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BUSINESS AND THE LAW
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BUSINESS AND THE LAW ANDREW TERRY DES GIUGNI
SIXTH EDITION
LAWBOOK CO. 2016
Published in Sydney by Thomson Reuters (Professional) Australia Limited ABN 64 058 914 668 19 Harris Street, Pyrmont, NSW First edition (Harcourt Brace) Second edition (Harcourt Brace) Third edition (Thomson Learning) Fourth edition (Thomson Learning) Fifth edition (Cengage Learning)
1994 1997 2003 2005 2009
National Library of Australia Cataloguing-in-Publication entry Terry, Andrew - author. Business and the law / Andrew Terry and Des Giugni. 6th edition 9780455236582 (paperback) Includes index. Commercial law--Australia. Law--Australia. Giugni, Des - author. 346.9407 © 2016 Thomson Reuters (Professional) Australia Limited This publication is copyright. Other than for the purposes of and subject to the conditions prescribed under the Copyright Act 1968, no part of it may in any form or by any means (electronic, mechanical, microcopying, photocopying, recording or otherwise) be reproduced, stored in a retrieval system or transmitted without prior written permission. Inquiries should be addressed to the publishers. Editor: Zoe Haynes Product Developers: Natasha Naude and Vickie Ma Publisher: Robert Wilson Printed by Ligare Pty Ltd, Riverwood, NSW This book has been printed on paper certified by the Programme for the Endorsement of Forest Certification (PEFC). PEFC is committed to sustainable forest management through third party forest certification of responsibly managed forests.
FOREWORD Michael T Schaper, BA, MComm, PhD Deputy Chairman, Australian Competition & Consumer Commission, Canberra
The myriad business laws and regulations that we have in Australia provide the basis upon which most commercial activity is undertaken. Simply put, it spells out what we can – and can’t – do in a business context: the legal structures that can be used, the ways in which firms compete or otherwise deal with each other, the behaviours that are acceptable when selling to customers, how we can resolve disagreements, and the way in which risk is managed, to name just a few. In short, it is the framework around which all commercial trading and activities takes place.
Learning the basics of business law is often seen as a tedious necessity by many students, especially those without any prior exposure to the law and its peculiarities. But it’s a crucial ingredient for anyone seeking to build a truly successful career in business or commerce. Knowing the rules of the game is an important first step in being able to successfully operate as a manager, business owner, entrepreneur, employee, director or investor. Understanding the law is essential in many different ways.
Firstly, it is an important operational factor for many businesses. Our web of laws and regulations jointly provide the framework that underpins almost all the other activities of business. They spell out such basic issues, for example, as how we employ people, the manner in which we collect and report our accounting information, and what claims can be made in an advertisement, as well as penalties for non-compliance. Secondly, the competitive nature of business makes it almost inevitable that, sooner or later, most firms will come into conflict or contention with someone else. How such disputes are managed, adjudged and resolved is an important feature of the contemporary legal environment. Our legal system may seem to focus on the responsibilities of businesses, but it also contains important rights and protections for firms. Knowing what these are, how they can be exercised, and the benefits of such measures can be a great help to the savvy business operator. Finally, our laws can be a great source of competitive advantage for those who bother to learn how they work, and why. The law matters to everyone, not just lawyers. Not everyone understands the law equally, and those who take the time to understand what the rules are, and what is permitted, can often plan strategically in a way that others don’t. Conversely, history is littered with many examples of enterprises that have come unstuck by ignoring or downplaying one or other of their legal responsibilities.
As the many cases and examples provided in this book show, the law is an evolving, challenging aspect of the business environment. It is full of fascinating and sometimes confusing issues, and there are many grey areas open to multiple analyses, challenges and debate. Its interpretation and application is not always clear, but it is always important.
This sixth edition of Business and the Law will provide you with a comprehensive overview of most of the key legal aspects you’re likely to encounter in the Australian business environment. Each of the sections in this book is valuable, and will help you to develop a better understanding of how laws are made, what they seek to do, and – perhaps most importantly – how they actually operate in practice. I commend it to you.
PREFACE Over 20 years ago the Preface to the first edition of Business, Society and the Law, as this book was then titled, noted that: The law is not simply peripheral to commerce. The transactions and relationships that constitute commerce are embedded in the law. The entire fabric of commerce is woven from a complex legal regime, statutory and judge made, which regulates all commercial activity and in relation to which the legality and enforceability of all commercial activity must ultimately be assessed.
This proposition is even more valid today in the light of a legal and regulatory regime which is increasingly pervasive and increasingly complex and increasingly significant. It is the hope of the authors that this text will lead to a more productive relationship between business students and this regulatory regime. We believe that the study of law need not intimidate students but rather that it should attract them. Its subject matter, reflecting as it does on all aspects of life, traverses the range from the gravely serious to the highly entertaining. While the law is not an easy pursuit it should interest and enthuse. This is our hope for this book. It perhaps reflects the increasing complexity of contemporary business that this sixth edition of Business and the Law has its sixth publisher. Restructures, mergers, acquisitions and copyright assignments have seen a new publisher for each edition. I am delighted that this edition is published by Thomson Reuters, Australia’s premier legal publisher. I am grateful to Nick Riley for suggesting a new edition with Thomson Reuters and to Robert Wilson for his enthusiastic support. Particular thanks to Natasha Naude who started the project and to Vickie Ma who has had the task of managing the project to completion. Their grace and style in the face of obfuscations and excuses for deadlines not being met, and their wise counsel at all stages of the project, is acknowledged and appreciated. It reflects the virtual world we live in that I have not met my New Zealand based editor, Sarah Hullah, but my thanks to her also for converting the manuscript into the house style and to Zoe Haynes, who has edited and refined the product. My thanks also to Dr Michael Schaper, Deputy Chair of the Australian Competition and Consumer Commission for contributing the Foreword. The ACCC not surprisingly features prominently in an Australian business law text and all contributors are delighted that he has graced this edition with his Foreword. This edition also features a new team of contributors – colleagues in the Discipline of Business Law in The University of Sydney Business School who have enthusiastically embraced the challenge of breathing new life into an established text. I am grateful for their commitment and support and contribution. And to Vinty Lim for his research and secretarial assistance. I also acknowledge the contributions of contributors to earlier editions who have all added value to the original text written by Des Giugni and me. Des has stepped back from the current edition but his influence continues to resonate and his style continues to enliven so many of the pages. My personal debt to him is inestimable. Andrew Terry March 2016
TABLE OF CONTENTS Table of Cases Table of Statutes
ix xxxiii
Part 1 THE AUSTRALIAN LEGAL SYSTEM
1
Chapter 1: The Law, the Legal System and the Constitution
3
Chapter 2: The Courts and Common Law
75
Chapter 3: The Parliament and Statute Law
103
Chapter 4: The Executive and Law-making by Administrative Agencies
135
Chapter 5: Commercial Dispute Resolution
159
Part 2 GENERAL PRINCIPLES OF BUSINESS LAW
183
Chapter 6: Contracts: Concepts of agreement Chapter 7: Contracts in Business
185 325
Chapter 8: Torts: Concepts of Liability
423
Chapter 9: Property and securities: Concepts of ownership
508
Chapter 10: Crime: Concepts of control
563
Part 3 BUSINESS ORGANISATION AND OPERATION Chapter 11: Alternative Business Structures
591 593
Chapter 12: Relationships in Business: Distributors, Agents, Employees, Independent Contractors
617
Chapter 13: Franchising
649
Chapter 14: Privacy
681
Chapter 15: International Business
703
Chapter 16: Business Failure
737
Part 4 BUSINESS, CONSUMERS AND FAIR TRADING Chapter 17: The Australian Consumer Law
757 759
Chapter 18: Misleading or Deceptive Conduct
807
Chapter 19: Unconscionable Conduct and Unfair Contract Terms
881
Chapter 20: Advertising and Sales Promotion
923
Chapter 21: Supply of Goods and Services
965
Part 5 BUSINESS AND COMPETITIVE TRADING Chapter 22: Competition Law
1015 1017
Chapter 23: Intellectual Property
1157
Part 6 BUSINESS AND THE LAW Chapter 24: Business Regulation, Risk and Compliance
1253 1255
Business and the Law
Index
1267
CONTRIBUTORS
Susan Carter is an adjunct lecturer in Business Law in The University of Sydney Business School teaching business law, competition and consumer law, and IP law. She has wide experience in legal practice having worked in both large commercial firms and as in-house counsel. Cary Di Lernia is a lecturer in Business Law in The University of Sydney Business School teaching corporations law and business regulation law. He has recently been awarded his PhD for his thesis on corporate reporting and disclosure and is widely published in the areas of corporate regulation and franchising. Ross Hodgson is a solicitor in private practice and an adjunct lecturer in Business Law in The University of Sydney Business School teaching business law and corporations law.
Joseph Huan is a solicitor and sessional tutor in Business Law in The University of Sydney Business School with publications in the areas of distribution and nano technology. Patty Kamvounias is a senior lecturer in Business Law in The University of Sydney Business School teaching business law and competition and consumer law. Her most recent book, Higher Education and the Law, co-edited with two colleagues, was published in 2015.
Simone Lockhart is a corporate lawyer, specialising in international business, with extensive experience in legal practice having worked in a leading commercial firm and as in-house counsel. She is a sessional lecturer in Business Law in The University of Sydney Business School teaching business law. Juliette Overland is a senior lecturer in Business Law in The University of Sydney Business School teaching corporations law, regulation of capital raising and corporate crime courses. She has recently completed her PhD on the topic of corporate liability for insider trading.
Trang Quang is a sessional lecturer in Business Law in The University of Sydney Business School teaching business and corporations law courses. Graham Raffell is a sessional lecturer in Business Law in The University of Sydney Business School teaching business law. He has had a long career in private practice in commercial litigation, both as a solicitor and a barrister, specialising in insolvency matters.
Andrew Terry is a Professor of Business Regulation in the Discipline of Business Law in the University of Sydney Business School teaching business law, business regulation and franchising courses. He is Emeritus Professor of UNSW and Honorary Dean of Beijing Normal University’s Franchise Management School and has been inducted into the Australian Franchising Hall of Fame.
Anna Ward is a lawyer with Special Broadcasting Service (SBS) specialising in media and copyright law, and a sessional lecturer in Business Law in The University of Sydney Business School.
Contributors to the 5th edition: Michael Adams; Janet Austin; Jenny Buchan; Anne Durie; Bruce Gordon; Wayne Gumley; Jason Harris; John McLaren; David Melz; Anne O’Rourke; Xanthe Paltridge; Greg Pearson; Dale Pinto and Tracey Sweeney.
TABLE OF CASES A A Firm of Solicitors, Re [1995] TLR 263 ..................................................................................................................... 7.1100 A Schroeder Music Publishing Co Ltd v Macaulay [1974] 1 WLR 1308 ..................................................................... 19.10 ACCC v AGL Sales Pty Ltd [2013] FCA 1030 ........................................................................................................... 17.650 ACCC v Abel Rent-a-Car Pty Ltd [1999] FCA 314 ....................................................................................................... 7.640 ACCC v AirAsia Berhad Company [2012] FCA 1413 ................................................................................................. 20.500 ACCC v Allergy Pathway [2011] FCA 74 .................................................................................................................... 18.870 ACCC v Allphones Retail Pty Ltd (No 2) [2009] FCA 17 ........................................................................................... 19.210 ACCC v Alstom Australia Limited (unreported, MR 78/01, 6 April 2001) .................................................................. 22.750 ACCC v Apple Pty Ltd [2012] FCA 646 ...................................................................................................................... 17.650 ACCC v Australian Safeway Stores Pty Ltd [1997] FCA 450 ...................................................................................... 24.80 ACCC v Baxter Healthcare Pty Ltd [2007] HCA 38 ................................................................................................... 22.150 ACCC v Black & White Cabs Pty Ltd [2010] FCA 1399 .......................................................................................... 22.1480 ACCC v Boral [2001] ATPR 41-803 .......................................................................................................................... 22.1910 ACCC v Boral Ltd [1999] FCA 1318 ........................................................................................................................... 22.300 ACCC v Boral Ltd [2001] FCA 30 ............................................................................................................................... 22.300 ACCC v Bytecard Pty Limited [2008] VCAT 482 ........................................................................................................ 19.440 ACCC v CG Berbatis Holdings Pty Ltd [2003] HCA 18 .................................................................. 19.120, 19.340, 19.380 ACCC v Capalabo Pty Ltd [2004] ATPR 41-976 ........................................................................................................ 19.280 ACCC v Chen [2003] FCA 897 ........................................................................................................................ 7.850, 23.230 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 ...................................... 18.390, 18.560, 18.570, 18.670 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 1405 ............................................................................. 19.320 ACCC v Coles Supermarkets Australia Pty Ltd [2014] FCA 634 ............................................................................... 20.100 ACCC v Coles Supermarkets Australia Pty Ltd [2015] FCA 330 ................................................................. 17.650, 20.100 ACCC v Cotton On Kids Pty Ltd [2012] FCA 1428 .................................................................................................... 17.650 ACCC v Craftmatic Pty Ltd [2009] FCA 972 .............................................................................................................. 19.250 ACCC v Dukemaster Pty Ltd [2009] FCA 682 ............................................................................................ 18.1110, 19.350 ACCC v Energy Australia Pty Ltd [2014] FCA 336 .................................................................................................... 17.650 ACCC v Energy Australia Pty Ltd [2015] FCA 274 .................................................................................................... 17.650 ACCC v Energy Watch Pty Ltd [2012] FCA 749 ........................................................................................................ 17.650 ACCC v Glendale Chemical Products Pty Ltd [1998] FCA 180 ..................................................... 21.680, 21.710, 21.740 ACCC v Halkalia Pty Ltd [2012] FCA 534 .................................................................................................................. 17.760 ACCC v Harvey Norman Holdings Ltd [2011] FCA 1407 ........................................................................................... 17.650 ACCC v Hewlett-Packard Australia Pty Ltd [2013] FCA 653 ..................................................................................... 17.650 ACCC v Hillside (Australia New Media) Pty Ltd t/as Bet365 [2015] FCA 1007 ....................................................... 20.120 ACCC v Hugo Boss Australia Pty Ltd [1996] FCA 799 ............................................................................................ 22.1700 ACCC v Jurlique International Pty Ltd [2007] FCA 79 ............................................................................................. 22.1570 ACCC v Keshow [2005] FCA 558 ............................................................................................................................... 19.260 ACCC v Leahy Petroleum Pty Ltd (2007) ATPR 42-162; [2007] FCA 794 ............................................................... 22.850 ACCC v Lux Distributors Pty Ltd [2013] FCAFC 90 ..................................................................................... 19.230, 19.290 ACCC v Maritime Union of Australia [2001] FCA 1549 ............................................................................................ 22.1230 ACCC v McCaskey [2000] FCA 1037 ......................................................................................................................... 20.340 ACCC v Neighbourhood Energy Pty Ltd [2012] FCA 1357 ....................................................................................... 17.650 ACCC v Nissan Motor Co (Australia) Pty Ltd [1998] ATPR 41-660 .......................................................................... 20.540 ACCC v Nissan Motor Co (Australia) Pty Ltd [1998] FCA 1048 ............................................................................... 18.880 ACCC v OmniBlend Australia Pty Ltd [2015] FCA 871 ............................................................................................ 22.1610 ACCC v Origin Energy Electricity Ltd [2015] FCA 278 ................................................................................. 17.650, 20.460 ACCC v P & N Pty Ltd [2014] FCA 6 ......................................................................................................................... 18.840 ACCC v Dynacast (Int) Pty Ltd (formerly Phoneflasher.com Pty Ltd) (2007) ATPR 42–156 ............................................................................................................................................................ 7.650 ix
Business and the Law
ACCC v Qantas Airways [2008] FCA 1976 .............................................................................................................. 22.1030 ACCC v RL Adams Pty Ltd [2015] FCA 1016 ............................................................................................................ 20.110 ACCC v Rana [2008] FCA 374 ................................................................................................................................... 17.390 ACCC v Samton Holdings Pty Ltd [2002] FCAFC 4 ..................................................................................... 19.100, 19.120 ACCC v Scoopon Pty Ltd [2014] FCA 820 ................................................................................................... 17.650, 17.730 ACCC v Seal-A-Fridge Pty Ltd [2010] FCA 525 ........................................................................................... 19.230, 19.360 ACCC v Simply No-Knead (Franchising) Pty Ltd [2000] FCA 1365 .......................................................................... 19.300 ACCC v Singtel Optus [2011] FCA 87 .......................................................................................................................... 20.30 ACCC v Skippy Australia Pty Ltd [2006] FCA 1343 ................................................................................................... 17.590 ACCC v TPG Internet Pty Ltd [2013] HCA 54 ........................................................................................................... 20.130 ACCC v TPG Internet Pty Ltd (No 2) [2012] FCA 629 .............................................................................................. 17.650 ACCC v Target Australia Pty Ltd [2001] FCA 1326 .................................................................................................... 18.720 ACCC v Telstra Corporation Ltd [2007] FCA 1904 ....................................................................................... 18.500, 18.540 ACCC v Virgin Mobile Australia Pty Ltd [2002] FCA 1548 ........................................................................................ 17.730 ACCC v Visa Inc [2015] FCA 1020 ........................................................................................................................... 22.1410 ACCC v Visy Industries Holdings Pty Ltd (No 3) [2007] FCA 1617 .................. 22.690, 22.800, 22.990, 22.1090, 24.110 ACCC v Worldplay Services Pty Ltd [2004] FCA 1138 ................................................................................................ 7.660 ACCC v Yellow Page Marketing BV (No 2) [2011] FCA 352 ..................................................................................... 17.650 AE Goodwin Ltd v AG Healing Ltd (1979) 7 ACLR 481 .............................................................................................. 7.940 ASIC v Forge (2003) 133 FCR 487 ............................................................................................................................ 16.160 ASIC v Waterwheel Holdings Ltd [2004] FCAFC 253 ................................................................................................ 16.350 Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470; [1993] FCA 265 ................................................................................................................................ 6.2560 Acros Ltd E A Ronaasen & Son [1993] AC 470 ........................................................................................................ 21.630 Adam v Ward [1917] AC 309 ...................................................................................................................................... 8.1300 Adams v ETA Foods Ltd [1987] FCA 402 .................................................................................................................. 17.610 Adamson v New South Wales Rugby League Ltd [1991] ATPR 41-141 .................................................................. 7.1060 Adelaide Steamship Co Ltd v The King (1912) 15 CLR 65; [1912] HCA 58 .............................................. 1.1020, 22.110 Advance (NSW) Insurance Agencies Pty Ltd v Matthews (1987) 4 ANZ Insurance Cases 60-813 ......................................................................................................................................... 7.1280 Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWCA 219 ................................................................ 8.390 Albion Insurance Co Ltd v GIG of NSW (1969) 121 CLR 342 ................................................................................. 7.1350 Aldi Stores Ltd Partnership v Frito-Lay Trading Company GmbH [2001] FCA 1874 ......................................................................................................................................................................... 23.580 Aldrich v Cooper (1803) 32 ER 402 ............................................................................................................................. 7.940 Alex Kay Pty Ltd v General Motors Acceptance Corp & Hartford Fire Insurance Co [1963] VR 458 ................................................................................................................................................... 6.2410 Alice Corporation v CLS Bank International 573 US 134 (2014) ............................................................................ 23.1340 Allcard v Skinner (1887) 36 Ch D 145 ............................................................................................. 6.1870, 6.1890, 6.1910 Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26 ...................................................................... 9.680 Aluminium Industries BV v Romalpa Aluminium Ltd [1976] 2 All ER 552 .................................................................. 9.700 Amalgamated Society of Engineers v The Adelaide Steamship Co Ltd [1920] HCA 54 .................................................................................................................................................................... 1.1220 Andrews v Styrap (1872) 26 LT 704 ............................................................................................................................. 2.150 Annand & Thompson Pty Ltd v IPC [1979] FCA 36 .................................................................................................. 18.550 Annand & Thompson Pty Ltd v TPC [1979] FCA 62 ................................................................................................. 18.100 Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 .......................................................... 23.1430 Aotearoa International Ltd v Scancarriers A/S [1985] 1 NZLR 513 ............................................................................. 6.960 Apco Service Stations Pty Ltd v ACCC [2005] FCAFC 161 ...................................................................................... 22.840 Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; [1990] FCA 51 .......................................................................................................................................... 7.230, 18.220, 18.1130 Arizona Employers’ Liability Cases 250 US Wot 433 (1919) ..................................................................................... 20.220 Armory v Delamirie (1722) 93 ER 664 .......................................................................................................................... 9.590 x
Table of Cases
Arnotts Ltd v TPC [1990] ATPR 41-061 ...................................................................................................................... 18.570 Ashby v Tolhurst [1937] 2 KB 242 ..................................................................................................................... 9.900, 9.980 Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 ....................................................... 21.350, 21.370, 21.440 Ashton v Pratt [2015] NSWCA 12 ................................................................................................................................. 6.830 Aspar Autobarn Co-operative Society Ltd v Dovola Pty Ltd [1986] ATPR 40-727 ................................................... 23.190 Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd [The Associated Alloys Case] [2000] HCA 25 ......................................................................................................................... 9.710, 9.720, 9.730 Associated Newspapers Ltd v Bancks [1951] HCA 24 .............................................................................................. 6.2770 Association for Molecular Pathology v Myriad Genetics Inc 596 US 12–398 (2013) ..................................................................................................................................................................... 23.1280 Astley v Austrust Ltd [1999] HCA 6 ................................................................................................................... 6.3010, 8.60 Atlantic Works v Brady 107 US 192 (1883) ............................................................................................................. 23.1390 Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436 ..................................................................... 3.290 Attorney-General (Cth) v Adelaide Steamship Co Ltd (1913) 18 CLR 30 ................................................................. 22.110 Attorney-General (Cth) v R (Boilermakers’ case) (1957) 95 CLR 529 ........................................................................ 1.590 Attorney-General (NSW) v Trethowan (1931) 44 CLR 394 .......................................................................................... 1.820 Attorney-General (NSW) v Trethowan (1932) 47 CLR 97; [1932] AC 526 ................................................................. 1.820 Attorney-General (Cth) v The Queen (1957) 95 CLR 529 ........................................................................................... 1.720 Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 ........................................................... 7.270, 19.50 Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd [1986] HCA 46 ....................................................................................................................................................... 22.1240 Australian Agricultural Co v Federated Engine-Drivers’ & Firemen’s Association of A/asia [1913] HCA 41 ........................................................................................................................................... 2.170 Australian Bridal Centre Pty Ltd v Dawes Corp Pty Ltd [1991] ATPR 41-072 ........................................................... 7.160 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 .................................................................................................................................................................... 14.60, 14.70 Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45 ...................................... 1.650, 1.1180, 2.240 Australian Casualty Co Limited v Frederico (1985-86) 160 CLR 513 ....................................................................... 7.1130 Australian Communications Network Pty Ltd v ACCC [2006] FCAFC 221 ............................................................... 20.400 Australian Communist Party v Commonwealth [1951] HCA 5 .......................................................................... 1.900, 1.980 Australian Guarantee Corporation Ltd v Jennings [1981] ATPR 40-210 ................................................................... 18.500 Australian Health & Nutrition Association Ltd t/as Sanitarium Health Food Co v Irrewarra Estate Pty Ltd t/as Irrewarra Sourdough [2012] FCA 592 .................................................................... 23.570 Australian Knitting Mills v Grant [1933] HCA 35 ......................................................................................................... 21.240 Australian Ocean Line Pty Ltd v West Australian Newspapers Ltd [1985] FCA 37 ............................................................................................................................................................................. 18.290 Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700 ............................................... 9.330, 9.340 Australian Timber Workers’ Union v Monaro Sawmills Pty Ltd, Re [1980] FCA 43 ............................................................................................................................................................................. 12.380 Automasters Australia Pty Ltd v Bruness Pty Ltd [2002] WASC 286 ........................................................................ 19.310 Auty v National Coal Board [1975] 1 WLR 784 ......................................................................................................... 16.460
B BG Transport Services v Marston Motor Co Ltd [1970] 1 Lloyd’s Rep 371 ............................................................... 9.980 BP Plc v Woolworths Ltd [2004] FCA 1362 .................................................................................................. 23.390, 23.470 BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 ............................................................................................................................................................................. 7.400 BRS (Contracts) Ltd v Colney Motor Engineering Co Ltd (The Times, 27 November 1958) ........................................................................................................................................................ 9.980 BS Brown & Sons v Craiks Ltd [1970] 1 WLR 752 ................................................................................................... 18.290 Bacchus Marsh Concentrated Milk Co Ltd (in liq) v Joseph Nathan & Co Ltd (1919) 26 CLR 410 ................................................................................................................................................. 7.1090 Baker v The Queen [2004] HCA 45 .............................................................................................................................. 1.760 xi
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Baldwin v Icon Energy Ltd [2015] QSC 12 ................................................................................................................... 7.350 Balfour v Balfour [1919] 2 KB 571 ................................................................................................................................ 6.860 Balmain New Ferry Co Ltd v Robertson (1906) 4 CLR 379; [1906] HCA 83 ............................................. 6.2370, 6.2380 Baltic Shipping Co v Dillon (1993) 111 ALR 289 ........................................................................................................ 6.2960 Bank of England v Vagliano Bros [1891] AC 107 ...................................................................................................... 7.1570 Bank of NSW v Commonwealth (1948) 76 CLR 1 ..................................................................................................... 1.1280 Banque Brussels Lambert SA v Australian National Industries Ltd (1989) 21 NSWLR 502 ............................................................................................................................................... 7.150, 18.1080 Bar-Mordecai v Hillston [2004] NSWCA 65 ................................................................................................................. 6.1920 Barlow v Neville Jeffress Advertising Pty Ltd [1995] ATPR 41-376 ........................................................................... 7.1090 Barton v Armstrong [1976] AC 104 ............................................................................................................................. 6.1840 Bateman v Slatyer [1987] FCA 58 .............................................................................................................. 18.1060, 18.1110 Bates v Hewitt (1867) LR 2 QB 595 ........................................................................................................................... 7.1255 Bath v Alston Holding Pty Ltd [1988] HCA 27 .............................................................................................................. 2.140 Baulderstone Hornibrook Pty Ltd v Queensland Investment Corporation [2007] NSWCA 9 ................................................................................................................................................... 12.140, 12.150 Baumgartner v Baumgartner [1987] HCA 59 ................................................................................................................ 9.230 Beatty v Guggenheim Exploration Co 225 NY 380 (1919) .......................................................................................... 9.230 Becker and Minister for Immigration and Ethnic Affairs, Re (1977) 1 ALD 158 ......................................................... 4.310 Belgrave Nominees Pty Ltd v Barlin-Scott Air Conditioning Pty Ltd [1984] VR 947 ............................................................................................................................................................................. 9.350 Bell v Lever Brothers Ltd [1932] AC 161 ......................................................................................... 6.1620, 6.1640, 6.1770 Bembridge v Just Spectacles Pty Ltd [2006] WASC 185 .......................................................................................... 18.640 Beneficial Finance Corporation Ltd v Karavas (1991) ASC 56-002 ........................................................................... 19.560 Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292 ............................................................................................................................................................... 3.330 Lord Bernstein of Leigh v Skyviews & General Ltd [1978] QB 479 ............................................................................ 9.320 Bertram v Clemons [1955] LMD 94 ........................................................................................................................... 22.1640 Betfair Pty Ltd v Western Australia [2008] HCA 11 .................................................................................................... 1.1080 Bevillesta Pty Ltd v Liberty International Insurance Co [2009] NSWCA 16 ................................................................ 8.490 Bisset v Wilkinson [1927] AC 177 ............................................................................................................................... 6.1570 Black v Black (2008) 216 FLR 422; [2008] FamCAFC 7 ........................................................................................... 6.1450 Bleyer v Neville Jeffress Advertising Pty Ltd (unreported, NSWCA, Kirby P, Hope and Mahoney JJA, 15 December 1987) ........................................................................................................ 7.920 Blomley v Ryan [1956] HCA 81 ..................................................................................................................................... 19.80 Blyth v Birmingham Waterworks Co (1856) 11 Ex 781 ................................................................................................ 8.500 Bobux Marketing Ltd v Raynor Marketing Ltd [2001] NZCA 348 .............................................................................. 13.270 Bodum v DKSH Australia Pty Ltd [2011] FCAFC 98 .................................................................................................. 18.950 Bolam v Friern Barnet Hospital Management Committee [1957] 2 All ER 118 .......................................................... 8.630 Bolton v Stone [1951] AC 850 ....................................................................................................................................... 8.530 Bond Brewing Holdings Ltd v NAB (1990) 8 ACLC 330 ............................................................................................ 16.440 Boral Besser Masonry Ltd v ACCC [2003] HCA 5 .......... 22.300, 22.390, 22.1810, 22.1880, 22.1910, 22.1920, 22.2000 Boylis v Bishop of London [1913] 1 Ch 127 ................................................................................................................. 7.220 Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 ...................................................................... 6.140 Brambles Security Services Ltd v Bi-Lo Pty Ltd (1992) Aust Torts Reports 81–161 ....................................................................................................................................................................... 9.980 Brandy v Human Rights & Equal Opportunity Commission [1995] HCA 10 ............................................................... 1.740 Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 ......................................................................... 6.140 Bridges v Hawkesworth (1851) 21 LJ (QB) 75 ............................................................................................................. 9.590 British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504 ....................................................................................................................................................................... 7.310 Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 ........................................................................................ 6.580 Brookfield Multiplex Ltd v Owners-Strata Plan No 61288 [2014] HCA 36 ................................................................. 8.1100 xii
Table of Cases
Brown v Jam Factory Pty Ltd (1981) 53 FLR 340; [1981] ATPR 40-213; [1981] FCA 35 ................................................................................................................................ 18.10, 18.20, 18.410, 18.490 Bryan v Maloney [1995] HCA 17 ........................................................................................................ 2.160, 8.1070, 8.1080 Bunnings Group Limited v Laminex Group Ltd [2006] FCA 682 ................................................................................. 21.90 Burger King Corp v Hungry Jack’s Pty Ltd [2001] NSWCA 187 .................................................................. 6.2180, 6.2200 Burnie Port Authority v General Jones Pty Ltd [1994] HCA 13 ................................................................................... 8.480 Burns v Man Automotive (Aust) Pty Ltd (1986) 161 CLR 653 .................................................................................. 6.2880 Bustfree Pty v Llewelyn [2013] QCA 103 ................................................................................................................... 6.1860 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 .......................................................................................... 18.1160 Byrne v Australian Airlines Ltd [1995] HCA 24 ............................................................................................................. 7.400 Byrne v Van Tienhoven (1880) LR 5 CPD 344 ............................................................................................................ 6.390
C CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36 .................................................................... 7.1210 CSR Ltd v Resource Capital Australia Pty Ltd [2003] FCA 279 .................................................................. 23.260, 23.270 Cadbury Schweppes Pty Ltd v Darrell Lea Chocolate Shops Pty Ltd (No 8) [2008] FCA 470 ..................................................................................................................................................... 18.1000 Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd (1981) 55 ALJR 333 ........................................... 8.1120, 23.120 Caltex Oil (Australia) Pty Ltd v The Dredge “Willemstad” [1976] HCA 65 .................................................. 8.1000, 8.1010 Cameron v Holt [1980] HCA 5 ..................................................................................................................................... 10.220 Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41 ............................................................... 5.230, 5.240 Campomar Sociedad Ltd v Nike International Ltd [2000] HCA 12 ............................................................................ 23.590 Canny Gabriel Castle Jackson Advertising v Volume Sales (Finance Pty Ltd) [1974] HCA 22 ............................................................................................................................................ 11.120, 11.220 Canterella Bros v Andreason [2005] NSWSC 1157 .................................................................................................... 6.2160 Caparo Industries plc v Dickman [1990] 2 AC 605; [1990] 1 All ER 568 ....................................................... 8.940, 8.970 Cargill Inc v Monfort of Colorado Inc 479 US 104 (1986) ....................................................................................... 22.1910 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 ......... 6.80, 6.340, 6.350, 6.360, 6.410, 6.930, 6.940, 6.960, 17.100, 20.20 Carpet Call Pty Ltd v Chan [1987] ATPR (Digest) 46-025 ............................................................................. 21.80, 21.400 Carsales.Com Limited v One Way Traffic Limited [2015] VSC 367 .......................................................................... 18.750 Carter v Boehm (1766) 97 ER 1162 ........................................................................................................................... 7.1230 Cartledge v Topling [1943] AC 772 ............................................................................................................................. 6.2430 Casey’s Patents, Re [1892] 1 Ch 104 ........................................................................................................................ 6.1040 Cassell & Co Ltd v Broome [1972] AC 1027 ................................................................................................................ 1.120 Cassidy v Ministry of Health [1951] 2 KB 343 ............................................................................................................... 2.50 Cassidy v Saatchi & Saatchi Australia Pty Ltd [2004] FCAFC 34 ............................................................................. 18.880 Castioni, Re [1891] 1 QB 149 ....................................................................................................................................... 3.420 Castlemaine Tooheys Ltd v South Australia [1990] HCA 1 .......................................................................................... 2.140 Castlemaine Tooheys Ltd v Williams & Hodgson Transport Pty Ltd [1986] HCA 72 ........................................................................................................................................................................... 22.1490 Cattle v Stockton Waterworks (1875) LR 10 QB 453 ................................................................................................ 8.1010 Causer v Browne [1952] VLR 1 .................................................................................................................................. 6.2330 Cellulose Products Pty Ltd v Truda (1970) 92 WN (NSW) 561 .................................................................................. 7.940 Central London Property Trust v High Trees House Ltd [1947] KB 130 ........................................ 6.1190, 6.1200, 6.1220 Centurion Industries Ltd v Industrial Progress Corporation Pty Ltd [1998] WASC 117 ........................................................................................................................................................................... 21.420 Champtaloup v Thomas [1976] 2 NSWLR 264 ............................................................................................................ 2.350 Chan v Sellwood [2009] NSWSC 1335 ....................................................................................................................... 14.100 Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694 ............................................................................... 8.1060 Chapman Bros v Verco Bros & Co Ltd [1933] HCA 23 ............................................................................................... 9.940 Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87 ....................................................................................................... 6.990 Charles v Federal Commisioner of Taxation [1954] HCA 16 ....................................................................................... 9.270 xiii
Business and the Law
Charles of the Ritz Distributor Corp v FTC 143 F (2d) 676 (1944) .......................................................................... 18.960 Chattis Nominees Pty Ltd v Norman Ross Homeworks Pty Ltd (Receiver Appointed) (in liq) (1992) 28 NSWLR 338 ............................................................................................................... 9.710 Checker Taxicab Co Ltd v Stone [1930] NZLR 169 ................................................................................................... 11.100 Chiarabaglio v Westpac Banking Corp [1989] FCA 266 .............................................................................................. 8.970 Chicago Board of Trade v United States 246 US 231 (1918) ................................................................................. 22.1830 Chokolingo v Attorney-General [1981] 1 WLR 106 ...................................................................................................... 3.270 Church of Scientology v Woodward [1982] HCA 78 .................................................................................................... 4.320 City of London v Wood (1701) 12 Mod 669 ................................................................................................................. 1.780 Clayton v Adams (1976) 6 TR 604 ............................................................................................................................. 6.1310 Clifford Davis Management Ltd v WEA Records [1975] 1 All ER 237 ...................................................................... 7.1080 Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466; [1926] HCA 6 ..................................................... 1.920, 1.930 Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 ........................................................................ 7.320 Coca-Cola Bottling Co v Coca-Cola Co 227 USPQ 18 (D Del 1985) ..................................................................... 23.1410 Coco v AN Clark (Engineers) Ltd [1969] RPC 41 .................................................................................................... 23.1410 Coco v The Queen (1994) 179 CLR 427; [1994] HCA 15 ............................................................................... 1.810, 4.200 Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24 .................................... 6.1960, 6.2710, 7.400 Cole v Whitfield [1988] HCA 18 .......................................................................................................... 1.1060, 1.1070, 2.140 Colgate Palmolive Pty Ltd v Rexona Pty Ltd (1981) 37 ALR 391; [1981] FCA 146 ................................................................................................................................................ 18.170, 18.460, 18.820 Collings v HF Stevenson (Aust) Pty Ltd [1991] ATPR 41-104 ................................................................................... 19.270 Collins Marrickville Pty Ltd v Henjo Investments Pty Ltd [1987] ATPR 40-782 ...................................................... 18.1200 Comcare v PVYW [2013] HCA 41 ............................................................................................................................... 12.510 Commercial Bank of Australia Ltd v Amadio [1983] HCA 14 ................................................................ 19.60, 19.70, 19.80 Commercial Union v Beard [1999] NSWCA 422 ........................................................................................... 7.1240, 7.1255 Commissioner of Police v Anderson (unreported, NSWCA, Mahoney ACJ, Meagher and Beazley JJA, 21st October 1996) ................................................................................................... 10.410 Commissioners for Special Purposes of Income Tax v Pemsel [1891] AC 531 ....................................................... 7.1320 Commonwealth v Australian Capital Territory [2013] HCA 55 .................................................................................. 18.1030 Commonwealth v Tasmania [1983] HCA 21 .......................................................................................... 1.960, 1.970, 1.980 Commonwealth, The v Australia Capital Territory [2013] HCA 55 ............................................................................... 1.940 Commonwealth Bank v Eise & Friedrich (1991) 6 ACSR 1 ....................................................................................... 16.350 Commonwealth Trading Bank of Australia v Sydney Wide Stores Pty Ltd (1981) 148 CLR 304 ........................................................................................................................................................... 7.1710 Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54 ..................................................................... 6.2920 Communications Workers of America v Western Electric Co 860 F 2d 1137 (1988) ..................................................................................................................................................................... 22.1510 Community Nutrition Inst v Block 749 F 2d 50 (1984) ............................................................................................... 21.770 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14 .................................................................................................................................. 1.100 Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; [1990] HCA 17 .......................................................................................................................... 17.300, 18.220, 18.230, 18.1020 Construction Enterprises Pty Ltd v Lafarge Plasterboard Pty Ltd [2002] NTSC 21 ............................................................................................................................................................................. 12.330 Continental TV Inc v GTE Sylvania Inc 433 US 36 (1977) ...................................................................... 22.1280, 22.1350 Coogee Esplanade Surf Motel Pty Ltd v Commonwealth of Australia (1976) 50 ALR 363 ..................................................................................................................................................................... 7.300 Cooke v New River Company (1888) 38 Ch 56 ............................................................................................................ 2.90 Cooper v Stuart (1889) 14 App Cas 286 ...................................................................................................................... 1.290 Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation [1981] HCA 26 ............................................................................................................................................................................... 3.320 Coordinated Corporate Services Ltd v National Video Inc (1984) 82 CPR (2d) 251 ........................................................................................................................................................................... 13.170 xiv
Table of Cases
Cope Allman (Marrickville) Ltd v Farrow (1984) 3 IPR 567 ..................................................................................... 23.1440 Corocraft Ltd v Pan American Airways Inc [1968] 3 WLR 714 ................................................................................... 3.260 Corporate Affairs Commission v Bradley (1974) 1 NSWLR 391 ............................................................................... 23.180 Couldery v Bartrum (1881) 19 Ch D 394 .................................................................................................................... 6.1150 Coulls v Bagot’s Executor & Trustee Co Ltd (1967) 119 CLR 460 ............................................................. 6.2540, 6.2570 Country Road Clothing Pty Ltd v Nagee Nominees Pty Ltd [1991] FCA 101 .......................................................... 18.750 Coventry v Charter Pacific Corp [2005] HCA 67 .......................................................................................................... 16.40 Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 .................................................................................................................................... 12.120 Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 ............................................................................................................................................................... 6.1850 Cummings v Sands [2001] NSWSC 7 .......................................................................................................................... 12.80 Cundy v Lindsay (1878) 3 App Cas 459 .................................................................................................................... 6.1690 Currie v Misa (1875) LR 10 Exch 153 .......................................................................................................................... 6.930 Curtis v Chemical Cleaning & Dyeing Co [1951] 1 KB 805 ...................................................................................... 6.2320 Cut-Price Deli Pty Ltd v Jacques [1994] ATPR (Digest) 46-128 .............................................................................. 18.1120
D D & C Builders Ltd v Rees [1966] 2 QB 617 ............................................................................................................. 6.1160 D’Arcy v Myriad Genetics Inc [2014] FCAFC 115 .................................................................................................... 23.1280 D’Arcy v Myriad Genetics Inc [2015] HCA 35 .......................................................................................................... 23.1290 DPP v Chresta [2005] NSWSC 233 .............................................................................................................................. 3.260 Dalkeith Investments Pty Ltd, Re (1984) 9 ACLR 247 ............................................................................................... 16.290 Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317 .......................................................................................... 23.990 Dallas Buyers Club LLC v iiNet Limited (No 4) [2015] FCA 838 .............................................................................. 23.990 Dallinger v Halcha Holdings Pty Ltd (1995) 60 FCR 594 .......................................................................................... 16.510 Dandy Power Equipment Pty Ltd v Mercury Marine Pty Ltd [1982] FCA 178 ............................................ 22.210, 22.350 Darlington Futures Pty Ltd v Delco [1986] HCA 82 ................................................................................................... 6.2400 David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48 ............................................. 6.1640, 6.3110 Davies v Powell (1737) Willes 46 .................................................................................................................................. 1.160 Davis v Pearce Parking Station Pty Ltd (1954) 91 CLR 642 .................................................................................... 6.2430 Davis Contractors v Fareham UDC [1956] AC 696 .................................................................................................... 6.2720 Davy v Leeds Corporation [1964] 1 WLR 1218 ........................................................................................................... 3.320 Dawson v World Travel Headquarters Pty Ltd [1980] ATPR 40-187 ......................................................................... 20.360 Deep Vein Thrombosis and Air Travel Group Litigation, Re [2006] 1 All ER (Comm) 313 ............................................................................................................................................................... 3.260 Delnorth Pty Ltd v Dura-Post (Aust) Pty Ltd [2008] FCA 1225 ............................................................................... 23.1260 Dencio v Zivanovic (1991) 105 FLR 117 ...................................................................................................................... 6.430 Derry v Peek (1889) 14 App Cas 337 .................................................................................................. 2.30, 8.1160, 8.1170 Desktop Marketing Systems Pty Ltd v Telstra Corp Ltd [2002] FCAFC 112 ............................................................ 23.920 Diamond Press Australia Pty Ltd, Re [2001] NSWSC 313 ........................................................................................ 16.520 Dick Bentley Productions v Harold Smith Motors Ltd [1965] 1 WLR 623 ................................................................. 6.2030 Dick Smith Investments Pty Ltd v Roger John Ramsay [2014] ATMO 16 ................................................................ 23.630 Dickinson v Dodds (1876) 2 Ch D 463 ......................................................................................................................... 6.400 Dignan v Australian Steamships Pty Ltd [1931] HCA 9 ............................................................................................... 4.220 Dillon v Baltic Shipping Co (1989) 21 NSWLR 614; [1990] ATPR 40-992 .................................................. 18.500, 21.520 Director of Consumer Affairs Victoria v Craig Langley Pty Ltd [2008] VCAT 482 ....................................... 19.400, 19.420 Director of Consumer Affairs Victoria v Dimmeys Stores Pty Ltd [2013] FCA 1371 ......................................................................................................................................................................... 17.650 Director of Consumer Affairs Victoria v Dimmeys Stores Pty Ltd [2013] FCA 618 ................................................................................................................................................ 17.350, 17.670, 17.760 Doe v Yahoo!7 Pty Ltd [2013] QDC 181 .................................................................................................................... 14.100 xv
Business and the Law
Donoghue v Stevenson [1932] AC 562 ....... 2.90, 2.100, 2.320, 2.130, 8.140, 8.190, 8.200, 8.210, 8.240, 8.360, 8.890, 8.1000, 8.1060, 8.1080, 17.100 Dow Jones & Company Inc v Gutnick [2002] HCA 56 .............................................................................................. 8.1250 Dowell v Tower Corporation [1991] ANZ Conv R 177 ................................................................................................ 6.1240 Dowling v Dalgety Australia Ltd (1992) TPR 41–165; [1992] FCA 27; [1992] FCA 35 ........................................................................................................................................ 22.290, 22.350, 22.1790 Downsview Nominees Ltd v First City Corp Ltd (1992) 11 ACLC 3101 ................................................................... 16.430 Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 ........................................................................ 4.310 Duchess of Argyll v Duke of Argyll [1965] 1 All ER 611 .......................................................................................... 23.1430 Dudley v Dudley (1705) Ch 241 ...................................................................................................................................... 2.30 Dunlop v Selfridge [1915] AC 847 ................................................................................................................................. 6.930 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 ...................................................... 7.500 Dunton v Dunton (1892) 18 VLR 114 .............................................................................................................. 6.950, 6.1020 Duport Steels Ltd v Sirs [1980] ICR 161 ...................................................................................................................... 1.490 Duracell Australia Ltd v Union Carbide Australia Ltd [1988] FCA 380 ...................................................................... 18.770 Durant v Greiner (1990) 21 NSWLR 119 .................................................................................................................... 18.260 Dye v Commonwealth [2010] FCA 720 ....................................................................................................................... 14.100
E “EZ” and “EY” [2015] AlCmr 23 ................................................................................................................................... 14.380 eBay International AG v Creative Festival Entertainment Pty Ltd (2006) Aust Contract R 90–248; [2006] FCA 1768 ............................................................................................. 6.2360, 7.670, 7.770 Eastern Express Pty Ltd v General Newspapers Pty Ltd [1991] FCA 321 ................. 22.410, 22.1120, 22.1900, 22.1910 Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) ATPR 41-167 ..................................................... 22.1120 Edgington v Fitzmaurice (1885) 29 Ch D 459 ............................................................................................................ 6.1580 Elder Smith Goldsbrough Mort Ltd v McBride [1976] 2 NSWLR 631 ....................................................................... 21.440 Elders Trustee and Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332 ........................................................... 7.230 Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7 .................................................................. 7.410 Eliason v Henshaw (1819) 4 Wheaton 225 .................................................................................................................. 6.570 Emmens v Pottle (1885) 16 QBD 354 ........................................................................................................................ 19.430 Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523 ............................................................................................................................................................................. 6.630 Equuscorp Pty Ltd v Haxton [2012] HCA 7 ................................................................................................................ 6.1360 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8 ........................................................... 6.840, 12.410 Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731 ................................................ 8.1130, 8.1140, 8.1150 Esanda Finance Corp Ltd v Peat Marwick Hungerfords [1997] HCA 8 ........................................................... 8.210, 8.950 Esso Australia Resources Pty Ltd v Southern Pacific Petroleum NL Australia [2005] VSCA 228 ...................................................................................................................................................... 7.530 Esso Petroleum Co Ltd v Harpers Garage (Stourport) Ltd [1968] AC 269 .................................... 7.1020, 7.1030, 7.1110 Evans v Evans (1790) .................................................................................................................................................... 2.420 Evans v State of New South Wales [2008] FCAFC 130 ............................................................................................. 4.200
F Fabre v Lui [2015] NSWCA 157 .................................................................................................................................... 8.490 Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 .............................................................................................. 23.1460 Famel Pty Ltd v Burswood Management Ltd [1989] FCA 204 ................................................................................ 18.1080 Federation of Australian Underwater Instructors [1983] ATPR (Com) 50-055 ........................................................... 22.490 Felthouse v Bindley (1862) 142 ER 1037 ..................................................................................................................... 6.600 Fender v St John-Mildmay [1938] AC 1 ...................................................................................................................... 6.1440 Festival Stores v Mikasa (NSW) Pty Ltd [1971] 18 FLR 260 ................................................... 22.1620, 22.1660, 22.1670 Fido Dido Inc v Venture Stores (Retailers) Pty Ltd [1988] ATPR 40-912 ............................................................... 23.1610 Financings Ltd v Stimson [1962] 3 All ER 386 ............................................................................................................. 6.460 Fire Nymph Products Ltd v Jalco Products (WA) Pty Ltd [1983] ATPR 40-353 ..................................................... 18.1040 xvi
Table of Cases
Fisher v Bell [1961] 1 QB 394 ...................................................................................................................................... 6.250 Fitness First v Chong [2008] NSWSC 800 ................................................................................................................. 19.390 Fitzgerald v Masters (1956-7) 95 CLR 420 ................................................................................................................. 7.1130 Fitzgerald v Muldoon [1976] 2 NZLR 615 ..................................................................................................................... 1.800 Fleming Bros (Monaro Agencies) Pty Ltd v Smith [1983] ATPR 40-389 ................................................................... 7.1090 Fletcher v Nextra Australia Pty Ltd [2015] FCAFC 52 ............................................................................................... 18.300 Foakes v Beer (1884) 9 App Cas 605 ........................................................................................................................ 6.1140 Foran v Wight [1989] HCA 51 ..................................................................................................................................... 6.1260 Fragomeni v Fogliani (1968) 42 ALJR 263 ................................................................................................................. 6.1720 Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 ................................................................................................... 18.1170 Fred Chappell Ltd v National Car Parks Ltd (1987) (The Times, 22 May 1987) ....................................................... 9.980 Freeman & Lockyer v Buckhurst Park Properties Ltd [1964] 2 QB 480 ...................................................... 12.120, 12.180 Freeman Cosmetic Corporation, The v Jenula Trial Pty Ltd [1993] FCA 505 .......................................................... 18.990 Frost v Warner [2002] HCA 1 ........................................................................................................................................ 8.260
G Gaffikin Marine Pty Ltd v Princes Street Marina Pty Ltd [1995] ATPR (Digest) 46-149 ........................................................................................................................................................................ 7.240 Gallie v Lee [1971] AC 1004 ....................................................................................................................................... 6.1670 Garcia v National Australia Bank Ltd [1998] HCA 48 ..................................................................................... 6.1910, 7.980 Gardam v George Wills & Co Ltd [1988] FCA 194 .................................................................................................. 18.1150 Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903 ........................................................ 6.2180 Gary Aircraft Corp v US 698 F 2d 775 (1983) ........................................................................................................... 16.220 Gas and Fuel Corporation of Victoria v Wood Hall Ltd [1978] VR 385 ...................................................................... 4.380 Gate Gourmet Australia Pty Ltd (in liq) v Gate Gourmet Holding AG [2004] NSWSC 149 .............................................................................................................................................................. 7.150 Gates v City Mutual life Insurance Society Ltd (1986) ATPR 40-666 ....................................................................... 6.2810 Gee v Burger [2009] NSWSC 149 .............................................................................................................................. 14.100 Geebung Investments Pty Ltd v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551 ...................................................................................................................................... 7.70, 7.120 General Newspapers Pty Ltd v Australian & Overseas Telecommunications Corporation Ltd (1993) ATPR 41–215; [1993] FCA 5 ............................................................................ 22.290, 22.1970 General Newspapers Pty Ltd v Telstra Corp (1993) ATPR 41–274; [1993] FCA 473 ................................................................................................................................................ 7.240, 22.290, 22.1970 Genex Corporation Pty Ltd v Bocove Pty Ltd (unreported, NSWSC, 13 May 1987) ...................................................................................................................................................................... 18.1100 Gharibian v Propix Pty Ltd (t/as Jamberoo Recreational Park) [2007] ATPR 42-171 ...................................................................................................................................................................... 21.480 Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 198 ALR 100 ............................................................................. 8.850 Gillette Australia Pty Ltd v Energiser Australia Pty Ltd [2002] FCAFC 223 .............................................................. 18.780 Gillingham Bus Disaster Fund, Re [1958] Ch 300 ............................................................................................ 9.210, 9.220 Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270 ............................................................................. 6.1060 Glasgow Corporation v Muir [1943] AC 448 ...................................................................................................... 8.500, 8.520 Glendale Chemical Products Pty Ltd v ACCC [1998] FCA 1571 ............................................................................... 21.710 Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82; [1984] FCA 180 ...................................................................................................................................... 18.290, 18.330, 18.1110 Goldberg v Kelly 397 US 254 (1970) ............................................................................................................................ 9.640 Goldman Sachs JB Were Services Pty Ltd v Nickolich [2007] FCAFC 120 ............................................................... 7.390 Goodman v Sayers (1820) 2 Jac & W 249 ................................................................................................................ 6.2810 Goodman Fielder Consumer Foods Ltd (formerly Meadow Lea Foods Ltd) v Cospak International Pty Ltd [2004] NSWSC 704 ........................................................................ 6.2130, 6.2420, 7.370 Google Inc v ACCC [2013] HCA 1 .............................................................................................................................. 18.860 Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540 ................................................................................. 21.330 xvii
Business and the Law
Grainger & Sons v Gough [1896] AC 325 .................................................................................................................... 6.210 Gray v Pearson (1857) 6 HLC 61 ................................................................................................................................. 3.290 Great Lakes Forwarding Corp v Pennsylvania R Co 100 A 2d 612 (1953) .................................................................. 8.70 Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd (The Great Peace) [2003] QB 679 ............................................................................................................................................ 6.1810 Greco v Bendigo Machinery Pty Ltd [1985] ATPR 40-521 ....................................................................................... 18.1110 Green v Broadcasting Corporation of New Zealand (1989) AIPC 90-950 ................................................................. 23.880 Greenwood v Council of the Municipality of Waverley (1928) 28 SR (NSW) 219 .......................................... 9.890, 9.980 Greenwood v St Martins Bank [1933] AC 51 ............................................................................................................. 7.1710 Grosse v Purvis [2003] QDC 151 .................................................................................................................................. 14.80 Gul v Creed [2010] VSC 185 ........................................................................................................................................ 3.260 Gutnick v Dow Jones & Co Inc (2002) 194 ALR 433 ...................................................................................... 7.860, 7.870 Gynch v Polish Club Ltd [2015] HCA 23 .................................................................................................................... 6.1400
H HCF Australia Ltd v Switzerland Health Fund Pty Ltd [1988] ATPR 40-846 ............................................................ 18.750 HL Bolton (Engineering) Co Ltd v TJ Graham & Sons Ltd [1957] 1 QB 159 .......................................................... 10.440 Hadley v Baxendale (1854) 156 ER 145 ............................................................................ 6.2820, 6.2830, 6.2840, 6.2920 Hai Quan Global Smash Repairs v Ledabow Pty Ltd [2004] FCA 1224 ................................................................. 18.1190 Halton Pty Ltd v Stewart Bros Drilling Contractors Pty Ltd [1992] ATPR 41-158 ....................................................... 7.240 Hamersley Iron Pty Ltd v National Competition Council [1999] ATPR 41-705 .......................................................... 22.580 Hamlyn v Mark Foy’s Pty Ltd [1982] ATPR 40-316 ................................................................................................... 21.810 Harriton v Stephens [2006] HCA 15 .................................................................................................................. 8.190, 8.290 Hartley v Ponsonby (1857) 119 ER 1471 ................................................................................................................... 6.1100 Hartnell v Sharp Corporation [1975] ATPR 40-003 ....................................................................................................... 20.20 Harvela Investments Ltd v Royal Trust Co of Canada Ltd [1986] AC 207 ................................................................. 6.300 Harvey v Facey [1893] AC 552 ..................................................................................................................................... 6.330 Hatcher v Black [1954] CLY 2289 ................................................................................................................................. 8.630 Hatzimanolis v ANI Corporation Ltd [1992] HCA 21 ................................................................................................... 12.510 Hawkesbury Development Co Ltd v Landmark Finance Pty Ltd [1969] 2 NSWR 782 ........................................................................................................................................................................... 16.440 He Kaw Teh v The Queen [1985] HCA 43 ................................................................................................................. 10.230 Healing (Sales) Pty Ltd v Inglis Electrix Pty Ltd (1968) 121 CLR 584 ..................................................................... 21.210 Heating Centre Pty Ltd, The v TPC [1986] FCA 73 ................................................................................................. 22.1580 Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 ....... 6.1620, 8.190, 8.780, 8.870, 8.880, 8.890, 8.1000, 8.1160 Helicruise Air Services Pty Ltd v Rotorway Australia Pty Ltd [1996] ATPR 41-510; [1996] FCA 308 .......................................................................................................................... 22.230, 22.1850 Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235 .............................................. 6.750, 7.90, 7.100, 7.120 Henderson v Pioneer Homes Pty Ltd (No 2) [1980] ATPR 40-159 ........................................................................... 18.710 Henderson v Pioneer Homes Pty Ltd [1980] ATPR 40-168 ........................................................................... 18.100, 20.90 Henderson v Preston (1888) 4 rl R 632 ..................................................................................................................... 8.1150 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd [1988] FCA 40 ..................................... 18.110, 18.330, 18.1180 Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 ........................................................... 21.240, 21.300 Henthorn v Fraser [1892] 2 Ch 27 ................................................................................................................................ 6.690 Henville v Walker [2001] HCA 52 ................................................................................................................................ 17.690 Hewson v Sydney Stock Exchange Ltd (1967) 87 WN (NSW) 422 .......................................................................... 12.270 Heydon’s case, Re (1584) 76 ER 637 .......................................................................................................................... 3.290 Hill v Van Erp (1997) 188 CLR 159; [1997] HCA 9 ........................................................................................ 6.2550, 8.980 Hillas v Arcos [1932] All ER 494 ...................................................................................................................... 7.410, 7.1770 Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 ........................................................................................... 6.780, 7.30 Hinks v Fleet (The Times, 7 October 1986) ................................................................................................................. 9.980 Hobbs v Petersham Transport Co Pty Ltd [1971] HCA 26 ............................................................................... 9.850, 9.940 xviii
Table of Cases
Hogan v Pacific Dunlop Ltd [1988] FCA 361 ............................................................................................................ 23.1600 Hollis v Vabu Pty Ltd [2001] HCA 44 .............................................................................................................. 8.130, 12.400 “Holly Hobbie” trade mark, Re (1984) 1 IPR 486 ....................................................................................................... 23.650 Holwell Securities Ltd v Hughes [1974] WLR 155 ....................................................................................................... 6.680 HomeSec Finance Express Pty Ltd v Richardson [2012] NSWSC 1375 .................................................................. 19.550 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; [1962] 1 All ER 474 .............................................................................................. 6.750, 6.2730, 6.2740, 6.2790, 7.450 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] ATPR 40-067; [1978] HCA 11 ............................... 18.360, 18.620, 18.890, 18.940, 23.460, 23.650 Hospital Products Ltd v United States Surgical Corp [1984] HCA 64 ........................................................... 6.2150, 7.540 House of Lords in Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 ......................................................................................................................................................... 7.1020 Household Fire & Carriage Accident Insurance Co (Ltd) v Grant (1879) LR 4 ExD 216 ..................................................................................................................................................................... 6.660 Howe v Teefy (1927) 27 (NSW) 301 ........................................................................................................................... 6.2860 Hoyts Pty Ltd v Spencer (1919) 27 CLR 133 ............................................................................................................ 6.2080 Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330; [1909] HCA 36 ........................................ 1.1020, 22.110 Hughes v Western Australian Cricket Association (Inc) [1986] FCA 56 .................................................................. 22.1160 Humberstone v Northern Timber Mills (1949) 79 CLR 389 ....................................................................................... 12.360 Hyde v Wrench (1840) 49 ER 132 .................................................................................................................... 6.470, 6.530
I Immigration and Ethnic Affairs, Minister for v Teoh [1995] HCA 20 .......................................................................... 1.1000 Ingram v Little [1961] 1 QB 31 ...................................................................................................................... 6.1700, 6.1710 Inntrepreneur Pub Co (GL) v East Crown Ltd [2000] 2 Lloyds Rep 611 .................................................................. 6.2100 Insurance Co v Dutcher 95 US 269 (1877) .................................................................................................................. 6.710 Insurance Commission v Joyce [1948] HCA 17 ........................................................................................................... 8.770 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1988] 1 All ER 348 ........................................................................................................................................................................... 6.2330 Intermatch Sweden Aktiebolag v Dick Smith Investments Pty Ltd (2003) AIPC 91-878 ...................................................................................................................................................................... 23.510 International Harvester Co of Australia Pty Ltd v Carrigan’s Hazeldene Pastoral Co (1958) 100 CLR 644; [1958] HCA 16 ......................................................................................... 12.10, 12.20, 12.60 International News Service v Associated Press 248 US 215 (1918) ......................................................................... 23.120 Invercargill City Council v Hamlin [1996] 1 All ER 756 .............................................................................................. 1.1130 Invicta Plastic Ltd v Clare (1976) Crim LR 131 .......................................................................................................... 10.380 Isbester v Knox City Council [2015] HCA 20 ................................................................................................................ 4.390
J J & C Reid Pty Ltd v Abau Holdings Pty Ltd (1988) NSW ConvR 55–416 .............................................................. 6.1130 J Bollinger v Costa Brava Wine Co Ltd [1959] 3 All ER 800 .................................................................................... 8.1120 J Evans & Son (Portsmouth) Ltd v Andrea Merzario Ltd [1976] WLR 1078 ............................................................ 6.2060 J Spurling Ltd v Bradshaw [1956] 1 WLR 461 ........................................................................................................... 6.2330 JC Williamson Ltd v Lukey [1931] HCA 15 ................................................................................................................ 6.3040 Jacques v Cut-Price Deli Pty Ltd [1993] FCA 88 ..................................................................................................... 18.1120 Jaensch v Coffey [1984] HCA 52 ....................................................................................................................... 2.100, 8.230 James v Cowan [1930] HCA 48 .................................................................................................................................. 1.1040 Jane Doe v Australian Broadcasting Corporation [2007] VCC 281 ................................................................ 8.1390, 14.90 Janson v Driefontein Consolidated Mines Ltd [1902] AC 484 ................................................................................... 6.1430 Jarra Creek Central Packing Shed Pty Ltd v Amcor Ltd [2011] FCA 671 ................................................................ 22.990 Jarvis v Swan Tours Ltd [1973] 2 QB 233 ................................................................................................................. 17.100 Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101 ........................................................................................... 6.1270 Jeffrey v London County Council (1954) 52 LGR 521 ................................................................................................. 8.620 xix
Business and the Law
Jewellery Group Pty Ltd, The v ACCC [2013] FCAFC 144 ....................................................................................... 20.550 Jingalong Pty Ltd v Todd [2015] NSWCA 7 .................................................................................................................. 7.140 John R Glass Real Estate Pty Ltd v Karawi Constructions Pty Ltd [1993] FCA 295 .......................................................................................................................................................... 18.1140, 18.1150 Johnson v Browning (1704) HOLT KB 3 ..................................................................................................................... 8.1220 Johnson v Buttress [1936] HCA 41 ............................................................................................................................. 6.1880 Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2003) Aust Torts Reports 81-692 ........................................................................................................................................................ 8.1000, 8.1030 Jones v Bartlett [2000] HCA 56 ..................................................................................................................................... 8.370 Jones v Randall (1774) 98 ER 954 ............................................................................................................................ 7.1290 Jones v Vernons Pools Ltd [1938] 2 ALL ER 626 ....................................................................................................... 6.910 Joslyn v Berryman [2003] HCA 34 .................................................................................................................... 8.520, 8.750
K K B Docker, Re (1938) 10 ABC 198 ........................................................................................................................... 16.130 Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; [1996] HCA 24 ............................................................................................................................................... 1.750, 1.760, 1.810 Kabushiki Kaisha Sony Computer Entertainment v Stevens [2003] FCAFC 157 ................................................... 23.1020 Kakavas v Crown Ltd [2007] VSC 526 ....................................................................................................................... 8.1040 Kakavas v Crown Melbourne Ltd [2013] HCA 25 ....................................................................................................... 19.110 Keech v Sandford (1726) 25 ER 223 ........................................................................................................................... 9.170 Keen Mar Corporation Pty Ltd v Labrador Park Shopping Centre Pty Ltd [1989] FCA 46 ................................................................................................................................................................... 18.1220 Kenman Kandy Australia Pty Ltd v Registrar of Trade Marks [2002] FCAFC 273 ................................................... 23.480 Kennedy v De Trafford [1897] AC 180 .......................................................................................................................... 12.20 Ketterer v Amour & Co 200 F 322 (1912) .................................................................................................................... 21.10 Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] FCA 280 .............................................................................................. Kingswell v The Queen [1985] HCA 72 ...................................................................................................................... 10.320 Kleinwort Benson Ltd v Malaysian Mining Corp [1988] 1 ALL ER 785 ....................................................................... 7.150 Knight v Earl of Plymouth (1747) Dick 120 ................................................................................................................... 9.110 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61 ....................................................... 6.3130 Koowarta v Bjelke-Petersen (1982) 153 CLR 168 ....................................................................................................... 1.960 Ku v Song [2007] FCA 1189 .......................................................................................................................................... 7.410 Ku-ring-gai Co-operative Building Society (No 12) Ltd, Re [1978] FCA 50 ............................................. 22.1330, 22.1460 Kuntstreetwear Pty Ltd, Re [2007] ATMO 34 .............................................................................................................. 23.430 Kupferman v McGehee 63 Ga 250 ............................................................................................................................... 9.200 Kurth v McGavin [2007] 3 NZLR 614 ......................................................................................................................... 6.1320 Kuzmanovski v New South Wales Lotteries Corporation [2010] FCA 876 .................................................................. 6.160
L L’Estrange v Graucob [1934] 2 KB 394 ........................................................................................................ 6.2300, 6.2310 La Forrest v Ford [2001] QCA 455 .................................................................................................................... 7.600, 7.720 Laing O’Rourke v Transport Infrastructure [2007] NSWSC 732 .................................................................................. 7.330 Lam v Ausintel Investments Australia Pty Ltd [1990] ATPR 40-990 ............................................................ 7.230, 18.1200 Lange v Australian Broadcasting Corporation (1997) 189 CLR 520; [1997] HCA 25 .................................................................................................................................................................. 1.660, 8.1330 Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6 ......................................................................... 3.260 Laws v GWS Machinery (2007) 209 FLR 53 ............................................................................................................. 21.320 Le Lievre v Gould [1893] 1 QB 491 .............................................................................................................................. 8.190 Leading Edge Events Australia Pty Ltd v Kiri Te Kanawa (2007) Aust Contract R 90-250 .................................................................................................................................................................. 6.3130 Leaf v International Galleries [1950] 2 KB 86 ............................................................................................................ 6.1610 Leather Cloth Co v American Leather Cloth Co (1865) 11 H L Cas 523 ................................................................. 8.1120 xx
Table of Cases
Lee v R [2014] HCA 20 ................................................................................................................................................... 3.50 Lee v Wilson [1934] HCA 60 ....................................................................................................................................... 8.1240 Legione v Hateley [1983] HCA 11 .................................................................................................................. 6.1210, 6.1250 Lennard’s Carrying Co Ltd v Asiatic Petroleum Ltd [1915] AC 705 .......................................................................... 10.440 Leon Laidley Pty Ltd v The Transport Workers’ Union of Australia [1980] FCA 15 ........................................................................................................................................................................... 22.1220 Levi Strauss & Co v Wingate Marketing Pty Ltd [1993] ATPR 41-252 ..................................................................... 23.560 Lewis v Averay [1972] 1 QB 198 ..................................................................................................................... 6.1695, 9.770 Lewis v Daily Telegraph Ltd [1963] 1 QB 340 ............................................................................................................ 18.380 Lezam Pty Ltd v Seabridge Pty Ltd [1992] FCA 206 ............................................................................................... 18.1210 Lifesavers (A/asia) Ltd v Frigmobile Pty Ltd [1983] 1 NSWLR 431 .......................................................................... 6.2570 Lifestyle Appliances Ltd v Autel TV Services Ltd (2005) 8 NZBLC 99-588 ................................................................ 7.130 Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555 .................................................................................... 12.530 Liverpool Catholic Club v Moor [2014] NSWCA 394 .................................................................................................... 8.380 Lloyd’s Bank Ltd v Bundy [1974] 3 WLR 501 ................................................................................................................ 2.30 London Joint Stock Bank Ltd v Macmillan [1918] AC 777 ........................................................................................ 7.1710 Louth v Diprose [1992] HCA 61 ..................................................................................................................... 19.140, 19.150 Lumley v Wagner (1852) 1 DeG M & G 604; 42 ER 687 ......................................................................................... 6.3060 Lynch v Household Finance Corporation (1972) 405 US 538 ..................................................................................... 9.520 Lyon v Daily Telegraph [1943] KB 746 ....................................................................................................................... 8.1310
M MCI Communications Corp v American Telephone and Telegraph Co 708 F 2d 1081 (1983) ............................................................................................................................................................. 22.550 MLC v Evatt (1968) 122 CLR 556 ......................................................................................................... 8.890, 8.900, 8.960 Mabo v Queensland (No 2) [1992] HCA 23 .................. 1.110, 1.300, 1.310, 1.320, 1.330, 1.1120, 1.1180, 2.240, 2.250 MacPherson v Buick Motor Co (1916) 217 NY 382 ................................................................................................... 18.390 Macaura v Northern lnsurance Co Ltd [1925] AC 619 ............................................................................................... 7.1190 Mackay v Douglas (1872) LR 14 Eq 106 ..................................................................................................................... 11.60 Mackintosh v Johnson [2013] VSCA 10 ...................................................................................................................... 19.150 Macquarie Bank Ltd v Google [2008] FCA 1417 ........................................................................................................ 23.280 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2002) ATPR 41-854 ......................................................................... 23.1430 Magor & St Mellons Rural District Council v Newport Corporation [1950] 2 All ER 1226 ..................................................................................................................................................................... 3.270 Magor & St Mellons Rural District Council v Newport Corporation [1952] AC 189 ............................................................................................................................................................................. 3.270 Mahmoud & Ispahani, Re [1921] 2 KB 716 ................................................................................................................ 6.1370 Makita (Australia) Pty Ltd v Black & Decker (Australasia) Pty Ltd [1990] ATPR 41-030 ...................................................................................................................................................................... 18.760 Malone v Metropolitan Police Commissioner [1979] 2 WLR 700 .................................................................................. 3.60 Mammone v RACV Insurance Pty Ltd [1976] VR 617 ............................................................................................... 7.1290 Manchester & Milford Railway Co, Re (1880) 14 Ch D 645 ..................................................................................... 16.410 Maralinga Pty Ltd v Major Enterprises Pty Ltd [1973] HCA 23 ................................................................................. 6.3080 March v E & MH Stramare Pty Ltd [1991] HCA 12 ........................................................................................ 8.670, 17.690 Mark Lyons Pty Ltd v Bursill Sportsgear Pty Ltd (1987) ATPR 40–809; [1987] FCA 282 .................................................................................................................................... 22.290, 22.1440, 22.1930 Mark Lyons Pty Ltd v Bursill Sportsgear Pty Ltd [1987] FCA 450 .......................................................................... 22.1790 Marks & Spencer plc v One in a Million Ltd [1998] FSR 265 ..................................................................... 23.240, 23.290 Marsh v Baxter [2014] WASC 187 .............................................................................................................................. 8.1050 Marsh v Baxter [2015] WASCA 169 ................................................................................................... 8.860, 8.1050, 8.1380 Marshall v Colonial Bank of Australia (1904) 1 CLR 632 .......................................................................................... 7.1710 Master Education Services Pty Ltd v Ketchell [2008] HCA 38 ....................................................... 6.1390, 13.390, 13.400 Masters v Cameron (1954) 91 CLR 353; [1954] HCA 72 .................................................. 6.740, 6.800, 7.80, 7.90, 7.120 xxi
Business and the Law
Matthew Short & Associates Pty Ltd v Riviera Marine (International) Pty Ltd [2001] NSWCA 281 ....................................................................................................................................... 9.870, 9.980 Matthews v Baxter (1873) LR 8 Exch 132 ................................................................................................................. 6.1310 May & Butcher Ltd v The King [1934] 2 KB 17 .................................................................................................. 6.810, 7.50 Maynard v Mosely (1676) 36 ER 1009 ....................................................................................................................... 19.500 Mayne Nickless Ltd v Pegler [1974] 1 NSWLR 228 .................................................................................................. 7.1230 Maynes v Casey [2011] NSWCA 156 ......................................................................................................................... 14.100 McCaughey v Commr of Stamp Duties (NSW) (1945) 46 SR (NSW) 192 ................................................................... 9.40 McCutcheon v David MacBrayne Ltd (1964) 1 WLR 125 .......................................................................................... 6.2130 McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 ............................................................................................... 7.920 McDonald’s Corporation v Bellamy [2004] ATMO 26 ................................................................................................. 23.520 McDowell v Oyer 21 Pa St 417 (1853) ......................................................................................................................... 2.150 McKeand v Thomas [2006] NSWSC 1028 .................................................................................................................... 6.890 McKinnon v Secretary, Department of Treasury [2006] HCA 45 ................................................................................. 4.290 McLaughlin v City Bank of Sydney (1912) 14 CLR 684 ............................................................................................ 6.1310 McLean, Ex parte (1930) 43 CLR 472; [1930] HCA 12 ............................................................................................... 1.930 McRae v Commonwealth Disposals Commission [1951] HCA 79 ................................................................ 6.1790, 6.2910 McWilliam’s Wines Pty Ltd v McDonald’s System of Australia Pty Ltd (1980) 49 FLR 455; [1980] ATPR 40-188; [1980] FCA 159 ........................................................................ 18.590, 18.940, 23.530 Medtel Pty Ltd v Courtney [2003] FCAFC 151 ............................................................................................. 21.290, 21.690 Meehan v Jones [1982] HCA 52 .......................................................................................................................... 6.730, 7.80 Meinhard v Salmon 249 NY 458 (1928) ..................................................................................................................... 11.200 Melway Publishing Pty Ltd v Robert Hicks Pty Ltd [2001] HCA 13 ........................................................................ 22.1980 Mendelsohn v Normand Ltd [1969] 3 WLR 139 ......................................................................................................... 6.2330 Mercer v Commissioner for Road Transport and Tramways [1936] HCA 71 .............................................................. 8.600 Merry v Green 151 ER 916 ........................................................................................................................................... 9.590 Metricon Homes Pty Ltd v Barrett Property Group Pty Ltd [2008] FCAFC 46 ......................................................... 23.960 Midland Great Western Railway of Ireland v Johnson (1858) 6 HLC 798 ................................................................ 6.1630 Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 ......................................................................................................... 1.300 Millar v Taylor (1749) 4 Burr 2303 ............................................................................................................................. 23.1150 Miller v Fionas Clothes Horse of Centrepoint Pty Ltd [1989] ATPR 50-515 ............................................................. 21.520 Miller v TCN Channel Nine Pty Ltd [1986] HCA 60 ................................................................................................... 1.1050 Miller v Tipling (1918) 43 OLR 97 ................................................................................................................................. 9.420 Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31 ......................................................................................................................................................... 18.440 Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR 26 ................................................................................ 9.680 Mishawaka Rubber & Woollen Manufacturing Co v SS Kresge Co (1942) 316 US 203 ..................................................................................................................................................................... 23.570 Mitchell v Mosley [1914] 1 Ch 438 ............................................................................................................................... 9.320 Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61 ................................................................ 8.430, 8.450 Mogul Steamship Co Ltd v McGregor, Gow & Co (1888) 21 QBD 544 ................................................................. 22.2050 Montgomery v Thompson [1891] AC 217 .................................................................................................................... 8.1130 Moorabool Shire Council v Taitapanui [2004] VSC 239 .................................................................................. 8.860, 8.1060 Moorcock, The [1886-90] All ER Rep 530 .................................................................................................................. 6.2140 Moore & Co ltd and Landauer & Co, Re [1921] 2 KB 519 ....................................................................................... 6.2610 Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414; [1984] HCA 73 ......................................................................................................................................... 23.120, 23.1420 Morgan v Jones (1773) Lofft 160 ................................................................................................................................ 6.2400 Morphett Arms Hotel Pty Ltd v TPC [1980] FCA 62 .................................................................................................. 22.830 Moss v Lowe Hunt & Partners Pty Ltd [2010] FCA 1181 ........................................................................................ 18.1030 Mount Isa Mines Ltd v Pusey [1970] HCA 60 ................................................................................................................ 1.30 Murphy v Abi-Saab (1995) 37 NSWLR 280 .................................................................................................................. 2.320 Murphy v Steeplechase Amusement Co Inc 250 NY 479 (1929) ................................................................................ 8.720 xxii
Table of Cases
Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 ............................................. 6.760, 7.20 Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723 .................................................................................. 6.1070, 6.1090
N NSW v Lepore [2003] HCA 4 ............................................................................................................................. 8.120, 8.480 NT Power Generation Pty Ltd v Power and Water Authority [2004] HCA 48 ......................................................... 22.1950 Nagle v Feildon [1966] 2 QB 633 ............................................................................................................................... 6.1430 Narhex Australia Pty Ltd v Sunspot Products Ltd [1990] FCA 232 ........................................................................... 18.470 Nashua Australia Pty Ltd, Re (1975) 1 TPCD 168 .................................................................................................. 22.1400 National Australia Bank Ltd v Blacker [2000] FCA 681 ................................................................................................ 9.360 National Crime Authority v Margaret Elizabeth Flack [1998] FCA 932 ........................................................................ 9.600 National Provincial Bank Ltd v Ainsworth [1965] AC 1175 ............................................................................................. 9.50 National Trustees Executors Agency Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373 ..................................................................................................................... 11.270 Natra Pty Ltd v Markhill Investments Pty Ltd [2005] FCA 552 .................................................................................. 6.1980 Navitaire Inc v Easy Jet Airline Co Ltd [2004] EWHC 1725 .................................................................................... 23.1050 Navitaire Inc v Easy Jet Airline Co Ltd [2006] RPC 111 .......................................................................................... 23.1050 Needlework Warehouse Pty Ltd v Chansonette Pty Ltd [2006] FCA 1185 ................................................................. 7.290 Neilsen v Hempston Holdings Pty Ltd (1986) 65 ALR 302; [1986] FCA 100 ................................................ 7.230, 18.350 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd [2004] HCA 14 ........................................................................ 23.1010 New South Wales v Commonwealth [2006] HCA 52 ...................................................................................... 1.1030, 8.650 New South Wales v The Commonwealth [1990] HCA 2 ............................................................................................ 1.1010 New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154 ............................................................. 6.650 News Ltd v Australian Rugby Football League Ltd (No 2) [1996] FCA 1256 ............................................................. 2.440 News Ltd v Australian Rugby Football League Ltd [1996] FCA 870 ....................................................................... 22.1180 News Ltd v South Sydney District Rugby League Football Club Ltd [2003] HCA 45 ................................................................................................................................................................ 1.170, 22.1190 Nguyen v Nguyen [1990] HCA 9 ................................................................................................................................... 2.110 Nicolene Ltd v Simmonds [1953] 1 QB 543 ................................................................................................................. 6.790 Nissho Iwai Australia Ltd v Malaysian International Shipping Corp Berhad [1989] HCA 32 ......................................................................................................................................................... 6.2450 Nocton v Lord Ashburton (1914) AC 932 ........................................................................................................................ 2.30 Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co [1894] AC 535 .................................... 7.1020, 7.1030, 7.1090 North Australian Territory Company, Re (1891) 61 L J Esq 129 ............................................................................... 18.870 North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 ........................................................ 6.1860 Northern Pacific Railway Co v United States 356 US 1 (1958) .............................................................................. 22.1400 Northstate Carpet Mills Pty Ltd v BR Industries Pty Ltd [2006] NSWSC 1057 .......................................................... 6.640 Nothman v Barnet London Borough Council [1978] 1 WLR 220 ................................................................................ 1.240 Nutrientwater Pty Ltd v Baco Pty Ltd [2010] FCA 2 ................................................................................................ 23.1620
O O’Brien v Smolonogov [1983] FCA 305 ...................................................................................................................... 18.220 O’Connell v The Queen (1844) 11 Cl & F 155 ............................................................................................................ 8.280 O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) 152 CLR 359 .................................................................... 6.2980 O’Toole v Charles David Pty Ltd (1991) 171 CLR 232; [1990] HCA 44 ........................................................... 1.130, 2.80 Obrljin v Beard [2010] NSWCA 93 ................................................................................................................................ 8.370 Olley v Marlborough Court [1949] 1 KB 532 .............................................................................................................. 6.2340 Orion Pet Products Pty Ltd v RSPCA (Vic) [2002] FCA 860 ................................................................................................ Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) [2002] FCA 860 ........................................................................................ 8.1230, 8.1350, 18.200, 18.280 Orion Pet Products Pty Ltd v Royal Society for the Prevention of Cruelty to Animals (Vic) Inc [2002] FCA 860 ..................................................................................................................................... xxiii
Business and the Law
Orix Australia Corporation Ltd v Moody Kiddel & Partners Pty Ltd [2006] NSWCA 257 ............................................................................................................................................................ 12.320 Ormond v Public Service Board (1984) NSW Court of Appeal ................................................................................... 4.380 Ormonoid Roofing & Asphalts Limited v Bitumenoids Ltd [1930] 31 SR (NSW) 347 ......................................................................................................................................................................... 23.1450 Orton v Melman [1981] ATPR 40-250 ......................................................................................................................... 7.1050 Osborne v The Commonwealth [1911] HCA 19 .......................................................................................................... 1.1280 Oscar Chess Ltd v Williams [1957] 1 All ER 325 ...................................................................................................... 6.2020 Ostime v AMP Society [1960] AC 459 .......................................................................................................................... 2.210 Outboard Marine Australia Pty Ltd v Hecar Investments (No 6) Pty Ltd [1982] FCA 265 ................................................................................................................................................................... 22.210 Overlook v Foxtel (2002) Aust Contract R 90-143; [2002] NSWSC 17 ............................................ 6.2180, 6.2190, 7.530 Overseas Tankship (UK) v Miller SS Co [1967] 1 AC 617 .......................................................................................... 8.720 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Ltd [1961] AC 388 ...................................................................................................................................................... 8.700, 8.710, 8.720
P Pacific Dunlop Ltd v Hogan (1989) 23 FCR 553; [1989] FCA 185 ............................................ 18.340, 18.1010, 23.1600 Pacific Hotels Pty Ltd v Asian Pacific International Ltd [1986] FCA 297 .................................................................. 18.550 Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] AC 867 ............................................................................................................................................................................. 9.790 Pacific National (ACT) Ltd v Queensland Rail [2006] FCA 91 ................................................................. 22.1830, 22.1870 Paciocco v Australian and New Zealand Banking Group Ltd [2015] FCAFC 50 ..... 7.500, 7.510, 7.530, 19.170, 19.240, 19.380 Packer v Packer [1953] 2 All ER 127 ........................................................................................................................... 2.150 Palsgraf v Long Island Railway Co (1928) 248 NY 339 .............................................................................................. 8.230 Panayiotou v Sony Music Entertainment (UK) Ltd [1994] EMLR 229 ....................................................................... 7.1070 Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] 2 QB 711 ................................................................................................................................................................. 12.170 Papathanasopoulos v Vacopoulos [2007] NSWSC 502 ............................................................................................... 9.970 Pappas v Sake Pty Ltd (1983) ATPR 40-411 ........................................................................................................... 18.1020 Pappas v Soulac Pty Ltd (1983) 50 ALR 231; [1983] FCA 3 .......................................................................... 7.210, 7.250 Paris v Stepney Borough Council [1951] AC 367 ........................................................................................................ 8.550 Parish v World Series Cricket [1977] ATPR 40-039 ................................................................................................... 18.520 Park v Koh [2007] NSWSC 222 .................................................................................................................................. 18.310 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191; [1982] HCA 44 ................................................. 8.1150, 18.50, 18.80, 18.170, 18.320, 18.420, 18.550, 18.600, 18.890 Parker v McKenna (1874) LR l0 Ch App 96 .............................................................................................................. 12.260 Parker v SE Railway (1877) 2 CPD 416 .................................................................................................................... 6.2330 Parmiter v Coupland (1840) 6 M & W 105 ................................................................................................................. 8.1220 Partridge v Crittenden [1968] 2 All ER 421 .................................................................................................................. 6.230 Patents, Commissioner of v Microcell Pty Ltd [1959] HCA 71 ................................................................................ 23.1260 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] FCA 397 ........................................................................................................................................................... 1.30 Paul Dainty Corp Pty Ltd v National Tennis Centre Trust (1990) 22 FCR 495; [1990] FCA 163 ...................................................................................................................................... 22.1500, 22.1530 Payne v Cave (1789) 100 ER 502 ................................................................................................................................ 6.280 Payne v McDonald [1908] HCA 40 ............................................................................................................................. 6.1470 Pearce v Brooks [1861] All ER Rep 102 .................................................................................................................... 6.1440 Peldan v Anderson [2006] HCA 48 ............................................................................................................................... 9.410 Pengelly v Bell Punch Co Ltd [1964] 1 WLR 1055 ...................................................................................................... 3.310 Perre v Apand [1999] HCA 36 ............................................................................................................ 8.940, 8.1020, 8.1050 Perri v Coolangatta Investments Pty Ltd [1982] HCA 29 ............................................................................................. 6.720 xxiv
Table of Cases
Petelin v Cullen [1975] HCA 24 ..................................................................................................................... 6.1670, 6.1680 Petera Pty Ltd v EAJ Pty Ltd [1985] FCA 277 ........................................................................................................... 18.110 Peters (WA) Ltd v Petersville Ltd [2001] ATPR 41-830 .............................................................................................. 7.1110 Petty v Penfold Wines Pty Ltd [1993] FCA 427 ....................................................................................................... 22.1840 Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401 ....................................................................................................................................................... 6.260 Phelps v Western Mining Corp Ltd [1978] ATPR 40-077 ........................................................................................... 18.150 Phillips v Brooks [1919] 2 KB 243 .............................................................................................................................. 6.1695 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 .................................................................. 6.2390, 21.520 Pinnel’s case; Penny v Core (1602) 5 Co Rep 117a .................................................................................... 6.1150, 6.1170 Pioneer Studios Pty Ltd v Hills [2015] NSWCA 222 .................................................................................................. 12.510 Plimer v Roberts [1997] FCA 1361 ............................................................................................................................. 18.240 Poseidon Ltd v Adelaide Petroleum NL [1991] FCA 663 ............................................................................................. 7.240 Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd [2005] FCAFC 131 ........................................................ 18.1220 Powell v Lee (1908) 99 LT 284 ..................................................................................................................................... 6.620 Prager v Blatspiel, Stamp & Heacock Ltd [1924] 1 KB 566 ...................................................................................... 19.170 Presidential Security Services of Australia Pty Ltd v Clinton Joseph Brilley [2008] NSWCA 204 ................................................................................................................................................. 10.490 Pretorius v Venture Stores (Retailers) Pty Ltd [1992] FCA 46 .................................................................................. 17.610 Prevost v Gratz [1896] 19 US (6 Wheat) 481 ............................................................................................................ 8.1180 Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462 ................................................................. 19.10 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 .................................................................. 8.330 Proudman v Dayman (1941) 67 CLR 536; [1941] HCA 28 ............................................................ 10.200, 10.210, 10.220 Pyrenees Shire Council v Day [1998] HCA 3 ............................................................................................................... 8.470
Q QCMA, Re [1976] ATPR 40-012 .................................................................................................................... 22.330, 22.470 QIW Retailers v Davids Holdings Pty Ltd (1993) ATPR 41–226 ............................................................................... 22.290 Queensland Co-operative Milling Association Ltd, Re [1976] ATPR 40-012 ............................................................. 22.250 Queensland Wire Industries Pty Ltd v Broken Hill Proprietary Co Ltd (1989) 167 CLR 177; [1989] HCA 6 ............... 22.80, 22.220, 22.230, 22.250, 22.550, 22.1720, 22.1730, 22.1770, 22.1790, 22.1840, 22.1850, 22.1940
R R R R R R
v Barbouttis (1995) 37 NSWLR 256 ....................................................................................................................... 10.410 v Clarke [1927] HCA 47 ................................................................................................................................. 6.550, 6.930 v Dudley and Stephens (1884) 14 QBD 273 ............................................................................................................ 1.210 v El Azzi [2001] NSWCCA 397 ............................................................................................................................... 10.410 v Federal Court of Australia; Ex parte WA National Football League [1979] HCA 6 ...................................................................................................................................................................... 18.200 R v Gilham (unreported, NSWSC, Abadee J, 7th April 1995) ................................................................................... 10.270 R v Howe (1987) 2 WLR 568 ..................................................................................................................................... 10.380 R v Kirby; Ex parte Boilermakers’ Society of Australia [1956] HCA 10 ............................................... 1.720, 1.740, 2.420 R v Loughnan [1981] VR 443 ........................................................................................................................................ 1.210 R v Smith (1975) AC 476 ............................................................................................................................................ 10.390 R v Toohey; Ex parte Meneling Station Pty Ltd [1982] HCA 69 ................................................................................... 9.50 R v Van Hung Mai (1992) 60 A Crim R 49 ................................................................................................................ 10.440 RACV Insurance Pty Ltd v Alam [2001] VSC 503 ..................................................................................................... 7.1270 RACV Insurance Pty Ltd v Unisys Australia Ltd [2001] VSC 300 ............................................................... 5.130, 18.1070 Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd [1982] FCA 206 ........................................................................... 22.350 Radio 2UE Sydney Pty Ltd v Stereo FM Pty Ltd [1983] FCA 140 ......................................................................... 22.1010 Rafferty v Madgwicks [2012] FCAFC 37 ..................................................................................................................... 13.370 Raffles v Wichelhaus (1842) 159 ER 375 ................................................................................................................... 6.1750 xxv
Business and the Law
Ranoa Pty Ltd v BP Oil Distribution Ltd (1989) 91 ALR 251 .................................................................................... 13.170 Ransley v Black & Decker (A/Asia Pty Ltd) (1997) 3 TPR 138 ................................................................................ 21.820 Rasell v Cavalier Marketing (Aust) Pty Ltd [1991] 2 Qd R 323 ................................................................... 21.250, 21.340 Read v J Lyons & Co [1947] AC 156 ......................................................................................................................... 19.430 Reader’s Digest Services Pty Ltd v Lamb [1982] HCA 4 .......................................................................................... 8.1220 Reardon v Morley Ford Pty Ltd [1981] ATPR40-205 .................................................................................................. 17.300 Reardon-Smith Line Ltd v Hansen-Tangen [1976] I WLR 989 .................................................................................. 6.2100 Reddaway v Banham [1896] AC 199 ............................................................................................................. 8.1150, 22.780 Reese Bros Plastics Ltd v Hamon-Sobelco Australia Pty Ltd (1988) 14 BCL 91 ....................................................... 7.360 Remedios v Kentucky Homes Pty Ltd [1987] ATPR 40-799 ...................................................................................... 18.880 Remington & Sons v Samara Bay Co 140 Mass 494 (1886) .................................................................................... 11.390 Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 ............................................................................................................................................................. 6.2170 Rentokil Pty Ltd v Lee [1996] ATPR 41-451 ............................................................................................................... 7.1060 Reynolds v Katoomba RSC All Services Club Ltd [2004] NSWCA 234 ...................................................................... 8.250 Richards v The Commercial Bank of Australia (1971) 18 FLR 95 ............................................................................ 9.1180 Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71 ............................................................................................ 6.2990 Roads and Traffic Authority of NSW v Dederer [2007] HCA 42 .................................................................................. 8.580 Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16 .................................................................................................. 23.990 Rogers v Whitaker [1992] HCA 58 ......................................................................................................... 8.630, 8.640, 8.650 Rolls-Royce Motors Ltd v DIA (Engineering) Pty Ltd [1981] FCA 19 ........................................................................ 18.970 Romeo v Conservation Commission of the Northern Territory [1998] HCA 5 ............................................................. 8.560 Ron Hodgson (Holdings) Pty Ltd v Westco Motors (Distributors) Pty Ltd [1980] FCA 2 ..................................................................................................................................................................... 22.1630 Ron Hodgson (Holdings) Pty Ltd v Westco Motors (Distributors) Pty Ltd [1980] FCA 3 ..................................................................................................................................................................... 22.1580 Roscorla v Thomas (1842) 3 QB 234 ......................................................................................................................... 6.1040 Routledge v Grant (1828) 4 Bing 653 ........................................................................................................................... 6.380 Rowland v Divall (1923) 2 KB 500; [1923] All ER Rep 270 .............................................. 6.3100, 21.180, 21.190, 21.580 Rozones v Bowen (1928) 32 U L Rep 98 .................................................................................................................. 7.1255 Ruddock v Taylor [2003] NSWCA 262 .......................................................................................................................... 8.680 Rural Press Ltd v ACCC [2003] HCA 75 ................................................................................................... 22.1880, 22.1990 Rural Traders Co-operative (WA) Ltd, Re [1979] ATPR 40-110 ................................................................................ 22.480 Russo v Buck [2006] SCSA 380 .................................................................................................................... 12.210, 12.220 Ruxley Electronics Ltd v Forsyth [1995] 3 WLR 118 ................................................................................................. 6.2940 Ryan v Great Lakes Council [1999] ATPR 46-191; [1999] FCA 177 .............................................. 21.330, 21.370, 21.390
S S Davis & Co Ltd, Re [1945] Ch 402 ........................................................................................................................... 9.840 SEC v Chenery Corp 318 US 80 ................................................................................................................................ 11.250 Saad v Chubb Security Australia Pty Ltd [2012] NSWSC 1183 ................................................................................ 14.100 St Clair v Petricevic (1988) ASC 55-688 ..................................................................................................................... 19.540 St John Shipping Corporation Ltd v Joseph Rank Ltd [1957] 1 QB 267 .................................................... 6.1410, 6.1480 Salomon v A Salomon & Co Ltd [1897] AC 22 ............................................................................................. 11.310, 11.330 Samaha v Corbett Court Pty Ltd (2006) NSWSC 1441 ............................................................................................... 7.250 Samsung Electronics Australia Pty Ltd v LG Electronics Australia Pty Ltd [2015] FCA 227 ................................................................................................................................................................... 18.480 San Sebastian Pty Ltd v Minister Administering the Environment Planning & Assessment Act 1979 [1986] HCA 68 .......................................................................................................... 8.920, 8.930 Sanchez-Sidiropoulos v Canavan [2015] NSWSC 1139 ............................................................................................... 8.620 Sandell v Porter [1966] HCA 28 .................................................................................................................................. 16.215 Sanders v Snell [1998] HCA 64 .................................................................................................................................. 8.1370 Sands v State of South Australia [2013] SASC 44 .................................................................................................... 14.100 xxvi
Table of Cases
Santley v Wilde (1899) 2 Ch 474 ................................................................................................................................ 9.1170 Scammell & Nephew Ltd v HC and JG Ouston [1941] AC 251 ............................................................. 6.770, 6.800, 7.60 Schroeder Music Publishing Co Ltd v Macaulay [1974] 3 All ER 616 ...................................................................... 7.1080 Schroeder Publishing Co Ltd v Macaulay [1974] 1 WLR 1308 ................................................................................. 6.1940 Scott v Davis [2000] HCA 52 ......................................................................................................................................... 8.480 Scott v Sampson (1882) 8 QBD 491 .......................................................................................................................... 8.1180 Seafolly Pty Ltd v Madden [2012] FCA 1346 ............................................................................................................. 18.440 Seaford Court Estates Ltd v Asher [1949] 2 KB 481 ................................................................................................... 3.250 Secretary of Department of Health (NSW) v Harvey (1990) 34 IR 58 ........................................................................ 3.360 Seddon v North Eastern Co Ltd [1905] 1 Ch 326 ..................................................................................................... 6.1600 Sedleigh-Denfield v O’Callagan [1940] AC 880 .......................................................................................................... 8.1380 Seidler v Schallhofer [1982] 2 NSWLR 80 ................................................................................................................. 6.1440 7-11 Stores Pty Ltd, Re [1994] ATPR 41-357 ............................................................................................................. 22.440 Seven Network (Operations) Ltd v Endemol Australia Pty Ltd [2015] FCA 800 ....................................................... 23.890 Shaddock & Associates v Parramatta City Council [1981] HCA 59 ................................................................. 8.910, 8.920 Shadwell v Shadwell (1860) 142 ER 62 ...................................................................................................................... 6.1110 Shahid v the Australasian College of Dermatologists [2007] FCA 693 ..................................................................... 18.310 Sharman v Kunert (1985) 1 NSWLR 225 ................................................................................................................... 19.520 Sharp v Parramatta City Council [2015] NSWCA 260 ................................................................................................. 8.400 Sheddon v Goodrich (1803) 8 Ves Jr 481 .................................................................................................................... 8.350 Shelanu Inc v Print Three Franchising Corporation (2003) 64 OR (3d) 533 .............................................................. 7.540 Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407 ...................................................... 23.440 Shogun Finance Ltd v Hudson [2004] 1 AC 919 ....................................................................................................... 6.1710 Short v The City Bank (1912) 12 SR (NSW) 186 ...................................................................................................... 8.1360 Shostakovich v Twentieth Century Fox Film Corp (1948) 80 NYS 2d 575 ............................................................... 23.850 Siddons Pty Ltd v The Stanley Works Pty Ltd [1991] ATPR 41-111; [1991] FCA 116 ................................................................................................................................................ 18.380, 18.530, 18.700 Sim v Stretch (1936) 52 TLR 669 ............................................................................................................................... 8.1220 Singtel Optus Pty Ltd v ACCC [2012] FCAFC 20 ...................................................................................................... 17.650 Slater v May (1704) 2 Ld Rayn 1071 ........................................................................................................................... 1.980 Slatyer v Daily Telegraph [1908] HCA 22 ................................................................................................................... 8.1220 Smith v Anderson (1880) 15 Ch D 247 ........................................................................................................................ 11.80 Smith v Commercial Banking Co of Sydney Ltd (1910) 11 CLR 667 ....................................................................... 7.1460 Smith v Hughes (1871) LR 6 QB 597 ........................................................................................................................ 6.1530 Snow v Eaton Centre Ltd (1982) 70 CPD (2d) 105 ................................................................................................... 23.860 Solle v Butcher [1950] I KB 671 ....................................................................................................... 6.1530, 6.1800, 6.1810 Sons of Gwalia v Margaretic [2007] HCA 1 ................................................................................................................ 16.380 Sony v Stevens [2002] FCA 906 ............................................................................................................................... 23.1020 South Australia v Tanner [1989] HCA 3 ........................................................................................................................ 4.190 South Australia v The Commonwealth [1942] HCA 14 ..................................................................................... 1.900, 1.980 Southern Cross Beverages Pty Ltd, Re [1981] ATPR 40-200 ................................................................................. 22.1400 Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management [2012] WASCA 79 ..................................................................................... 8.1380 South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 ..................................................................................................................................................................... 1.170 Spalding v Gamage (1916) 32 RPC 273 .................................................................................................................... 8.1120 Spedding v Nobles [2007] NSWCA 29 .......................................................................................................................... 8.270 Spedley Securities Pty Ltd v Bank of New Zealand [1991] ATPR 41-143 .............................................................. 18.1170 Spencer v Harding (1870) LR 5CP 561 ........................................................................................................................ 6.290 State Energy Commission of Western Australia v Fluor Australia Pty Ltd [1987] FCA 99 ..................................................................................................................................................................... 18.140 State Government Insurance Commission v JM Insurance Pty Ltd [1984] FCA 127 ........................................................................................................................................................................... 18.170 xxvii
Business and the Law
State Government Insurance Commission (SA) v Trigwell [1979] HCA 40 ....................................................... 2.370, 3.40 State Revenue, Commissioner of v Mortgage Force Australia Pty Ltd [2009] WASCA 24 ............................................................................................................................................................... 12.430 State Savings Bank of Victoria, Commissioners of v Permewan Wright & Co Ltd (1914) 19 CLR 457 ........................................................................................................................................... 7.1390 StatusCard Australia Pty Ltd v Rotondo [2008] QSC 181 .......................................................... 23.900, 23.1040, 23.1050 Stekel v Elice [1973] 1 All ER 465 ................................................................................................................................ 11.80 Stephens v West Australian Newspapers [1994] HCA 45 ............................................................................ 8.1320, 8.1330 Stevens v Brodribb Sawmilling Co Pty Ltd [1986] HCA 1 ............................................................................ 12.390, 12.400 Stevenson Jacques & Co v McLean (1880) 5 QBD 346 ............................................................................................. 6.490 Stilk v Myrick (1809) 170 ER 1168 ................................................................................................................ 6.1080, 6.1100 Stockdale v Hansard (1839) 9 Ad & El 1 ..................................................................................................................... 3.240 Stokely-Van Camp Inc v New Generation Beverages Pty Ltd [1998] ATPR 41-657 ...................................................................................................................................................................... 7.1040 Streets Ice Cream Pty Ltd, Re [1975] ATPR (Com) 8609 ....................................................................................... 22.1320 Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468; [1971] HCA 40 ............................................ 1.1020, 22.110 Strong v Woolworths Ltd [2012] HCA 5 ........................................................................................................................ 8.690 Stuart Alexander & Co (Interstate) Pty Ltd v Blenders Pty Ltd (1981) 53 FLR 307 ........................................................................................................................................................................... 18.810 Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale NV [1967] 1 AC 361 ................................................................................................................... 6.2260, 6.2380 Sullivan v Moody [2001] HCA 59 ........................................................................................................... 8.210, 8.230, 8.940 Summers v Solomon (1857) 7 E & B 879 .................................................................................................................. 12.190 Suncorp-Metway Ltd v Bellairs [2009] NSWSC 135 ................................................................................................... 19.490 Surge Licensing Inc v Pearson [1991] FCA 216 ........................................................................................................ 18.530 Sutherland Shire Council v Heyman [1985] HCA 41 .................................................................................................... 8.230 Sutton’s Hospital Case, Re (1612) 10 Co Rep 1a ................................................................................................... 18.1130 Sydney Corporation v West [1965] HCA 68 ............................................................................................................... 6.2440 Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 ........................................................................................................................................................................... 18.980
T TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC TPC xxviii
v Allied Mills Industries Pty Ltd [1980] FCA 108 ................................................................................................ 22.900 v Allied Mills Industries Pty Ltd [1981] FCA 11 .................................................................................................. 22.870 v Ansett Transport Industries (Operations) Pty Ltd [1978] FCA 21 ................................................................... 22.380 v Arnott’s Ltd (1990) ATPR 41–062; (1990) ATPR 41–06 ................................................................................. 22.290 v Australia Meat Holdings Pty Ltd [1988] ATPR 40-876 ...................................................................... 22.210, 22.290 v CSR Ltd [1990] FCA 521 ................................................................................................................................. 22.750 v Calderton Corporation Pty Ltd [1994] ATPR 41-306 ....................................................................................... 20.380 v Carlton United Breweries Ltd [1990] FCA 248 .............................................................................................. 22.1960 v Cue Design Pty Ltd [1996] FCA 1343 ............................................................................................................. 20.530 v David Jones (Australia) Pty Ltd [1986] FCA 19 .............................................................................................. 22.890 v Dunlop Australia Ltd [1980] FCA 76 .............................................................................................................. 22.1550 v Email Ltd [1980] FCA 86 .................................................................................................................... 22.830, 22.900 v General Corporation Japan (Aust) Pty Ltd [1988] FCA 390 .......................... 22.1540, 22.1600, 22.1640, 22.1650 v Legion Cabs (Trading) Cooperative Society Ltd [1978] FCA 47 .................................................................. 22.1470 v Massey Ferguson (Aust) Ltd [1983] FCA 124 .............................................................................................. 22.1370 v Nicholas Enterprises Pty Ltd [1979] FCA 51 ................................................................................... 22.830, 22.1000 v Orlane Australia Pty Ltd [1984] FCA 3 .......................................................................................................... 22.1690 v Parkfield Operations Pty Ltd [1985] FCA 27 ................................................................................................. 22.1000 v Pioneer Concrete (Qld) Pty Ltd [1994] FCA 628 .......................................................................................... 22.1770 v Prestige Motors Pty Ltd [1994] FCA 495 ........................................................................................... 22.1590, 24.80 v Pye Industry Sales Ltd [1978] ATPR 45-088 ................................................................................................ 22.1580
Table of Cases
TPC v Service Station Association Ltd [1993] FCA 405 ............................................................................. 22.830, 22.1020 TPC v Sharp Corp of Australia [1975] ATPR 40-010 ............................................................................................... 22.1580 TPC v Simpson Pope Ltd [1980] FCA 83 ................................................................................................................. 22.1580 TPC v Sony (Australia) Ltd [1990] FCA 360 ............................................................................................................ 22.1660 TPC v Stihl Chain Saws (Aust) Pty Ltd [1978] ATPR 40-091 ................................................................................. 22.1530 TPC v TNT Australia Pty Ltd [1995] FCA 1046 ................................................................................... 22.970, 24.80, 24.90 TPC v TNT Management Pty Ltd [1985] FCA 23 ..................................................................................................... 22.1150 TPC v Tooth & Co [1979] ATPR 46-127 ................................................................................................................... 22.1450 Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177; [1982] ATPR 40-303; [1982] FCA 136 ................... 18.100, 18.330, 18.370, 18.410, 18.490, 18.570, 18.580, 18.920, 18.940 Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd [1957] HCA 10 ......................................................... 7.280 Tamawood Ltd v Henley Arch Pty Ltd [2004] FCAFC 78 .......................................................................................... 23.870 Tame v NSW; Annetts v Australian Stations Pty Ltd [2002] HCA 35 ................................................... 8.210, 8.320, 8.850 Taprobane Tours WA v Singapore Airlines Ltd (1990) ATPR 41–054; (1992) ATPR 41–159 .......................................................................................................................................................... 22.290 Targetts Pty Ltd v Target Australia Pty Ltd [1993] FCA 191 ...................................................................................... 18.940 Taylor v Caldwell (1863) 122 ER 309 ............................................................................................................ 6.2690, 6.2700 Taylor v Combined Buyers Ltd [1924] NZLR 627 ....................................................................................................... 21.440 Taylor v Johnson (1983) 57 ALJR 197; [1983] HCA 5 ........................................................ 6.170, 6.1640, 6.1720, 6.1730 Taylor Bros Ltd v Taylor Group Ltd [1988] 2 NZLR 1 ................................................................................................ 18.360 Telstra Corp Ltd v Desktop Marketing Systems Pty Ltd [2001] FCA 612 ................................................................. 23.920 Telstra Corporation v Optus Communications Pty Ltd [1996] FCA 1035 .................................................................. 18.680 Telstra Corporation Ltd v SingTel Optus Pty Ltd [2007] FCA 824 ............................................................................. 18.790 Telstra Corporation Ltd v Treloar [2000] FCA 1170 ........................................................................................................ 2.60 Tenax Steamship Co Ltd v Owners of the Motor Vessel “Brimnes” [1974] 3 All ER 88 ......................................................................................................................................................................... 7.730 10th Cantanae Pty Ltd v Shoshana Pty Ltd [1987] FCA 421 ...................................................................................... 7.210 Tepko Pty Ltd v Water Board [2001] HCA 19 .............................................................................................................. 8.960 Theophanous v Herald & Weekly Times Ltd [1994] HCA 46 ............................................................ 1.660, 8.1320, 8.1330 Thomas v Beck (1983) ANZ Conv R 200 ..................................................................................................................... 9.380 Thomas v Mowbray is (2002) 233 CLR 307 ................................................................................................................ 2.460 Thompson v Mastertouch TV Services Pty Ltd [1977] ATPR 40-027 ...................................................................... 18.1080 Thorby v Goldberg [1964] HCA 41 .................................................................................................................................. 7.50 Thornton v Shoe Lane Parking Ltd (1971) 2 QB 163 ....................................................................... 6.310, 6.2330, 6.2350 Thorp v CA Imports Pty Ltd [1989] FCA 515 ............................................................................................................. 17.610 Tillmanns Butcheries Pty Ltd v AMIEU [1979] FCA 85 ............................................................................................ 22.1140 Tobacco Institute of Australia v Woodward (1993) 32 NSWLR 559 .......................................................................... 18.270 Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations [1993] FCA 83 ................................................................................................................................. 18.150 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ................................................... 6.1970, 6.2310, 7.60, 19.390 Tonto Home Loans Australia Pty Ltd v Tavaros [2011] NSWCA 389 ........................................................................ 19.220 Tooth & Co Ltd, Re; Re: Tooheys Ltd [1979] ATPR 40-113 ....................................................................... 22.280, 22.1380 Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd [1975] ATPR 40-004 ...................................................................................................................................................................... 22.240 Torkington v Magee [1902] 2 KB 427 ........................................................................................................................... 9.610 Trade Mark “Orlwoola”, Re (1909) 26 RPC 850 ......................................................................................................... 23.510 Trade Practices Commission v Prestige Motors Pty Ltd [1994] FCA 1495 ................................................................. 24.80 Trade Practices Commission v TNT Australia Pty Ltd [1995] FCA 1046 ......................................................... 24.80, 24.90 Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 ................................................................................................................................... 6.2760, 6.2780, 6.2790, 6.2970 Transport Workers’ Union of Australia v Leon Laidley Pty Ltd [1980] ATPR 40-149 .................................................................................................................................................................... 22.1220 xxix
Business and the Law
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107; [1988] HCA 44 ............................................................................................................ 2.50, 6.2520, 6.2540, 7.1180 Tru Tone Ltd v Festival Records Retail Marketing Ltd [1988] 2 NZLR 352 ................................................................ 22.50 Tulk v Moxhay (1848) 2 Phil 774 .................................................................................................................................. 9.460 Turner v Moreland Finance Corp (Vic) Pty Ltd (1990) ASC 56-006 ........................................................................... 3.330 Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498 ................................................................................ 6.470, 6.480 Turriff Construction Ltd & Turriff Ltd v Regalia Knitting Mills Ltd (1971) 9 BLR 24 ............................................................................................................................................................................... 7.300 Tweddle v Atkinson [1861] 121 ER 762 ........................................................................................................ 6.2510, 7.1180 Twentieth Century Fox Film Group v The South Australian Brewing Co Ltd [1996] FCA 1484 ........................................................................................................................................ 18.900, 18.930
U Ultramares Corp v Touche (1931) 174 NE 441 ............................................................................................................ 8.850 Ultzyen v Nichols [1891] All ER Rep 1202 ................................................................................................................... 9.920 Unilan Holdings Pty Ltd v Kerin [1992] ATPR 41-169 ................................................................................................ 18.250 Union Carbide Australia Ltd v Duracell Australia Pty Ltd [1987] ATPR (Digest) 46-020 ...................................................................................................................................................................... 18.660 Unisys Australia Ltd v RACV Insurance Pty Ltd [2004] VSCA 81 ........................................................................... 18.1070 United Dominions Corp Ltd v Brian Pty Ltd [1985] HCA 49 ........................................................................................ 11.80 United Group Rail Services Ltd v Rail Corporation New South Wales [2009] NSWCA 177 .............................................................................................................................................................. 7.340 United States v Aluminum Co of America (1945) 148 F 2d 416 ............................................................................. 22.1890 United States v Arnold Schwinn 388 US 365 (1987) ................................................................................................... 13.90 United States v Benjamin 328 F 2d 854 (1964) ........................................................................................................... 8.870 United States v Trenton Potteries Co (1927) 273 US 392 ...................................................................................... 22.1040 United States v Wunderlich 342 US 98 (1951) ............................................................................................................ 1.690 Universal Music Australia v ACCC [2003] FCAFC 193 ............................................................................. 22.1800, 22.1880 University of London Press Ltd, The v University Tutorial Press Ltd [1916] 2 Ch 601 ......................................................................................................................................................................... 23.1000 Upper Hunter County District Council, The v Australian Chilling & Freezing Co Ltd [1968] HCA 8 ........................................................................................................................................................ 7.40 Utans v Consolidated Insurances of Australia Ltd (Supreme Court of South Australia (Full Court), unreported, 17 February 1988 ...................................................................................................... Utans v Consolidated Insurances of Australia Ltd (unreported, SASC, 17 February 1988) .......................................................................................................................................... 10.170, 10.175
V Vabu Pty Limited v Federal Commissioner of Taxation (1996) 33 ATR 537 ............................................... 12.400, 12.410 Vairy v Wyong Shire Council [2005] HCA 62 ............................................................................................................... 8.570 Van den Esschert v Chappell [1960] WAR 114 .......................................................................................................... 6.2050 Vandervell’s Trusts (No 2), Re [1974] 1 Ch 269 .......................................................................................................... 2.270 Vander Wool v Goddenough [1983] Conv R 55-115 ................................................................................................ 18.1220 Veen (No 2) v The Queen [1988] HCA 14 ................................................................................................................. 10.330 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 ............................................................. 6.2850 Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479 ............................................................................................................................................................................. 14.50 Victoria Park and Recreation Grounds Co Ltd v Taylor [1937] HCA 45 ................................................................... 23.870 Vital Finance Corporation Pty Ltd v Taylor (1991) ASC 56-099 .................................................................................. 19.90 Voli v Inglewood Shire Council [1963] HCA 15 ............................................................................................................ 8.630
W Wakeling v Ripley (1951) 51 SR (NSW) 183 ............................................................................................................... 6.870 xxx
Table of Cases
Wakim, Re; Ex parte McNally (1999) 163 ALR 270; [1999] HCA 27 ................................................. 1.700, 1.1350, 2.410 Walford v Miles [1992] 2 WLR 174 ............................................................................................................................... 7.320 Walker v New South Wales [1994] HCA 64 .................................................................................................................. 1.110 Walton Stores Ltd v Sydney City Council [1968] 88 WN (Pt 2) (NSW) 153 .............................................................. 9.910 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7 .............................................................................................. 6.1220 Warlow v Harrison (1859) 120 ER 925 ......................................................................................................................... 6.280 Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59 ........................................................................ 17.680 Warnock v ANZ Banking Group Ltd [1989] ATPR 40-928 ......................................................................................... 21.490 Waterside Workers’ Federation of Australia v JW Alexander Ltd (1918) 25 CLR 434 ............................................................................................................................................................................. 1.720 Watson v Lee [1979] HCA 53 .......................................................................................................................................... 1.80 Watt v State Bank of New South Wales [2003] ACTCA 7 ........................................................................................... 7.960 Weiss v The Queen (2005) 224 CLR 300 .................................................................................................................. 19.190 Weitmann v Katies Ltd (1977) ATPR 40-041 ................................................................................... 18.320, 18.330, 18.510 Welcome Real-Time SA v Catuity Inc [2001] FCA 445 ............................................................................................ 23.1310 Weller & Co v Foot & Mouth Disease Research Institute [1966] 1 QB 569 ............................................................... 8.190 Wertheim v Chicoutimi Pulp Co [1911] AC 301 .......................................................................................................... 6.2760 West v AGC (Advances) Ltd (1986) 5 NSW LR 610 ................................................................................................. 19.520 West v Mead [2003] NSWSC 161 ................................................................................................................................. 9.230 Western Australian Bank v Royal Insurance Co (1908) 5 CLR 533 .......................................................................... 7.1130 Westpac Banking Corporation v Royal Tongan Airlines [1996] NSWSC 409 .............................................................. 9.950 White v Bluett (1853) 23 LJ Ex 36 ............................................................................................................................. 6.1010 White v John Warwick & Co Ltd [1953] 1 WLR 1285 ............................................................................................... 6.2430 White v Malco [1999] NSWSC 1055 ........................................................................................................................... 21.100 Whitlock v Brew (1968) 118 CLR 445 ........................................................................................................................... 6.780 Whittaker v Child Support Registrar [2009] FCA 188 ................................................................................................. 8.1370 Whittet v State Bank of NSW (1991) 24 NSWLR 146 ............................................................................................... 6.2490 Wickman Ltd v Schuler AG [1974] AC 276 ................................................................................................................ 6.2800 Wigan v Edwards (1973) 47 ALJR 586 ...................................................................................................................... 6.1070 Wik Peoples v State of Queensland [1996] HCA 40 .................................................................................................... 1.330 Williams v Commonwealth of Australia [2012] HCA 23 ................................................................................................ 1.770 Williams v Commonwealth of Australia [2014] HCA 23 ................................................................................................ 1.910 Williams v Frayne (1937) 58 CLR 710 .......................................................................................................................... 7.940 Williams v Raffey Bros & Nicholls (Contractors) Ltd [1999] 1 QB 1 ......................................................................... 6.1070 Williams v Scholz [2007] QSC 266 ............................................................................................................................. 16.340 Wilmers and Gladwin Pty Ltd v WAL Building Supplies Pty Ltd [1955] SR (NSW) 442 ................................................................................................................................................................. 9.980 Wilson v Ferguson [2015] WASC 15 ........................................................................................................................... 14.110 Wingecarribee Shire Council v Lehman Brothers Australia Ltd [2012] FCA 1028 ...................................................... 18.40 Wishart v Fraser [1941] HCA 8 ..................................................................................................................................... 1.900 Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 .................. 2.160, 8.1060, 8.1070, 8.1080, 8.1090 Woolmington v DPP [1935] AC 462 ............................................................................................................... 10.160, 10.180 Woolworths Limited v BP Plc [2006] FCAFC 132 ...................................................................................................... 23.390 Workplace Safety Australia v Simple OHS Solutions Pty Ltd [2015] NSWCA 84 ......................................... 7.190, 13.360 Wyong Shire Council v Shirt [1980] HCA 12 ................................................................................................................ 8.560
X X v Amalgamated Services Pty Ltd (1987) 9 NSWLR 575 ............................................................................ 2.160, 6.1170 X7 v Australian Crime Commission [2013] HCA 29 ....................................................................................................... 3.50
Y Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42 ................................................................ 6.1380 xxxi
Business and the Law
Yanmar Diesel Engine Co Ltd v Kama Diesel Australia Pty Ltd [2002] FCA 1330 ......................................................................................................................................................................... 23.700 Yeoman Credit Ltd v Latter [1961] 1 WLR 828 ............................................................................................................ 7.910 Yerkey v Jones (1939) 63 CLR 649; [1939] HCA 3 ....................................................................................... 6.1910, 7.980 Yewens v Noakes (1880) 6 QBD 530 ......................................................................................................................... 12.360 Yonge v Toynbee [1910] 1 KB 215 ............................................................................................................................. 12.330 Yorke v Lucas (1985) 158 CLR 661; [1985] HCA 65 .......................... 17.360, 18.90, 18.1130, 18.1150, 18.1200, 22.760 Yulema Pty Ltd v Simmons [2015] NSWSC 640 .......................................................................................................... 7.420
Z Zaravinos v Dairy Farmers Cooperative Ltd [1985] ATPR 40-559; [1985] FCA 77 ...................................................................................................................................................... 21.20, 21.30, 21.820 Zuijs v Wirth Brothers Pty Ltd [1955] HCA 73 .............................................................................................. 12.360, 12.370
xxxii
TABLE OF STATUTES COMMONWEALTH
Aboriginal Land Grant (Jervis Bay Territory) Act 1986: 9.420 Aboriginal Land Rights (Northern Territory) Act 1976: 9.420 Acts s s s s s
Interpretation Act 1901: 3.330 15AA: 3.340 15AA(1): 3.330 15AA(2): 3.350 15AB(2): 3.360 15AC: 21.230
Administrative Appeals Tribunal Act 1975: 4.310 Administrative Decisions (Judicial Review) Act 1977: 4.350 s 5(1): 4.360, 4.380 s 16: 4.370 Anti-Money Laundering and Counter-Terrorism Financing Act 2006: 14.320 Australia Act 1986: 1.380, 1.410, 1.1200 Australian Consumer Law: 3.70, 3.260, 6.20, 6.70, 6.120, 6.270, 6.920, 6.1520, 6.1620, 6.1630, 6.1960, 6.2110, 6.2460, 7.510, 7.520, 7.550, 7.650, 7.660, 7.1140, 8.390, 9.830, 10.420, 13.280, 17.170, 17.180, 17.200, 17.210, 17.310, 17.340, 17.360, 17.370, 17.390, 17.430, 17.450, 17.460, 17.490, 17.500, 17.540, 17.580, 17.590, 17.600, 17.630, 17.650, 17.670, 17.680, 17.690, 17.700, 17.710, 17.720, 17.730, 17.750, 17.760, 17.780, 17.790, 18.160, 18.850, 18.1040, 19.10, 19.40, 19.130, 19.160, 19.380, 19.410, 20.10, 20.30, 20.170, 20.220, 20.230, 20.250, 20.320, 20.350, 20.430, 20.460, 21.30, 21.60, 21.70, 21.120, 21.130, 21.150, 21.230, 21.280, 21.330, 21.430, 21.470, 21.480, 21.520, 21.590, 21.600, 21.610, 21.650, 21.660, 21.670, 21.700, 21.760, 21.770, 22.70, 23.230, 23.660, 23.700, 24.120 s 2: 17.360, 21.60, 21.150, 21.470, 21.480, 21.660 s 2(2): 18.210 s 2A: 18.190 s 3: 17.210, 17.300, 21.70 s 3(1): 21.70 s 3(2): 21.70 s 3(3): 21.70 s 3(10): 21.70 s 4: 18.120, 18.190, 18.1050, 18.1090, 18.1100, 18.1110, 21.30
s s s s s s s
6: 21.30 7: 17.210, 21.670 7(1): 21.150 9: 17.210, 21.700 9(2): 21.700 9(3): 21.700 18: 2.410, 6.20, 6.1330, 6.2110, 7.170, 7.200, 7.230, 7.240, 7.260, 7.630, 8.970, 8.1150, 17.100, 17.300, 17.780, 18.10, 18.20, 18.30, 18.50, 18.60, 18.70, 18.80, 18.90, 18.100, 18.110, 18.120, 18.130, 18.140, 18.150, 18.160, 18.170, 18.180, 18.210, 18.220, 18.290, 18.310, 18.330, 18.360, 18.380, 18.400, 18.420, 18.430, 18.440, 18.450, 18.570, 18.750, 18.890, 18.1020, 18.1030, 18.1040, 18.1050, 18.1060, 18.1070, 18.1080, 18.1100, 18.1130, 18.1170, 18.1200, 20.50, 20.90, 20.100, 20.110, 20.120, 20.170, 21.520, 21.610, 23.20, 23.260, 23.650, 23.660 s 18(1): 18.10 s 18(2): 18.50 ss 18 to 19: 17.220 s 19: 6.1330, 18.290 s 19(1): 21.610 s 19(2): 21.610 s 20: 19.120, 19.130, 19.340, 21.610 s 20(2): 19.120 ss 20 to 22A: 17.220 s 21: 6.20, 6.1940, 6.2460, 17.100, 19.120, 19.130, 19.160, 19.180, 19.340 s 21(2): 19.180 s 21(3): 19.180 s 21(4): 19.180 s 22: 19.160, 19.180, 19.190 ss 23 to 28: 17.220 s 25: 19.430 s 26: 6.1330 s 27: 6.1330, 19.430 s 27(1): 19.430 s 29: 20.20, 20.50, 20.70, 20.90, 20.120, 20.510, 23.660 s 29(1): 17.780, 20.130 s 29(1)(a): 17.780, 20.110 s 29(1)(i): 6.270 s 29(1)(k): 17.780 s 29(1)(m): 21.520 s 29(i)(a): 20.100 s 29(i)(k): 20.170 ss 29 to 38: 17.230 s 30: 6.1330, 20.50, 20.70, 20.90 xxxiii
Business and the Law
Australian Consumer Law — cont s 31: 6.1330, 20.50, 20.70, 20.90 s 32: 20.370, 20.380, s 33: 20.50, 20.70, 20.90, 20.100, 20.110 s 34: 20.50, 20.70, 20.90 s 35: 6.270, 20.70, 20.160 s 35(1): 20.160 s 35(2): 20.160 s 36: 20.360 s 37: 20.50, 20.70, 20.90 s 39: 20.410 ss 39 to 43: 17.230 s 40: 20.410 s 41: 20.410 s 43: 20.410 s 44: 7.660, 20.390 ss 44 to 46: 17.230 s 45(1): 20.390 s 46: 20.390 s 47: 6.270, 6.1330, 20.480 ss 47 to 48: 17.230 s 48: 20.490, 20.500 s 49: 20.310 ss 49 to 50: 17.230 s 50: 20.330 s 51: 9.740, 9.830, 21.130, 21.160, 21.170, 21.190, 21.220 ss 51 to 59: 17.230 s 51AA: 19.300 s 51AB: 19.160 s 51AC: 19.160, 19.300, 19.310 s 52: 7.210, 9.830, 17.300, 18.20, 18.50, 18.80, 18.140, 21.130, 21.160, 21.200, 21.220 s 52(1): 18.10 s 53: 9.830, 20.20, 21.130, 21.160, 21.220 s 54: 9.830, 21.130, 21.160, 21.230, 21.280, 21.410, 21.440, 21.470, 21.520, 21.530, 21.610 s 54(2): 21.260, 21.450 s 54(3): 21.260, 21.430 s 54(4): 21.310 s 54(5): 21.310 s 54(6): 21.310 s 54(7): 21.310 s 55: 21.130, 21.160, 21.300, 21.360, 21.390, 21.410, 21.430, 21.440, 21.500, 21.520, 21.530, 21.610 s 55(2)(b): 21.360 s 56: 21.130, 21.140, 21.160, 21.440, 21.530, 21.610 s 57: 21.130, 21.160, 21.450, 21.610 s 57(3): 21.450 s 58: 20.360, 21.130, 21.160, 21.460 s 58(2): 21.460 s 59: 21.130, 21.160, 21.470 s 60: 8.390, 21.130, 21.160, 21.490, 21.520, 21.610 xxxiv
ss 60 to 63: 17.230 s 61: 8.390, 21.160, 21.500, 21.610 s 61(1): 21.130 s 61(2): 21.130 s 62: 21.130, 21.160, 21.510 s 64: 6.1420, 6.2460, 21.490, 21.520 s 64A: 21.520, 21.610 ss 64 to 64A: 17.230 ss 65 to 68: 17.230 s 66(2): 21.240 ss 69 to 72: 17.230 ss 73 to 77: 17.230 ss 78 to 81: 17.230 ss 82 to 88: 17.230 s 87B: 17.490 ss 89 to 95: 17.230 s 96(1): 20.420 s 96(2): 20.420 s 96(3): 20.420 ss 96 to 99: 17.230 s 97: 20.420 s 98: 20.420 s 99: 20.420 s 100(1): 20.470 s 100(2): 20.470 ss 100 to 103: 17.230 s 101: 20.470 s 102(3): 21.470 s 103: 21.460 s 104: 21.760, 21.780 ss 104 to 108: 17.230 s 105: 21.780 s 106: 21.760 s 109: 21.780 ss 109 to 113: 17.230 s 114: 21.770, 21.780 ss 114 to 117: 17.230 ss 118 to 119: 17.230 ss 120 to 121: 17.230 s 122: 21.760, 21.770, 21.790 ss 122 to 127: 17.230 s 123: 21.790 s 128: 17.230, 21.760, 21.790 s 129: 21.760, 21.800 ss 129 to 130: 17.230 s 131: 21.760 ss 131 to 132A: 17.230 s 133: 17.230 s 134E: 17.540 ss 134 to 137: 17.230 s 135: 21.760 s 138: 21.660, 21.720 ss 138 to 142: 17.230
Table of Statutes
Australian Consumer Law — cont s 139: 21.660, 21.720 s 140: 21.660, 21.720 s 141: 21.660, 21.720 s 142: 21.730 s 143: 21.740 ss 143 to 149: 17.230 s 144: 21.740 s 147: 21.740 s 148: 21.730 s 149: 21.740 s 150: 17.230, 21.750 s 151: 6.270, 17.780 s 151(1)(a): 17.780 s 151(1)(k): 17.780 s 151(1)(m): 21.520 ss 151 to 160: 17.620 s 155: 17.500 s 157: 6.270 s 157(4): 20.160 ss 161 to 163: 17.620 s 164: 17.620 s 165: 17.620 s 166: 6.270, 17.620 ss 167 to 168: 17.620 s 169: 17.620 ss 170 to 187: 17.620 ss 188 to 191: 17.620 ss 192 to 193: 17.620 ss 194 to 195: 17.620 s 196: 17.620 ss 197 to 198: 17.620 s 199: 17.620 ss 200 to 201: 17.620 s 202: 17.620 ss 203 to 204: 17.620 s 205: 17.500, 17.620 s 206: 17.500, 17.620 s 207: 17.610, 20.20, 20.80 s 208: 17.610, 20.80 s 209: 17.610, 20.80 ss 210 to 211: 17.610 s 214: 20.20 s 217: 19.160 s 218: 17.460, 17.480, 17.490 s 218(4): 17.480 s 219: 17.460, 17.500, 20.220 s 219(1): 17.500 s 219(2): 17.500 ss 219 to 222: 17.500 s 221: 17.500, 20.220 s 223: 17.520
s 224: 17.540, 17.550, 17.620, 17.630, 19.160, 19.380, 20.100 s 224(2): 17.640 ss 224 to 230: 17.630 s 225: 17.630 s 229: 17.640 s 232: 17.370, 17.750, 18.140, 18.150, 19.160, 19.380 s 232(1): 17.660, 17.680 s 232(2): 17.670 s 232(4): 17.680 s 232(5): 17.680 s 232(6): 17.680 s 232(7): 17.680 ss 232 to 235: 17.660 s 233: 17.680 s 234: 17.680 s 236: 7.210, 17.370, 17.690, 17.700, 18.140, 18.150, 19.160, 19.380 s 236(1): 17.690 s 236(2): 17.690 s 237: 17.700, 19.380 s 237(1)(b): 17.700 s 239: 17.700 s 243: 17.710, 18.140, 18.150 s 246: 17.720 s 246(1): 17.720 s 246(2): 17.720 s 247: 17.750 s 247(1): 17.750 s 247(2): 17.750 s 248: 17.760 s 248(2): 17.760 s 248(3): 17.760 s 255: 20.170 s 255(3): 20.180 s 256: 20.180 s 257: 20.180 s 259(1): 21.550 s 259(2): 21.550 s 259(3): 21.550 s 259(4) to (6): 21.550 s 259(7): 21.550 s 260: 17.790, 21.540, 21.550 s 261: 21.550 s 262: 21.550 s 263(1): 21.550 s 263(3): 21.550 s 263(4): 21.550 s 264: 21.550 s 265: 21.550 s 266: 21.540, 21.550 s 267(1): 21.570 xxxv
Business and the Law
Australian Consumer Law — cont s 267(2): 21.570 s 267(3): 21.570 s 267(4): 21.570 s 269: 21.570 s 270: 21.570 s 271: 21.150, 21.160, 21.580 s 271(1): 21.580 s 271(2): 21.580 s 271(3): 21.580 s 271(5): 21.580 s 271(7): 21.580 s 272(1): 21.580 s 273: 21.580 s 274: 21.150, 21.360, 21.530, 21.580 s 276A: 21.530 s 276A(2): 21.530 Ch 1: 17.200 Ch 2: 6.1930, 17.200, 17.300, 17.520, 17.580, 17.690, 17.720, 20.10 Ch 3: 17.200, 17.520, 17.580, 17.690, 17.720, 20.10 Ch 3, Pt 2-2: 17.750 Ch 3, Pt 3-2, Div 1: 17.300, 17.790, 21.550 Ch 3, Pt 3-2, Div 1, subdiv B: 21.570 Ch 4: 17.200, 17.250, 17.360, 17.520, 17.580, 17.590, 17.600, 17.720, 17.750 Ch 4, Pt 4-6: 17.610 Ch 4, Pt 5-2: 17.540 Ch 5: 17.200, 17.250, 17.360, 17.590 Ch 5, Pt 5-3: 17.780 Ch 5, Pt 5-4: 17.790 Ch 5, Pt 5-4, Div 1, subdiv A: 21.550 Pt 2-1: 17.220, 17.620 Pt 2-2: 17.220, 17.620 Pt 2-3: 17.220, 17.620, 19.380 Pt 2-3, Div 2, subdiv BA: 19.380 Pt 3-1: 17.230, 17.620, 20.10 Pt 3-1, Div 1: 17.230, 17.620 Pt 3-1, Div 1, subdiv A: 17.230, 21.130 Pt 3-1, Div 1, subdiv B: 17.230, 21.130, 21.480 Pt 3-1, Div 1, subdiv C: 17.230 Pt 3-1, Div 1, subdiv D: 17.230 Pt 3-1, Div 1, subdiv E: 17.230 Pt 3-1, Div 2: 17.230, 17.620, 20.410 Pt 3-1, Div 3: 17.230, 17.620 Pt 3-1, Div 4: 17.230 Pt 3-1, Div 5: 17.230 Pt 3-1, Div 6: 17.230 Pt 3-2: 6.2220, 17.230, 17.620, 20.10 Pt 3-2, Div 1: 21.130 Pt 3-2, Div 1, subdiv A: 21.550 Pt 3-2, Div 2: 20.10, 20.430 Pt 3-3: 17.230, 17.620, 20.10, 21.760, 21.770 xxxvi
Pt Pt Pt Pt Pt Pt
3-3, Div 1: 21.780 3-3, Div 2: 21.780 3-3, Div 3: 21.790 3-3, Div 4: 21.800 3-4: 17.230, 17.620, 20.10, 21.760, 21.770, 21.810 3-5: 17.230, 17.620, 20.10, 21.650, 21.660, 21.700, 21.710, 21.720, 21.730, 21.740, 21.750 Pt 4-1: 17.240 Pt 4-3: 21.820 Pt 5-1: 17.620 Pt 5-1, Div 2: 20.70 Pt 5-2: 18.140 Pt 5-3: 20.10, 20.70, 20.170 Pt 5-4: 21.540 Pt 5-5, Div 1: 18.750 Pt V, Div 2A: 21.20 Pt IV: 17.280 Pt VA: 21.20 Div 6: 17.230 Sch Pt 3-2, Div 1, subdiv A: Sch 1: 6.110 Australian Consumer law: Australian Crime Commission Act 2002 s 24A: 3.50 s 25A: 3.50 Australian Grape and Wine Authority Act 2013: 23.660 Australian Human Rights Commission Act 1986: 14.170 Australian Industries Preservation Act 1906: 1.1020, 22.110 Australian Securities and Investments Commission Act 2001: , 7.1140, 17.130, 17.170, 19.160, 19.380 s 12DA: 8.970, 18.30 s 12BAB: 17.170 s 131A: 18.30 Banking Act 1959: 6.1380 Bankruptcy Act 1966: 16.10, 16.40 s 40: 16.70 s 40(1)(g): 16.70 s 109: 16.90 s 116(1)(a): 16.120 s 116(1)(b): 16.120 s 120: 16.140 s 120(3): 16.140 s 121: 16.150 s 122: 16.150 s 123: 16.140 s 126: 6.1340 s 133: 6.1340
Table of Statutes
Bankruptcy Act 1966 — cont s 149D: 16.160 s 152: 16.160 s 185C(2): 16.180 s 188: 16.180, 16.190 s 269: 6.1340 s 306: 16.70 Pt X: 6.1170, 16.170, 16.190 Pt IX: 16.170 Bankruptcy Legislation Amendment (Superannuation Contributions) Act 2007: 16.120 s 115: 16.130 Bankruptcy and Family Law Legislation Amendment Act 2005: 16.40 Bills of Exchange Act 1909: 6.1520, 7.1380, 7.1410, 7.1540 s 8: 7.1400, 15.290 s 13(2): 7.1410 s 57: 7.1560 s 89: 7.1550 s 90: 7.1560 s 92: 7.1560 s 93: 7.1560 s 94: 7.1560 s 95: 7.1540 Business Names Registration Act 2011: 11.20, 11.40, 11.70, 23.180 Cheques Act 1986: 7.1380, 7.1570, 7.1630, 7.1720 s 10: 7.1570 s 22: 7.1680 s 71: 7.1600 s 72: 7.1600 s 73: 7.1610 s 77: 7.1650 s 86: 7.1610 s 91: 7.1720 s 92: 7.1720 s 93: 7.1720 s 94: 7.1720 s 94(1): 7.1720 s 94(2): 7.1720 Cheques and Payment Orders Act 1986: 6.1520, 6.2530 Circuit Layouts Act 1989: 23.20, 23.1400 Civil Dispute Resolution Act 2011: 5.160 s 3: 5.160 Civil Liability Act 2002: 8.580 Commonwealth of Australia Constitution Act: 1.140,
1.280, 1.400, 1.410, 1.440, 1.450, 1.460, 1.480, 1.510, 1.520, 1.530, 1.560, 1.590, 1.610, 1.640, 1.650, 1.670, 1.680, 1.700, 1.710, 1.740, 1.750, 1.800, 1.810, 1.910, 1.920, 1.940, 1.1020, 1.1030, 1.1040, 1.1090, 1.1110, 1.1150, 1.1180, 1.1200, 1.1250, 1.1330, 1.1350, 2.300, 2.310, 2.320, 2.420, 3.10, 3.40, 3.90, 3.100, 3.210, 3.340, 4.10, 4.20, 4.30, 4.50, 4.60, 4.80, 4.90, 4.200, 8.1320, 17.110, 17.120, 17.170, 22.110, 23.20 s 1: 1.550, 1.680, 3.70, , 3.90 s 5: 4.60 s 6: 1.390, 17.120 s 9: 3.30 s 24: 3.100 s 25: 1.620 s 32: 4.60 s 51: 1.440, 1.860, 1.880, 1.890, 1.900, 1.920, 1.1210, 1.1260, 1.1280, 1.1330 s 51(i): 17.120 s 51(v): 17.120 s 51(xxvi): 1.620 s 51(xxxix): 1.900 s 51(xxiiiA): 1.910 s 51(xxix): 1.950 s 51(xxxvii): 1.1340, 2.320 s 51(xxii): 2.320 s 51(xviii): 23.20 s 51(ii): 1.1260 s 51(vi): 1.900, 1.1260 s 51(xx): 1.1010, 1.1020, 1.1030, 1.1350, 17.120, 22.110 s 51(xvi): 7.1380 s 51(xxi): 1.940 s 52: 1.850 s 52(1)(a): 3.70 s 52(1)(a)(i): 3.70 s 53: 3.130 s 53: 3.130 s 57: 3.200, 3.220, 4.60 s 58: 3.210, 4.60 s 61: 1.560, 1.690, 1.770, 4.30 s 62: 1.560, 1.690, 4.30, 4.70 s 64: 1.560, 4.60 s 68: 1.560 s 71: 1.570, 1.700, 2.410, 3.50 s 72: 1.570, 4.60 s 73: 2.310 ss 73 to 78: 1.570 s 76: 2.310 s 77: 2.410 s 86: 1.1250 s 87: 1.1250 s 90: 1.580, 1.850 xxxvii
Business and the Law
Commonwealth of Australia Constitution Act — cont s 92: 1.580, 1.1040, 1.1070, , 1.1080, 1.1090, 2.140 s 96: 1.910, 1.1250, 1.1300 s 106: 1.590 s 107: 1.590 s 108: 1.590 s 109: 1.380, 1.440, 1.590, 1.860, 1.920, 1.930 s 115: 1.590 s 116: 1.590 s 121: 1.600 s 122: 1.600, 1.850, 17.120 s 123: 1.600 s 124: 1.600 s 128: 1.610, 1.1090 Ch VIII: 1.610 Ch V: 1.590 Ch IV: 1.580 Ch VI: 1.600 Ch III: 1.570, 1.700, 3.50 Communist Party Dissolution Act 1950: 1.900 Competition Policy Reform Act 1995: 1.1350, 22.140, 22.540, 22.650 Competition and Consumer Act 2010: 1.1010, 1.1020, 1.1350, 2.410, 3.70, 6.20, 6.110, 6.1390, 7.1010, 8.1360, 9.650, 10.30, 10.470, 10.480, 13.220, 13.310, 13.330, 17.170, 17.180, 17.280, 17.360, 17.380, 17.390, 17.400, 17.430, 17.460, 19.330, 19.570, 22.10, 22.20, 22.30, 22.50, 22.60, 22.70, 22.90, 22.100, 22.110, 22.140, 22.150, 22.450, 22.470, 22.500, 22.510, 22.530, 22.640, 22.650, 22.670, 22.760, 22.780, 22.920, 22.960, 22.1040, 22.1050, 22.1060, 22.1210, 22.1340, 22.1530, 22.2150, 24.70 s 50): 22.700, 22.710 s 2: 17.280, 22.10, 22.50 s 2A: 22.100, 22.150 s 2B: 22.100, 22.150 s 4(2): 18.1170 s 4B: 20.310 s 4D: 22.90, 22.1140, 22.1150 s 4E: 22.240 s 4F: 22.1840 s 4F(b): 22.1330 s 4G: 22.310 s 4M: 7.1010 s 5(1): 22.1030 ss 13 to 134G: 17.540 s 28: 22.650 s 33C(1)(c): 22.700 s 44ZZRA: 22.790 s 44ZZRO: 22.790 s 44ZZRP: 22.790 xxxviii
s s s s s s s s s s s
44ZZLF: 22.820 44ZZRD(3)(C): 22.1060 44ZZRD(6): 22.1050 44ZZRD(11): 22.1050 44B: 22.570 44H(4): 22.610 44N: 22.590 44X: 22.620 44ZZA: 22.600 44ZZA(3): 22.600 45: 22.90, 22.950, 22.1100, 22.1110, 22.1120, 22.1140, 22.1540, 22.1710 s 45(2): 22.1100, 22.1110 s 45A: 22.1540 s 45C(3): 22.1000 s 45D: 22.1140, 22.1210, 22.1240 s 45D-45EA: 22.1210 ss 45D to 45DE: 22.1250 s 45E: 22.1220 ss 45 to 45E: 22.50 s 45DC: 22.1210 s 45DD: 22.1210 s 46: 22.50, 22.150, 22.180, 22.230, 22.420, 22.450, 22.550, 22.1120, 22.1410, 22.1520, 22.1720, 22.1770, 22.1780, 22.1790, 22.1800, 22.1810, 22.1820, 22.1840, 22.1880, 22.1910, 22.1920, 22.1940, 22.1950, 22.2010, 22.2020 s 46(1): 22.1720, 22.1740, 22.1750, 22.1760, 22.1770, 22.1920, 22.2000 s 46(1A): 22.1760 s 46(1AA): 22.1720, 22.2000 s 46(1AAA): 22.1920 s 46(3): 22.1790 s 46(4): 22.1790 s 46(4A): 22.1750 s 46(6): 22.1720 s 46(7): 22.1840 s 46A: 22.1760 s 47: 22.50, 22.150, 22.460, 22.1270, 22.1280, 22.1310, 22.1410, 22.1450, 22.1520, 22.1710 s 47(2): 22.1410, 22.1840 ss 47(2)(a) to (c): 22.1350 s 47(2)(d): 22.1290, 22.1300, 22.1350, 22.1360, 22.1390 s 47(2)(f): 22.1290, 22.1300, 22.1430, 22.1450 s 47(3)(d): 22.1300, 22.1350 s 47(3)(f): 22.1300, 22.1430, 22.1450 s 47(4): 22.1290, 22.1300, 22.1450 s 47(5): 22.1300, 22.1450, 22.1840 s 47(6): 22.90, 22.1290, 22.1300, 22.1460, 22.1490, 22.1500, 22.1510 s 47(6)(7): 22.1400 s 47(7): 22.90, 22.1300, 22.1460
Table of Statutes
Competition and Consumer Act 2010 — cont s 47(8): 22.1290, 22.1300 s 47(9): 22.1290, 22.1300 s 47(10): 22.1270, 22.1340, 22.1350, 22.1450 s 47(13)(a): 22.1310 s 48: 7.500, 22.50, 22.90, 22.1040, 22.1540 s 50: 22.50, 22.380, 22.1120, 22.2070, 22.2080, 22.2160 s 50(1): 22.2070 s 50(3): 22.370, 22.2090, 22.2120 s 50(6): 22.240, 22.1120, 22.2070 s 50A: 22.2150, 22.2170 s 50A(1): 22.2150 s 51: 22.100 s 51(2)(a): 22.1140, 22.1210, 22.1260 s 51(2)(b): 7.1010 s 51(2)(d): 7.1010 s 51(2)(e): 7.1010 s 51(2A): 22.1140 s 51AD: 22.200 s 75B: 17.360 s 76: 22.710, 22.730, 22.760, 22.980 s 76(1): 22.730 s 76(1A): 22.740 s 77A: 22.790 s 78: 22.730 s 79: 22.710, 22.790 s 79B: 22.720 s 80: 22.700, 22.710 s 81: 22.700, 22.710, 22.2070 s 82: 22.700 s 84: 10.480, 22.760 s 86: 22.680 s 86C: 10.470, 22.710, 22.790 s 86D: 10.470, 22.710 s 86E: 22.710, 22.790 s 87: 22.700 s 87B: 17.460, 17.490, 22.710, 22.720 s 88: 22.450 s 90: 22.450 s 90(9A): 22.480 s 90A: 22.450 s 93: 22.460 s 93(5): 22.460 ss 95AC to 95AJ: 22.2170 ss 95AT to 95AZ: 22.2170 s 96(3): 22.1560 s 96(4): 22.1560 s 96A: 22.1560 ss 96 to 100: 22.50, 22.1540 s 97: 22.1660 s 98: 22.1620 s 98(2): 22.1680
s 98(3): 22.1680 s 99: 22.1560 s 100: 22.1640 s 134: 17.540 s 134A: 17.540 s 134A(2): 17.540 s 134C: 17.540 s 134D(3): 17.540 s 137A(1): 21.730 s 137B: 7.230 s 139A: 8.160 s 139B: 8.350 s 155: 17.390, 22.710, 22.860 s 155(6A): 17.390 s 155(7): 17.390 s 163A: 22.700, 22.710 Ch 3: 22.1860 Pt IIIA: 22.60, 22.540, 22.550, 22.570, 22.580, 22.590, 22.620 Pt VIII: 22.1040, 22.1540, 22.1560 Pt X: 22.60 Pt II: 17.380, 22.650 Pt IV: 6.1360, 7.1010, 22.50, 22.60, 22.80, 22.90, 22.100, 22.140, 22.220, 22.650, 22.680, 22.690, 22.710, 22.730, 22.740, 22.760, 22.950, 22.2070 Pt IV, Div 1: 22.790 Pt IX: 22.450 Pt XI: 17.180, 17.390 Pt III: 22.660 Pt IVB: 19.570, 22.200 Pt VII: 22.450, 22.650, 22.1350, 22.1450 Pt XIB: 22.60 Pt XIC: 22.60 Div 1: 22.50, 22.90 Div 1A: 22.950 Sch 2: 3.70, 17.180, 22.70 Competition and Consumer (Industry Codes – Franchising) Regulations 2014: 16.300 s 588FE: 16.320 Competition and Consumer Law Regulations 2010 reg 90: 21.470 reg 91: 21.460 Copyright Act 1968: 6.1520, 9.1020, 22.1800, 23.20, 23.70, 23.100, 23.110, 23.780, 23.790, 23.820, 23.990, 23.1020, 23.1030, 23.1100, 23.1120, 23.1400, 23.1550 s 14(1): 23.1010 s 31(1)(a)(c)(d): 23.800 s 31(1)(b): 23.800 ss 74 to 77A: 23.750 xxxix
Business and the Law
Copyright Act 1968 — cont s 85: 23.800 s 86: 23.800 s 87: 23.800 s 88: 23.800 s 103A: 23.1010, 23.1120 s 103B: 23.1010, 23.1120 s 103C: 23.1120 s 103AA: 23.1120 s 116A: 23.1020 Pt IX: 23.840 Copyright Amendment (Digital Agenda) Act 2000: 23.1020, 23.1030 Copyright Amendment (Moral Rights) Act 2000: 23.70, 23.820 Corporations Act 2001: 1.1010, 1.1350, 6.1520, 7.1140, 9.1000, 9.1010, 9.1080, 10.30, 11.430, 11.450, 16.10, 16.200, 22.760, 22.2070 s 45A: 11.420 s 95A(2): 16.215 s 112: 11.370 s 113: 11.420 s 114: 11.420, 11.430 s 115: 11.60 s 118: 11.320 s 124: 11.310 s 197: 11.270 s 198A: 11.320 s 201A: 11.420, 11.430 s 206F: 16.330 s 206EA: 17.760 s 233: 16.290 ss 410 to 415: 16.450 s 411: 16.460 ss 416 to 434: 16.400 s 419: 16.430 s 419A: 16.430 s 420: 16.430 s 422: 16.430 s 424: 16.430 s 435A: 16.490, 16.510 ss 435A to 451D: 16.480 s 436A: 16.500 s 436B: 16.500 s 436C: 16.500 s 440A: 16.510 s 444D: 16.530 s 459C: 16.270 s 461: 16.270, 16.290 s 461(1)(k): 16.290 s 462: 16.260 xl
s 491: 16.240 s 494: 16.240 s 495: 16.240 s 497: 16.250 s 541: 16.290 s 553: 16.380 s 556: 16.360 s 563A: 16.380 s 588G: 11.340, 16.340, 16.350 s 588H: 16.350 s 588V: 16.340 s 596AB: 16.360 s 1070A: 9.610, 9.1000 s 1071B(2): 9.1010 s 1274AA: 17.760 s 1318: 16.340 Ch 2K: 9.710, 9.1080, 9.1090 Pt 5.1: 16.250 Pt 5.2: 16.400 Pt 5.8A: 16.360 Corporations Law: 1.1350, 11.450, 13.300 Corporations Regulations 2001 reg 2A.1.01: 11.60 Crimes Act 1914: 10.30, 17.390 s 16A: 17.600 Criminal Code Act 1995: 10.30, 10.60, 10.540, 17.390, 17.600 s 12.2: 17.600 s 12.3: 10.450 Cross-Border Insolvency Act 2008: 16.210 s 95A(1): 16.215 Customs Act 1901 s 233B(1)(b): 10.230 s 233B(1)(c): 10.230 Cybercrime Act 2001: 10.540 Designs Act 1906: 23.690, 23.720, 23.770 Designs Act 2003: 9.1020, 23.20, 23.690, 23.700, 23.720, 23.740, 23.760 s 5: 23.710 s 7: 23.710 Electronic Transactions Act 1999: 6.710, 7.570, 7.580, 7.590, 7.600, 7.670, 7.680, 7.690, 7.700, 7.710, 7.720, 7.730, 7.750, 7.790 s 3: 7.580 ss 3(a) to (d): 7.580 s 4: 7.600 s 8(1): 7.590, 7.600
Table of Statutes
Electronic Transactions Act 1999 — cont s 9(1): 7.590 s 10: 7.590 s 10(1)(a): 7.790 s 10(1)(b): 7.790 s 10(1)(c): 7.790 s 12(1): 7.590 s 14(1): 7.680 s 14(3): 7.720 s 14(4): 7.720 s 14A: 7.680 s 14B: 7.710 ss 14B(2) to 14B(4): 7.710 s 15B: 7.740 s 15D: 7.740 Enforcement Legislation Amendment (Powers) Act 2015: 3.50 Fair Entitlements Guarantee Act 2012: 16.90, 16.370 s 116(1)(a): 16.120 s 553(1): 16.370 Fair Trading Act 1999 Pt 2B: 19.400 Fair Work Act 2009: 12.460, 12.540, 22.1210 Family Law Act 1975: 2.320, 6.1450, 16.40 Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008: 16.40 Federal Court of Australia Act 1976: 2.330, 5.80 s 40: 5.80 Federal Court of Australia Amendment Act 1991: 5.220, 22.700 Freedom of Information Act 1982: 4.290 s 3: 4.290 Healthcare Identifiers Act 2010: 14.320 High Court Act 1979: 1.700 Human Rights and Equal Opportunity Commission Act 1986: 1.740 Income Tax Assessment Act 1936: 3.70, 3.320, 6.3110 s 159GZZZZE: 3.70 s 160: 3.70 s 160A: 3.70 s 161: 3.70 Pt III, Div 6: 11.290
Insurance (Agents and Brokers) Act 1984: 7.1140 Insurance Contracts Act 1984: 7.1140, 7.1150, 7.1240, 7.1250, 7.1255, 7.1260, 7.1270, 7.1320, 7.1330, 7.1340, 7.1350 s 13: 7.1210, 7.1360 s 14: 7.1210, 7.1360 s 14(3): 7.1210 s 16: 7.1190 ss 16 to 18: 7.1190 s 17: 7.1190, 7.1360 s 18: 7.1190, 7.1360 s 20: 7.1180, 7.1190, 7.1360 s 21: 7.1240, 7.1360 s 21(1)(b): 7.1240 s 21(2): 7.1255 s 21(2)(c): 7.1255 s 21(3): 7.1260, 7.1270 s 22: 7.1270, 7.1360 s 22(1): 7.1270 s 22(3): 7.1270 s 23: 7.1280, 7.1360 s 24: 7.1360 s 26: 7.1300, 7.1360 s 27: 7.1310, 7.1360 s 28: 7.1320, 7.1360 s 28(1): 7.1320 s 28(2): 7.1320 s 28(3): 7.1320 s 31: 7.1320, 7.1360 s 33: 7.1320 s 35: 7.1360 s 37: 7.1360 s 44: 7.1360 s 45: 7.1350 s 48: 6.2530, 7.1360 s 48(1): 7.1180 s 52: 7.1140, 7.1250 s 53: 7.1140, 7.1250 s 54: 7.1360 s 56: 7.1330, 7.1360 s 65: 7.1340 ss 65 to 66: 7.1360 s 66: 7.1340 s 76: 7.1350, 7.1360 Pt IV, Div 2: 7.1250 International Arbitration Act 1974: 5.310 Judiciary Act 1903: 1.700
Independent Contractors Act 2006: 12.540
Legislative Instruments Act 2003: 4.250 s 3: 4.250
Insurance Act 1973: 7.1140
Life Insurance Act 1995: 7.1140 xli
Business and the Law
Life Insurance Act 1995 — cont s 52: 7.1170 Marine Insurance Act 1909: 6.1520, 7.1140, 7.1150 Marriage Act 1961: 1.940 s 111A: 6.1120 National Consumer Credit Act 2009: 19.480 s 62B: 19.480 s 106: 19.480 Pt 6: 19.480 National Consumer Credit Protection Act 2009: 7.1750
Pt IIIA: 14.190 Sch 1: 14.200 Privacy Amendment (Enhancing Privacy Protection) Act 2012: 14.190 Privacy Amendment (Private Sector) Act 2000: 7.840 Privacy (Market and Social Research) Code 2014: 14.330 Public Interest Disclosure Act 2013: 4.300 s 6: 4.300 Racial Discrimination Act 1975: 1.740, 1.960
Native Title Act 1993: 1.330, 9.420
Restrictive Trade Practices Act 1971: 1.1020, 22.110, 22.1530, 22.1660
Ombudsman Act 1976: 4.280 s 15(1): 4.280
Royal Style and Titles Act 1973: 1.430
Patents Act 1990: 9.1020, 23.20, 23.1170, 23.1250, 23.1290, 23.1350, 23.1550 s 18(1): 23.1250 s 18(1)(a): 23.1290 s 18(2): 23.1270 ss 54 to 64: 23.1550 s 108: 23.1550 s 109: 23.1550 s 133: 23.1550 Personal Property Securities Act 2009: 9.710, 9.720, 9.740, 9.1060, 9.1080, 9.1090, 9.1120, 9.1140, 9.1160, 9.1190, 14.320, 16.360, 21.190 s 12: 9.1120 s 26: 9.760 s 55: 9.1160, s 555: 16.360 Pt 2.6: 9.1160 Plant Breeder’s Rights Act 1994: 23.20, 23.1390 Prices Surveillance Act 1983: 17.380, 22.650 s 17: 22.650 Privacy Act 1988: 7.810, 7.840, 14.170, 14.180, 14.190, 14.200, 14.230, 14.250, 14.320, 14.330, 14.350 s 2A: 14.180 s 13: 14.320 s 30: 14.370 s 32: 14.370 s 33E: 14.370 s 33F: 14.370 s 35A: 14.340 s 41: 14.360 s 55A: 14.370 s 62: 14.370 s 80W: 14.370 s 98: 14.370 xlii
Spam Act 2003: 7.830 Statute of Westminster Adoption Act 1942: 1.410 Taxation Administration Act 1953: 10.30 Sch 1, s 12-55: 12.420 Telecommunications Act 1991: 22.590 Telecommunications (Interception and Access) Act 1979: 14.190 Trade Marks Act 1995: 9.1020, 18.750, 23.20, 23.160, 23.170, 23.190, 23.250, 23.270, 23.370, 23.410, 23.490, 23.550, 23.590, 23.650, 23.660, 23.740, 23.1590 s 6: 23.370 s 8: 23.440, 23.1590 s 10: 23.550 s 17: 23.370, 23.410 s 24: 23.640 s 29(1): 23.660 s 33: 23.740 s 39: 23.420 s 40: 23.420, 23.450 s 41: 23.740 s 41(2): 23.420, 23.460 s 42: 23.420, 23.510 s 43: 23.420, 23.510 s 44: 23.420, 23.510 s 51: 23.500 s 58: 23.500 s 59: 23.500 s 60: 23.500, 23.510, 23.520 s 62: 23.500 s 72: 23.620 s 87: 23.640 s 88: 23.620 s 120: 23.250
Table of Statutes
Trade Marks Act 1995 — cont s 120(1): 23.550 s 120(2): 23.550 s 120(3): 23.550 s 122(1): s 122(1)(d): 18.750 s 122(2): 23.610 s 162: 23.410 s 169: 23.410 s 185: 23.410 Pt 9: 23.620 Trade Marks Regulations 1995 reg 4.3(7): 23.450 Sch 1: 23.410 Trade Practices Act 1965: 1.1020, 22.110 Trade Practices Act 1974: , 1.1020, 1.1350, 7.370, 7.550, 7.650, 13.400, 17.110, 17.120, 17.130, 17.150, 17.170, 17.180, 17.280, 17.380, 18.20, 18.60, 18.170, 18.450, 18.630, 18.680, 18.780, 18.1020, 19.20, 19.160, 19.570, 20.20, 21.20, 21.30, 21.50, 21.70, 21.100, 21.130, 21.230, 21.240, 21.250, 21.260, 21.280, 21.290, 21.330, 21.360, 21.540, 21.710, 22.70, 22.110, 22.120, 22.140, 22.400, 22.540, 22.650, 22.1170, 22.1180, 22.1810, 23.230 s 4B: 21.70 s 4D: 22.1190 s 18: 18.10 s 45D(3): 22.1220 s 46: 22.290, 22.300, 22.1820, 22.1850, 22.1900, 22.1910, 22.1930, 22.1940, 22.1970, 22.1980, 22.2010 s 46(1AA): 22.1920 s 47: 22.770 s 47(2)(d): 22.1370 s 47(3)(d): 22.1370, 22.1440 s 47(6): 22.1490 s 50: 22.290, 22.660 s 51A: 18.1090 s 51AA: 17.120 s 51AB: 17.120 s 51AC: 17.120, 19.300 s 52: 6.2560, 7.170, 7.320, 7.630, 7.640, 7.770, 17.770, 18.10, 18.20, 18.60, 18.230, 18.290, 18.520, 18.600, 18.660, 18.760, 18.1000, 18.1220, 23.170, 23.270, 23.510, 23.530 s 53(c): 7.650 s 59(2): 17.770 s 65A: 18.290 s 65AAC(1): 7.660 s 85: 20.20 s 87B: 22.710
s 98(2): 22.1690 Pt IIIA: 22.580 Pt IV: 1.1350, 22.240 Pt IVA: 17.120 Pt IVB: 13.310 Pt V: 17.120, 17.300 Pt V, Div 1: 17.120, 17.130 Pt V, Div 1A: 17.120, 17.130, 21.760 Pt V, Div 1AA: 17.120 Pt V, Div 1AAA: 7.660, 17.120 Pt V, Div 2: 17.120, 17.130, 21.20 Pt V, Div 2A: 17.120, 17.130 Pt VA: 17.120, 21.650 Trade Practices Revision Act 1986: 19.20, 22.80 WorkChoices legislation (Workplace Relations Amendment (WorkChoices) Act 2006: 1.1030 Workplace Relations Amendment (WorkChoices) Act 2006: 1.1030 AUSTRALIAN CAPITAL TERRITORY
Civil Law (Property) Act 2006 s 201: 6.1510, 9.200 s 205: 9.640 Civil Law (Wrongs) Act 2002: 6.1620, 8.160 s 173: 6.1600 Criminal Code 2002: 10.40, 10.60 Fair Trading Act 1992: 17.130 Fair Trading (Australian Consumer Law) Amendment Act 2010: 17.190 Human Rights Act 2004: 1.1160 Land Titles Act 1925: 9.460 Marriage Equality (Same Sex) Act 2013: 1.940 Native Title Act 1994: 9.420 Sale s s s s s
of Goods Act 1954: 9.650, 21.600 23: 9.690 25: 9.660 26: 9.740 29: 9.780, 9.800 52: 9.660
Unit Titles Act 2001: 9.470 NEW SOUTH WALES
Aboriginal Lands Rights Act 1983: 9.420 Auctioneers and Agents Act 1941: 12.100 xliii
Business and the Law
Building and Construction Industry Security of Payment Act 1999: 7.470 Civil Liability Act 2002: 8.160, 8.180, 8.340, 8.360, 8.480, 8.570, 8.650, 8.680, 8.760 s 5B: 8.280, 8.380, 8.610 s 5B(2): 8.620 s 5C: 8.610 s 5D(1)(a): 8.680 s 5D(1)(b): 8.680 s 5F: 8.380 s 5L: 8.350, 8.390, 8.400, 8.570, 8.580 s 5M: 8.350, 8.390, 8.400 s 5N: 8.350, 8.390 s 5Q: 8.480 s 30(2): 8.330 s 32: 8.330 s 49: 8.440 s 50: 8.440 s 54: 8.420 s 55: 8.340 s 57: 8.340 s 60: 8.390 s 61: 8.340 s 69: 8.410 Pt 3: 8.330 Commercial Arbitration Act 2010: 5.300 Community Protection Act 1994: 1.750 Compensation to Relatives Act 1897: 8.820 Constitution Act 1902: 1.820 s 5: 1.750 Contracts Review Act 1980: 19.490, 19.500, 19.510, 19.520 s 7: 19.510 s 7(1): 19.500 s 9(1): 19.510 s 9(2): 19.510 s 9(4): 19.510 Conveyancing Act 1919: 9.460 s 12: 9.640 s 23C: 9.200, 9.440 s 36C: 6.2530 s 54A: 6.1510, 9.440 Crimes Act 1900: 10.40 Crimes Legislation Amendment (Existing Life Sentences) Act 2001: 1.760 Defamation Act 2005 s 26: 8.1280 xliv
District Court Act 1973: 2.390 Electronic Transactions Act 2000: 7.580 Employees Liability Act 1991: 12.530 Fair Trading Act 1987: 17.130 Fair Trading Act (Australian Consumer Law) Act 2010: 17.190 Frustrated Contracts Act 1978: 6.2730 Industrial Relations Act 1996: 19.480 Minors (Property and Contracts) Act 1970: 6.1330 Motor Dealers and Repairers Act 2013: 19.480 Native Title (New South Wales) Act 1994: 9.420 Partnership Act 1892 s 1: 11.60 s 5: 11.90 s 32: 11.150 s 32(b): 11.80 s 33: 11.150 s 35: 11.150 s 35(f): 11.150 s 39: 11.150 Pt 3: 11.190 Property (Relationships) Act 1984 s 45: 6.1440 Protection of the Environment Operations Act 1997: 10.470 Public Interest Disclosures Act 1994: 4.300 Real Property Act 1900: 9.460 Restraints of Trade Act 1976: 7.1050 s 4(1): 7.1050 Retail Leases Act 1994: 19.480 Sale of Goods Act 1923: 7.370, 7.550, 9.650, 21.600 s 4(2A): 6.1600 s 8: 21.600 s 17: 21.170 s 23: 9.690 s 25: 9.660 s 26(1): 9.740 s 28(1): 9.780 s 28(2): 9.800 s 51: 9.660 Security Interests in Goods Act 2005: 9.1090 Strata Schemes Management Act 1996: 9.470
Table of Statutes
Subordinate Legislation Act 1989: 4.250
Constitution Act 1867: 1.370
The Liquor Act 1982: 8.270
Criminal Code Act 1899: 10.40
Trustee Act 1925: 11.260
Fair Trading Act 1989: 17.130
Unlawful Gambling Act 1998 s 56(1): 6.1420
Fair Trading (Australian Consumer Law) Act 2010: 17.190 Land Title Act 1994: 9.460
Workers Compensation Act 1987: 12.500 s 9: 8.80
Native Title (Queensland) Act 1993: 9.420
World Youth Day Act 2006: 4.200 s 58(1): 4.200 s 58(2): 4.200
Property Law Act 1974: 9.460 s 11: 9.200 s 55: 6.2530 s 59: 6.1510, 9.440
World Youth Day Regulation 2008 cl 7: 4.200 NORTHERN TERRITORY
Consumer Affairs and Fair Trading Act 1990: 17.130 Consumer Affairs and Fair Trading Amendment (National Uniform Legislation) Act 2010: 17.190 Criminal Code Act 1983: 10.40 Land Title Act s 61: 9.440
Sale of Goods Act 1896: 9.650, 21.600 s 21: 9.690 s 23: 9.660 s 24: 9.740 s 27: 9.780, 9.800 s 50: 9.660 SOUTH AUSTRALIA
Aboriginal Lands Trust Act 1966: 9.420 Civil Liability Act 1936: 8.160
Land Title Act 2000: 9.460
Community Titles Act 1996: 9.470
Law of Property Act 2000 s 56: 6.2530 s 62: 9.200 s 221: 6.1510
Constitution Act 1856: 1.370
Personal Injuries (Liabilities and Damages) Act 2003: 8.160
Frustrated Contracts Act 1988: 6.2730
Sale s s s s s
of Goods Act 1972: 9.650, 21.600 23: 9.690 25: 9.660 26: 9.740 28: 9.780, 9.800 51: 9.660
Criminal Law Consolidation Act 1935: 10.40 Fair Trading Act 1987: 17.130 Law of Property Act 1936: 9.460 s 15: 9.640 s 26: 6.1510, 9.440 s 29: 9.200 Maralinga Tjarutja Land Rights Act 1984: 9.420
Unit Titles Act 1979: 9.470
Misrepresentation Act 1972: 6.1620 s 6(1)(b): 6.1600
Validation of Titles and Actions Act 1994: 9.420
Native Title (South Australia) Act 1994: 9.420 Pitjantjatjara Land Rights Act 1981: 9.420
QUEENSLAND
Aborigines Act 1971: 9.420 Aborigines and Torres Strait Islanders (Land Holding) Act 1985: 9.420 Building Units and Group Titles Act 1980: 9.470 Civil Liability Act 2003: 8.160
Real Property Act 1886: 9.460 Sale s s s s s
of Goods Act 1895: 9.650, 21.600 18: 9.690 20: 9.660 21: 9.740 25: 9.780, 9.800 48: 9.660 xlv
Business and the Law
Statues Amendment and Repeal (Australian Consumer Law) Act 2010: 17.190 TASMANIA
s 30: 9.780 s 31: 9.800 s 55: 9.660
Aboriginal Lands Act 1995: 9.420
Instruments Act 1958 s 126: 6.1510
Australian Consumer Law (Tasmania) Act 2010: 17.190
Judicial Proceedings Act 1958: 8.1390
Civil Liability Act 2002: 8.160
Land Titles Validation Act 1994: 9.420
Constitution Act 1855: 1.370
Partnership Act 1958 s 5: 11.60
Conveyancing and Law of Property Act 1884: 9.460 s 36: 6.1510, 9.200, 9.440 Fair Trading Act 1990: 17.130
Property Law Act 1958: 9.460 s 52: 9.440 s 53: 9.200, 9.440 s 134: 9.640
Land Titles Act 1980: 9.460
Subdivision Act 1988: 9.470
Native Title (Tasmania) Act 1993: 9.420
Subordinate Legislation Act 1994: 4.250
Sale s s s s s s
Transfer of Land Act 1958: 9.460
Criminal Code Act 1924: 10.40
of Goods Act 1896: 9.650, 21.600 9: 21.600 23: 9.690 25: 9.660 26: 9.740 30: 9.780, 9.800 53: 9.660
Wrongs Act 1958: 8.160 WESTERN AUSTRALIA
Aboriginal Affairs Planning Authority Act 1972: 9.420 Civil Liability Act 2002: 8.160
Strata Titles Act 1998: 9.470
Criminal Code Act 1913: 10.40
VICTORIA
Fair Trading Act 1987: 17.130
Aboriginal Land (Manatunga Land) Act 1992: 9.420
Fair Trading Act 2010: 17.190
Aboriginal Land (Northcote Land) Act 1989: 9.420
Land Act 1933: 9.420
Aboriginal Lands (Aborigines’ Advancement League) (Wall Street, Northcote) Act 1982: 9.420
Law Reform (Statute of Frauds) Act 1962 s 2: 6.1510
Aboriginal Lands Act 1970: 9.420
Property Act 1969 s 34: 9.200
Aboriginal Lands Act 1991: 9.420 Charter of Human Rights and Responsibilities Act 2006: 1.1160 Crimes Act 1958: 10.40 Fair Trading Act 1999: 17.130, 19.400, 19.410 Pt 2B: 19.380 Fair Trading Amendment (Australian Consumer Law) Act 2010: 17.190 Goods Act 1958: 9.650, 21.600 s 23: 9.690 s 25: 9.660 s 27: 9.740 xlvi
Property Law Act 1969: 9.460 s 11: 6.2530 s 20: 9.640 s 33: 9.440 s 34: 9.440 Sale s s s s s s
of Goods Act 1895: 9.650, 21.600 4: 21.600 18: 9.690 20: 9.660 21: 9.740 25: 9.780, 9.800 48: 9.660
Strata Titles Act 1985: 9.470
Table of Statutes
Titles Validation Act 1995: 9.420
Companies Act 1862: 11.330
Transfer of Land Act 1893: 9.460
Copyright Act 1956: 6.990
IMPERIAL
Factories Act 1961:
Australian Constitutions Act (No 1) 1842: 1.350 Australian Constitutions Act (No 2) 1850: 1.350, 1.360, 1.370 s 1: 1.360 s 15: 1.360 s 21: 1.360 s 51: 1.360 Australian Courts Act 1828: 1.350, 1.380 Colonial Laws Validity Act 1865: 1.380, 1.410 Commonwealth of Australia Constitution Act 1900: 1.520 s 51(xiv): 7.1140 New South Wales Constitution Act 1855: 1.360, 1.370 Statute of Frauds 1677: 6.1510, 6.1520, 9.440, 21.600
First Charter of Justice (1787): 1.340 Merchant Shipping (Safety and Load Line Conventions) Act 1932: 6.1410 Pharmacy and Poisons Act 1933: 6.260 Protection of Birds Act 1954: 6.230 Restriction of Offensive Weapons Act 1959: 6.250 Sale of Goods Act 1893: 1.100, 3.370, 6.2220, 7.550, 17.10, 21.10, 21.600 Second Charter of Justice (1814): 1.340 Statute of Westminster: 1.410 Third Charter of Justice: 1.340 Third Charter of Justice (1823): 1.340
Statute of Westminster Act 1931: 1.410 Victoria Constitution Act 1855: 1.370
TREATIES AND CONVENTIONS
West Australia Constitution Act 1890: 1.370
Agreement on Trade-Related Aspects of Intellectual Property Rights: 15.310 Art 1.1: 15.310 Art 2.1: 15.310 Art 9.1: 15.310
ENGLAND
Statute of Monopolies: 23.1170 s 6: 23.1170
Australia-United States Fair Trade Agreement: 23.80 FRANCE
Civil Code: 3.370 NEW ZEALAND
Commerce Act 1986 s 3(1A): 22.240 UNITED STATES
Competition Code: 1.1350 Conduct Code Agreement: 1.1350 False Claims Act: 24.130 Sherman Act s 2: 22.550 UNITED KINGDOM
Commonwealth of Australia Constitution Act 1900: 1.280 s 9: 1.520
Berne Convention for the Protection of Literary and Artistic Works (1886): 23.70, 23.130, 23.820 Convention for the Unification of Certain Rules Relating to International Carriage by Air Art 17: 3.260 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958): 15.330 International Covenant on Civil and Political Rights: 14.170 Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks: 23.410 Paris Convention for the Protection of Industrial Property: 15.310, 23.130 Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations: 23.130 xlvii
Business and the Law
United Nations Convention on Contracts for the International Sale of Goods: 15.240 United Nations Convention on the Use of Electronic Communications in International Contracts (2005): 15.240
xlviii
Part 1 THE AUSTRALIAN LEGAL SYSTEM
CHAPTER 1
The Law, the Legal System and the Constitution Andrew Terry THE BUSINESS CONTEXT Australia is a well-developed nation commercially, politically and socially. Those characteristics of an advanced society are held in place by a complex set of rules that make up the law and by a similarly complex system which administers that law. In the daily lives of all of us the law is at work, unceasingly, sometimes surreptitiously but as essential to the functioning of the state as is oxygen to the body. An informed understanding of contemporary business law requires an understanding of the underlying legal system through which laws are made and applied and interpreted and enforced. This chapter aims to provide that understanding.
[1.10]
1.1 THE NATURE AND THE ROLE OF LAW ............................................................................... 5
[1.40]
1.2 THE REQUISITES OF LAW .................................................................................................... 7
[1.90]
[1.160]
[1.250]
[1.50]
Certainty ................................................................................................................... 7
[1.60]
Flexibility ................................................................................................................... 8
[1.70]
Fairness ...................................................................................................................... 8
[1.80]
Accessibility ............................................................................................................... 8
1.3 THE SOURCES OF LAW ........................................................................................................ 9 [1.100]
Customary law ......................................................................................................... 9
[1.120]
Common law .......................................................................................................... 10
[1.130]
Common (case) law ............................................................................................... 11
[1.140]
Legislation ............................................................................................................... 11
[1.150]
Common law and equity ...................................................................................... 12
1.4 LAW, ORDER, JUSTICE AND MORALITY ........................................................................... 12 [1.180]
Law and order ........................................................................................................ 13
[1.200]
Law and morality ................................................................................................... 14
[1.220]
Law and justice ....................................................................................................... 16
1.5 THE NATURE AND ROLE OF A LEGAL SYSTEM ................................................................ 18 3
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[1.290]
[1.420]
[1.520]
[1.670]
[1.780]
4
1.6 THE DEVELOPMENT OF THE AUSTRALIAN LEGAL SYSTEM ........................................... 21 [1.290]
The reception of English law ................................................................................. 21
[1.300]
Terra nullius, Mabo and native title ...................................................................... 21
[1.340]
The constitutional development of the Australian colonies ............................... 23
[1.360]
State constitutions ................................................................................................. 24
[1.380]
Increasing legislative authority ............................................................................. 25
[1.390]
Federation ............................................................................................................... 26
[1.400]
Enactment of the Commonwealth Constitution ................................................ 26
[1.410]
Breaking the colonial ties ...................................................................................... 27
1.7 AN OUTLINE OF THE AUSTRALIAN LEGAL SYSTEM ....................................................... 27 [1.430]
A constitutional monarchy .................................................................................... 27
[1.440]
Federation, the Constitution and the division of powers ................................... 28
[1.450]
The separation of powers ...................................................................................... 28
[1.460]
Responsible government ....................................................................................... 28
[1.480]
The sovereignty of Parliament .............................................................................. 29
[1.490]
The rule of law ........................................................................................................ 29
[1.510]
The Australian legal system ................................................................................... 31
1.8 THE CONSTITUTION ......................................................................................................... 31 [1.520]
The Constitution .................................................................................................... 31
[1.550]
Chapter I: The Parliament ..................................................................................... 34
[1.560]
Chapter II The Executive Government ................................................................. 34
[1.570]
Chapter III The Judicature ..................................................................................... 35
[1.580]
Chapter IV Finance and trade ............................................................................... 35
[1.590]
Chapter V The States ............................................................................................. 35
[1.600]
Chapter VI New States ........................................................................................... 35
[1.610]
Chapter VIII Alteration of the Constitution .......................................................... 36
[1.640]
Implied rights under the Constitution ................................................................. 39
1.9 THE SEPARATION OF POWERS – LEGISLATURE, EXECUTIVE AND JUDICIAL POWERS ..................................................................................................................................... 40 [1.680]
Legislative power .................................................................................................... 41
[1.690]
Executive power ..................................................................................................... 42
[1.700]
Judicial power ......................................................................................................... 42
[1.710]
The separation of powers under the Constitution .............................................. 43
1.10 PARLIAMENTARY SOVEREIGNTY ..................................................................................... 47 [1.780]
The struggle for legislative supremacy ................................................................. 47
[1.810]
The sovereignty of Parliament in Australia .......................................................... 48
[1.820]
Legal sovereignty and manner and form provisions .......................................... 49
Chapter 1 The Law, the Legal System and the Constitution
[1.830] [1.840]
[1.880]
Political sovereignty ............................................................................................... 49
1.11 THE DIVISION OF LEGISLATIVE POWER BETWEEN THE COMMONWEALTH AND THE STATES ........................................................................................................................................ 49 [1.850]
Exclusive powers .................................................................................................... 50
[1.860]
Concurrent powers ................................................................................................ 50
[1.870]
Residual powers ...................................................................................................... 50
1.12 THE LEGISLATIVE COMPETENCE OF THE COMMONWEALTH .................................... 51 [1.890]
The interpretation of the concurrent powers ...................................................... 52
[1.920]
Inconsistency between Federal and State laws ................................................... 54
[1.950]
The expansion of Commonwealth legislative competence through the external affairs power ........................................................................................................... 56
[1.1010] The expansion of Commonwealth legislative competence through the corporations power ................................................................................................ 59 [1.1040] 1.13 FREEDOM OF INTERSTATE TRADE AND COMMERCE .................................................. 61 [1.1090] 1.14 THE CONTINUING DEVELOPMENT OF THE AUSTRALIAN LEGAL SYSTEM ............... 63 [1.1100]
The parliamentary system and the role of the Executive ................................... 64
[1.1110]
The changing role of the High Court ................................................................... 64
[1.1130]
The increasing Australianness of Australian law .................................................. 65
[1.1140]
A Bill of Rights? ....................................................................................................... 65
[1.1200] The move to a republic? ........................................................................................ 68 [1.1210] Expanding Commonwealth jurisdiction .............................................................. 68 [1.1250] The financial strength of the Commonwealth .................................................... 70 [1.1260] The Uniform Tax Scheme ...................................................................................... 71 [1.1300] Tied grants .............................................................................................................. 72 [1.1330] Uniform legislation in a federal system ................................................................ 72 [1.1340] Ceding powers ....................................................................................................... 73 [1.1350] National cooperative schemes .............................................................................. 73
1.1 THE NATURE AND THE ROLE OF LAW [1.10] The initial inquiry in a book of this nature must be as to the essential quality of the law. This is a very big topic, which over the centuries has engaged the attention of the world’s greatest philosophers. It does not do justice to the complexity of this debate but, for our purposes, it is sufficient to describe the law as essentially the system of control through which society operates. The law is a necessary and inevitable requirement of a civilised society. Life as we know would not be possible without a comprehensive body of law that regulates our social lives and our business lives – indeed every aspect of human endeavour. Even primitive societies develop systems of social control which may derive their authority from customs which have developed over time rather than from the commands of the person or body with the acknowledged power to make rules for that community. Today 5
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most of the world’s seven billion inhabitants are subject to much more sophisticated, comprehensive and voluminous laws made by the body to which a country’s legal system enshrined in its constitution is entrusted with that role. The law is the witness and external deposit of our moral life. Its history is the history of the moral development of the race. The practice of it, in spite of popular jests, tends to make good citizens and good men. Justice Oliver Wendell Holmes JR.
A society such as ours has a ferocious appetite for law and our nine legislatures – federal, State and Territory – enact well over 20,000 pages of legislation every year. In the words of Henry Bosch over 30 years ago when he was the Chairman of the body that is now the Australian Securities and Investments Commission (ASIC) – despite the lure of deregulation it necessarily remains a fact of modern life that economic and social growth “depends on a highly complex economy which requires sophisticated rules and enforcement procedures across a wide range of activities”.
The law is like an ice-cream container full of hot, steamy, juicy pies … they just mix it all up together. Sir Joh Bjelke-Petersen, The Bulletin (20 July 1993).
[1.30] A contemporary issue which raises the natural law/positivism dichotomy is the relationship between law and morality, between law and ethics. It is accepted that the law is a systematic set of rules to control conduct within a society and a modern view requires that the rules should reflect the changing values of society, especially in sensitive moral and ethical areas so that as science advances and makes possible new methods of eg healing disabilities, the law should change to allow such processes (see the cloning debate). Justice Windeyer of the High Court of Australia remarked that “the law marches with medicine, but in the rear and limping a little” (Mount Isa Mines Ltd v Pusey [1970] HCA 60 at [3]). The place of the law in a dispute with considerable social, political, economic and emotional consequences is nevertheless clear – in the words of the Full Federal Court in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] FCA 397 the business of the court is “legality”. That case arose out of a hotly contested dispute between Patrick Stevedores, a shipping company seeking extensive reform of waterfront labour practices, and the Maritime Union. The court stated that:
[1.20] In the middle ages there was wide support for a theory of natural law – that the ultimate test of a law’s validity was its conformity with the principles of reason and justice flowing from the law of nature (frequently identified with the law of God). The rules of natural law were thought to bind all earthly authorities. No sovereign, government or church could enact a law in contradiction to those rules. Any attempt to do so was thought to be completely ineffectual. Attacks on the theory of natural law ultimately led to the development of the jurisprudential theory which became known as positivism. In essence, positivism requires that society be obedient to a certain superior: this superior (or sovereign, in our case a parliament) issues commands enforced by sanctions. This is how positive law operates. The two essential elements are that rules of conduct are enforced by the imposition of a sanction, the whole bolstered by the sovereign power of the law maker. Whereas today natural law may be regarded as what the law ought to be, positive law is what the law is. Positive law is contained in the mass of statutes, regulations and case law that together make up our law.
Before dealing with the case as presented, it is perhaps useful for us to say a word on what the case is not about. We do so because many commentators … appear to have laboured under a misconception of the role of a court in a situation like this. As individuals, each member of the Bench, like all sensible Australians, is in favour of an efficient waterfront. Export income is the economic lifeblood of our nation. Most of our exports depart by sea, many through container terminals. It is obviously important to ensure that the 6
Chapter 1 The Law, the Legal System and the Constitution
operation of container terminals is as efficient and economical as reasonably possible. But these are personal views. We each have personal views, not necessarily identical, about how this might best be achieved. But the Court, as a Court, has no view about such matters. The Court does not have the material that would be necessary for it to make a judgment about the efficiency of the Australian waterfront, either in absolute terms or relative to other countries, the causes of such inefficiencies as may exist, or the desirable steps to overcome any perceived problems. This material has not been placed before the Court because the parties have realised, although some commentators have not, that these are not issues for the Court’s determination. The business of the Court is legality. Just as it is not unknown in human affairs for a noble objective to be pursued by ignoble means, so it sometimes happens that desirable ends are pursued by unlawful means. If the point is taken before them, courts have to rule on the legality of the means, whatever view individual judges may have about the desirability of the end. This is one aspect of the rule of law, a societal value that is at the heart of our system of government. It follows that this judgment should be seen only as a judgment about legal issues, not a view about the social, economic and political arguments concerning waterfront management that have dominated the media during the last couple of weeks.
1.2 THE REQUISITES OF LAW [1.40] The legal rules which govern the complex interactions in society and which form the legal system under which we live depend for much of their strength on widespread community acceptance. To gain that acceptance the laws must possess certain qualities. While there may be some debate as to the exact range of those necessary characteristics, it is clear that at least the following are essential: • certainty; • flexibility; • fairness; and • accessibility.
Certainty [1.50] The degree of certainty required, of course, falls short of the absolute. What is necessary is that people, in both their personal and their business lives, should be able to form relationships with others, enter into contracts, and acquire and dispose of property reasonably secure in their knowledge of what they are doing and their understanding of its effects. One of the powerful arguments against the retrospective operation of new laws is that this may make unlawful an act which was lawful at the time it was done, or change the effect of an agreement after it was entered into. Similarly, the argument raised by the business community (in relation to the current trend to confer broad discretions on the courts eg misleading or deceptive conduct or unconscionable conduct) is that justice between individuals is sought at the expense of predictability on which the operation of business relies. The orderly conduct of business is incompatible with unpredictability of the relevant law, but to seek too great an element of certainty is inconsistent with the equally legitimate demand for flexibility to achieve justice in individual cases.
They (the Law Lords) think the great aim is certainty in the law. My aim is justice. Lord Denning, Sunday Times, United Kingdom (1 August 1982).
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Flexibility [1.60] Modern society is complex and continually changing and the law must be able to respond without undue delay to the challenge of change at all levels of society. In the words of the American jurist Benjamin Cardozo, “the law, like the traveller, must be ready for the morrow” (The growth of the law (Yale University Press, 1924) p 19). A change in moral values brings with it a need for a corresponding adjustment of the law, not all are greeted with unanimous approval. Additionally, the increasingly complex demands made by the rapid advance of technology have required flexibility and change in the law. To say that does not override the earlier requirement of certainty. What it does require is a readiness on the part of the law to adapt to changing circumstances, to react to new and unforeseen situations and, where possible, to predict developments and have in place rules and structures to cater for them as they arise. The subject matter may be largely ethical (eg dealing with the rapid advance in medical technology) or it may be largely commercial (eg facilitating new business structures and regulating innovative commercial conduct), but in all cases the law must respond accordingly.
Fairness The law and justice are not synonymous. Rather, the law is to justice what the violin is to music, simply an imperfect vehicle. Like a Stradivarius, it often needs fine-tuning. Granoff LH, Letter to the editor, Time Magazine (1 March 1993).
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[1.70] In a modern democratic society the effectiveness of a law ultimately depends upon its acceptance, or at least toleration, by members of that society. That will not be available where a law is manifestly inequitable, unfair or unreasonable. The classic example is the prohibition laws of the United States in the late 1920s, which prohibited the production, sale and consumption of alcohol. The view in the community that the Prohibition Amendment was unfair and unreasonable led to its widespread violation, the growth of organised crime and, ultimately, its repeal in 1933. The requirement of fairness also encompasses the need for the law to reflect the moral and ethical concerns of society, and for it to endeavour to move with changing societal standards.
Accessibility [1.80] Ignorance of the law does not excuse liability for its breach. Despite the often-heard assertion that everyone is presumed to know the law, the fact is that no one knows all of it. What is important, however, is that all should have access to that knowledge either directly or through the intermediary of a legal adviser. A former chief justice of the High Court of Australia (Sir Garfield Barwick in Watson v Lee [1979] HCA 53 commented that “to bind the citizen by a law, the terms of which he has no means of knowing, would be a mark of tyranny”: at [5]. While the law is increasingly accessible in an age of information technology (see eg http://www.austlii.edu.au) such access does not solve the more complex problem of citizens understanding the massive regulatory regime that governs them.
Chapter 1 The Law, the Legal System and the Constitution
1.3 THE SOURCES OF LAW [1.90] With the increasing sophistication of society, customary law – the unwritten laws established by habitual use by a community – is no longer a source of law of any real significance in Australia and other developed countries. Under Australia’s common law legal system, which is described below, the law was originally developed by judges through their decisions in disputes that came before them. While the role of the judges in developing the common law remains a central characteristic of our legal system it is legislation – the written law made by the legislature, the Federal Parliament in the Australian context – that is the dominant source of law today.
Customary law [1.100] In its most general sense, customary law consists of unwritten law established by the habitual use of a group of people, usually the inhabitants of a particular territory, over a long period of time. English law, which provides the heritage for Australian law, has its genesis in customary law administered in local community courts. It was not until after the Norman Conquest in 1066 that customary law became incorporated as part of the common law, and since that time it has not represented a significant force in that legal system. In a less-developed legal system, customary law has a more important role. With the increasing sophistication of a legal system the influence of custom as a separate source of law is minimal. Customs that are generally applied become incorporated in the common law and, at a later stage of development, may be enshrined in legislation. An example is provided by the Sale of Goods Act 1893 (UK) which provided the model for the sale of goods legislation adopted in each Australian State and Territory. The accepted trade customs and practices of merchants which developed in England in the eighteenth and nineteenth centuries were recognised and applied as the “law merchant” by special mercantile courts prior to being incorporated by the common law courts as part of the common law. The 1893 Act was virtually a codification in statutory form of the common law that had developed from habitual mercantile customs.
When asked by anthropologists what the Indians called America before the white man came, an Indian said simply, Ours. Vine Deloria.
Today the scope for custom to generate new law is very restricted. One area in which it retains an influence is in contract law where the existence of a custom or usage will justify the implication of a term into a contract if there is evidence that the matters relied on are so well known and acquiesced in that everyone making a contract in the situation can reasonably be presumed to have imported a term embodying them into the contract (Con-Stan Industries of Australia Pty v Norwich Winterthur Insurance (Australia) Ltd [1986] HCA 14).
IN CONTEXT Indigenous customary law [1.110] The extent to which the Australian legal system should recognise customary Aboriginal and Torres Strait Islander laws that sit outside the formal legal system raises complex issues. In Walker v New South Wales [1994] HCA 64, 9
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the High Court held that Australian criminal law could not accommodate an alternative body of customary Indigenous criminal law operating alongside it. Mason CJ stated (at [4]-[6], references omitted) that: counsel for the plaintiff … submitted that the question which arose was whether customary Aboriginal criminal law is something which has been recognised by the common law and which continues to this day … That proposition must be rejected. It is a basic principle that all people should stand equal before the law. A construction which results in different criminal sanctions applying to different persons for the same conduct offends that basic principle. The general rule is that an enactment applies to all persons and matters within the territory to which it extends, but not to any other persons and matters. The rule extends not only to all persons ordinarily resident within the country, but also to foreigners temporarily visiting. And just as all persons in the country enjoy the benefits of domestic laws from which they are not expressly excluded, so also must they accept the burdens those laws impose. The presumption applies with added force in the case of the criminal law, which is inherently universal in its operation, and whose aims would otherwise be frustrated … Even if it be assumed that the customary criminal law of Aboriginal people survived British settlement, it was extinguished by the passage of criminal statutes of general application … English criminal law did not, and Australian criminal law does not, accommodate an alternative body of law operating alongside it.
There is wide acceptance that Indigenous laws have been treated with disdain and that their recognition, particularly customary laws dealing with marriage, adoption, inheritance and family relationships, is long overdue. The recommendations of the Australian Law Reform Commission (Recognition of Aboriginal Customary Laws, Report No 31 (1986)) have been given greater impetus by the Mabo decision (see [1.300]) but recognition of Indigenous customary laws is ultimately a matter for legislative action.
Common law [1.120] The term “common law” has three main meanings. For present purposes, and generally throughout this book, the term “common law” is used to describe judge-made law, ie the source of law developed by the courts (also known as case law), as opposed to legislation. Second, reference is made to Australia having a common law legal system, which is often contrasted with a civil law legal system. An integral feature of the common law system is common law in the sense of judge-made law as a source of law, ie court decisions that interpret statutory provisions enacted by Parliament and develop the areas of law over which Parliament has not legislated. Legislation is also a source of law in a common law system. In contrast, civil law systems are codified (set out specifically in Codes), ie authoritatively and comprehensively laid down in a systematic form.
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Chapter 1 The Law, the Legal System and the Constitution
Third, the term “common law” may refer to the judge-made law developed in the King’s courts (or common law courts) as opposed to equity, the judge-made law developed in the equity courts (Chancellor’s courts ie the Courts of Chancery) (see [1.150]).
Common (case) law [1.130] What is the common law in the sense of judge-made law? Many descriptions are offered but for present purposes it is the law that has evolved through judicial decision and practice as distinct from law laid down by statute. In simple terms, the common law is found in the reported decisions of the cases. It consists of case law. When Blackstone says that the common law is “declared”, he advances the traditional theory that judges do not make law, they simply declare the law as it exists. The theory gives comfort to those who believe that laws should only be made by those elected for that purpose. It does not reflect reality. Within the common law systems, judges are regularly confronted with cases that require more than a declaration of a pre-existing precept. They have to make new law. This reality was forcefully expressed by the then Chief Justice of the High Court, Brennan CJ, in O’Toole v Charles David Pty Ltd [1990] HCA 44 at [17]: Nowadays nobody accepts that judges simply declare the law; everybody knows that, within their area of competence and subject to the legislature, judges make law. Within the proper limits, judges seek to make the law an effective instrument of doing justice according to contemporary standards in contemporary conditions. And so the law is changed by judicial decision, especially by decision of the higher appellate courts.
In essence, the doctrine of stare decisis, or binding precedent, requires a court to follow the reason for the decision, the ratio decidendi, of a higher court within the same system of courts. Given the contemporary reality that statutes are numerous and far-reaching much of the work of the courts involves the interpretation and application of legislation. In other areas, legislation may not have been enacted and the development of the law is left to the courts. The decisions of the courts in applying the law to individual cases, whether that law derives from a statute, from a precedent interpreting a statute, or from a precedent in an area not regulated by statute, all form part of the common law. Case law or judge-made law is discussed in more detail in Chapter 2.
Legislation
The common law would not have survived in any of those countries which have adopted it, if it did not reflect the changing norms of the particular society of which it is the basic legal system. Cassell & Co Ltd v Broome [1972] AC 1027 at 1127 per Lord Diplock.
The message is very simple. Whatever the cultural practice, whatever the religious practice, there is no law in Australia above Australian law. PruGoward, NSW Minister for Community Services, The Australian (8 February 2014).
[1.140] Legislation refers to the laws made by the body recognised by the particular legal system as having the supreme power and authority to make laws. Australia, like any complex modern society, requires regulation across a broad range of economic, commercial and social activities and legislation enacted by the Federal and State Parliaments (on whom legislative ownership is conferred by their respective constitutions) is the dominant source of law in Australia today. Under the common law system (indeed under most modern legal systems), supreme law-making authority resides in a legislature. Under the Commonwealth Constitution, legislative power is conferred on the Federal Parliament and the laws it makes are referred to as legislation, or written law, or enacted law, or more specifically, statutes or Acts of Parliament. The Parliaments of the States and Territories also have law-making powers. But not all legislation is statutory law. 11
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A little government and a little luck are necessary in life but only a fool trusts either of them. O’RourkePJ, A parliament of whores (Atlantic Monthly Press, 1991).
Statutes are the products of Parliament. Subsidiary to the statutes is delegated or subordinate legislation: the rules and regulations made pursuant to the statutes with the purpose of setting out more detail as to the scope and application of the statute itself. Many such matters of detail require frequent adjustment to cater for changing situations. The cumbersome process of amending statutes in Parliament would not provide sufficient flexibility and speed. The rule-making powers are therefore delegated to the executive arm of government, the Executive being empowered to create rules and to amend those already in existence. Legislation is discussed in more detail in Chapter 3. Delegated legislation is discussed in more detail in chapter 4.
Common law and equity [1.150] Equity evolved centuries ago to provide recourse in situations where the common law either operated to produce a defective result or failed entirely. Equity grew initially not as a rival to the common law but rather as a supplement in certain instances. The function of equity was to intervene when the normal processes of common law failed. While it might seem that such a system would lead to chaos, the birth and growth of equity was both justified by and controlled by the Monarch’s conscience. It was simply part of the Monarch’s duty to intervene to prevent injustice. From such simple beginnings it developed an influence of critical significance.
1.4 LAW, ORDER, JUSTICE AND MORALITY When the nature of things changes the rules of law must change too. Davies v Powell (1737) Willes 46.
[1.160] Although the principal function of law is to ensure order in an increasingly complex society, it must at the same time respect and help shape the morality of that society and reflect that society’s notions of “justice”. Whatever justice is – and this is a much debated topic – it is not the same as the law. For our purposes we can regard justice as “fair play” and this is an admirable aspiration for any law. But it must be remembered that under our legal system the law is what it actually is and not what it should be to accord with underlying notions of justice. No court has the power to strike down a law because it is “unjust” or does not accord with community standards or does not represent fair play. Similarly with morality. It is obviously desirable that in our society laws reflect underlying concepts of justice and morality but these are abstract concepts which, in a pluralistic society, will have shades of meaning. The fact that our politicians in Australia have to face the electorate every three years (Federal Parliament) or four years (State Parliaments) mean that our laws will generally accord with acceptable community standards of justice and morality. A legal system does not operate in a vacuum. It exists to serve its society, and in order to fulfil this role it requires the respect and cooperation of the members of that society. In the words of Lyndon B Johnson, when he was President of the United States, “Respect for law is the condition upon which our whole social order depends”. That necessary respect and cooperation will be given more readily when the law reflects contemporary societal values. In a complex multicultural nation such as Australia, the challenges have no easy solutions. Australia’s people are multi-religious or non-religious and reflect diverse cultural
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Chapter 1 The Law, the Legal System and the Constitution
backgrounds. For this reason, it is not possible to have simple resort to those rules adopted by one religious or value system, be it Christian or otherwise, in the quest for expression of ethical and moral standards of conduct. What is now required of our law, in its ethical content, is that it should reflect and enforce the broad ethical principles of the diverse society. The appropriate response to these challenges falls both to the Parliaments and the courts.
IN CONTEXT Law and community values [1.170] In 2000, proceedings were instituted by the South Sydney Rugby League Club (Souths) claiming it had been improperly excluded from the National Rugby League. Justice Finn observed that the real matter of contention was whether commercial interests should be permitted to override something valued in the community. Souths’ view (South Sydney District Rugby League Football Club Ltd v News Ltd (2000) 177 ALR 611 at [564]) was that: in our view Rugby League is an icon to be preserved for the people who love and support it, not a product to be carved up to the media for their own financial gratification.
Finn J said (at [564]) that: It usually is only fortuitous that some legal principle can be found that could provide such preservation as is sought … I have not been able to arrive at the conclusion in the present proceeding that such a principle is available to Souths. This is not one of the fortuitous cases.
The High Court upheld the decision of Finn J (News Ltd v South Sydney District Rugby League Football Club [2003] HCA 45) but Souths nevertheless remain in the competition because of a change of heart by the NRL driven largely by the massive public outpouring of support for the Rabbitohs. To the uninitiated this may explain the delight of many – perhaps with the exception of Bulldogs supporters – when Souths won the 2014 Premiership.
Law and order
Laws are generally found to be nets of such a texture, as the little creep through, the great break through, and the middle-sized are alone entangled in. William Shenstone.
[1.180] One of the primary functions of the state, through the legal system, is the preservation of order within the community. It may be said that in a perfect world the force of a legal system would be unnecessary. When, however, our society is less than perfect, some compulsion is necessary. It is largely for that reason that the restraints imposed by law are tolerated, it being accepted that the alternative is chaos and damage to the legitimate interests of everyone. Order is necessary at all levels of social interaction – from laws governing road use to those regulating affairs of state. It is often said that law is currently failing in its stated aim of preserving order but this opinion is of course coloured by different perceptions of what order entails.
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“NAKED RAMBLER” STEPHEN GOUGH MAKES UK LEGAL HISTORY BY FACING COURT IN THE NUDE [1.190] London: He wears boots, a hat, a backpack, and not much else, and he’s singlehandedly making the law an ass. The UK’s so-called “Naked Rambler”, Stephen Gough, suffered another loss on Tuesday, when despite (or perhaps because of) a history-making nude court appearance, he lost his appeal. But legal experts are calling for an end to what one called the “legal daftness” of the pursuit of this 56 year-old ex-Royal Marine, whose only crime is persistent nudity. On Tuesday Gough appeared in the Court of Appeal, naked, via prison video link from Winchester Prison, where he is serving a two and a half year sentence for breach of a court order. The sentence, imposed in 2014, was just the latest in a string of convictions and prison terms for Gough, who has spent eight years behind bars thanks to his unshakeable conviction that he has the right to wander England in the buff. Despite often freezing temperatures he sticks to his chosen outfit of socks, boots, hat and rucksack, saying it was “one step in the whole process of making people aware about our bodies because we are so paranoid about them”.
Because public nudity is not a crime, authorities instead imposed an Anti-Social Behaviour Order, or “Asbo”, making it unlawful for Gough to be nude in public. “The result is that the only person in the country who actually wants to wander naked around the streets of Winchester is also the only man in the country who commits a crime by doing so,” criminal barrister Matthew Scott wrote. “An eccentric who poses no risk to anybody is being made to spend the rest of his life in jail – incidentally at huge public expense – because of a law that has been crafted to criminalise his chosen way of life.” “He has chosen to look ridiculous. The law is making itself look ridiculous.” On Tuesday Mr Scott calculated that it had cost £330,000 ($660,700) to keep Gough in prison, not including legal costs. Another legal blogger, lawyer David Allen Green, said on Twitter on Tuesday that Gough’s case “exposes the illiberal daftness of our legal system”. Miller N, “Eccentric “Naked Rambler” makes legal history”, Sydney Morning Herald (11 June 2015).
Law and morality Never forget that if you leave your law to judges and your religion to bishops you will presently find yourself without either law or religion. George Bernard Shaw.
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[1.200] Natural law theory and its prominence in the history of our legal system highlight the interrelationship between law and morality. The tension in that relationship has become critical in a society increasingly faced with great moral issues in areas such as euthanasia, abortion, artificial reproduction, rights of frozen embryos, information technology, surveillance, etc. The domain of morality spreads over a wide territory. An essential conflict arises between competing viewpoints. In the context of what are known as “victimless crimes” (eg drug-taking and prostitution), there are those who take the view that the law should not intervene in the private lives of citizens any more than is
Chapter 1 The Law, the Legal System and the Constitution
necessary to preserve public order and decency. This approach, in Victorian times, was put simply in the instruction that consenting adults could do what they liked, so long as they didn’t do it in the street and frighten the horses. Given that horses are not a common feature of Australian streets today a more substantial standard is required, but the search for it remains elusive.
IN CONTEXT Law, morality and the necessity defence [1.210] While the status of necessity as a defence to crime is uncertain, the leading case of R v Dudley and Stephens (1884) 14 QBD 273 raises important issues concerning the relationship between law and morality. This celebrated case, widely known as “the case of the Mignonette” concerned the yacht Mignonette that put to sea on 5 May 1884 from Tollesbury in Essex, with a crew of four to sail to Sydney – a four-month voyage. Two months later, during a severe storm in the South Atlantic Ocean, the Mignonette was struck by a massive wave and sank within five minutes. The crew escaped in a flimsy dinghy without fresh water and with only two tins of turnips, and a chronometer and sextant with which they would determine that they were drifting away from shipping lanes towards South America, over 3000 kilometres away. For the first 11 days they subsisted on turnips and a small turtle, and the principal problem was not hunger but thirst. By that time they had begun to drink their own urine, a standard technique in such conditions. Then hunger became a problem. A not-so-standard technique adopted on the twentieth day was to kill the weakest of the four and thereafter for the remaining three to sustain themselves by eating his body. That continued for the next four days, at which time they were rescued by a passing ship. Their subsequent prosecution for murder tempered the joy of their rescue. The facts, agreed upon by the jury, were that without the cannibalism, the others would not have survived, and that the victim was likely to have died before them. Indeed, the jury found that the only way to save life was to sacrifice one as a source of protein for the others. The question then of whether this act amounted to the crime of murder was ultimately referred, on appeal, to the Queen’s Bench Division. That court found the defendants guilty and sentenced them to death. A reprieve followed and the punishment was reduced to six months’ imprisonment. The case of Dudley and Stephens is still cited today as an authority for the defence of necessity to a murder charge. The decision captures not only many of the peculiarities of legal reasoning but also questions of practical living and morality with which the law must deal. These issues are commonly raised, albeit in less dramatic circumstances. The need to achieve a workable resolution to the conflict 15
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between the survival instinct of the individual and social demand for an objective moral standard is not amenable to one solution for all time. It presents itself again and again in different guises. This is reflected, for example, in the contemporary debate over euthanasia and the allocation of scarce medical resources. Is there to be a case-by-case approach (probably trusting in non-observance of the law by the authorities), or is there to be a single objective standard against which all such conduct may be measured? The dangers inherent in either approach are obvious, but inconsistency and the protection of some individuals where others are not so favoured can lead to cynicism and distrust of the legal system. Even the House of Lords can be pragmatic. The trial of Lady Chatterley’s Lover aroused parliamentary comment. In the House of Lords a noble Lord defending the book was asked, would you want your wife to read it? and responded, I would not object to my wife reading it but I don’t know about my game-keeper. Lady Chatterley Letters (1962) 48 American Bar Association Journal 43 at 47.
The Court of Queen’s Bench in Dudley and Stephens somewhat pompously demanded of the defendants the observance of a duty (at 287): not of the preservation, but of the sacrifice of their lives for others, from which in no country, least of all it is to be hoped in England, will men ever shrink, as indeed they have not shrunk … It is enough in a Christian country to remind ourselves of the Great Example whom we profess to follow.
In so far as some general statement as to the availability of necessity as a defence can be made it seems that the defence exists, albeit with some caprice, and in Victoria the Full Supreme Court has recognised its existence (see R v Loughnan [1981] VR 443), provided that the consequence to be averted is serious and that the steps taken to accomplish that aversion are in proportion and appropriate to the gravity of the dangers.
Law and justice [1.220] On the occasion of his swearing in as Chief Justice on 21 April 1995 Brennan CJ spoke of law, justice and society in a provocative and stimulating way: Justice is a social goal, a guarantee of order and peace in the community, a precondition of human development – and it is therefore of concern to every member of our community. For the Christian, justice has a special and central significance: it is a divine imperative. Justice is not brought to the people either by populist clamour or by implementing the will of the powerful. It must be sought by careful reflection upon the interests of the individual and of society as a whole and there must be an especial concern for the powerless, the socially insignificant, the weak minority. The bruised reed may be a drug addict, an unemployed boy or girl, an innocent but discarded spouse. The dimly burning wick may present itself as a refugee, a lonely migrant, an Aboriginal group removed from the traditional land, the children of a broken family, the lonely aged.
[1.230] To the question “What is justice?” there are many answers. They range from that cited by Thomas Aquinas that it is “the perpetual and constant will to render to each one his right” to the view of the practising lawyer in contemporary times that “justice is what happens when the money runs out”. The expectation that the legal system is the complete source of justice is doomed to disappointment for various reasons. Most significantly, the achievement of justice 16
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requires a general approach by all in their dealings with each other – it is not always controlled by to the specific regulation of the statute nor the individual reach of the court in judging a case. Its field of operation is wider, indeed, it is all-encompassing. In essence we must ourselves set standards or meanings for justice in our own community. That such an approach is embraced by the judges is evidenced by the comments of Sir Edward Pearce, then a member of the English Court of Appeal, when he said that “since every case has merits one way or the other there may at any time be a pull to deflect decision from the straight and narrow path of logic in order to secure fair play”: Pearce E, “Our common heritage” (1959) 33 ALJ 103 at 105. In the course of the same address (at p 105) he said that:
In England, justice is open to all – like the Ritz Hotel. Mathew LJ.
When the law is derived from cases, the merits of the individual case are bound to influence the decisions in some degree. It is quite useless to expect an English judge, or, I suspect, an Australian judge, to reach a decision that he feels to be unjust or unworkable if with industry and ingenuity he can produce a result that is fair and workable. His judicial duty compels him to follow decided cases and his judicial conscience compels him to follow the general direction of the riverbed. But within those limits he will slightly deflect, if thereby he can secure justice and fair play. For to the ordinary judge fairness between man and man is of paramount importance. I know that I and most of my colleagues are made miserably unhappy, if we find ourselves compelled to give a judgment that to our minds in the circumstances of the cases produces unfairness and injustice.
Abstract notions of justice are reduced to the search for “fair play”. In a very practical sense that approach is to be applauded. “Fair play” in reality is more comforting than “justice” in theory. It is as unrealistic to expect the law to provide justice at all times as it is to expect pharmacology to cure all ills. The discipline must do its best. Very often the people subjected to it must play their part also, not by a resort to self-help but by introducing into their society the aspects of justice already described.
IN CONTEXT The role of the judges [1.240] On the occasion of this swearing in as a justice of High Court in 1952 ((1951-1952) 85 CLR XIV) Sir Owen Dixon said: It may be that the Court is thought to be excessively legalistic. I should be sorry to think that it is anything else. There is no other safe guide to judicial decisions in great conflicts than a strict and complete legalism.
Faced with glaring injustice, the judges are, it is said, impotent, incapable and sterile. Not so with us in this court. Nothman v Bomet London Borough Council [1978] 1 WLR 220 at 228 per Lord Denning MR.
Four decades later in the occasion of his swearing in as a justice of the High Court Michael Kirby said (“Farewell Speech” (1996) 70 ALJ 271 at 275-276 (footnotes omitted)): Since that April day in 1952 much has changed. The world, our country and its law have changed. Technology has put our species into Space. Scientists have unravelled the double helix of DNA. Information technology has revolutionised our planet and now reaches towards simple artificial intelligence. But the abiding judicial duties of neutrality, integrity and the provision of persuasive reasoning remain as strong today as they were in Sir Owen Dixon’s time. The termination of Privy Council appeals has 17
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finally released Australian law from accountability to the judicial values of England that lasted so long. The slow realisation of this fact, and its implications, in a profession often so resistant to change, presents to this, as to other Australian courts and courts of the region, challenges which are exciting and sometimes difficult. There will be no returning to the social values of 1952 when Sir Owen Dixon spoke, still less those of 1903 when this Court was established. It falls to each generation of Australian lawyers, led by this Court, to fashion new principles of the Constitution, common law, and of equity, which will contribute wisely to the good governance of the Australian people. There is now a greater public understanding of the limited, but still very real, scope for judicial creativity and legal development. Judges are now more candid about this aspect of their function. Without a measure of creativity how else would the common law have survived seven centuries, from feudalism to the spaceage? How else would it have endured in so many lands after the sun had set on the British Empire? In any case, the “good old days” were not always so good in the law of Australia, including the common law. They were not so good if you happened to be an Australian Aboriginal. Or indeed, a woman. Or an Asian confronted by the White Australia policy. Or a homosexual Australian. A conscientious objector. A person with heterodox political views. A homeless person. A publisher of the mildly erotic. A complainant against official oppression. A person with little English involved in a court case. We in Australia have now taken a confident turn in our legal journey towards enlightenment and justice for all under the law. But the lesson of our present enlightenment must be that there are other injustices to which we are still impervious, or indifferent or which we do not yet see clearly. We need to defend our legal institutions and to adhere to time-honoured legal principles. Not blindly. And not mechanically. But with ears, minds and hearts always open to the call of justice. Only the quest for justice gives our profession its claim to nobility.
These two passages obviously reflect very different attitudes to the judicial rule in accommodating changing community values.
1.5 THE NATURE AND ROLE OF A LEGAL SYSTEM [1.250] The totality of the laws that regulate a state – a legally organised community – is known as a legal system which comprises not so much the rules and regulations governing that community but the more basic issues of how those laws are made and applied and administered. Although Australia’s legal system shares traditions, principles, procedures, rules and institutions with other common law countries that derived their legal system from England, such as New Zealand, Canada and the United States, given that the law reflects the general character of the society in which it exists, it is not surprising that over a period of 200 years there is a lack of complete uniformity between the laws of those countries influenced by British settlement. There are obviously important differences between the legal systems of these countries both at the lofty level of constitutional arrangements and at the more basic level of the particular rules and regulations. Nevertheless, those systems have more in common than they have elements of difference. The common law model shares common values, institutions and principles.
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Chapter 1 The Law, the Legal System and the Constitution
[1.260] There are other legal systems throughout the world. Most countries in Western Europe, Latin America, and Asia have adopted the civil law system, which has its heritage in Roman law. Other systems include those based in religion (such as Islamic law) or politics (such as socialist law). [1.270]
Reporter: What do you think of Western civilisation? Mahatma Gandhi: I think it would be a very good idea.
World Legal Systems
Source: University of Ottawa, Faculty of Law JuriGlobe – World Legal Systems Research Group (http://www.juriglobe.ca/eng). [1.280] The basis of the legal system of any state is its constitution, defined by Professor Hood Phillips as “the system of laws, customs and conventions which define the composition and powers of the organs of the state and regulate the relations of the various state organs to one another and to the private citizen”: Constitutional and administrative law (5th ed, 1973, p 5). The constitution of any country must, at the very least, provide for the process of government and the allocation of legislative (law-making), executive (administrative) and judicial powers, to those bodies which are to exercise them. The development of a country’s constitution – its fundamental political and legal framework – is shaped by history. In the United Kingdom it has developed from the experience of centuries of struggle between the Crown, its council of advisers and the courts. The Constitution of the United Kingdom is unusual in that it is unwritten (New Zealand provides one of the few other examples). Instead of one fundamental document enshrining
It has been said that democracy is the worst form of government except all those other forms that have been tried from time to time. Winston Churchill, speech in the House of Commons, November 1947.
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the country’s government, the principles and rules are found in various statutes, judicial decisions and the unwritten usages and practices (the “conventions”) which have evolved over centuries. A legal tradition … is not a set of rules of law about contracts, corporations, and crimes, although such rules will almost always be in some sense a reflection of that tradition. Rather it is a set of deeply rooted, historically conditioned attitudes about the nature of law, about the role of law in the society and the polity, about the proper organisation and operation of a legal system, and about the way law is or should be made, applied, studied, perfected and taught. Merryman JH, The civil law tradition (Stanford University Press,1976).
The United States on the other hand has a written Constitution, which was drawn up in 1787, the preamble to which declares that: We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Similar sentiments are expressed in the preamble to the French Constitution, which declares that: the people freely created the political institutions, based on the “common ideal of liberty, of equality and fraternity” and that France “is a republic, indivisible, secular, democratic and social”.
The US Constitution represented that country’s breaking away from imperial dominance and marked the start of a new era. The sentiments which brought to a head the breaking away from Britain are dramatically expressed in the 1776 Declaration of Independence, the opening words of which state that: When in the Course of Human Events it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the Powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation. We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed. That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles, and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
In Australia the driving force behind the Constitution was the recognition in the late 1890s that several independent colonies locked within the one island would be better served by a form of cooperative federalism. It came into effect on 1 January 1901. Whereas the US Constitution was a product of revolution and was enacted through that emerging nation’s own processes, the Commonwealth Constitution, a product of evolution, was enacted for 20
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Australia by the Imperial (British) Parliament (Commonwealth of Australia Constitution Act 1900 (UK)). The Commonwealth Constitution is discussed in Chapter 3.
1.6 THE DEVELOPMENT OF THE AUSTRALIAN LEGAL SYSTEM The reception of English law [1.290] Unlike many other examples of colonial expansion made by European countries from the seventeenth century onwards, Australia (and in particular New South Wales) was treated as settled by England rather than conquered. The distinction has importance in that a settled colony is regarded as unoccupied (terra nullius) and thereby acquires as its first laws those of the country making a settlement, at least in so far as they are appropriate. On the other hand, a conquered colony will normally retain its existing legal framework, subject to alterations imposed upon it by the conquering or colonising state (Blackstone, Commentaries on the Laws of England (1765)): It hath been held, that if an uninhabited country be discovered and planted by English subjects, all the English laws then in being, which are the birthright of every subject, are immediately there in force. But this must be understood with very many and very great restrictions. Such colonists carry with them only so much of the English law as is applicable to their own situation and the condition of an infant colony.
These principles had been expounded prior to Governor Phillip setting sail to establish the colony of New South Wales in 1788, and were confirmed by the Privy Council in Cooper v Stuart (1889) 14 App Cas 286. The effect of Australia being held to be a settled colony rather than a conquered colony was the application of English Law, the failure to acknowledge the rights and customary laws of the Indigenous people (and indeed their very existence) and the Crown’s ownership of all land in the colony.
Terra nullius, Mabo and native title [1.300] As indicated above, the starting point for the legal system of an English colony depends upon whether the land, being uninhabited, was settled or whether the land, being previously occupied was conquered. The view taken in the case of Australia was that at the time of colonisation, New South Wales (and later, Australia) was uninhabited. As Australia clearly was not uninhabited the legal conclusion was supported by the legal fiction that whatever occupation by Indigenous peoples there may have been did not amount to the land being inhabited in the legal sense. In Mabo v Queensland (No 2) [1992] HCA 23 the High Court made law in rejecting the fiction that inhabited land may be terra nullius. Brennan J expressed the history in this way (at [39]):
[Indigenous law was] a subtle and elaborate system highly adapted to the country in which the people led their lives. Milirrpum v Nabalco Pty Ltd (1971) 17 FLR 141 at 143 per Blackburn J.
As the indigenous inhabitants of a settled colony were regarded as “low in the scale of social organisation”, they and their occupancy of colonial land were ignored in considering the title to land in a settled colony. Ignoring those rights and interests, the Crown’s sovereignty over a territory which had been acquired under the enlarged notion of terra nullius was equated with Crown ownership of the lands therein, because, as Stephen CJ said, there was “no other proprietor of such lands” … The theory that the indigenous inhabitants of a “settled” colony had no proprietary interest in the land thus depended on a discriminatory denigration of 21
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indigenous inhabitants, their social organisation and customs. As the basis of the theory is false in fact and unacceptable in our society, there is a choice of legal principle to be made in the present case. This Court can either apply the existing authorities and proceed to inquire whether the Meriam people are higher “in the scale of social organisation” than the Australian Aborigines whose claims were “utterly disregarded” by the existing authorities or the Court can overrule the existing authorities, discarding the distinction between inhabited colonies that were terra nullius and those which were not.
Six of the seven members of the court agreed that Australian common law recognised a form of native title which, in the cases where it has not been extinguished, reflects the entitlement of the indigenous inhabitants, in accordance with their laws or customs, to their traditional lands.
IN CONTEXT The Mabo decision and judicial activism The acts and events by which that dispossession in legal theory has carried into practical effect constitute the darkest aspect of the history of this nation. Mabo v Queensland (No 2) [1992] HCA 23 at 109 per Gaudron and Deane JJ.
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[1.310] Justice Dyson Heyden with reference to Mabo (No 2) in a speech prior to his appointment to the High Court (Quadrant Magazine (January 2003)) said: It is questionable whether it is the proper role of the courts to introduce radical changes of this kind, which Parliament had not done, particularly in view of their tendency to cause immense strains, not only within the community as a whole, but also within the legislature. It is legislators which create new laws. Judges are appointed to administer the law, not change it or undermine it.
[1.320] In Mabo, the status of the Australian colonies as “settled” was confirmed, the established order of sovereignty was undisturbed, and although a form of native title was recognised, in respect of any particular land it was to survive only until it was extinguished by a valid exercise of sovereign power by or on behalf of the Crown. For those purposes the court required action by the legislature or the Executive that demonstrated a clear intention to nullify the native interests. For example, native title is lost if freehold title has been granted to someone else. Justice Brennan was of the view that the court was not free “to adopt rules that accord with contemporary notions of justice and human rights if their adoption would fracture the skeleton of principle which gives the body of our law its shape and internal consistency”. His Honour recognised the chaos that would result from a declaration that might permit the entire continent to revert to Indigenous ownership. There is now some uncertainty as to what will suffice to extinguish native title. Crown grants of land and alienation by statute are sufficient. Doubt is raised by lesser dealings.
Chapter 1 The Law, the Legal System and the Constitution
IN CONTEXT Native title [1.330] After Mabo recognised native title, many complex issues arose – in particular, whether native title could co-exist with certain non-Indigenous land tenures. To help clear the way, the Federal Government introduced the Native Title Act 1993 (Cth). The Native Title Act established the National Native Title Tribunal to hear and decide applications as to the existence of native title to particular areas of land. It has been said that “the fundamental requirement in an application for determination of native title is that the Applicants satisfy the court, on the balance of probabilities, that the group to which they belong maintains its connection with its country by laws and customs based on the laws and customs that have governed the group since the date the British claimed sovereignty over the country under claim”. Subsequently, in a further decision of the High Court, Wik Peoples v State of Queensland [1996] HCA 40, it was decided that native title rights could co-exist with other land tenures. There was a considerable public reaction to Wik, the Howard government describing it as creating “a crisis in land management”. That government subsequently passed amendments, in 1998, to the Native Title Act that substantially cut back native title rights as protected in the 1993 legislation by validating certain non-Indigenous titles; confirming the extinguishment of certain native titles; winding back the right to negotiate for native title; and widening the uses available to others (eg primary producers) on native-title land. The 1998 amendments were deemed to be in breach of Australia’s international human rights obligations by The United Nations Committee for the Elimination of Racial Discrimination.
The constitutional development of the Australian colonies [1.340] In the early days of the establishment of New South Wales as a penal colony the Governor determined which of the existing English laws should apply in NSW and laid down other laws by proclamation. The first courts of criminal and civil jurisdiction established by the Imperial Parliament at an early date by the First Charter of Justice (1787) were to be supplanted, in so far as civil matters were concerned, by the Second Charter of Justice (1814) which established the Supreme Court and a rudimentary subordinate structure. The Third Charter of Justice (1823) provided a comprehensive court system for both civil and criminal matters and the model for the system currently in use in New South Wales. At the same time steps were being taken to vest the law-making power of the colony in a body more representative than the Governor alone. That process of development was furthered in New South Wales when in 1823 the Imperial Parliament passed an Act (under which the Third Charter of Justice was issued) establishing New South Wales as a full colony and constituting a Legislative Council consisting of residents
“Like reading porridge”. BHP’s John Prescott on the substance of native title legislation, The Australian (29 November 1993).
One of the things for which we must thank the fathers of the Constitution is that they were very short-sighted. Turner HB, Sydney Morning Herald (14 March 1970).
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of the colony appointed by the Crown. A legislative procedure was established. Bills were to be initiated by the Governor and then voted upon by the Council. The Chief Justice of the Supreme Court was required to certify that any proposed law was consistent with the laws of England. As a move towards self-government it was a paltry measure. Some men look at Constitutions with sanctimonious reverence, and deem them like the Ark of the Covenant, too sacred to be touched. They ascribe to the men of the preceding age a wisdom more than human, and suppose what they did to be beyond amendment. Jefferson T, Letter to Samuel Kercheval, 12 July 1816.
[1.350] Some advancement came in 1828 with the passage by the Imperial Parliament of the Australian Courts Act 1828 (Imp), which increased the size of the Legislative Council, the members of which were still to be appointed by the Crown, and which diminished the powers of the Governor. Significantly, the Act provided that all applicable common and statute laws of England in force in 1828 were to have effect in New South Wales. The colony was kept waiting for its first representative government until 1842. In that year the Australian Constitutions Act (No 1) 1842 (Imp) established an enlarged Legislative Council and required that two-thirds of its members must be elected. There were substantial restrictions on those qualified to vote. After a series of intermediate steps the Australian Constitutions Act (No 2) 1850 (Imp) was passed in 1850 with two profound consequences: • it severed the Port Phillip district of New South Wales and created of it the colony of Victoria; and • it empowered the Legislative Councils of the various colonies to amend their constitutions to establish parliaments of two houses. Qualifications for voting were eased.
State constitutions [1.360] In New South Wales in 1853 the Legislative Council passed a Bill for submission to the Imperial Parliament, necessary because its terms exceeded the authority granted by the Act of 1850. The purpose of the Bill was to create two houses of parliament, the upper house (the Legislative Council) consisting of nominees of the Governor, and the lower house (the Legislative Assembly) consisting of representatives elected by a wider electorate. That Bill, upon its passage by the Imperial Parliament, became the New South Wales Constitution Act 1855 (Imp). Section 1 invested that legislature with power to make laws for the peace, welfare and good government of the colony. Section 15 gave power to alter electoral boundaries and the number of members. Section 21, in furtherance of long-standing British practice, provided that taxation and appropriation Bills were to originate in the Assembly, not the Council. The Act also introduced a system of responsible government under which a government no longer enjoying the confidence of Parliament was to resign. To ease the burden s 51 provided for the payment of pensions to ministers retiring in such circumstances. The result was that New South Wales now had a representative and responsible government. [1.370] The New South Wales Constitution Act 1855 had its counterpart in each of the other colonies. All such constitutions were enacted in furtherance of the powers granted by the Australian Constitutions Act (No 2) 1850 (Imp): • In Victoria, the Victoria Constitution Act 1855 (Imp) was passed and ratified by the Imperial Parliament in 1855. It created a legislature of two elected houses: the Legislative Assembly and the Legislative Council. 24
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• Tasmania’s Constitution Act 1855 (Tas) was passed by that colony (then known as Van Diemen’s Land) in 1854 and received the royal assent in 1855. Similarly, it established a Parliament of two elected houses. • The 1855 Constitution Bill of South Australia, which achieved a similar result, was assented to in 1856, becoming the Constitution Act 1856 (SA). • Queensland was separated from New South Wales and established as a colony in 1859. That separation was completed in 1867, the power being held by the Queensland Parliament with its own consolidation of the laws (previously those of New South Wales) relating to the “Constitution of the Colony of Queensland” (the Constitution Act 1867 (Qld)). Having established two houses of Parliament earlier, Queensland abolished its Legislative Council in 1922. • The colony of Western Australia passed its Constitution Bill in 1889, and this was ratified by the Imperial Parliament in 1890 becoming the West Australia Constitution Act 1890 (Imp). Again a Parliament of two elected houses was established.
Increasing legislative authority [1.380] The residual doubts as to which English laws applied after settlement were resolved by the Imperial Parliament’s enactment of the Australian Courts Act 1828 (Imp), which provided that, as far as they could be applied, all laws and statutes in force in England on 25 July 1828 should be applied in New South Wales and Tasmania, the colonies in existence at that time. English laws made after 1828 did not automatically apply in the colonies, although the Imperial Parliament retained the power to legislate for the colonies. A further restriction on the legislative power of the colonies was contained in the Colonial Laws Validity Act 1865 (Imp). That Act, while it confirmed the ability of colonial legislatures to amend their own constitutions, declared that colonial Parliaments had no power to pass laws that were “repugnant” to English laws directly applicable to the colony in question and passed expressly for that purpose. However, English laws, which were part of the received law of the colonies pursuant to the 1828 Act, could be amended or repealed. The restriction on legislative power imposed by the Colonial Laws Validity Act 1865 (Imp) continued, despite the transition of the colonies to statehood on Federation. Although it became increasingly unlikely that the Imperial Parliament would pass laws affecting the States against their wishes, it was not until 1986, when both the Australian and the United Kingdom Parliament passed the Australia Act 1986 (Cth), that any lingering operation of the Colonial Laws Validity Act was terminated and the authority of State Parliaments was confirmed.
Professor La Nauze has provided some analysis of those who constituted the 1891 Convention: There was one clean-shaven member; one wore a moustache only; one a moustache and side whiskers; the rest beards … The clean-shaven features of Edmund Barton … are untypical; the Constitution emerged from the labours of an overwhelming majority of hairy men. CoperM, Encounters with the Australian Constitution (CCH, 1987).
The Australia Act repealed the Colonial Laws Validity Act, with the consequence that the States (as the colonies became known on Federation) could legislate contrary to imperial legislation. The Australia Act also conferred express authority to pass laws with extra-territorial application, provided that a sufficient connection exists between the Territory or the State and the subject matter of the statute. However, the greatest fetter on 25
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the law-making power of State Parliaments is to be found in s 109 of the Commonwealth Constitution, which provides that where a State law is inconsistent with a Commonwealth law, the latter shall prevail (see [1.920]).
Federation [1.390] There was considerable dispute over whether the colonial legislatures of Australia should join to create an Australian government. The debate was contested during the 1880s and 1890s and finally a Bill for a national constitution was submitted to all colonies in 1899, with the exception of Western Australia, which at that stage refused to cooperate. It was initially anticipated the colony of New Zealand form part of the Federation. (Indeed New Zealand is still included in the definition of “State” in s 6 of the covering clauses of the Constitution).
Enactment of the Commonwealth Constitution [1.400] Once the negotiations and preparatory phase were over, the Constitution had to be enacted by the British Parliament. The Bill was passed on 5 July 1900 (during this time Western Australia had agreed to hold a referendum on the Bill, which resulted in its approval on 31 July) and in the following September Queen Victoria proclaimed that the Commonwealth of Australia would be born on 1 January 1901, the first day of the new century. Prior to this Australia of course existed as a country – the world’s largest island and the world’s smallest continent – but not as a nation. In simple terms, the events leading to 1 January 1901 converted six colonies – each independent of the other, each with separate legal systems and legislative and executive structures – into one nation. The shared history of each of the colonies made the mission possible. It involved, of course, an agreement to relinquish certain powers – legislative, administrative and judicial. Without that nothing could have been achieved. What was necessary (in 1895) was commitment to support the whole, even if at the expense of the interests of some of the parts. That commitment has been described in these terms (Irving, “Mapping a Constitution”, Sydney Morning Herald (25 June 1995)): In an extraordinary moment of self-denial and co-operation, and despite reservations held by Queensland and Western Australia, the Premiers all agreed to pass enabling acts in their respective colonies, so that 10 delegates each could be chosen to meet in a convention, draft a Federal Constitution and have it put to the people before submitting it to the Crown.
While the colonies (now States) gave up powers, rights and duties to the new central government, they retained their individual identities and a great deal of legislative authority. In any federation it is necessary that the powers of government be divided between the central or national government and those of the various States. The method was put by AV Dicey (Law of the Constitution (8th ed, Macmillan, 1927)) at its simplest: Whatever concerns the nation as a whole should be placed under the control of the national government. All matters which are not primarily of common interest should remain in the hands of the several States.
In this way the tension naturally arising between the concepts of national union and its constituent but independent States is resolved. The Constitution by which the division of 26
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powers is achieved must possess supreme authority and the appropriate judicial mechanism must be in place to resolve issues as to its interpretation. The division of powers under the Constitution, and the Constitution itself, are examined at [1.840] and [1.520].
Breaking the colonial ties [1.410] The fundamental changes to the Australian legal system introduced by the Commonwealth Constitution did not have the effect of granting full legislative independence to the Commonwealth of Australia. The earlier imperial legislation, the Colonial Laws Validity Act 1865 (Imp), continued to limit the legislative competence of the States and the Commonwealth by prohibiting legislation contrary to the provisions of Imperial legislation applying in Australia. Pressure from former British colonies who sought independence from Britain led to the enactment of the Statute of Westminster Act 1931 (Imp), which provided for the dominion Parliaments to assume full legislative competence. This imperial legislation was adopted by the Commonwealth Parliament in the Statute of Westminster Adoption Act 1942 (Cth). As a result of this legislation, the Colonial Laws Validity Act no longer applied to the Commonwealth of Australia, which could finally legislate contrary to imperial legislation and make laws with extra-territorial effect. The Imperial Parliament could no longer legislate for the Commonwealth of Australia, unless the Commonwealth Parliament expressly requested and consented to such an enactment. An example of this process is the Australia Act 1986 passed by both the Imperial and Commonwealth Parliaments, which finally repealed the Colonial Laws Validity Act and freed the States (who were not affected by the Statute of Westminster) from the restrictions on legislative power imposed by that legislation.
The only sure bulwark of continuing liberty is a government strong enough to protect the interests of the people and a people strong enough and well enough informed to maintain its sovereign control over its government. Roosevelt FD, Fireside chat (14 April 1938).
Today, the legislative competence of the Commonwealth and the States is a matter for domestic law to be allocated under the Commonwealth and State constitutions, and is free from the interference of, or limitations imposed by, the Imperial Parliament.
1.7 AN OUTLINE OF THE AUSTRALIAN LEGAL SYSTEM [1.420] In addition to inheriting British laws, Australia also inherited the UK model of liberal democracy known as the Westminster system incorporating a constitutional monarchy, the separation of powers, responsible or representative government, the sovereignty of Parliament, and the rule of law.
A constitutional monarchy [1.430] Australia is a constitutional monarchy. The official Head of State of the Commonwealth of Australia and the States is the Monarch, the Queen of Australia (as Her Majesty has been titled since the Royal Style and Titles Act 1973 (Cth)). The reference to a constitutional monarchy signifies that the Monarch is Head of State pursuant to underlying constitutional arrangements rather than pursuant to the force of arms which was of course the case in the Middle Ages. The powers of the Monarch, represented by the Governor-General in relation to the Commonwealth, and the Governor in relation to the States, are largely formal today, the constitutional arrangements requiring the Head of State
And indeed it is one of the characteristic marks of English liberty, that our common law depends upon custom; which carries this internal evidence of freedom along with it, that it probably was introduced by the voluntary consent of the people. Blackstone, 1 Comm 74.
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to act on the advice of her or his Ministers (known formally as the Executive Council). The debate as to whether Australia should move from a constitutional monarchy to a republic is referred to below.
Federation, the Constitution and the division of powers [1.440] The constitutional arrangements outlined above are enshrined in so far as the Commonwealth of Australia is concerned, in the Commonwealth Constitution of 1900 which was enacted for Australia by the Imperial (United Kingdom) Parliament to unite the separate Australian colonies in a federation. By definition, a federation involves a division (or distribution) of powers between the constituent elements – in Australia that is between the States and the federal body, the Commonwealth of Australia. One of the most important roles of the Constitution is the division of powers between the Federal and State legislatures. The Constitution confers a limited number of exclusive powers on the Commonwealth (defence, foreign trade and immigration etc) but most of the Commonwealth’s powers, granted under s 51, are concurrent powers. These powers can be exercised by the Commonwealth and the States but, in the event of conflict, the Commonwealth law will prevail (s 109). Powers which are not expressly mentioned in the Constitution, residual powers, remain with the States.
The separation of powers Democracy is the recurrent suspicion that more than half the people are right more than half the time. White EB.
[1.450] Australia also inherited the Westminster system’s concept of the separation of powers, under which the functions of government, viz, (i) legislative (making laws), (ii) executive (administering laws) and (iii) judicial (applying laws to individual cases), are allocated to different institutions. Under the Commonwealth Constitution, legislative power is formally allocated to the Commonwealth Parliament, executive power to the Crown (the Governor-General acting through the Federal Executive Council, effectively the government) and judicial power to the courts. Under the Westminster system the separation of powers is not absolute. In Australia (unlike eg the United States), there is a substantial overlap between the Executive and the legislature. The Prime Minister and the Ministers of the Crown, who in practical terms constitute the Executive, are required by the Constitution to be members of the legislature.
Responsible government [1.460] Australia also inherited the concept of responsible or representative government, a term which is used today in a general sense to denote “a form of government which is responsive to public opinion and answerable to the electorate” (Walker D, Oxford companion to law, (Oxford University Press, 1980)) and an executive government responsible to the legislature. It is a concept of real and enduring significance. It is a concept which is given effect to in the Constitution and has a real and enduring impact in shaping our personal liberties, eg through supporting an implied right of political communication under the Constitution (see [1.520]) and underpinning the rule of law.
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CANBERRA’S ATTACK ON BASIC FREEDOMS [1.470] The fundamental rights of citizenship that Australia inherited from Britain have been wound back by 160 laws enacted by federal governments from both sides of politics. Canberra’s attack on the nation’s fundamental freedoms has been identified in research by the Institute of Public Affairs that suggests Australians now have less protection from the power of the federal government than at the time of federation. The research has found that four of the most fundamental rights of citizenship have been under long-term attack by the commonwealth – the privilege
against self-incrimination, the right to natural justice, the presumption of innocence and the right to silence. The research, which covers federal laws enacted since 1974, found a total of 262 breaches of fundamental rights that have been enacted in 158 separate statutes. The overwhelming majority of those breaches removed the legal rights of employers and those in the business community such as company directors, the research found. Merritt C, “Canberra’s attack on basic freedoms”, The Australian (5 December 2014).
The sovereignty of Parliament [1.480] It is a fundamental principle of the Westminster system that Parliament is the supreme law making body. This principle is enshrined in the Constitution but, given that Australia is a federal system, is not absolute in Australia because of the necessity for legislative power to be all divided between the Commonwealth Parliament and the State Parliaments.
The rule of law [1.490] It will be clear from what has already been said in this chapter that there exists a problem in achieving the correct balance to be struck between personal freedom and legislative power in a modern democracy. Traditionally, the rule of law has been regarded as the means of maintaining that balance. Although it is often cited as the foundation of constitutional democracy it is not easy to define. Professor Walker has suggested in The rule of law (Melbourne University Press, 1988, p 3) that this is because: it manifests itself more as an absence than a presence, rather like those other great negatives, peace and freedom. It imports an attitude of restraint, an absence of arbitrary coercion by governments or by other individual groups.
Unpalatable statute law may not be disregarded or rejected, merely because it is unpalatable. Duport Steels Ltd v Sirs [1980] ICR 161 at 190 per Lord Scarman.
The rule of law is essentially a rule of fair play. All members of society must be equally subject to the ordinary law of the land, and Parliament itself, although largely omnipotent in the Australian context, is subject to the rule to the extent that it should act fairly and not arbitrarily. A particular application of the rule is in the control of public administration. The delegation of near legislative powers to administrative departments 29
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and the creation of quasi-judicial bodies demand active safeguards and plead for a restoration of the influence of the rule of law.
I believe with all my heart that justice cannot be rationed. Justice is owned by the people. Justice must be available to the people and until justice is affordable to all members of the community we do not have a proper or effective judicial system. Marsden JR, President, Law Society of New South Wales.
It “lies at the heart of Australian society … few would disagree with the proposition that ‘the essence of the rule of law is that all authority is subject to, and constrained by law’”: Ruth McColl SC, Australian Bar Association, 13 November 2001.
IN CONTEXT The Rule of Law [1.500] Under the “rule of law” … it is not possible, at least without explicit parliamentary legislation to the contrary, for most important material or personal interests of one citizen to be radically damaged against that citizen’s wishes by another citizen, a corporation, or an arm of government unless some independent person holds that that is right. The rule of law prevents citizens being exposed to the uncontrolled decisions of others in conflict with them. Powerful citizens are not permitted to use self-help against other citizens so far as their arbitrary might permits. Officers of the state are not permitted to imprison or otherwise deal forcibly with citizens or their property merely because they think it is their duty to do so. Mobs are not able to loot or lynch their enemies at will. Indeed, St Augustine thought that without a rule of law states themselves were nothing but organised robber bands. The rule of law operates as a bar to untrammeled discretionary power. It does so by introducing a third factor to temper the exposure of particular citizens to the unrestrained sense of self-interest or partisan duty of other citizens or institutions — an independent arbiter not affected by self-interest or partisan duty, applying a set of principles, rules and procedures having objective existence and operating in paramountcy to any other organ of state and to any other source of power, and possessing a measure of independence from the wrath of disgruntled governments or other groups. These independent arbiters are usually judges. The rule of law preserves for citizens an area of liberty in which they can live their lives free from the raw and direct application of power. It creates a framework within which the creative aspects of human life can thrive. The rule of law dilutes power; it diffuses it; and yet it also makes it more efficient. The rule of law prevents police officers trespassing on and seizing private property or holding citizens without trial or other hearing; yet it permits and facilitates the procurement of evidence in a regular way with a view to the convincing demonstration of criminal guilt in due course. It prevents the employees of banks, for example, applying the strict terms of oppressive mortgages ejecting debtors from their houses at will; but it enables the enforcement of whatever contractual rights there are in due course. The rule of law operates on principles which are known or readily discoverable and hence do not change erratically without notice; which are reasonably clear; which apply uniformly and generally, not in a discriminatory way; which apply prospectively, not retroactively; and which are in force through public trials operating on rational procedural rules before judges who are independent of the state and of all parties. All parties are treated as intrinsically important, however unequal in strength and however lacking in popularity or virtue they may be. The more ineffective a
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state’s laws are against private coercion or anarchy or government power, the less they can be described as representing the rule of law. The purpose of the rule of law is to remove both the reality of injustice and the sense of injustice.
Justice Dyson Heyden, “Judicial Activism and the Death of the Rule of Law” Quadrant Magazine (January 2003).
The Australian legal system [1.510] It should be apparent even from this brief outline that the Australian legal system is a complex animal. It may indeed be regarded as comprising nine separate but related systems – the Commonwealth system, the six State systems and the two Territory systems – each of which is underpinned by a constitution (in the case of the Commonwealth and the States) or empowering legislation providing for self-government under the jurisdiction of the Commonwealth (in the case of the Territories). In many areas where the Commonwealth does not have exclusive legislative jurisdiction there can be nine separate regulatory regimes, although in this, as in other areas where uniformity is desirable, agreement between Commonwealth, State and Territory governments has increasingly delivered a greater degree of uniformity in the disparate schemes. While the federal and State/Territory tiers of Australian democracy are accommodated in the Constitution, Australians third tier of government – local government – is entirely overlooked. Local and municipal authorities have massive powers to pass delegated legislation under powers delegated to them by the legislative arm of government, and to make binding administrative decisions which affect all individuals and businesses – the lack of constitutional recognition may be thought surprising.
1.8 THE CONSTITUTION The Constitution [1.520] The events leading to Federation and the Constitution that enshrined the arrangements for the division of power between the Commonwealth and the States and for the functions of government within the Commonwealth were outlined above. It may be thought surprising today that the Australian Constitution was formally enacted by the Imperial Parliament as s 9 of the Commonwealth of Australia Constitution Act 1900 (UK). This simply reflects the historical fact that Australian Federation and the Constitution developed not from revolution but by evolution. In place of the stirring words of, eg the US and French Constitutions which reflect the circumstances in which the constitutions of those countries were drafted, the preamble to the legislation of the Imperial Parliament enacting the Commonwealth Constitution seem very prosaic: Whereas the people of New South Wales, Victoria, South Australia, Queensland, and Tasmania, humbly relying on the blessing of Almighty God, have agreed to unite in one indissoluble Federal Commonwealth under the Crown of the United Kingdom of Great Britain and Ireland, and under the Constitution hereby established:
What the Commonwealth proposes will be a test of the genuineness of its commitment to cooperative federalism rather than the stupid antagonism and rivalry which has grown up over the post half-century. McGuinness PP, The Australian (27 October 1990).
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And whereas it is expedient to provide for the admission into the Commonwealth of other Australasian Colonies and possessions of the Queen: Be it therefore enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:
[1.530]
The Constitution is divided into eight chapters:
Chapter I Chapter II Chapter III Chapter IV Chapter V Chapter VI Chapter VII Chapter VIII
The Parliament The Executive Government The Judicature Finance and Trade The States New States Miscellaneous Alteration of the Constitution
THE SPIRIT OF MAGNA CARTA COULD SERVE US WELL TODAY [1.540] The English template for individual liberty retains a universal appeal 800 years later On Monday it will be 800 years since a bunch of barons forced King John of England to give his seal to a documentary they had drawn up. Scrawled on sheepskin, in ink made from dust, water and apples, the document contained 63 clauses. Its aim was to prevent a civil war between the irate barons and autocratic John. To avoid his kingdom descending into strife, the barons said, John should accede to their demands, which were as varied as “There should be standard measures of ale, wine and corn throughout the kingdom” to “If a man dies owing money to Jews, his wife (should) pay nothing towards the debt from it”.
tentative nod to their demands could have imagined the impact their document would have – not just in England, but everywhere. It’s no exaggeration to say that Magna Carta, as it came to be known, has shaped the world we live in more than any other single document. It propelled England into the modern era, helped give birth to liberty in America, inspired French revolutionaries, shaped Aussie law, and inspired radicals as far afield as South Africa and China. Not bad for a list of demands made by some pissed-off medieval barons 800 years ago.
Reluctantly, John signed. But the peace was shortlived. Within weeks the document had been annulled by Pope Innocent III, who described it as “shameful” and the barons and king were at war.
The reason the Great Charter had such a planetquaking impact is because, for all its quirkier demands about ale, women and debt, it unleashed a simple but revolutionary idea: that the power of the state must sometimes be shackled in order to allow individual liberty and autonomy to flourish.
None of the men who gathered in that field near Windsor on June 15, 1215 to watch John give a
The idea sings through clauses 38 and 39. “In future no official shall place a man on trial upon his own
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unsupported statement, without producing credible witnesses to the truth of it,” says clause 38. Here, in words that sounds as relevant to us today as they must have done to those barons 800 years ago, we have one of the earliest articulations of the rule of law. Let people be, Magna Carta says, unless there’s a strong case they’ve done something wrong. Clause 39 says: “No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled … except by the lawful judgment of his equals or by the law of the land.” Here again we have a proposal to limit pesky officials’ ability to interfere with people’s rights and property unless they have a very good reason to do so, Magna Carta, with its king-defying – even Goddefying – insistence that the power of the state should be limited in the name of letting “free men” go about their business, let the genie of liberty out of the bottle. And there was no forcing it back in. Subsequent generations built on Magna Carta, arguing that it shouldn’t only be barons who enjoyed protection against nosy, interfering officials – so should everyone. In England in the 17th century, the radical jurist Edward Coke cited Magna Carta in his successful arguments against the right of officials to search people’s homes. He said: “(T)he house of everyone is to him as his Castle and Fortress.” That is, an Englishman’s home is his castle. Coke was saying the falling-down home of a dirt-poor farmer should be treated the same as a baron’s castle: a place where officialdom should not tread. And so was Magna Carta’s promise of liberty spread beyond barons. In America in the 1760s, the revolutionary James Otis denounced the British colonialists’ use of “writs of assistance”, which allowed them to search people’s homes. Such meddling went against Magna Carta, he said. He went so far as to say that when the document was signed in 1215, “American independence was then and there born”. The Fourth Amendment of the US
constitution – which guarantees “The right of the people to be secure in their persons, houses, papers and effects” – made clause 39 of Magna Carta a reality for all. Magna Carta energised the French Revolution. The 1789 Declaration of the Rights of Man and Citizen borrows from the barons when it says no man should be “indicted, arrested, or detained except in cases determined by law”. In South Africa, Nelson Mandela appealed to Magna Carta in his famous 1964 trial, insisting that he and all black South Africans deserved protection against the excessive power of apartheid courts. In Tiananmen Square in 1989, the rowdy students who faced down the Communist Party’s tanks also harked back to that document drawn up by English barons. They pinned Magna Carta to their “Democracy Wall”. On the 800th anniversary of Magna Carta, the thing most people are saying about it is that it pretty much invented the rule of law. That’s true. But it makes Magna Carta’s achievements sound boring, lawyerly. For what Magna Carta ultimately did is point to a potential, and profound, shift in the relationship between the state and the individual. It implied that there’s something bad in an overweening state, and something good in letting individuals be. “The right to be let alone”, as American revolutionaries would put it. “Let alone” – this is Magna Carta’s true revolutionary idea, the one that spoke to generation after generation who longed to get officials off their backs so they could live more freely. The Levellers, the most radical wing in the English Civil War of the 1640s, put it best. Magna Carta, they said, was a “brazen wall and impregnable bulwark” protecting people from power. This is what humans have longed to build, using Magna Carta as a foundation stone: a brazen wall guarding the individual from officialdom. From the Levellers to the Tiananmen revolters, the human, demand has been the same: shackle the state in order that the individual might live a freer happier life. 33
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Today, even as we celebrate Magna Carta’s birthday, this idea is under attack. We’re no longer “let alone”. The bossiness of the state is growing, at the expense of the individual autonomy. Whether it’s banning smoking, restricting boozing, censoring speech, reading our emails, storing our phone data, or telling us how we should eat, parent and behave, the state’s instinct to interfere in our lives is as strong today as it’s ever been.
Waving the Magna Carta won’t ward off these nannies, nudgers and naggers. Instead we need to recover the spirit of Magna Carta, which was expanded on by hordes of humans over 800 years: the spirit of freedom; the spirit of independence; the spirited demand to be let alone to determine our destinies for ourselves. O’Neill B, The Australian (13 June 2015).
The state is breaking down the “impregnable bulwark” between itself and us, now monitoring the minutiae of our lives.
Chapter I: The Parliament No constitution can work too smoothly if politicians play too rough. Kerr J, Sydney Morning Herald (14 September 1985).
[1.550] Chapter I, s 1 of the Constitution vests the legislative power of the Commonwealth in a “Federal Parliament, which shall consist of the Queen, a Senate, and a House of Representatives, and which is hereinafter called ‘The Parliament’, or ‘The Parliament of the Commonwealth’”. Chapter 1 also provides for the establishment of the Houses, the significant procedures, and the powers of the Parliament. These provisions are dealt with in five parts: Part I General; Part II The Senate; Part III The House of Representatives; Part IV Both Houses of the Parliament; and Part V Powers of the Parliament. The powers of the Parliament are discussed at [1.680]. The Parliament itself and the nature of the legislative process are discussed in Chapter 3.
Chapter II The Executive Government [1.560] This Chapter of the Constitution vests the executive power of the Commonwealth in the Queen and provides for it to be “exercisable by the Governor-General as the Queen’s Representative” (s 61) with the advice of the Federal Executive Council (s 62). The command-in-chief of the naval and military forces of the Commonwealth is vested in the Governor-General as the Queen’s Representative (s 68). The Federal Executive Council comprises the Ministers of State for the Commonwealth, who must sit in Parliament and who “hold office during the pleasure of the Governor-General” (s 64). Section 64 creates an exception to the general rule that the Governor-General acts with the advice of the Federal Executive Council. It creates a reserve power of dismissal which may be exercised without the advice of the Executive Council or indeed in a manner contrary to any such advice. The most dramatic example of the Governor-General’s exercise of the reserve power was the dismissal of the Whitlam Labor government by the Governor-General Sir John Kerr in 34
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1975. This was due to the government’s inability to pass supply legislation necessary to fund the administration of the Commonwealth through the Senate. The Governor-General then appointed the Liberal-Country Party coalition, led by Malcolm Fraser, which controlled the Senate and could pass the legislation as caretaker government until a federal election could be held. The reserve power under s 64 conflicts with the long-established constitutional conventions, the accepted practices that are recognised as obligatory events, though not laid down in statute or case law, that the Governor-General acts only on the advice of her or his government. The events of 1975 are still strongly debated by constitutional scholars. The executive power is discussed in more detail in Chapter 4.
Chapter III The Judicature [1.570] Chapter III of the Constitution vests the judicial power of the Commonwealth in a “Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction” (s 71). The chapter also provides for the appointment, tenure and remuneration of the Justices of the High Court (s 72) (such provisions being designed to preserve their independence) and defines the jurisdiction of the High Court (ss 73-8). The High Court and the judicial power are discussed in more detail in Chapter 2.
Chapter IV Finance and trade [1.580] Chapter IV of the Constitution contains some of the most important and contentious provisions of all. Section 90 grants exclusive power to the Federal Parliament over customs and excise duties, while s 92 provides that “trade, commerce and intercourse among the States … shall be absolutely free” and has alone provided thousands of pages of High Court judgments as to its meaning, which provides evidence of remarkable shifts in understanding. There are encouraging signs that the confusion may be ending. The meaning of s 92 is discussed in [1.1040].
Chapter V The States [1.590] Chapter V of the Constitution preserves State constitutions (s 106), State laws (s 108) and the powers of State Parliaments (s 107). Section 109 however provides that “when a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid”. Section 109 is one of the most difficult and most litigated sections of the Constitution (see [1.920]). Section 115 prohibits States from coining money and s 116 prohibits the Commonwealth from legislating with respect to religion, apparently disenfranchising both Caesar and God in succeeding sections.
Chapter VI New States [1.600] Chapter VI of the Constitution provides for new States to be admitted to the Commonwealth (ss 121, 124) and for the territorial limits of a State to be altered (s 123). Chapter VI also provides for the Commonwealth Parliament’s authority over the Territories. Section 122 states that:
In a federal system the absolute independence of the judiciary is the bulwark of the constitution against encroachment whether by the legislature or by the executive. R v Kirby; Ex parte Boilermakers Society of Australia (1957) 95 CLR 529.
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The Parliament may make laws for the government of any Territory surrendered by any State to and accepted by the Commonwealth, or of any Territory placed by the Queen under the authority of and accepted by the Commonwealth, or otherwise acquired by the Commonwealth, and may allow the representation of such Territory in either House of the Parliament to the extent and on the terms which it thinks fit.
Laws establishing responsible governments for both the Northern Territory and the Australian Capital Territory have been passed under this power.
Chapter VIII Alteration of the Constitution [1.610] Chapter VIII contains only one section (s 128) that provides the procedure by which the Constitution may be amended. In order to protect both the Constitution and the less populous States, s 128 requires that any law to alter the Constitution must be passed by both houses of Parliament and then submitted to vote in each State. That vote must be carried by a majority of voters and a majority of the States. Section 128 provides that: Make no mistakes about referendums. Their results are notorious. You couldn’t introduce free beer by referendum. Sir JohnWalsh, Sydney Morning Herald (5 June 1965).
This Constitution shall not be altered except in the following manner: The proposed law for the alteration thereof must be passed by an absolute majority of each House of the Parliament, and not less than two nor more than six months after its passage through both Houses the proposed law shall be submitted in each State and Territory to the electors qualified to vote for the election of members of the House of Representatives. But if either House passes any such proposed law by an absolute majority, and the other House rejects or fails to pass it, or passes it with any amendment to which the first-mentioned House will not agree, and if after an interval of three months the first-mentioned House in the same or the next session again passes the proposed law by an absolute majority with or without any amendment which has been made or agreed to by the other House, and such other House rejects or fails to pass it or passes it with any amendment to which the first-mentioned House will not agree, the Governor-General may submit the proposed law as last proposed by the first-mentioned House, and either with or without any amendments subsequently agreed to by both Houses, to the electors in each State and Territory qualified to vote for the election of the House of Representatives. When a proposed law is submitted to the electors the vote shall be taken in such manner as the Parliament prescribes. But until the qualification of electors of members of the House of Representatives becomes uniform throughout the Commonwealth, only one-half the electors voting for and against the proposed law shall be counted in any State in which adult suffrage prevails. And if in a majority of the States a majority of the electors voting approve the proposed law, and if a majority of all the electors voting also approve the proposed law, it shall be presented to the Governor-General for the Queen’s assent. No alteration diminishing the proportionate representation of any State in either House of the Parliament, or the minimum number of representatives of a State in the House of Representative, or increasing, diminishing, or otherwise altering the limits of the State, or in any manner affecting the provisions of the Constitution in relation thereto, shall become law unless the majority of the electors voting in that State approve the proposed law. In this section, “Territory” means any territory referred to in section one hundred and twenty-two of this Constitution in respect of which there is in force a law allowing its representation in the House of Representatives.
This requirement of a “double majority” allows the States with small populations to have an opportunity to prevent constitutional change that is contrary to their interests being 36
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forced upon them simply because of the greater number of voters in a few States. The provision has had the effect that amendment of the Commonwealth Constitution is a rare event.
UNFINISHED BUSINESS – A REFERENDUM TO CHANGE THE CONSTITUTION TO RECOGNISE INDIGENOUS PEOPLE [1.620] Recognition of Indigenous Australians in constitution will help alleviate disadvantage
Strait Islander peoples. It is as if their history does not matter, and is not part of the nation’s story.
The 1967 referendum that deleted discriminatory references to Aboriginal people from the constitution left unfinished business.
That referendum also failed to deal with clauses in the constitution that permit racial discrimination generally. As the group in the community that has most often been subjected to discrimination under the law – such as in regard to voting rights – Aboriginal people have spoken strongly about their desire to see such clauses removed. Doing this would help modernise the Australian constitution and bring it into line with contemporary values. Indeed, Australia is now the only democratic nation in the world that has a constitution with clauses that still authorise discrimination on the basis of race.
Half a century ago, 30 University of Sydney students boarded a bus and journeyed through rural New South Wales to draw attention to discrimination against Indigenous people. Their landmark action plus the determined advocacy or Aboriginal and Torres Strait Islander campaigners generated overwhelming support for removing discrimination against Aboriginal people from the constitution. At the 1967 referendum more than nine in 10 Australians voted yes, making it the most successful in Australia’s history. Since then, many people – including a long list of Aboriginal and Torres Strait Islanders and successive prime ministers - have agitated for further changes as it became clear that the 1967 referendum had left unfinished business. The 1967 referendum deleted discriminatory references specific to Aboriginal people, but put nothing in their place. Torres Strait Islanders have never been referred to in the constitution. As a result, rather than recognising Indigenous people, the referendum left a silence at the heart of the constitution. The document reflects Australia’s history of British settlement, but fails to mention the much longer occupation of the continent by Aboriginal and Torres
Each of Australia’s major parties have committed to hold a referendum to change the constitution to recognise Aboriginal and Torres Strait Islander peoples. However, leaders have yet to agree on the model for change, and so the words of the change to the constitution remain uncertain. The federal government has yet to announce a timetable for the referendum, though it has indicated that a referendum will be held no later than May 27, 2017. This is the 50th anniversary of the 1967 referendum. Changing the constitution could have an important symbolic and legal effect. However, some people find it hard to see why this change should be given attention when so much else needs to be done to address Aboriginal disadvantage such as is manifest 37
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in poor life expectancy and high unemployment. But addressing disadvantage requires multiple approaches. Recognition and addressing discrimination in the constitution is one of the things that could be done to improve the situation.
2.
Delete two sections that permit Australia’s Parliaments to make laws according to a person’s race: section 25, which recognises that people can be denied the vote in State elections because of their race; and section 51(xxvi), which empowers the Federal Parliament to make laws that discriminate for or against a group on the basis of their race.
3.
Replace the races power in section 51(xxvi) with a new power to enable the Federal Parliament to make laws for Aboriginal and Torres Strait Islander peoples.
4.
Insert a new limitation that prevents the Federal Parliament, and perhaps also the State and Territory Parliaments, from passing laws that discriminate against any person, or perhaps just Indigenous peoples, on the basis of their race.
5.
Require the Federal Parliament to consult with Aboriginal and Torres Strait Islander peoples before passing any law that affects them.
… So constitutional change could have broad, positive effects that extend far beyond the law. For example, the referendum could unite Australians around a sense of their shared history which, for the first time in the constitution, would include the long habitation of the continent by Indigenous peoples. As in other nations, these words in the founding document could be used in schools to educate young people. Constitutional recognition could also have positive health effects. Medical research shows how legal discrimination and exclusion can have a negative impact on mental and physical wellbeing. Indeed, it is hard to underestimate the emotional and other costs of being cast as an outsider in your own land. … Five options for change to the constitution 1.
Insert symbolic words of recognition that do not create any new rights or obligations, but provide national recognition of Aboriginal and Torres Strait Islanders as the first peoples of Australia.
Williams G, Sydney Morning Herald (11 April 2015).
IN CONTEXT Constitutional reform [1.630] The Australian Constitution can only be changed by referendum. There have been 44 referendums held since 1901 and only eight of these have been successful. The most successful referendum in Australia’s history was in 1967 where 90.77% of the nation voted “Yes for Aborigines”. The 1967 referendum amended the Australian Constitution to give the federal parliament the power to make laws in relation to Aboriginal and Torres Strait Islander people and to allow for Aboriginal and Torres Strait Islander people to be included in the census. This is in stark contrast to the 1999 referendum which proposed to alter the Australian Constitution so that Australia became a republic and insert a new 38
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preamble. The result was a no vote for both amendments. On the question of a republic, 54.87% voted against the proposal and on the question of the preamble 60.7% voted no. Australian Human Rights Commission, Constitutional reform: Fact Sheet – Historical Lessons for a Successful Referendum (http://www.humanrights.gov.au/ publications).
Implied rights under the Constitution [1.640] Unlike the US Constitution the Commonwealth Constitution does not incorporate a Bill of Rights guaranteeing basic personal freedoms. In the 1990s the High Court nevertheless recognised an implied right of free speech in the form of freedom of political communication distilled from the concept of representative or responsible government enshrined in the Westminster system and given effect in the Constitution.
AUSTRALIAN CAPITAL TELEVISION PTY LTD V THE COMMONWEALTH [1.650] Case)
Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45 (Political Advertising
Commonwealth legislation required television and radio broadcasters to provide free time for political broadcasts prior to elections. Of the total time available for such broadcasts, 90% was to be made available to political parties already represented in the relevant Parliament in proportion to their share of votes in the last election. While the Commonwealth claimed that this system offered equality of access to all, in fact it denied substantial access to those who had not succeeded at the prior election. The High Court held that the legislation was invalid. The principal argument raised against the legislation was based on the fact that the Constitution provides for representative government. It was argued that it was essential to the effective operations of that system of representative government that there should be a guarantee of freedom of expression in relation to public and political affairs. The High Court adopted that view and said that such a guarantee of freedom of expression was necessarily implied in the Constitution itself where it created that system of representative government. Mason CJ stated that: The Constitution provided for representative government by creating the Parliament … in which legislative power is vested (s 1), the members of each House being elected by popular vote … The very concept of representative government and representative democracy signifies government by the people through their representatives. Translated into constitutional terms, it denotes that the sovereign power which resides in the people is exercised on their behalf by their representatives … The Constitution brought into existence a system of representative government for Australia in which the elected representatives exercise sovereign power on behalf of the Australian people … The point is that the representatives who are members of Parliament and 39
Business and the Law Ministers of State are not only chosen by the people but exercise their legislative and executive powers as representatives of the people. And in the exercise of those powers the representatives of necessity are accountable to the people for what they do and have a responsibility to take account of the views of the people on whose behalf they act.
His Honour held that freedom of communication, at least in relation to public affairs and political discussion, was indispensable to that accountability: Only by exercising that freedom can the citizen communicate his or her views on the wide range of matters that may call for, or are relevant to, political action or decision. Only by exercising that freedom can the citizen criticise government decisions and actions, seek to bring about change, call for action where none has been taken and in this way influence the elected representatives. By these means the elected representatives are equipped to discharge their role so that they may take account of and respond to the will of the people. Communication in the exercise of the freedom is by no means a one-way traffic, for the elected representatives have a responsibility not only to ascertain the views of the electorate but also to explain and account for their decisions and actions in government and to inform the people so that they may make informed judgments on relevant matters. Absent such a freedom of communication, representative government would fail to achieve its purpose, namely, government by the people through their elected representatives; government would cease to be responsive to the needs and wishes of the people and, in that sense, would cease to be truly representative.
[1.660] The implied right of free speech was later reconsidered by the High Court in the context of a defence to defamation in Theophanous v Herald & Weekly Times Ltd [1994] HCA 46 and Lange v Australian Broadcasting Corporation [1997] HCA 25 (Political Free Speech case). In Theophanous the High Court by a 4:3 majority held that defamation was subject to the implied freedom of political communication and that there was a “constitutional defence” where a defamatory publication was a matter of political discussion.
Power corrupts. Absolute power is kind of neat. John Leman, US Secretary of the Navy.
In Lange a former Prime Minister of New Zealand brought a defamation action against the ABC who defended it on the basis of the “Theophanous defence”. The High Court retreated from Theophanous – it upheld the implied constitutional right of political communication but held that it operated as a constraint on legislation and did not confer personal rights to freedom of speech. The High Court nevertheless developed a modified form of qualified privilege to accommodate the principle that: “each member for the Australian community has an interest in disseminating and receiving information, opinions and arguments concerning government and political matters that affect the people of Australia”.
1.9 THE SEPARATION OF POWERS – LEGISLATURE, EXECUTIVE AND JUDICIAL POWERS [1.670] The government of any organised community requires the exercise of legislative, executive and judicial powers. Legislative power is the power to make laws. Executive power is, in general terms, “the authority within the State which administers the law, carries on the business of government and maintains order within and security from without the
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State” (Wynes WA, Legislative, executive and judicial powers in Australia (4th ed, The Law Book Co, 1970) p 364). Judicial power is the power to apply the law to individual cases and to resolve disputes arising under the law. The institutions in which the three branches of government are entrusted are provided for in the Constitution.
Legislative power [1.680]
Section 1 of the Constitution provides that:
The legislative power of the Commonwealth shall be vested in a Federal Parliament, which shall consist of the Queen, a Senate and a House of Representatives, and which is hereinafter called “The Parliament”, or “The Parliament of the Commonwealth”.
The essential feature of the Westminster system is the recognition that Parliament has the absolute right to make or unmake any law without any limitation. This sovereignty or supremacy of Parliament was the outcome of a long and bitter struggle between the Monarch and the Monarch’s council. The council, the ancient predecessor of the elected houses of Parliament, ultimately prevailed when in 1689 the Bill of Rights denied the Monarch any right to legislate independently of the embryonic assembly of representatives. The formal institution of Parliament which developed in the United Kingdom, the Westminster Parliament, provided the model for Australia. Under the Commonwealth Constitution the legislative, or law-making, function of government is vested in the Federal (or Commonwealth) Parliament – a bicameral legislature comprising two elected houses, the Senate or upper house, consisting of members elected from and representing the States, and the House of Representatives or lower house, consisting of members elected to represent constituencies into which the country is divided. The vesting of certain legislative powers in the Commonwealth does not deny the fundamental role assigned to the High Court by the Constitution. It is the right and the task of the High Court to interpret the Constitution, a task which involves determining the proper role of the Parliament within that Constitution. The Crown – represented by the Governor-General – is also part of the legislature and measures passed by both houses of Parliament are not law unless and until they receive the royal assent. Similar constitutional arrangements exist under the constitutions of the States (with the exception of Queensland which has a unicameral legislature, its upper house having been abolished in 1922). In the States, the upper house is called the Legislative Council and the lower house is called the Legislative Assembly, except in Tasmania and South Australia where it is called the House of Assembly. The Crown is represented in each State by a State Governor. The Territories have power to make their own laws but their power derives from Commonwealth legislation and their legislatures are subordinate legislatures to the Commonwealth Parliament. In Australia, the consequences of Federation impose a significant qualification on the sovereignty of Parliament. In unitary systems such as those of the United Kingdom or New Zealand, the central legislature is the supreme law-making authority. Other legislative bodies may be allowed to function but they will always be subordinate to the primary 41
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legislature. In federal systems such as those of Australia, the United States or Canada, legislative powers must be shared between the central body and its constituent parts (in Australia between the Commonwealth and the States). A vital role of the Constitution is the allocation of power between the Commonwealth and the States. Australia adopted the US model whereby the Federal Parliament’s powers are limited by and enumerated in the Constitution with all residuary powers being vested in the State parliaments. The Canadian model differs in that under the Constitution, specified legislative powers are assigned to the provinces and the residue, the unspecified powers, is vested in the Dominion Parliament. The legislative competence of the Parliament is discussed throughout this chapter. The machinery of enacting legislation is discussed in Chapter 3.
Executive power Power granted is seldom neglected. United States v Wunderlich 342 US 98 at 101 (1951).
[1.690]
Section 61 of the Constitution provides that:
The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen’s representative, and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth.
The executive power vested in the Queen is exercisable by the Governor-General on the advice of the Federal Executive Council (s 62) drawn from the Ministers of Crown, that is, those members of the Government (the party controlling the lower house) appointed by the Governor-General on the advice of the Prime Minister (the leader of the government) to administer the Commonwealth Departments of State. Patrick O’Brien has traced the development of executive government (“The fatal flaw: Has the Westminster system produced a form of executive dictatorship?”, Time Magazine (16 September 1991)):
The parliamentary process has changed. To a large extent we’ve got executive government. Parliament is a sham. I just observe the fact that the man on the bus thinks all politicians are bloody idiots. Jacobs S, Business Review Weekly (5 November 1993).
The origins of the Westminster system lie in the long struggles between the British crown and the British parliament over the right to exercise the executive powers of government. The battle for power began in the 17th century when Charles I claimed a divine right to rule and sacked the parliament. But parliament refused to be sacked: there was a revolt, Charles was tried, convicted of treason and executed. There followed decades of turmoil, including a civil war and a republican dictatorship under Cromwell. Over time, a system of absolute monarchy was transformed into a constitutional monarchy and, in the process, the crown, albeit reluctantly, relinquished its powers, to a “sovereign parliament” at Westminster hence the term “Westminster system”. There was a struggle between parliament and the crown for sovereignty; the people had no real part in it … Under the Westminster system … all significant constitutional, political and administrative powers have been transferred from the crown to the executive government.
The role of executive government and its exercise is discussed in greater detail in Chapter 4.
Judicial power [1.700]
Section 71 of the Constitution provides that:
The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates 42
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and in such other courts as it invests with federal jurisdiction. The High Court shall consist of a Chief Justice, and so many other Justices, not less than two, as the Parliament prescribes.
The High Court of Australia was established in 1903 under the Judiciary Act 1903 (Cth) (since replaced by the High Court Act 1979 (Cth)). Since that time a number of other federal courts (eg the Federal Court and the Family Court) have been created, and State courts have been given federal jurisdiction in particular cases (see Chapter 4). On the other hand, legislation which has provided for Commonwealth courts to exercise State jurisdiction has been held invalid by the High Court in Re Wakim; Ex parte McNally (1999) 163 ALR 270. The basis of the decision was that Chapter III of the Constitution fully set out the matters with which a Commonwealth court could deal. It was not possible for States to grant further jurisdiction to Commonwealth courts. The High Court occupies a pre-eminent position in the administration of justice in Australia. It not only is responsible for matters relating to the interpretation of the Constitution (eg the limits of the Commonwealth Parliament’s legislative competence, and demarcation disputes between the Commonwealth and the States) but it is also the highest appellate court for matters of Federal and State law.
Igor Karpec, head of the Soviet Lawyers’ Delegation, stated that he was delighted with the whole series of events … (but) … we do not believe in the separation of powers doctrine, and you will just have to accept this. American Bar Association News Release (17 September 1986).
The separation of powers under the Constitution [1.710] The government of any organised community requires the exercise of legislative, executive and judicial powers. In an autocratic or dictatorial system these powers may be concentrated in one body. In the mid-eighteenth century, Montesquieu developed the theory of the separation of powers, conscious that power corrupts and absolute power corrupts absolutely. Liberty is effectively safeguarded only by the separation of legislative, executive and judicial powers between separate and independent persons or bodies. However, the Westminster system of government (Westminster being the home of the form of parliamentary democracy which Australia inherited, and parts of which are enshrined in the Commonwealth Constitution) has never satisfied Montesquieu’s ideal. The operation of the separation of powers under the Commonwealth Constitution does not achieve the ideal because it fails to bring about the actual result that the three powers are in fact exercised by organs of government separate from and independent of each other. This has not been realised in practice in Australia because the Cabinet and other ministers who comprise the Executive Council in whom executive power resides are members of Parliament, the legislative body. The reality of the Westminster system is that the Executive is drawn from the government and the government, by virtue of its parliamentary majority, controls Parliament, although in recent years it has frequently been found that the Senate is not under the control of the government (majority) in the lower house. A useful contrast arises out of the United States Constitution. In the United States, those who make up the legislature are not those who collectively constitute the executive branch of government, so that in fact there exists a real separation between these two powers. The constitutional intention is that any combination of the powers in the same hand must be prohibited.
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R V KIRBY, EX PARTE THE BOILERMAKERS’ SOCIETY OF AUSTRALIA [1.720] R v Kirby, Ex parte the Boilermakers’ Society of Australia [1956] HCA 10 Facts
The leading case on the judicial power is the Boilermakers’ case, a decision of the High Court which was confirmed by the Privy Council on appeal in Attorney-General of Australia v The Queen; Ex parte the Boilermakers’ Society of Australia (1957) 95 CLR 529. That case concerned the powers of the then existing Commonwealth Court of Conciliation and Arbitration. That court was functioning in two capacities. One was in its judicial capacity to interpret and apply the law and to impose penalties where appropriate. The other was to make awards between the parties to an industrial dispute, with a view to settling that dispute. That was the primary and essential object of the legislation that established the court. Decision
It was found in both the High Court and in the Privy Council that the function of an industrial arbitrator is completely outside the realm of the judicial power and is of a different order. It had earlier been explained by Isaacs and Rich JJ in Waterside Workers’ Federation of Australia v JW Alexander Ltd (1918) 25 CLR 434 at 463-4 that:
The two functions therefore are quite distinct. The arbitral function is ancillary to the legislative function, and provides the factum upon which the law operates to create the right or duty. The judicial function is an entirely separate branch, and first ascertains whether the alleged right or duty exists in law, and, if it binds it, then proceeds if necessary to enforce the law. Not only are they different powers, but they spring from different sources in the Constitution. The arbitral power arises under s 51(xxxv); the judicial power under s 71.
It was therefore concluded that the Commonwealth Court of Conciliation and Arbitration was a non-judicial tribunal exercising arbitral functions. It could not purport to exercise judicial functions; in particular it had no power to impose a fine on union officials for contempt of court. Implications
Following Boilermakers, the old court was split into two bodies, one now known as the Australian Industrial Relations Commission, which makes awards, and one now known as the Industrial Division of the Federal Court, which interprets and enforces the award in the exercise of judicial power. The strict separation of the judicial power was enforced for many years after Boilermakers but recent times have seen the creation of a number of federal bodies, in particular tribunals, which may contravene the Boilermakers principle.
[1.730] The position in Australia is not so clear. Executive and legislative powers are not exercised by strictly independent bodies.
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BRANDY V HUMAN RIGHTS AND EQUAL OPPORTUNITY COMMISSION [1.740]
Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10
In Brandy, the High Court had the opportunity to reconsider the Boilermakers case when the Human Rights and Equal Opportunity Commission (HREOC), a non-judicial tribunal, sought to enforce its findings by having them treated as if they were Federal Court orders. That capacity had been given to the HREOC by its enabling legislation, the Human Rights and Equal Opportunity Commission Act 1986 (Cth). The judgment of the High Court was that the legislation was invalid because it provided for an exercise of judicial power contrary to the Constitution. The case arose out of a complaint by a white man, John Bell, that he had been racially abused by an Aboriginal man, Harry Brandy. The HREOC found the complaint established and ordered Brandy to apologise and pay Bell $2,500. It was the enforcement of that determination which brought the matter before the High Court, with the ironic result that it was an appeal by an Aboriginal person that struck down the enforcement provisions of the Racial Discrimination Act 1975 (Cth). The effect of the Brandy decision may be wide-ranging, and may subject the validity of decisions of many other tribunals to scrutiny, including the Industrial Relations Commission and the Australian Broadcasting Authority. Such Commissions and Authorities may register their determinations in the Federal Court, thus effectively making them orders of that court and therefore enforceable.
KABLE V DIRECTOR OF PUBLIC PROSECUTIONS (NSW) [1.750]
Kable v Director of Public Prosecutions (NSW) [1996] HCA 24
The question of whether the doctrine of separation of powers operates with in State constitutions came before the High Court in the Kable case. That case arose out of the enactment by the NSW Parliament of the Community Protection Act 1994 (NSW) for the purpose of keeping Kable, who had been convicted of the manslaughter of his wife, in jail after the expiration of his sentence, for the safety of the community. The Act conferred on the Supreme Court the power to: order that a specified person be detained in prison for a specified period if it is satisfied, on reasonable grounds: (a)
that the person is more likely than not to commit a serious act of violence; and
(b)
that it is appropriate, for the protection of a particular person or persons or the community generally, that the person be held in custody.
This power was described by Gummow J as allowing an order depriving an individual of liberty on the basis of an opinion. As such it was the antithesis of the judicial process and could not be characterised as a judicial function. The High Court was then faced with the argument that the NSW State Parliament, having constitutional authority to pass laws for the “peace, order and good government” of the State 45
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(Constitution Act 1902 (NSW), s 5), had jurisdiction to grant to its Supreme Court whatever powers it saw fit. The State was not constrained, as the Commonwealth was, by the doctrine of separation of powers. The response of the majority of justices was that the State courts form part of an integrated Australian court hierarchy, the High Court being the final court of appeal in that hierarchy. The State courts thus are part of a judicial system that exercises both Federal and State power, and therefore no State Parliament could assign to the courts of that State, functions that are repugnant to the exercise of federal judicial power. It was observed by Gummow J, at [35], that the Commonwealth Constitution invests State courts with jurisdiction to try offences against federal criminal law and that: the appearance of institutional impartiality in administering that law, and in inflicting punishment for breach of it, is sapped to an impermissible degree by ad hominem legislation of the nature I have discerned in the Act … The Act requires the Supreme Court to inflict punishment without any anterior finding of criminal guilt by application of the law to past events, being the facts as found. Such an activity is said to be repugnant to judicial process.
The High Court therefore concluded that while the separation of powers doctrine does not prevent States investing their courts with non-judicial functions, the law in question in Kable was repugnant to or incompatible with the exercise by those courts of Commonwealth judicial power and was therefore invalid. [1.760] Subsequent to this decision the NSW Parliament passed the Crimes Legislation Amendment (Existing Life Sentences) Act 2001 (NSW) which provided that for prisoners who were sentenced “never to be released”, there must exist “special reasons” for a judge to consider an application for the grant of parole. That legislation has survived a High Court challenge in Baker v The Queen [2004] HCA 45. Gleeson CJ rejected the appellants’ submission that the amended legislative scheme “was a charade” (at [19]). Each one of them believes that the Constitution prohibits that which they think should be prohibited, and permits that which they think should be permitted. Justice Hugo Black, Newsweek (9 December 1968).
To strike down the legislation it was necessary to show that it was impossible to establish special reasons and that no application could succeed. That had not been shown. The relatively slight distinction between the prior Act (struck down in Kable) and the amendment was sufficient for the amendment to succeed (Baber v The Queen [2004] HCA 45). A further issue relating to the independence of the judicial power arises in the context of mandatory sentencing under what legislators specifies the sentences that courts must impose for the commission of certain offences. It has been suggested that those laws are open to constitutional attack based on the (Justice K Santow, Sydney Morning Herald (28 March 2000)): contention that these mandatory sentencing regimes undermine the integrity of the court’s sentencing processes and the independence of the court from the executive and legislature, viewed – and tested – as a matter of objective reality.
WILLIAMS V COMMONWEALTH OF AUSTRALIA [1.770] 46
Williams v Commonwealth of Australia [2012] HCA 23
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The plaintiff, the father of four children attending a state school in Queensland, challenged a funding agreement between the Commonwealth and Scripture Union Queensland for the provision of chaplaincy services at that school. The constitutional challenge was on the basis that the funding agreement was not supported by s 61 of the Constitution. The High Court by majority held that the funding agreement was invalid because it was beyond the executive powers of the Commonwealth. There was no statutory authority for the funding agreement and s 61 did not empower the Commonwealth to make the agreement. The majority held that the Commonwealth Executive power did not include a power to do what the Parliament could, but had not, authorised the Executive to do.
1.10 PARLIAMENTARY SOVEREIGNTY The struggle for legislative supremacy [1.780] By the 17th century English political history was dominated by the struggle for law-making supremacy between the Crown and Parliament. The Monarch claimed the right to legislate by proclamation by virtue of the royal prerogative. The Parliament claimed that the Monarch could legislate only with its consent. The struggle culminated in the “glorious revolution” of 1688 when James II’s claim of a prerogative right to dispense with laws in the face of increasing parliamentary opposition forced him to flee from England. The offer of the vacant Crown of England to William III and Mary II was conditional on their acceptance of the Declaration of Rights which detailed a list of grievances which it sought to correct, and to remove the improper assumption of powers by James II. The Declaration of Rights was enacted as the Bill of Rights – a document which ranks as one of the world’s great charters of rights and liberties. Parliament emerged victorious when the judiciary accepted that the Crown in Parliament was the supreme legislative authority.
An Act of Parliament can do no wrong, though it may do several things that look pretty odd. City of London v Wood (1701) 12 Mod 669 at 687 per Holt CJ.
[1.790] Dicey AV, in An Introduction to the Study of the Law of the Constitution (10th ed, Palgrave Macmillan, 1985) described parliamentary sovereignty in these words: The principle of Parliamentary sovereignty means neither more nor less than this, namely, that Parliament thus defined has under the English constitution the right to make or unmake any law whatever; and, further, that no person or body is recognised by the law of England as having a right to override or set aside the legislation of Parliament.
[1.800] In Australia the sovereignty of Parliament is enshrined in the Constitution which confers legislative authority on the Federal Parliament acting within the scope of the powers conferred. The sovereignty of State Parliaments is achieved in a similar manner under State Constitutions. In New Zealand, which is one of the few countries in the world without a formal written constitution contained in a fundamental document, it was necessary for the Supreme Court to resort to the Bill of Rights of 1688 to vindicate the authority of Parliament. The facts of Fitzgerald v Muldoon [1976] 2 NZLR 615 arose out of the announcement by the then newly elected Prime Minister Robert Muldoon, honouring an election promise that the government’s legislative intention was to disband the Superannuation Board and that compulsory deductions from employees for the statutory superannuation scheme should cease. The Chief Justice, Sir Richard Wild, granted a declaration that this announcement was illegal (at 622-623): 47
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The whole development of parliament was in the struggle to establish first its independence of the Crown and then its final superiority. It is the gradual encroachment of the executive, usurping the role of the Crown, which has undermined first of all the powers, then the responsibility, and finally the reputation, of parliament. This has allowed governments to escape serious scrutiny in Parliament. The executive has simply become too powerful. McGuinness PP, The Australian (April 1992).
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[The plaintiff’s case] asserts a breach of s 1 of the Bill of Rights 1688: That the pretended power of suspending of laws or the execution of laws by regal authority without consent of Parliament is illegal. It is a graphic illustration of the depth of our legal heritage and the strength of our constitutional law that a statute passed by the English Parliament nearly three centuries ago to extirpate the abuses of the Stuart Kings should be available on the other side of the earth to a citizen of this country which was then virtually unknown in Europe and on which no Englishman was to set foot for almost another hundred years. And yet it is not disputed that the Bill of Rights is part of our law. The fact that no modern instance of its application was cited in argument may be due to the fact that it is rarely that a litigant takes up such a cause as the present, or it may be because governments usually follow established constitutional procedures. But it is not a reason for declining to apply the Bill of Rights where it is invoked and a litigant makes out his case. The Act of Parliament in force required that those deductions and contributions must be made, yet here was the Prime Minister announcing that they need not be made. I am bound to hold that in so doing he was purporting to suspend the law without consent of Parliament. Parliament had made the law. Therefore the law could be amended or suspended only by Parliament or with the authority of Parliament.
The sovereignty of Parliament in Australia [1.810] Dicey’s classic formulation of parliamentary sovereignty, that the English Parliament has “the right to make or unmake any law whatever; and, further, that no person or body is recognised by the law of England as having a right to override or set aside the legislation of Parliament”, requires some modification in the United Kingdom of the present day. As a member of the European Community, sovereignty in certain matters has been ceded to the Council and Commission of the European Community. In Australia, Dicey’s proposition obviously requires substantial modification. A federal system requires a division of legislative power between the central Federal Parliament and the State Parliaments. Under the Constitution the Commonwealth Parliament is limited to the legislative powers expressly conferred on it by the Constitution. The High Court has the power to declare legislation unconstitutional and invalid if it is not supported by a head of power granted by the Constitution. But, if legislation is constitutionally valid, the consequences of parliamentary sovereignty follow. No person or body whether judge, prime minister, department head or government can override or amend a law made by Parliament, assuming that the law has been validly enacted under the terms of the Constitution. In Coco v The Queen (1994) 179 CLR 427 this proposition was clearly reaffirmed by the High Court, Mason CJ, Brennan, Gaudron and McHugh JJ stating that even fundamental rights, freedoms and immunities can be reduced by a State Parliament acting within its constitutional powers provided that the intention of Parliament is “clearly manifested by unmistakable and unambiguous language” (at 437). However, the attempted exercise by the NSW Parliament of its legislative power to confer jurisdiction on the NSW Supreme Court (which was incompatible with the role of that court in the Australian judicial system) was struck down by the High Court in Kable v DPP (NSW) [1996] HCA 24 (see 3.5).
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Legal sovereignty and “manner and form” provisions [1.820] Another consequence of parliamentary sovereignty is that Parliament cannot legislate to limit its future sovereignty. If, for example, a Parliament controlled by a government opposed to a particular form of tax passed legislation declaring that such a tax could never be introduced, a later Parliament could repeal that legislation. But although future Parliaments cannot be bound as to the substance of legislation they can be bound as to the manner and form or procedure for passing legislation. The leading authority is A-G (NSW) v Trethowan (1931) 44 CLR 394. The Constitution Act 1902 (NSW) provided that the upper house of the New South Wales Parliament could not be abolished except by a Bill passed by both houses and approved at a referendum. This procedural requirement was itself “entrenched” and could not be amended or repealed except by the same manner and form. Both the High Court (A-G (NSW) v Trethowan (1931) 44 CLR 394) and the Privy Council (A-G (NSW) v Trethowan [1932] AC 526) held that the current Parliament was bound by the manner and form requirement of the referendum imposed by an earlier Parliament. The procedures laid down had to be followed.
Political sovereignty [1.830] The above discussion has addressed legal sovereignty. In practice extra-legal considerations provide an effective restraint on the powers of Parliament. The common law’s tradition of equality, freedom and justice, although undefined, is a powerful factor as are the moral and religious views of those exercising legislative power. The cynic would argue that the most effective restraint on legislative excess is the power of the ballot box. In this respect political sovereignty may be said to reside in the citizenry who can democratically reject an unpopular government through the ballot box. The ultimate sanction of course is revolution, and history abounds with examples of the overthrow of oppressive regimes by the citizens. The French revolution is one example; the declaration of independence from Britain by the United States is another. The preamble to the Constitution of the United States enshrines popular sovereignty: We the People of the United States, in order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common Defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
It is impossible for a Federal Constitution which divides powers between a central government and governments of States or Provinces to satisfy all sections of any community. Complaints of the difficulties of amending the Constitution are often made, and it is argued that the Commonwealth Parliament itself ought to be able to amend the Constitution. If the Commonwealth Parliament had such a power the Constitution would become a unitary as distinct from a Federal Constitution. Sir John Latham, Interpretation of the Constitution, in Else-Mitchell (ed), Essays on the Australian Constitution (2nd ed, The Law Book Company Limited, 1961).
1.11 THE DIVISION OF LEGISLATIVE POWER BETWEEN THE COMMONWEALTH AND THE STATES [1.840] Australia is a federation which requires law making powers to be distributed between the Commonwealth and the States. In Law of the Constitution, (8th ed, Macmillan, 1927), Dicey suggested that: Whatever concerns the nation as a whole should be placed under the control of the national government. All matters which are not primarily of common interest should remain in the hands of the several States.
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Under Australian Federation, while the colonies (now States) gave up powers, rights and duties to the new central government, they nevertheless retained their individual identities and a great deal of legislative authority. There are three categories of legislative powers: exclusive, concurrent and residual.
Exclusive powers Our Constitution is now over 80 years old and stands, almost in its entirety, in its original form. It’s a remarkable thing that during more than 80 years our polity has functioned as smoothly as it has, governed as it is by a constitution formed in the 1890s by middle-aged and elderly men who, most of them, had their views formed in the social climate of the 1860s and 70s, now well over a hundred years ago. This is remarkable in any age; it is truly remarkable in an age which has seen swifter and more radical changes than ever before. Sir Ninian Stephen.
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[1.850] An exclusive power is one exercisable only by the Parliament in which it is vested and no other. In Australia, there are few exclusive powers, the principal of which are vested in the Federal Parliament by s 90 of the Constitution which, in part, provides: On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive.
Other exclusive powers are granted by s 52 (in relation to the seat of government of the Commonwealth and places acquired by it for public purposes, and matters relating to the Executive Government of the Commonwealth) and s 122 (in relation to the Parliament’s power to make laws to the territories). Where the Commonwealth is granted an exclusive power, the States are deprived of any right to legislate in respect of that matter.
Concurrent powers [1.860] Concurrent powers are those exercisable by either Federal or State Parliaments. Within the Australian context, that means they are powers specifically granted to the Commonwealth under s 51 of the Constitution but remaining also within the general law-making capacity of the States. Section 51 confers 39 heads of power in relation to which the Commonwealth can legislate for the “peace, order and good government of the Commonwealth”. Because the s 51 powers are concurrent powers, ie overlapping powers, the States retain their right to legislate in these fields, but in the event of a conflict arising between Federal and State law, s 109 of the Constitution provides that the Federal legislation prevails. Sections 51 and 109 are discussed at [1.920].
Residual powers [1.870] Residual powers embrace all non-exclusive and non-concurrent powers. In the Australian context the residual powers are matters within the legislative competence of the States. These powers are not specifically enumerated in State constitutions – the grant of legislative power under State constitutions is in general terms and authorises all legislation necessary for “good government” – and they are simply those heads of power over which the Commonwealth has no specific exclusive or concurrent powers. The residual powers cover a wide area: education, health, traffic, buildings and construction, local government, crime, contracts and so on. However, the trend since Federation, which has increased significantly over the last few decades, is for the Commonwealth to assume, by cooperative means as well as through generous High Court interpretations of its concurrent powers, greater responsibilities in areas which, at the time of Federation, were assumed to be within the exclusive jurisdiction of the States.
Chapter 1 The Law, the Legal System and the Constitution
1.12 THE LEGISLATIVE COMPETENCE OF THE COMMONWEALTH [1.880] The heads of power granted to the Commonwealth to pass legislation, albeit concurrently with the States, are set out in s 51 of the Constitution. That section commences with the words: The Parliament shall subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to …
and thereafter lists 39 specific heads of power. The effect of the provision is that if subject matter proposed for Commonwealth legislation is not included within the 39 heads, then the Federal Government has no legislative authority to deal with it. The “concurrent powers laid down in s 51 are” … (i)
trade and commerce with other countries, and among the States;
(ii)
taxation; but so as not to discriminate between States or parts of States;
(iii)
bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth;
(iv)
borrowing money on the public credit of the Commonwealth;
(v)
postal, telegraphic, telephonic, and other like services;
(vi)
the naval and military defence of the Commonwealth and of the several States, and the control of the forces to execute and maintain the laws of the Commonwealth;
(vii)
lighthouses, lightships, beacons and buoys;
(viii)
astronomical and meteorological observations;
(ix)
quarantine;
(x)
fisheries in Australian waters beyond territorial limits;
(xi)
census and statistics;
(xii)
currency, coinage, and legal tender;
(xiii)
banking other than State banking also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money;
(xiv)
insurance, other than State insurance; also State insurance extending beyond the limits of the State concerned;
(xv)
weights and measures;
(xvi)
bills of exchange and promissory notes;
(xvii)
bankruptcy and insolvency;
(xviii) copyrights, patents of inventions and designs, and trade marks. (xix)
naturalization and aliens;
(xx)
foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth;
(xxi)
marriage;
(xxii)
divorce and matrimonial causes; and in relation thereto, parental rights, and the custody and guardianship of infants;
(xxiii) invalid and old-age pensions; 51
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(xxiiiA) the provision of maternity allowances, widows’ pensions, child endowment, unemployment, pharmaceutical, sickness and hospital benefits, medical and dental services (but not so as to authorize any form of civil conscription), benefits to students and family allowances; (xxiv) the service and execution throughout the Commonwealth of the civil and criminal process and the judgments of the courts of the States; (xxv)
the recognition throughout the Commonwealth of the laws, the public Acts and records, and the judicial proceedings of the States;
(xxvi) the people of any race for whom it is deemed necessary to make special laws; (xxvii) immigration and emigration; (xxviii) the influx of criminals; (xxix) External affairs; (xxx)
the relations of the Commonwealth with the islands of the Pacific;
(xxxi) the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws; (xxxii) the control of railways with respect to transport for the naval and military purposes of the Commonwealth; (xxxiii) the acquisition, with the consent of a State, of any railways of the State on terms arranged between the Commonwealth and the State; (xxxiv) railway construction and extension in any State with the consent of that State; (xxxv) conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State; (xxxvi) matters in respect of which this Constitution makes provision until the Parliament otherwise provides; (xxxvii) matters referred to the Parliament of the Commonwealth by the Parliament or Parliaments of any State or States, but so that the law shall extend only to States by whose Parliaments the matter is referred, or which afterwards adopt the law; (xxxviii) the exercise within the Commonwealth, at the request or with the concurrence of the Parliaments of all the States directly concerned, of any power which can at the establishment of this constitution be exercised only by the Parliament of the United Kingdom or by the Federal Council of Australasia; (xxxix) matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth. I’m the Parliamentary Draftsman, I compose the country’s laws, and of half the litigation, I’m undoubtedly the cause. JPC, Poetic justice (Stevens & Sons, 1947).
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The interpretation of the concurrent powers [1.890] It would be idle to pretend that lawyers are unanimous in their views of what matters fall within s 51 of the Constitution and the section has been much litigated. The Commonwealth Government is, of course, enthusiastic in its endeavours to expand the scope of the listed powers, and the States, and those adversely affected by Commonwealth legislation, are just as enthusiastic to restrict them. Some significant examples are discussed below.
Chapter 1 The Law, the Legal System and the Constitution
AUSTRALIAN COMMUNIST PARTY V COMMONWEALTH [1.900]
Australian Communist Party v Commonwealth [1951] HCA 5
The High Court has been confronted with many other challenged assumptions of Commonwealth power. A celebrated case arose in 1951 after the Menzies government passed the Communist Party Dissolution Act 1950 (Cth). In essence, the Act declared that the Australian Communist Party was an unlawful association and seized its assets. Other bodies dominated by communists could be declared unlawful and individuals could be prohibited from holding Commonwealth offices and some industrial positions, any such declaration or prohibition being at the instigation of the Executive. The case highlights the problems inherent in the Australian system of legislative power-sharing. The Commonwealth sought to justify the Act by the defence power (s 51(vi)) with a supplementary reliance on the incidental power in s 51(xxxix). This paragraph of s 51, gives power for legislation on matters “incidental to the execution of any power” vested in the Parliament. The High Court, with the sole dissentient being Latham CJ, declared the Act invalid. Fullagar J pointed out that the defence power was given by reference to the purpose or object of the law (to secure the defence of the Commonwealth) and not by reference to some concrete subject matter (eg to provide for railway construction). This characteristic had led to alternative tests of validity; if the law had defence as its direct and immediate object then it would have effect, notwithstanding that there was no current or threatened war at the time of the enactment. If, however, an actual state of war exists or there is some immediate apprehension of war, then the power could extend to (at [12] per Fullagar J): an infinite variety of matters which could not be regarded in the normal conditions of national life as having any connection with defence. Examples … are … the rationing of goods … and the conditions of employment in industry.
In these circumstances the court would acknowledge the force of the incidental power and the width of the executive powers. In an earlier decision (Wishart v Fraser [1941] HCA 8) Dixon J had said: the defence of a country is particularly the concern of the Executive, and in war the exigencies are so many, so varied and so urgent, that width and generality are a characteristic of the powers which it must exercise.
The problem for the Commonwealth was that although in 1950 the Communist Party was certainly not the flavour of the month in Australia, and was the subject of virulent attack elsewhere in the Western world, there was no state of war on which to hang the extended authority of the Executive and the extraction of all that the incidental power might offer. With the exception of the Chief Justice and in so far as one can draw a common thread from the judgments of the other members of the court, the High Court was not about to allow the Parliament and the Executive to usurp its right and authority to define the content of the powers granted to the Commonwealth in s 51. Even Latham CJ had said, at an earlier time (South Australia v The Commonwealth [1942] HCA 14) that: A Parliament of limited powers cannot arrogate a power to itself by attaching a label to a statute
The nub of the problem was put by Fullagar J when he said that the dissolution of the Communist Party considered alone and not as a restraint on activities such as espionage and sabotage themselves: “cannot be supported as an exercise of any power conferred by the Constitution on the Parliament. It is not possible by 53
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means of anything that appears on its face to relate it to any subject matter that is not left by the Constitution exclusively within the legislative powers of the States”. The case is a useful illustration of the constant potential for tension between any State and the Commonwealth, each jealous of its powers, and the judiciary itself when not disposed to relinquish its assigned role. The then Prime Minister, Robert Menzies, not content with the restraints imposed by the High Court, called a referendum for constitutional power to declare the Communist Party illegal. The proposal was narrowly defeated by a people moved by the eloquence of HV Evatt, then leader of the opposition and a former High Court justice himself, who warned of the potential for abuse of civil liberties and the ultimate risk of the creation of a police state.
WILLIAMS V COMMONWEALTH OF AUSTRALIA [1.910]
Williams v Commonwealth of Australia [2014] HCA 23
In an earlier case the plaintiff successfully challenged a Commonwealth government funded program for religious teaching in State schools. The High Court held that it was beyond the executive powers of the Commonwealth as there was no statutory authority for it (Williams v Commonwealth of Australia [2014] HCA 23 (see [1.770])) The government’s response was for the Parliament to pass laws providing legislative support for the school chaplaincy program and other like arrangements and grants. The persistent Mr Williams again challenged the scheme and was again successful. The High Court held that the legislative provisions which supported the challenged chaplaincy arrangements were not valid laws of the Commonwealth as they were not supported by a head of legislative power under the Constitution. In particular, providing chaplaincy services in school was not within the s 51(xxiiiA) power in respect of “benefits to students”. In these circumstances the only way in which school chaplaincy programs could be continued – other than by amendment of the Constitution – is by the federal government providing s 96 grants to State governments other than directly to the chaplaincy service provided to fund the program.
Inconsistency between Federal and State laws The rights of self-government of the States have been fondly supposed to be safeguarded by the Constitution. It left them legally free, but financially bound to the chariot wheels of the Central Government. Alfred Deakin, 1902.
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[1.920] It has been seen that while the Commonwealth has specified legislative powers, the States have general non-specific authority to legislate on virtually any subject. Where the Commonwealth validly exercises its power to legislate pursuant to s 51, the effect of s 109 is that the Commonwealth law shall prevail over any State law inconsistent with it. Section 109 states that: When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.
The power of the States to legislate with respect to most of the matters listed in s 51 continues, but in the event of inconsistency, the Commonwealth law prevails. On occasion the Commonwealth Constitution grants to the Federal Parliament exclusive rights to legislate with respect to a subject. The powers are otherwise known as concurrent.
Chapter 1 The Law, the Legal System and the Constitution
The time that has elapsed since the enactment of the Constitution has permitted the development of criteria to determine whether or not an Act passed by a State, under legislative powers concurrently held with the Commonwealth, is invalid pursuant to s 109 because it is inconsistent with a law of the Commonwealth. The High Court has shown an evolution in its approach to s 109 as it has in other constitutional dilemmas. The original approach was to seek out any direct inconsistency between the two laws; in simple terms, to find that it would not be possible for the subject to comply with both laws. The more substantial and appropriate test of inconsistency is to determine whether or not “a competent legislature expressly or impliedly evidences its intention to cover the whole field, that is a conclusive test of inconsistency where another legislature assumes to enter to any extent upon the same field”: Clyde Engineering Co Ltd v Cowburn [1926] HCA 6 per Isaacs J.
CLYDE ENGINEERING CO LTD V COWBURN [1.930]
Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466; [1926] HCA 6
In Clyde Engineering, a worker claimed an entitlement to a full week’s wages as prescribed in a federal award, although that award provided for a 48-hour week. He had in fact worked a 44-hour week pursuant to a New South Wales statute. The question for the High Court was whether the State Act was inconsistent with the Federal Act. In determining that it was inconsistent, Isaacs J stated at 489 that: The infallible test of whether … there is inconsistency is said for the respondent to be whether the two provisions … could both be obeyed. No doubt the employer could obey both, that is, physically … If an Act of parliament, for instance prescribed 25 lashes for robbery under arms and a later Act prescribed that such an offender should be punished with 20 lashes, it could, of course, with equal truth be said that both provisions could be obeyed and therefore, applying the suggested test, the offender must receive 45 lashes. But surely the vital question would be: Was the second Act on its true construction intended to cover the whole ground and, therefore, to supersede the first? If it was so intended, then the inconsistency would consist in giving any operative effect at all to the first Act, because the second was intended entirely to exclude it … If … a competent legislature expressly or impliedly evidences its intention to cover the whole field, that is a conclusive test of inconsistency where another legislature assumes to enter to any extent upon the same field.
The “covering the field” test has been applied since 1926 by the High Court with some consistency. It was expressed with absolute clarity by Dixon J (later Chief Justice of the High Court) in Ex parte McLean [1930] HCA 12 when he said that: The inconsistency does not lie in the mere coexistence of two laws which are susceptible of simultaneous obedience. It depends upon the intention of the paramount legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be the law governing the particular conduct or matter to which its attention is directed. When a federal statute discloses such an intention, it is inconsistent with it for the law of a State to govern the same conduct or matter. 55
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The simple fact is that whatever test is applied, it must give effect to s 109. The inquiries which might satisfy that section are varied. For the present, the “covering the field” test seems most applicable, but the court has indicated that all relevant matters will enter into its determination.
THE COMMONWEALTH V AUSTRALIA CAPITAL TERRITORY [1.940]
The Commonwealth v Australia Capital Territory [2013] HCA 55
This case concerned the validity of the ACT’s Marriage Equality (Same Sex) Act 2013(ACT) the object of which was to provide marriage equality for same sex couples. Section 51(xxi) of the Constitution gives the federal Parliament power to make laws with respect to “marriage”. The issue for the High Court was to determine whether s 51(xxi) permits the federal Parliament to make a law with respect to same sex marriage because the ACT Act would probably operate concurrently with the Marriage Act 1961 (Cth) if the federal Parliament had no power to make a national law providing for same sex marriage. If the federal Parliament did not have power to make a national law with respect to same sex marriage, the ACT Act would provide for a kind of union which the federal Parliament could not legislate to establish. By contrast, if the federal Parliament can make a national law providing for same sex marriage, and has provided that the only form of marriage shall be between a man and a woman, the two laws cannot operate concurrently. The High Court held that under the Constitution the federal Parliament’s legislative power in relation to “marriage” empowered it to provide for marriage between persons of the same sex. The ACT Act was not capable of operating concurrently with the Marriage Act and was therefore of no effect. That federal Parliament has not made a law permitting same sex marriage did not mean that the ACT legislature could make such a law: So long as the Marriage Act continues to define “marriage” as it now does and to provide, in effect, that only a marriage conforming to that definition may be formed or recognised in Australia, the provisions of the ACT Act providing for marriage under that Act remain inoperative.
The expansion of Commonwealth legislative competence through the “external affairs” power [1.950] Recent decades have seen a swing in favour of the Commonwealth in the allocation of legislative powers between it and the States. The High Court has allowed an evolution of constitutional legal thinking to facilitate this process. The best example is found in the use of the blunt device employed by the Commonwealth to stretch its legislative powers by reliance upon the external affairs power given to it in s 51(xxix). [1.960] The issue was raised squarely in Koowarta v Bjelke-Petersen (1982) 153 CLR 168, in which the Queensland government argued that the Racial Discrimination Act 1975 (Cth) was invalid. The High Court, by a four to three majority, upheld the Act as a law with respect to external affairs. There was in existence an international treaty, to which Australia 56
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was a signatory, proscribing racial discrimination. It followed, for the majority, that a law implementing the goals of that treaty was a law in furtherance of the external affairs power. The potential of the Koowarta decision was not lost on the politicians as is clearly illustrated by the Tasmanian Dams case:
COMMONWEALTH V TASMANIA [1.970]
Commonwealth v Tasmania [1983] HCA 21
In 1982 the Tasmanian Government decided to dam the Gordon River below the Franklin for the purpose of generating electricity. That decision was taken at the time of an impending federal election at which the existing government was defeated and RJL Hawke became Prime Minister with the not inconsiderable assistance of those implacably opposed to the Tasmanian scheme. The new government acted quickly to introduce a law prohibiting the action. That was also challenged before the High Court and again held valid pursuant to the external affairs power. The court indeed was at pains to emphasise that its decision was based solely on that constitutional argument and had no bearing on the issue of substance – whether or not the dam was desirable. This time the peg on which the Commonwealth could hang its environmental hat was the UNESCO Convention for the Protection of the World Cultural and Natural Heritage, which had been ratified by Australia in 1974. The argument that preoccupied the High Court was whether the simple fact of the treaty was sufficient to validate the Commonwealth law or whether, to earn inclusion within the external affairs power, it was necessary that the Act in dispute had some international flavour in its subject matter. The majority view was that it was not necessary and that, in any event, if an international aspect were sought it could be found in the treaty. The minority view was that the subject matter should be of significant international interest. [1.980] The majority decision in the Tasmania Dam case contains within itself the seeds of virtually uninhibited growth of Commonwealth legislative authority, provided that, as a first step, some relevant international agreement is entered into. The minority view introduces the obstacle of subjectivity, the challenge of assigning to the High Court the right to decide whether there is genuinely the substance of a matter of international concern or whether there is simply the convenience of an international treaty. The issue involved is not entirely divorced from that considered in the Communist Party case. The words of Sir John Latham in South Australia v The Commonwealth [1942] HCA 14, that “a Parliament of limited powers cannot arrogate a power to itself by attaching a label to a statute”, remain relevant, whether that label is defence or external affairs.
See the inconveniences of these scrambling reports: they will make us appear to posterity as a parcel of blockheads. Slater v May (1704) 2 Ld Rayn 1071 per Holt CJ.
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IN CONTEXT The external affairs power Australian federalism is very ill indeed – the Constitution has been bent almost double by the High Court (and the two levels of government) in order to make it work, and the whole federal system is breaking down. The classical federal system might have been sensible and pragmatic in 1901 but it is a political liability now. CullenR, Current Affairs Bulletin (May 1991).
[1.990] The dangers to federalism inherent in this approach have been put forcefully by a Victorian QC, SEK Hulme, who has argued against constitutional change simply for the sake of change. “I’m a great admirer of modern stationery but I don’t want a loose-leaf Constitution”, says Hulme. His concern is to protect the integrity of a Constitution good enough to meet the challenges of the day. “I’m not going to have it buggered about by academics on government grants”, he says. On the misuse of the external affairs powers, he says that of the 31 requests federal governments have made for an amendment that would increase Commonwealth power, 29 have been refused by the people in a referendum. To achieve greater power by indirect means, federal governments had signed “something like 1400-1500 treaties”. The Australian people hadn’t been consulted, the treaties weren’t scrutinised by Parliament. “Nobody has read them all.” “We just don’t know what sleepers there are in them”, says Hulme.
Lane B, “For the good of the States”, The Weekend Australian (8-9 April 1995).
A further example of the scope of the external affairs power is provided by Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20.
MINISTER FOR IMMIGRATION AND ETHNIC AFFAIRS V TEOH [1.1000]
Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20
The High Court held by a four to one majority that a United Nations Convention that had been ratified by Australia but had not been incorporated into Australian municipal law nevertheless created a legitimate expectation that administrative decision makers would act in conformity with it. Teoh, a Malaysian citizen in Australia under a temporary entry permit, married an Australian citizen who had been the de facto spouse of his deceased brother. While his application for permanent entry was pending he was convicted and sentenced to six years’ imprisonment, on charges of importing heroin. His application for resident status was rejected primarily because of his criminal record, this being departmental policy, and his deportation was ordered. The Immigration Review Panel confirmed that the seriousness of the crime warranted the deportation, although it noted that the family (seven children, including three of the marriage) faced a “very bleak and difficult future and will be deprived of a possible breadwinner as well as a father and a husband if resident status is not
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granted”. Teoh’s appeal to the High Court was successful, it being held that the departmental proceedings did not take account of the UN Convention, previously ratified by Australia. It was said, by Mason CJ and Deane J (at [26]), that: … the fact that the Convention has not been incorporated into Australian law does not mean that its ratification holds no significance for Australian law.
The expansion of Commonwealth legislative competence through the “corporations” power [1.1010] Section 51(xx) of the Constitution gives the Parliament power with respect to “trading or financial corporations formed within the limits of the Commonwealth”. Acting in furtherance of that power the Commonwealth Parliament in 1989 passed several Acts, including the Corporations Act 1989 (Cth), which purported to cover the whole field of corporate legislation. A High Court challenge ensued (New South Wales v The Commonwealth [1990] HCA 2) in which it was held that the words in s 51(xx) do not extend to cover the actual incorporation (the initial establishment) of companies, but rather only to control their behaviour once formed under other non-Commonwealth legislation. This nevertheless confers substantial power on the Commonwealth and provides the constitutional foundation for a range of significant laws impacting on business including the Competition and Consumer Act 2010 (Cth).
IN CONTEXT The Development of Australia’s competition laws [1.1020] The Constitution does not expressly confer power on the Federal Parliament to regulate restrictive trade practices and the history of Australian trade practices law is largely a history of constitutional interpretation. Australia’s federal statute book is littered with a number of earlier, and largely unsuccessful, attempts to regulate competition prior to the Trade Practices Act 1974 (Cth). The early interpretations of the High Court jealously preserved State rights and it was not until the 1974 Act that the Commonwealth’s legislative authority in this area was confirmed. Within five years of Federation, the Australian Industries Preservation Act 1906 (Cth) was enacted following concern about monopolistic practices in general and the International Harvester Corporation’s threat of dumping to capture the Australian agricultural implement market in particular. The effectiveness of the 1906 Act was nevertheless emasculated by constitutional limitations and judicial conservatism. In Huddart Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 (High Court) and the Coal Vend case (Attorney-General v The Adelaide Steamship Co Ltd (1912) 15 CLR 65 (High Court)), it was held that the “corporations power” did not extend to controlling the trading activities of corporations and that the “interstate trade and commerce power” did not extend to purely intrastate activities. The Coal Vend case further weakened the legislation by a lenient
It is by virtue of the corporations power that proposed Commonwealth legislation to ban the advertising of tobacco in newspapers is to take effect. What is to stop the Commonwealth then proceeding to ban advertising of liquor, and then other commodities? Or to ban political advertising, as it is already proposing to do on television? Or to ban the dissemination of facts and opinions which it on some ground or another feels are harmful? All this is a clear abuse of the corporations power, and quite contrary to the intentions of the framers of the Constitution. McGuinness PP, The Australian (10 February 1990).
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interpretation which, in that case, allowed reasonableness based on distressed economic conditions to be pleaded as a defence to collusive price fixing. The legislation never recovered from these blows and ceased to be used. Pressure for new and effective legislation mounted in the 1960s resulting in the Trade Practices Act 1965 (Cth). This Act was also unsuccessful. Not only did the legislation fail to provide an overall effective antitrust policy, it failed on constitutional grounds. In Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468, the High Court held that the Federal Parliament had failed to use correctly the available sources of federal power and that the Act had no clear constitutional basis. However, the High Court indicated that the Huddart Parker case had been wrongly decided and acknowledged that the corporations power provided a sufficient constitutional base for laws governing the trading activities of corporations. The Restrictive Trade Practices Act 1971 (Cth), which replaced the 1965 Act, was essentially a re-enactment of the legislation constitutionally based on the corporations power of s 51(xx). The acknowledged policy weaknesses of that legislation led to its repeal and replacement in 1974 by the the Trade Practices Act 1974 (Cth) – which is also based on the corporations power and which survived its predictable constitutional challenges. In 2010 the Trade Practices Act was renamed the Competition and Consumer Act 2010 (Cth).
NSW V COMMONWEALTH [1.1030]
NSW v Commonwealth [2006] HCA 52
In 2006 the States challenged the use by the Commonwealth of the corporations power in the Constitution (s 51(xx)) to support its WorkChoices legislation (Workplace Relations Amendment (WorkChoices) Act 2006 (Cth)), a system of extensive industrial relations reform which had the effect, among other things, of making it easier for business to dismiss employees. Callinan J commented (at [619]) that: This is one of the most important cases with respect to the relationship between the Commonwealth and the States to come before the Court in all of the years of its existence. If the legislation is to be upheld the consequences for the future integrity of the federation as a federation, and the existence and powers of the States will be far-reaching. The Act in its present form is well beyond, and in contradiction of what was intended and expressed in the Constitution by the founders.
In a decision which will affect the future of federalism the High Court decided, by majority, that s 51(xx) extended to give the constitutional power to the Federal Government to enact the Workplace Relations Amendment (WorkChoices) Act 2006 (Cth). Callinan and Kirby JJ delivered strong dissenting judgments. 60
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Kirby J stated that “the view now endorsed by the majority effectively discards a century of constitutional doctrine” (at [611]): No one could contest the pervasive role of corporations in almost every activity of a modern society. However, the unnuanced interpretation of the corporations power now embraced by a majority of this Court, released from the previous check stated in the industrial disputes power (and other similar constitutional checks), has the potential greatly to alter the nation’s federal balance. It risks a destabilising intrusion of direct federal lawmaking into areas of legislation which, since federation, have been the subjects of State laws. It does so unchecked by any express provisions in such powers or by any implied features of the Constitution derived from the federal system that lies at its very heart.
Callinan J stated (at [779]) that: There is nothing in the text or the structure of the Constitution to suggest that the Commonwealth’s powers should be enlarged, by successive decisions of this Court, so that the Parliament of each State is progressively reduced until it becomes no more than an impotent debating society … To give the Act the valid operation claimed by the Commonwealth would be to authorise it to trespass upon essential functions of the States … The validation of the legislation would constitute an unacceptable distortion of the federal balance intended by the founders, accepted on many occasions as a relevant and vital reality by Justices of this Court
1.13 FREEDOM OF INTERSTATE TRADE AND COMMERCE [1.1040] A principle fundamental to the establishment and operation of Australian Federation – that interstate trade and commerce should be free – found expression in s 92 of the Constitution. That section simply declares that “trade, commerce, and intercourse among the States … shall be absolutely free”. It was observed above that the meaning of s 92 has been debated frequently before the High Court. It is in fact the most litigated sector of the Constitution. The section has been said by Sir Owen Dixon, a former Chief Justice of the High Court, to be “a provision which apparently must forever be expounded but never explained” (“The Law of the Constitution”, in Jesting Pilate (Law Book Co, 1965) p 52). One clear analysis of the section was delivered by Rich J in James v Cowan [1930] HCA 48, when he said that: The rhetorical affirmation of section 92 that trade, commerce and intercourse between the States shall be absolutely free has a terseness and elevation of style which doubtless benefits the expression of a statement so inspiring But inspiring sentiments are often vague and grandiloquence is sometimes obscure … Some hint at least might have been dropped, some distant allusion made from which the nature of the immunity intended could afterwards have been deduced by those whose lot is to explain the elliptical and expound the unexpressed. As soon as the section was brought down from the lofty clouds whence constitutional precepts are fulminated and came to be applied to the everyday practice of trade and commerce and the sordid intercourse of human affairs, the necessity of knowing and so determining precisely what impediments and hindrances were no longer to obstruct interstate trade obliged this Court to attempt the impossible task of supplying an exclusive and inclusive definition of a conception to be discovered only in the silences of the Constitution.
More than fifty years ago in Australia we issued clean from the press a beautiful Constitution. A choice bit of it was section 92 – and look what a mess we have made of it! I have been musing over the judgments in it, and frankly I want to burn the lot. Sir Robert Garran, First Commonwealth SolicitorGeneral, 1958.
[1.1050] In 1986, the quest for an established meaning was still described as “unsuccessful”. In Miller v TCN Channel Nine Pty Ltd [1986] HCA 60, Deane J noted (at [4]) that: 61
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the simple words of s 92 have, in an unsuccessful search for certainty in the law, been overlaid by formulae which have given rise to many problems while solving almost none. The section was, plainly enough, intended to serve the essential function of reinforcing the economic and social unity of an emerging nation by removing the barriers to commerce, trade and intercourse which the frontiers between the federating colonies had previously represented.
[1.1060] Shortly after this, in Cole v Whitfield, the Tasmanian lobster case, the full High Court adopted a construction of the section which solved many of the problems alluded to by Deane J.
COLE V WHITFIELD [1.1070]
Cole v Whitfield [1988] HCA 18
Whitfield was charged under Tasmanian law with the offence of possessing crayfish below the minimum legal size. The crayfish had come from South Australia, where they were of legal size, leading the defendant to claim that the Tasmanian law breached s 92 of the Constitution. The magistrate acquitted him. On appeal, the High Court confirmed that, although protectionist barriers could not be raised between the States, the section did not obliterate all attempts at regulation of activity that may have an interstate element. The fact that the application of a statute might have a restrictive effect on interstate trade is not of itself sufficient to render it invalid, and Whitfield was subject to the Tasmanian law: A law which has as its real object the prescription of a standard for a product or a service or a norm of commercial conduct will not ordinarily be grounded in protectionism and will not be prohibited by s 92. But if a law, which may be otherwise justified by reference to an object which is not protectionist, discriminates against interstate trade or commerce in pursuit of that object in a way or to an extent which warrants characterisation of the law as protectionist, a court will be justified in concluding that it nonetheless offends s 92.
What would henceforth be forbidden were laws that discriminated against interstate trade and commerce intended to have or having a protectionist effect. State boundaries of course mean little in the e-commerce era. The application of s 92 of the Constitution in this context was first considered in the High Court in the context of an online betting exchange.
BETFAIR PTY LTD V WESTERN AUSTRALIA [1.1080] 62
Betfair Pty Ltd v Western Australia [2008] HCA 11
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Betfair acted as an online intermediary through which racetrack punters placed bets with other racetrack punters. Betfair was licensed in Tasmania to operate a betting exchange under Tasmanian legislation. However Western Australia legislated to prohibit Betfair to operate in that State. The WA legislation was challenged under s 92 of the Constitution and it was held by the High Court, unanimously, to impose a discriminatory and protectionist burden that was not proportionate or appropriate. The joint judgement rejected Western Australia’s argument that its prohibition of Betfair was necessary to safe guard the integrity of the racing industry (at [110], [116]): What is involved here is an attempt at an evidentiary level to measure something of an imponderable. But, allowing for the presence to some degree of a threat of this nature, a method of countering it, which is an alternative to that offered by prohibition of betting exchanges, must be effective but non-discriminatory regulation. That was the legislative choice taken by Tasmania and it cannot be said that that taken by Western Australia is necessary for the protection of the integrity of the racing industry of that State. In other words, the prohibitory State law is not proportionate; it is not appropriate and adapted to the propounded legislative object … The effect of the legislation of Western Australia is to restrict what otherwise is the operation of competition in the stated national market by means dependent upon the geographical reach of its legislative power within and beyond the State borders. This engages s 92 of the Constitution.
1.14 THE CONTINUING DEVELOPMENT OF THE AUSTRALIAN LEGAL SYSTEM [1.1090] Law reform is an ongoing process. The legal environment is continually evolving as the law is developed by both Parliaments and the courts to accommodate the changing demands of the society it serves. Reform of the system itself as opposed to adjustments within the system – macro-reform as opposed to micro-reform – is obviously more fundamental and more difficult. Over the century since Federation there have been significant developments in the meaning and operation of the Constitution. There have been formal changes through amendment (although the legal requirement under s 128 for constitutional change by way of referendum attracting the support of a majority of voters and a majority of States has restricted amendment to only eight of the 44 proposals submitted to the electorate since Federation). Other changes have been through judicial interpretation by the High Court, the arbiter of the meaning of the Constitution. It is not surprising that a Constitution drafted a century ago does not always accommodate the demands and realities of today but, until recently, little serious consideration has been given to this issue. There has been, and will continue to be, wide public debate about the contentious and emotive issues of republicanism, about whether Australia remains a constitutional monarchy or adopts a presidential head of state, and about the flag.
In order to keep our wits about us, as efficiency advocates an attempt of plastic surgery on the Constitution, we need to acquire, in a hurry, familiarity with the document itself. At present it is far too expensive. What this country needs is a 50c Constitution. Devine F, The Australian (November 1990).
The focus of public debate on the continuing evolution of the Australian legal system has been concentrated on the issues of the move to an Australian Republic and the adoption of a Bill of Rights. There are of course a number of other issues of lesser profile but, nevertheless, of great significance to the development of the legal system, some of which are addressed below.
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The parliamentary system and the role of the Executive While on the subject of s 92 of the Constitution, I am reminded of the eminent Victorian Supreme Court Judge, Sir Charles Lowe. He had been asked who knew most about the law, and he said, There are two classes of people who know all about the law. Number one is the university lecturer. From him there is scarcely a right of appeal. Number two is a High Court Judge; from him also there is scarcely a right of appeal. But in our Constitution is s 92, a section made up of plain, simple words, needing no interpretation. But if you ask a High Court Judge what those words mean, he will launch into a spate of millions of words, each contradicting what his brother Judges have to say on their meanings. Gillespie-Jones AS, The lawyer who laughed again (Hutchinson, 1980).
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[1.1100] Two issues dominate this area – the role of upper houses and the dominance of the Executive. In relation to upper houses, their role, and the resolution of conflict between them and lower houses, and, increasingly, the voting system are contentious matters. In relation to the role of the Executive, it is argued that the dominance of executive government especially through the party system and uncertainty about the proper role of Parliaments is a universal concern. The Executive’s dominance is a by-product of the Westminster system of responsible government under which the ministry is drawn from and remains part of the legislature. Increasing attention is being given to the United States’ model of separation of powers under which not only is the judicature independent of government but the legislative and executive powers are clearly separated. Patrick O’Brien (“The fatal flaw: Has the Westminster system produced a form of executive dictatorship?”, Time Magazine (16 September 1991)) is particularly savage: The question of whether Australia should or should not be a republic is really a smokescreen to cover the perpetuation of the executive state or, as some might prefer to call it [executive], dictatorship.
The changing role of the High Court [1.1110] The Constitution confers on the High Court the role of final arbiter of disputes on interpretation of the Constitution and the validity of legislation enacted by the Commonwealth and State Parliaments. Over recent years a series of significant High Court judgments, in cases such as the terra nullius and political advertising cases discussed elsewhere in this chapter, have clearly signalled that the High Court will not be confined to the traditional view of its role of simply applying the law as it exists, but will seek a greater role in the development of that law itself. Through High Court decisions, the Constitution, and the Australian legal system that derives its authority therefrom, are continually evolving to meet the current demands of the society they serve.
IN CONTEXT The High Court and contemporary values [1.1120] In discharging its duty to declare the common law of Australia, this Court is not free to adopt rules that accord with contemporary notions of justice and human rights if their adoption would fracture the skeleton of principle which gives the body of our law its shape and internal consistency … The peace and order of Australian society is built on the legal system. It can be modified to bring it into conformity with contemporary notions of justice and human rights, but it cannot be destroyed. It is not possible, a priori, to distinguish between cases that express a skeletal principle and those which do not, but no case can command unquestioning adherence if the rule it expresses seriously offends the values of justice and human rights (especially equality before the law) which are aspirations of the contemporary Australian legal system. If a postulated rule of the common law expressed in earlier cases seriously offends those contemporary values, the question arises whether the rule should be maintained and
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applied. Whenever such a question arises, it is necessary to assess whether the particular rule is an essential doctrine of our legal system and whether, if the rule were to be overturned, the disturbance to be apprehended would be disproportionate to the benefit flowing from the overturning.
Mabo v Queensland (No 2) [1992] HCA 23 at [29] per Brennan J
The increasing Australianness of Australian law [1.1130] Patrick Parkinson has written in Tradition and change in Australian law (4th ed, Thomson Reuters, 2010) at p 3 that: [i]n its legal institutions, as in other aspects of its national life, Australia bears indelibly the marks of its birth. The legal and political institutions of Australia find their roots, not in the traditions of its native inhabitants, but in the traditions of a colonial power which imported its understanding of law and social organisation with the landing of the first white settlers in 1788.
A constitution should be short and obscure. Napoleon Bonaparte.
Australia and the other, primarily Commonwealth, countries that adopt the English common law model of a legal system share values, institutions, principles and procedures. There are of course differences, sometimes significant differences, among the particular laws of these jurisdictions. In the case of legislation, such diversity is not particularly surprising. The Parliaments of the former colonies have legislative power limited only by their own constitutions and will seek to impose the regulatory regime that is appropriate to that society. In the case of the common law, the judge-made law, the concept of diversity is more complex. It has nevertheless been accepted that common law may develop differently throughout the common law world. Indeed, as Lord Lloyd stated in Invercargill City Council v Hamlin [1996] 1 All ER 756 at 764-5: The ability of the common law to adapt itself to the differing circumstances of the countries in which it has taken root, is not a weakness, but one of its great strengths. Were it not so, the common law would not have flourished as it has, with all the common law countries learning from each other.
Particularly over the last quarter of a century, and under the leadership of the High Court, legal scholars can trace the emergence of “Australian law”. In relation to contract law it has been suggested by Starke et al in Cheshire & Fifoots Law of Contract (6th Australian ed, Butterworths, 1992) that: Its uniqueness, or Australian character, lies not in specific doctrinal departures from any other system, although such departures have occurred. Rather it lies ultimately in the situations to which it is addressed, which are ineluctably local, and which have an effect largely on what may be called its “shape”.
Similar claims can be made for all aspects of the Australian legal system.
A Bill of Rights? [1.1140] The basic and fundamental rights of the citizens of a country such as Australia may be said to be well understood and well respected. It has to be said, however, that nowhere are they listed and given express constitutional protection. Many argue that there is no need for the enactment of a Bill of Rights, while others urge us to commit such essential
If society is tolerant and rational, it does not need a Bill of Rights. If it is not, no Bill of Rights will preserve it. Former Australian High Court Chief Justice Sir Harry Gibbs, 1990 Reform 68.
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rights as free speech and freedom of association to writing in an endeavour to put such matters beyond dispute. Sir Ninian Stephen in “Time to take stock”, Australian Financial Review (16 April 1992) explains that: The “founding fathers” of our Constitution took it for granted that individual rights were secure under common law. But the experience of many countries and the growing power of executive government and bureaucracies have led to greater interest in the notion of incorporating constitutional guarantees of individual rights and freedoms in some kind of “Bill of Rights”. It is difficult to imagine an issue more likely to divide Australians than the Federal Government’s proposed enactment of a Bill of Rights. If Mr Hawke and Senator Evans achieve their objective, our political system, as well as our legal system, will be fundamentally changed. An enforceable code setting out the basic human rights of the citizen has many apparent attractions … The most powerful argument against a Bill of Rights is that if takes the power to decide on vital questions out of the hands of the people’s elected representatives in parliament and gives that power to judges who are appointed by politicians but are not answerable, as politicians are, to any electorate. Editorial, The Australian, (12 July 1983).
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[1.1150] Australia is becoming increasingly isolated in not enshrining and guaranteeing basic and fundamental rights and liberties in a constitutional document. The United States provides the best-known example, the Bill of Rights being constituted by the first 10 amendments to the Constitution. Art 1, for example, provides that: Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; of the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
[1.1160] Canada and New Zealand have also enacted legislative guarantees of individual rights. Indeed, it appears that Australia is now the only Western democracy that does not have a national Bill of Rights, although the Australian Capital Territory (Human Rights Act 2004 (ACT)) and Victoria (Charter of Human Rights and Responsibilities Act 2006 (Vic)) have enacted limited protections which require governments and those exercising public functions to act consistently with reference to the human rights set out and for the courts to, as far as possible, interpret all laws in ways compatible with the rights set out in the charter. [1.1170] The contrary argument suggests that fundamental rights may be more valuable because they are not legislated for – that the traditions of the rule of law developed over centuries provide a greater safeguard. Professor Lauchlan Chipman (Institute of Public Affairs (NSW), 1984) has addressed this issue in a forthright manner: The first point to note [is] that the existence of a Bill of Rights is neither sufficient nor necessary to ensure the existence of the rights guaranteed. It is not necessary as, for all their warts, England and Australia, which do not have a Bill of Rights in the relevant sense, have been among the better protectors of fundamental human rights. It is not sufficient, as anyone who examines the 1977 Constitution of USSR, which contains a magnificent Bill of Rights guaranteeing inter alia freedom of religion, preservation of national culture, and freedom of movement, can verify. It is worth noting that the worst excesses of segregation in America, and indeed the McCarthyist movement, existed notwithstanding the Bill of Rights in that country. The best way to handle questions relating to fundamental rights is with specific legislation in relation to specific rights, where judged necessary by parliament. A general Bill of Rights, because of its very generality, grants tremendous power, as well as responsibility to those charged with interpreting it, and this means a shift of important powers away from elected representatives to appointed officials, something that pleases the government in power that has the power to make the appointments. I do not believe that Australians really want a third legislative chamber, whether that chamber be the Human Rights Commission, a new Federal Court, or the High Court.
[1.1180] An important function of the High Court is that with it rests the power of interpreting the Constitution. An emerging activism in High Court judgments has been
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witnessed in the last 25 years, of which Mabo is a well-known example. The matter of the fundamental rights of Australians has also been considered. In 1992, the High Court held that Commonwealth legislation prohibiting the broadcast of political material in the period prior to an election was unconstitutional (Australian Capital Television Pty Ltd v The Commonwealth [1992] HCA 45). Central to the decision was the question of whether there was to be implied in the Constitution a right or freedom of communication. A majority of justices held that some such implication should be made. Mason CJ, with reference to the question of whether fundamental rights should be so implied, said (at [31]): The adoption by the framers of the Constitution of the principle of responsible government was perhaps the major reason for their disinclination to incorporate in the Constitution comprehensive guarantees of individual rights … [They] accepted, in accordance with prevailing English thinking that the citizen’s rights were best left to the protection of the common law in association with the doctrine of parliamentary supremacy.
With respect to the implication of a specific guarantee of freedom of communication on matters relevant to public affairs and political discussion, he said (at [42]): Freedom of communication in the sense just discussed is so indispensable to the efficacy of the system of representative government for which the Constitution makes provision that it is necessarily implied in the making of that provision.
The Chief Justice concluded that “in the ultimate analysis, it is for the Court to determine whether the constitutional guarantee has been infringed in a given case”. The decision indicates a more creative High Court, willing to play a greater role in the constitutional protection of human rights.
That is what the Victorian Charter of Rights and Responsibilities has always been about – changing the culture of government and public life so that human rights are brought from the periphery to the core. Rob Hulls, former Victorian AttorneyGeneral, cited by The Australian (22 May 2015).
[1.1190] It is, however, a role that is not free from criticism. It raises the issue of the High Court taking over the democratic right of the people to have their liberties controlled by an elected Parliament, rather than by an unelected court. The debate continues between those who support the concept of an activist, progressive High Court and those who argue that the court is encroaching upon the sovereignty of Parliament. George Williams has observed in “Build our rights, slowly” Sydney Morning Herald (28 December 1998) that: The Federal Parliament must re-enter the fray. Despite its failures, it has recognised important rights in Federal legislation; most significantly, the Racial Discrimination Act, the Sex Discrimination Act and the Disability Discrimination Act. However, it should seek to protect fundamental rights on a more comprehensive basis. The need for greater rights protection is plain. The law does not adequately protect the rights of the most vulnerable and disadvantaged. The rights already in place are also unsatisfactory because they are largely unknown, and thus are not accessible and fail to serve an educative or symbolic function. The need to shield fundamental rights from the exercise of arbitrary government power makes the case for a bill of rights compelling. While Australian parliaments have been generally effective in protecting basic rights, the record is far from unblemished. The Stolen Generation, the attempt to suppress communism in the 1950s, and even the White Australia policy show the need for a greater check on government power.
This argument was bolstered by Justice Michael Kirby, of the High Court, when, delivering the 2001 Manning Clark lecture, he commented that:
There are two things wrong with almost all legal writing. One is its style. The other is its content … The average Law Review writer is peculiarly able to say nothing with an air of great importance. Rodell F, “Goodbye to law reviews”, (1936) 23 Virginia LR 38 at 38.
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For most of my life, as a homosexual Australian, I have been oppressed by unjust laws. I do not doubt that had there been a constitutional bill of rights in this country, the reforms, slowly and sometimes reluctantly – and even apologetically – enacted from homosexual equality would have come more quickly from the courts.
The move to a republic? [1.1200] The role of the monarchy in the Commonwealth Constitution and the issue of republicanism have received widespread and rigorous public debate. The reality is that Australia is only a nominal monarchy as all the effective powers of the Head of State are vested in the Governor-General. The Queen’s refusal to intervene at the Speaker’s request in the constitutional crisis of 1975 when the Governor-General, against the advice of his ministers, dismissed a Prime Minister with the majority support of the House of Representatives, vividly illustrates this reality. In a paper delivered to the Constitutional Centenary Conference of 1991, Mr Justice Pincus of the Federal Court noted that Australia effectively became a republic five years earlier, when the Federal and State Parliaments passed the Australia Act 1986. The Act was the mirror image of legislation passed in Britain to sever the last legal ties joining Australia to the mother-country’s “Imperial Parliament”. It removed British powers to legislate for Australia and it declared the High Court to be the final court of appeal on all judicial matters. He explained (Constitutional Centenary Conference 1991: Collected Papers, Center for Comparative Constitutional Studies) that: The imperial connection has largely become a legal fiction. We have found it convenient to continue to pretend for some purposes that the English monarch exercises power in Australia when in truth she does not. The States are always saying States’ rights this and States’ rights that, but as soon as there’s a problem they come running home to mama, back to the Commonwealth. Paul Keating, 1993.
As any observer will be aware, the debate on this issue is comprehensive and, at times, emotional. The conservative view, that change is not necessary, is supported by the successful operation, at least to date, of the Constitution as it stands. The other side points to the identity problem, the need for an Australian citizen as Head of State and the need for proper selection procedures for that person. In the words of Robert Hughes, to cling to the present system, “suggests a sentimentality we don’t have, a nostalgia we don’t need, and an uncertainty about ourselves that we don’t feel”: Republic (Summer 1996) p 4. After widespread debate the issue was put to the Australian people by way of referendum in 1997, at which time the proposal to change was defeated, undoubtedly in part because the proposal envisaged that the Head of State would be appointed rather than being elected by the people (to avoid a “popularity contest” between an elected Prime Minister as the head of government and an elected “president” as Head of State). At that time the Republic Advisory Committee advised (“An Australian republic: The options”, Report (1993)) that: the only constitutional change … required to make Australia a complete republican system of Government is to remove the Monarch. All the essential elements of our system of government – federalism, responsible parliamentary government, the separation of powers and judicial review of legislation and government action – would be unaffected by such a change.
Expanding Commonwealth jurisdiction [1.1210] The history of Federation is one of expanding Commonwealth power and influence. To some extent this is not surprising. Federation brought into being a new nation 68
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state that was obviously going to have a greater profile than its constituent elements, the States. A complex modern society also requires strong national government and there is increasing pressure across a range of commercial and social activities for national laws rather than frustratingly different laws operating at the State and Territory level, the extent of the Commonwealth’s supremacy would nevertheless surprise the founders of Federation. To a large extent the pre-eminent position of the Commonwealth has flowed from its financial strength and development examined in the next section. However, a significant factor has been the Commonwealth’s aggressive use of its concurrent s 51 powers that have, in relation to the corporations and the external affairs powers, been supported by a High Court which has been sympathetic to centralisation. [1.1220] The scene was set early for the steady growth of Commonwealth legislation by the 1920 decision of the High Court in the Engineers case (Amalgamated Society of Engineers v The Adelaide Steamship Co Ltd [1920] HCA 54). Justice Isaacs, who delivered the majority judgment, stated that: It is undoubted that those who maintain the authority of the Commonwealth Parliament to pass a certain law should be able to point to some enumerated power containing the requisite authority. But we also hold that, where the affirmative terms of a stated power would justify an enactment, it rests upon those who rely on some limitation or restriction upon the power, to indicate it in the Constitution.
In other words, a broad and generous construction should be given to the powers vested in the Commonwealth. Although at different times there have been discernible shifts in emphasis in the approach of the High Court, a technical, restrictive approach has been resisted. [1.1230] Reference has been made in this chapter (see [1.920]) to the difficulties inherent in the Australian system of legislative power-sharing which at times leads to conflict between the Commonwealth and one or more States. What is readily apparent is that the 100 years since Federation have seen a significant shift in the balance and that Commonwealth (centralist) power has been allowed to grow at the expense of State power. A recent chief justice of the High Court (Sir Harry Gibbs) takes the view that true federalism is being eroded. He has said that there needs to be more public expression of the federalist view, and that the view expressed in the media tends to be centralist. Bernard Lane (“For the good of the states”, The Weekend Australian (8-9 April 1995)) has commented that: In the federalist view, the pattern this century has been a steady flow of power one way from the States to the Commonwealth with the High Court directing the traffic. This despite the Constitution giving specific and limited powers to the Commonwealth and leaving the rest to the States which, as colonies, could not have begun to imagine how the new Federal Government would grow at their expense. Says Gibbs: “Legally it might be said that Australia is no longer a federation. There is literally no field of activity in which the Commonwealth cannot legislate, if it enters into an appropriate treaty”.
The federal government system clearly reflects the country’s colonial heritage. The sheer numbers of governments – the Commonwealth, six States, two Territories and about 800 local governments – strongly suggest that we are over-governed, and that some simplification is necessary.If there were the luxury of starting all over again, efficiency and effective management would argue for a much clearer and simpler definition of responsibility for determining standards and providing functions. Business Council of Australia, The Australian (10 July 1991).
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While the Constitutional power-sharing arrangements need some flexibility in their operation in order to provide for the exigencies of a rapidly developing society, the fundamental balance between the Commonwealth and the States must be preserved if federalism itself is to be preserved.
IN CONTEXT For and against federation [1.1240] In the last analysis, it seems to me, our choices lie between two alternatives: Do we want the checks and balances, the democratic safeguard, of multiple governments against the monolithic few at the centre? Or do we want the economy and efficiency of centralism? The fundamental option of getting things done? And there it is… PH Lane, An introduction to the Australian Constitution, (6th ed, Law Book Company, 1994).
The financial strength of the Commonwealth [1.1250] The increasing influence of the Commonwealth is underwritten to a large extent by its financial strength. On Federation, the collection and control of customs and excise duties passed to the Commonwealth (s 86). The Constitution provided a formula for compensating the States for this significant loss of revenue which lasted “for a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides” (s 87). However, the Constitution provided no general rules governing the financial relationships between the Commonwealth and the States after the first 10 years of Federation and the Commonwealth has since that time emerged as the significantly strongest party in the Federation, to an extent not appreciated by the States at the time of Federation. This is because of the Commonwealth’s financial power over the States (whose revenue is sourced predominantly from federal funding). The Commonwealth’s financial power derives from its role as the primary authority and from s 96 grants (see [1.1300]). Dr Vince Fitzgerald, in a paper prepared for the Committee for Economic Development of Australia, has recently described the Commonwealth-State imbalance as creating an “extreme and dysfunctional vertical fiscal imbalance”. The levels of government at which the major components of the taxation system are administered are misaligned with government spending responsibilities. There was a celebrated declaration by Alfred Deakin in 1902 saying that the Constitution left the States legally free, but also left them “financially bound to the chariot wheels of the Central Government”, which displayed remarkable perspicacity. 70
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The Uniform Tax Scheme [1.1260] The Commonwealth’s financial power has been strengthened by the Uniform Tax Scheme, which emerged during World War II (1939-45) in order to provide the Commonwealth with the revenue required to finance the war. Section 51 of the Constitution confers concurrent legislative power on the Commonwealth with respect to taxation (s 51(ii)). The Commonwealth first levied a federal income tax during the First World War (1914-18) in order to fund the war effort, and until the Uniform Tax Scheme there were federal and State income taxes. Under the Uniform Tax Scheme, driven by the Commonwealth’s need for greater revenues, an agreement was reached that the States would not use their income tax powers and would be reimbursed by the Commonwealth. The Commonwealth’s position was strengthened not only by the spirit of cooperation engendered by war but also the defence power of s 51(vi) which the Commonwealth was able to invoke. [1.1270] The States have the power today to levy an income tax as this power was not removed by the Uniform Tax Scheme but was simply replaced by other arrangements. Its use is unlikely because of the political backlash that would be vented on a State government that imposed it. Professor PH Lane, in An introduction to the Australian Constitutions (6th ed, Law Book Co, 1994) at [1.38]) comments that: It is not that the States ever lost their power to impose State income tax, although back in 1953 Prime Minister Menzies spoke (not quite accurately) of “returning State taxing powers”. The small States, Tasmania and Western Australia, retorted: “We do not want our taxing powers back.” Presumably they preferred to be subsidised, through Commonwealth tax collection, by New South Wales and Victoria. In January 1970 the States, unanimous for once, asked Prime Minister Gorton to quit a share of the income tax market for them. He said, “No”. In October 1991 Prime Minister Hawke conjured up a possible State income tax. This time it was the States who said, “No”. One may claim that the States are not really interested in an exercise of State accountability. Not even States of the same political colour as Canberra are prepared to take up the slack in State revenue by imposing the extra State income tax. Still, it may be politically unrealistic to expect the State to impose income tax when Canberra’s existing rates remain high. If Canberra is really anxious to expose State budgeting it should lower its tax rates to accommodate State income tax, as the Canadian Dominion Government did to accommodate Provincial income taxes. For the time being then, there is no “double taxation” in Australia. The Uniform Tax Scheme survives, followed by heavy general purpose grants and, in some matters, specific purpose grants to the States and Northern Territory.
Taxation without representation is tyranny. James Otis, Watchward of the American Revolution.
Post-war Canberra … has been built on tied grants funded by the largess of a monopoly over income tax, wrested from the States by Chifley during World War II and kept in place by Robert Menzies and Malcolm Fraser. Brian Galligan, Federalism Tests PM’s Fibre, The Australian (4 April 1996).
[1.1280] Taxation measures have long been used as contrivances to achieve Commonwealth policies in situations where no actual legislative authority was specified in s 51 of the Constitution. This misuse of the taxation power was facilitated by the High Court as early as 1911 in Osborne v The Commonwealth [1911] HCA 19 when Griffith CJ observed that: Although it is a frequent result of taxation to bring about indirect consequences which could not practicably, or could not so easily, be brought about by other means, yet the circumstance that taxation has such a result is irrelevant to the question of the competence to impose the tax. 71
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Indeed, the very first tax imposed by the Commonwealth was a land tax, levied, it was alleged, to encourage the subdivision of large holdings with the consequential resettlement bringing sufficient population increase to ensure the effective defence of the country. Nevertheless, there are constraints on the overuse of the taxation power to achieve extraneous ends. In the 1948 bank nationalisation case the then Chief Justice, Sir John Latham, said that if the power were construed too widely (Bank of NSW v Commonwealth (1948) 76 CLR 1 at 84): the Commonwealth parliament might assume and exercise complete control over every act of every person in the Commonwealth by the simple method of imposing a pecuniary liability on everyone, who did not conform to specified rules of action, and calling that obligation a tax, not a penalty.
[1.1290] The introduction of a Goods and Services Tax on 1 July 2000 by the Commonwealth has enabled some rationalisation of the Federal-State taxation relationship. The reimbursement to the States of GST allowed the reduction or abolition of a number of State taxes.
Tied grants [1.1300] The reference at [1.1270] to general purpose grants and specific purpose grants is a reference to federal grants under s 96 of the Constitution, which provides that: During a period of ten years after the establishment of the Commonwealth and thereafter until the Parliament otherwise provides, the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.
[1.1310] General purpose grants are the annual grants of money provided by the Commonwealth to the States. The grants are for general purposes and constitute the major proportion of a State’s revenue. They are granted without conditions attached “apart from the understanding that the States will keep out of the income tax field, and sometimes the grants are used as political leverage against a State (eg if a State persists with a tax which Canberra does not want, Canberra will threaten to cut back that State’s general purpose grant)” (Lane, An introduction to the Australian Constitutions, at 34). [1.1320] Specific purpose (or tied) grants are financial grants “on such terms and conditions as the Parliament thinks fit”. Tied grants enable the Commonwealth to dictate policy to the States and are widely used. The Commonwealth’s involvement in many areas (eg health, education, roads) has been facilitated by the use of tied grants.
Uniform legislation in a federal system [1.1330] The drafters of the Constitution could not have foreseen the complexity, commercial and otherwise, of society one century later. The need for some harmonisation of laws in Australia has become apparent but cannot always be satisfied by a reliance upon s 51 of the Constitution. There are, however, other approaches.
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Ceding powers [1.1340] Section 51(xxxvii) of the Constitution authorises the Federal Parliament to pass laws on matters referred to it by any one or more States. It follows that where the States perceive that benefits will flow from national legislation this ability to refer their legislative powers to the Commonwealth may provide a practical solution.
National cooperative schemes [1.1350] Another approach that has been used with success is to engage the legislative cooperation of the Federal and State Parliaments. Reference was made earlier to the unconstitutionality of the Corporations Act 1989 (Cth). Following that determination of the High Court, and after negotiations pursuing the self-interests of those involved, an agreement on future corporate regulation in Australia was signed between the Commonwealth, the States and the Northern Territory in June 1990 that resulted in the Corporations Law. That system was subsequently undermined by the Wakim decision that the Federal Court could not decide corporations law cases. Accordingly, a further cooperative arrangement has been entered into whereby the States have referred their power to legislate in respect of corporate law to the Commonwealth. Following that step, the Commonwealth government enacted the Corporations Act 2001 (Cth) to regulate the conduct of corporations. In effect the final result is an example of the States coding their powers to legislate, on corporate law, to the Commonwealth. Another example of that approach is in the implementation of Australian competition policy. The effectiveness of by the Trade Practices Act 1974 (Cth) was nevertheless impeded by the limitations imposed by the Constitution. The constitutional basis was the corporations power (s 51(xx)), with the result that business enterprises which are not corporations were not subject to the Act. Complex negotiations by the Council of Australian Governments (COAG) representing the Commonwealth, States and Territories led to a cooperative agreement being signed by all the parties, the Conduct Code Agreement, under which the States and Territories agreed to implement the Competition Code as amended from time to time. The Competition Code, which was in effect a restatement of the Restrictive Trade Practices provisions of Pt IV of the then Trade Practices Act to catch individuals as well as corporations, was enacted by the Commonwealth in the Competition Policy Reform Act 1995. The Trade Practices Act has since been renamed to Competition and Consumer Act 2010 (Cth) (see [1.1020]). The single national consumer law – the Australian Consumer Law – prescribed in this Act in place of disparate State and Territory scheme was introduced in the same manner that gave us national competition laws.
QUESTIONS 1.
What is the relationship between: (a) law and morality and (b)
law and justice? 73
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2.
What is meant by the concept of sovereignty of Parliament? What factors, if any, restrict the operation of the classic formulation of parliamentary sovereignty in Australia?
3.
Should a Bill of Rights be introduced in Australia? How would this be done? How would it affect current constitutional arrangements?
4. The business of the Court is legality. Just as it is not known in human affairs for a noble objective to be pursued by ignoble means, so it sometimes happens that desirable ends are pursued by unlawful means. If the point is taken before them, courts have to rule on the legality of the means, whatever view individual judges may have about the desirability of the end. This is one aspect of the rule of law, a societal value that is at the heart of our system of government. It follows that this judgment should be seen only as a judgment about legal issues, not a view about the social, economic, and political arguments
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] FCA 397 (23 April 1998) per Wilcox, von Doussa and Finkelstein JJ. Discuss this proposition.
WEB REFERENCES ComLaw http://www.comlaw.gov.au Australasian Legal Information Institute http://www.austlii.edu.au
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CHAPTER 2
The Courts and Common Law Andrew Terry THE BUSINESS CONTEXT The role of the courts in the development of the law through the application of the doctrine of binding precedent is a central feature of the Australian legal system as well as other legal systems which form part of the common law world. In Australia, as in any contemporary jurisdiction, the legislative content of the law is expanding rapidly and the courts possess the critical double function of interpreting and applying that legislation and of continuing the still important tradition of the common law. The understanding of the common law method, and the federal, State and Territory systems which administer the judicial function of government, is essential knowledge for an understanding of the development and application of business law. This chapter examines the nature of judicial method and the structure of the Australian court system.
[2.10]
[2.50]
[2.280]
2.1 THE COMMON LAW ......................................................................................................... 76 [2.20]
The common law system ...................................................................................... 76
[2.30]
Equity ...................................................................................................................... 77
[2.40]
The fusion of common law and equity ................................................................ 78
2.2 THE DOCTRINE OF BINDING PRECEDENT ..................................................................... 78 [2.70]
Following prior authority ....................................................................................... 79
[2.110]
The judicial hierarchy ............................................................................................. 81
[2.120]
Res judicata ............................................................................................................. 81
[2.130]
Distinguishing prior authority ............................................................................... 81
[2.150]
Rejecting prior authority ........................................................................................ 82
[2.160]
Where there is no prior authority ......................................................................... 83
[2.180]
Every decision is a step in the process of legal growth ...................................... 84
[2.230]
Contemporary judicial activism ............................................................................ 88
2.3 THE COURT SYSTEM .......................................................................................................... 91 [2.300]
Federal courts ......................................................................................................... 92
[2.350]
State courts ............................................................................................................. 94
[2.410]
Jurisdictional conflicts ............................................................................................ 97 75
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[2.420]
2.4 TRIBUNALS .......................................................................................................................... 98
[2.430]
2.5 TERMINOLOGY AND CITATION ....................................................................................... 99 [2.440]
Civil cases ................................................................................................................ 99
[2.450]
Criminal cases ......................................................................................................... 99
[2.460]
The case report ..................................................................................................... 100
2.1 THE COMMON LAW [2.10] As set out in Chapter 1 (see [1.120]), the expression “common law” is used, rather confusingly, in three different senses: • case law or judge-made law, ie the law developed by the courts as distinct from the law enacted by Parliament. The common law in this sense owes its existence to generations of judges who have developed the law through decisions in individual cases; • a legal system based on the English model. Australia is a common law jurisdiction: it inherited the traditions and techniques of English law; and • the more restricted meaning, whereby it refers not to all case law but to case law developed in the courts of common law as opposed to case law developed in the courts of equity. The function of equity is described (at [2.30]) but the purpose of this chapter is to discuss the common law in its more general sense of all judge-made law.
The common law system [2.20] After the Norman Conquest in 1066, the monarchs of England sent travelling judges around the country to administer royal justice. Parliament was not an important source of law in those days and there was little established law to guide the judges in their deliberations. Therefore, they applied local customs in deciding cases. The customs varied from one area to another but in time the judges began to have regard to earlier decisions, and rules developed in one part of the country were applied in other parts. Gradually the rules and principles that evolved through previous decisions were regarded as authoritative and a complex body of law developed which replaced the local customary laws and was common to the whole kingdom. For this reason the law developed in this manner was known as the common law, and the courts in which it was administered were known as the common law courts. Nobody can simply bring together a country that has 365 kinds of cheeses. Charles De Gaulle, on France.
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Although the common law displayed a capacity for growth and expansion, its development was restricted by procedural matters. Development could take place only within the confines of a limited number of “forms of action” recognised by the common law courts as giving rise to legal remedies. The courts were reluctant to recognise new forms of action as the creation of new remedies amounted to law making and this was regarded as the proper function of parliament and not the courts. After parliament intervened in 1285 (The Statute of Westminster II) new forms of action were recognised in circumstances that were similar to those for which remedies were already available but the judges proceeded cautiously and were guided by principles already accepted by the common law. The result was that the common law system became rigid and inflexible and was unable to provide remedies for
Chapter 2 The Courts and Common Law
claims which should have been recognised in the interests of justice. It became apparent that a more flexible means of administering justice was necessary as an adjunct to the courts of common law themselves. The courts of equity provided that solution.
Equity [2.30] In the Middle Ages the Monarch was technically the “fountain of justice”. A person who had suffered an injustice through the inadequacies of the common law could seek the Monarch’s intervention. Such petitions for relief were considered by the Lord Chancellor who was the Monarch’s chief adviser and, at that time, a leading cleric. The Chancellor would hear the dispute and give a decision in accordance with his own ideas of justice and fairness: he applied rules which in his opinion ought to be binding in conscience. In time petitions for relief were addressed directly to him for him to deal with. The court thus created was originally a court of conscience and cases were decided according to the particular Chancellor’s ideas of “equity and good conscience”. But the court gradually began to have regard to its previous decisions and eventually rules and principles which had been decided in earlier cases were treated as authoritative. In time a complex body of law known as “equity” developed in the courts of chancery to supplement the law developed in the common law courts. Although equity developed alongside the common law it was not a self-sufficient body of law. It assumed the existence of the common law and simply provided a remedy where the common law gave no remedy or offered an inadequate remedy. Equity’s most outstanding contribution to the development of the law was the institution known as the “trust”. A trust arises where one person (the legal owner) holds property on behalf and for the benefit of another person (the equitable owner). Although the common law recognised only the rights of the legal owner (ie the trustee), equity would recognise the rights of the equitable owner (ie the beneficiary). Equity would compel the trustee to deal with the property over which he or she had control for the benefit of the beneficiary (see Chapter 9).
Now equity is no part of the law, but a moral virtue, which qualifies, moderates, and reforms the rigour, hardness, and edge of the law, and is an universal truth; it does also assist the law where it is defective and weak … and defends the law from crafty evasions, delusions, and new subtleties, invented and contrived to evade and delude the common law … Equity therefore does not destroy the law, nor create it, but assist it. Dudley v Dudley (1705) Ch 241 at 244 per Lord Cowper.
Another example is the treatment of fraud by the common law and by equity. At common law a fraudulent misrepresentation gave rise to an action for damages in the tort of deceit. To prove fraud in order to sustain an action of deceit the plaintiff had to establish that a false representation had been made either knowingly; without belief in its truth; or recklessly, careless whether it be true or false (Derry v Peek (1889) 14 App Cas 337). To succeed in an action for deceit at common law was therefore difficult. But equity did not insist on an “actual evil design” and gave relief where there had been a breach of “the sort of obligation which is enforced by a court that from the beginning regarded itself as a court of conscience”: Nocton v Lord Ashburton (1914) AC 932 at 954 per Lord Haldane LC). The doctrine of “constructive fraud” developed by equity enabled relief to be given over a wider range of circumstances than at common law. Equity gave relief because, in the words of Lord Denning in Lloyd’s Bank Ltd v Bundy [1974] 3 WLR 501 at 506, “as a matter of common fairness it is not right that the strong should be allowed to push the weak to the wall”. 77
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The fusion of common law and equity
Equity, in law, is the same that the spirit is in religion; what everyone pleases to make it. Seiden J, “Equity”, Table-talk (1689).
[2.40] The position in England until the end of the nineteenth century was that the judge-made law consisted of two complex and settled bodies of law that had been developed in two separate streams in two separate courts. Common law remedies were obtained from the common law courts and equitable remedies were obtained from the courts of equity. The practical and procedural difficulties caused by the dual system of courts were removed by the Judicature Acts of 1873 and 1875. The main reform of the legislation was the abolition of these separate courts and the establishment of the High Court of Justice which in all its divisions administered common law and equity. Common law and equity still exist as separate branches of the law but the appropriate rules and principles, whether common law or equitable, can be applied in any case. This development has since been introduced into Australia: in some jurisdictions only relatively recently. Indeed, New South Wales was the last jurisdiction to adopt the reform, becoming effective on 1 July 1972.
2.2 THE DOCTRINE OF BINDING PRECEDENT [2.50] The convenient practice of having regard to previous decisions – taking advantage of the accumulated wisdom of the past – had hardened into a rule of law by the nineteenth century. Today the essential characteristic of the common law is the binding nature of previous decisions. A court is bound to follow decisions of courts higher than itself in the same hierarchy of courts within the particular jurisdiction (eg New South Wales). The doctrine of binding precedent is sometimes referred to as stare decisis, meaning to follow previous decisions. The observance of this requirement is critical to the operation of the doctrine. Each lower tier in the hierarchy of courts must accept loyally the decisions of the higher tiers. As Brennan J explained in the High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44 at [11]: If an intermediate appellate court were free to disregard a fundamental doctrine settled by the final appellate court, an endemic uncertainty would infect the administration of justice.
It is unfortunate that the principle which I have enunciated was not drawn to the attention of the court in [an earlier case] but that was my fault, because I was counsel in the case. Cassidy v Ministry of Health [1951] 2 KB 343 at 363 per Denning LJ.
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The courts possess the critical double function of interpreting and applying legislation, and continuing the still important tradition of the common law. The doctrine of binding precedent applies to decisions interpreting legislation as well as to decisions where the relevant law is exclusively common law.
IN CONTEXT Stare decisis – the doctrine of binding precedent [2.60] Constraint consciously observed by courts and enforced by higher courts which is critical to the stability and predictability of the legal system is known as the doctrine of precedent or by its Latin name, stare decisis. The operation of, and justification for, stare decisis was well explained in the Federal Court in Telstra Corporation Ltd v Treloar [2000] FCA 1170 in the following terms (at [23]):
Chapter 2 The Courts and Common Law
The doctrine of stare decisis takes its name from the Latin phrase … which translates as “stand by the thing decided and do not disturb the calm”. It is a doctrine based on policy. The rationale for the doctrine can be grouped into four categories: certainty, equality, efficiency and the appearance of justice. Stare decisis promotes certainty because the law is then able to furnish a clear guide for the conduct of individuals. Citizens are able to arrange their affairs with confidence knowing that the law that will be applied to them in future will be the same as is currently applied. The doctrine achieves equality by treating like cases alike. Stare decisis promotes efficiency. Once a court has determined an issue, subsequent courts need not expend the time and resources to reconsider it. Finally, stare decisis promotes the appearance of justice by creating impartial rules of law not dependent upon the personal views or biases of a particular judge. It achieves this result by impersonal and reasoned judgments.
Gageler S, “Common Law Statutes and Judicial Legislation: Statutory Interpretation as a Common Law Process” (2011) 37(2) Monash University Law Review 1.
Following prior authority [2.70] The underlying idea is that every case which applies the law to a given set of facts arises from a legal principle which is necessary to the decision arrived at, and it is this principle which forms the binding element in the case
Ratio decidendi [2.80] That part of the decision that is binding or persuasive is known as the ratio decidendi (the reason for decision). In O’Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 267, Brennan J in the High Court explained that: [T]he law is taken to have been in accordance with the principle which informs the new decision: the ratio decidendi. The ratio, which is expressed in or necessarily implied by reasons for judgment to which a majority of the participating judges assent, is the law. It is not merely a judicial opinion as to what the law is: it is a source of law.
It is the ratio decidendi that binds subsequent courts. In this way the common law acquires the certainty that is recognised as its greatest advantage. But the application of the doctrine of precedent is not a mechanical function, and extraction of the binding element of a relevant precedent is not a mechanical process: it is the ratio decidendi of an earlier case that must be applied by later courts, but there is not any universally accepted formula or method for identifying that ratio decidendi. The practices involved in arriving at the ratio seem in fact to combine several elements both of law and of fact. The ratio decidendi may be defined as the reason for the decision or the principle underlying the decision or that legal proposition which the court has applied to the material facts of the case in order to arrive at its decision. Glanville Williams’ introductory text Learning the law (Stevens & Sons, 1973) explains that although in the flux of life all the facts of a case will never recur, the legally material facts may recur and it
A judicial decision is based on reason and is known to be so because it is supported by reasons. An arbitrary decision … may be based on personal feelings, or even on whims, caprice or prejudice. Lord Denning, Freedom under the law (Stevens & Sons, 1949).
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is with these that the doctrine of binding precedent is concerned. But the determination of the material facts is not a matter of formality and it is in this area that an element of flexibility arises within the common law. For present purposes the simplest way of defining the ratio decidendi is to say that it is the product of the material facts of the case and the decision on those facts. Materiality means legal materiality. There is no universal formula that can be applied for determining which facts are material. If a judge in deciding a case regards many facts as material the ratio decidendi of that case will be very narrow. Generally, for a later judge to be bound by the decision all those facts need to be present in the later case. If the judge regards few facts as being material it will be wide. It will not be necessary to find many equivalent facts in the succeeding case. If a later judge takes a narrower view of the facts considered material in the previous case the earlier decision has been restrictively distinguished. The earlier precedent is restricted to the extent of the boundaries imposed by the later decision. … the tons of judicial pulp that must be squeezed for an ounce of pure judicial law. Diamond, “Codification in the law of contract” (1968) 31 MLR 361 at 362.
[2.90] Examples of rationes decidendi abound throughout this book, but perhaps the best example is that of Donoghue v Stevenson [1932] AC 562 in which the House of Lords, the highest court in the English hierarchy, held that a soft drink manufacturer whose negligent processes allowed a snail to be bottled along with the ginger beer owed a duty of care to a consumer. The ratio decidendi of that case as expressed by Lord Atkin is based on material facts wider than snails and ginger beer (at 599):
I believe that obiter dicta, like the proverbial chickens of destiny, come home to roost sooner or later in a very uncomfortable way to the Judges who have uttered them, and are a great source of embarrassment in future cases. Cooke v New River Company (1888) 38 Ch 56 at 71 per Bowen LJ.
Lord Atkin in fact expressed the basis for liability in negligence in even wider terms (at 580):
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A manufacturer of products, which he sells in such a form as to show that he intends them to reach the ultimate consumer in the form in which they left him with no reasonable possibility of intermediate examination, [they were sold in opaque bottles] and with the knowledge that the absence of reasonable care in the preparation or putting up of the products will result in an injury to the consumer’s life or property, owes a duty to the consumer to take that reasonable care
That rule that you are to love your neighbour becomes, in law, you must not injure your neighbour; and the lawyer’s question, “Who is my neighbour?” receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who in law, is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.
This general theory (the “neighbour principle”) has led to the evolution of liability for negligence well beyond the particular circumstances of the case itself, a development discussed in Chapter 8.
Obiter dicta [2.100] Other legal argument and statements of principle found in judgments but not forming part of the ratio decidendi constitute obiter dicta (things otherwise said). These statements are not a part of the ratio and therefore are not binding on other courts. They may, however, be very persuasive depending on the status of the judge and the court. For
Chapter 2 The Courts and Common Law
example, the ratio decidendi of Donoghue v Stevenson set out above is expressed in terms of a “manufacturer” of products. Any reference in the case to the liability of a “repairer” of products is obiter dicta. The obiter in this case was, nevertheless, highly persuasive and Lord Atkin’s wider “neighbour” principle provided the foundation for the modern tort of negligence.
The judicial hierarchy [2.110] The characteristic of a binding precedent is that within any given judicial hierarchy (eg that of a particular State) a court is bound by the decision of a court above it in that hierarchy. Decisions from courts outside the particular hierarchy in which a case is being decided are not binding on the court. They are regarded as persuasive authorities and, depending on the status of the court, may be accorded great respect. Persuasive authorities are discussed in more detail later in this section. The decision of the highest court in the hierarchy is binding upon all the courts below it. In relation to previous decisions of a court at the same level, the general rule is that the decision is not binding but it will only be departed from if the earlier decision is regarded as wrongly decided. The High Court has “never regarded itself as bound by its own previous decisions” (Nguyen v Nguyen [1990] HCA 9 at [22]) and accepts that State Courts of Appeal, and the Full Federal Court, should not regard themselves as strictly bound by their own previous decisions either, as “rigid adherence to precedent is likely on occasions to perpetuate error without … significantly increasing the corresponding advantage of certainty” (at [22]).
Res judicata [2.120] The decision reached by the court in determining the case before it is, subject to any appeal, a final resolution of the issues raised in it insofar as the parties to the proceedings are concerned. These matters cannot be raised again by them. This principle, res judicata, is based on the public interest in finality of litigation, and the law’s concern with the injustice involved in permitting a litigant to be twice vexed with the same claim (Murphy v Abi-Saab (1995) 37 NSWLR 280 per Gleeson CJ). The ratio decidendi of the decision however lives on to influence the development of the law in later cases.
In any field of law however, there may arise the rare landmark case in which a court, usually a final appellate court, concludes that the circumstances are such as to entitle and oblige it to reassess the content of some rule or set of rules in the context of current social conditions, standards and demands and to change or reverse the direction of the development of the law. Jaensch v Coffey [1984] HCA 52 at [29] per Deane J.
A study of common law evolution in any particular area will demonstrate the intricate judicial skills employed in ensuring steady development and adaptation while remaining true to the basic doctrine of binding judicial precedent. In particular, the evolution of the tort of negligence – from 1932, when Donoghue v Stevenson [1932] AC 562 was decided, through to the present day – provides an excellent example of the judicial method (see Chapter 8).
Distinguishing prior authority [2.130] The flexibility and room for growth in the common law is partly maintained by the accepted judicial process of distinguishing earlier decisions. This method involves the judge finding that the material facts of the two cases differ so significantly that the earlier decision is not a binding authority in resolving the later case. The process of legal research 81
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may reveal a number of prior decisions which at first glance may appear applicable but on analysis of the material facts are not truly relevant to the case in question. They are accordingly distinguished. In addition, distinguishing provides a mechanism by which an earlier, and perhaps embarrassing legal doctrine can be so severely restricted that it is virtually abolished. The procedure whereby an existing decision is distinguished is simple enough. For example, if in the aftermath of Donoghue v Stevenson it became apparent that the rule of law as stated by the House of Lords was wrong or too wide, then a subsequent court could distinguish it by restricting it to cases involving soft drinks, opaque bottles and snails. In that way, a just result may be achieved by a lower authority within the court hierarchy without the need to wait for the House of Lords to have an opportunity to correct its own prior decision. Legal precedents are like statistics. If you manipulate them, you can prove anything. Hailey A , Airport (Doubleday, 1968).
[2.340] A more complex example of the judicial practice of distinguishing earlier judgments is to be found in Castlemaine Tooheys Ltd v South Australia [1990] HCA 1, in which the High Court considered the ruling in Cole v Whitfield [1988] HCA 18 to the effect that s 92 of the Constitution, a provision to secure the freedom of interstate trade, requires that interstate trade and commerce should only be immune from discriminatory burdens of a protectionist kind. The court held that Cole v Whitfield established “that a law which imposes a burden … but does not give the domestic product … a competitive or market advantage over … the interstate [product], is not a law which discriminates”: at [26]. The court then proceeded to distinguish the present case factually: “the present case stands on a different footing because the facts … show that the Bond brewing companies were disadvantaged … which gave the South Australian brewers a competitive … advantage”: at [26]. The result was that although Cole v Whitfield was distinguished, its ruling as to protection from discriminatory protectionist burdens was applied. At the same time the High Court referred to its own earlier decision in Bath v Alston Holding Pty Ltd [1988] HCA 27 and summarily distinguished it with the words “Bath is an example of one form of discriminatory protectionism. But it does not touch the issues which arise for decision in this case”: at [28].
Rejecting prior authority [2.150] It has been demonstrated that by the process of distinguishing prior decisions, a court may avoid having to apply some part of the law otherwise binding upon it which was decided by a court superior to it. That process is also adopted by the most superior courts in order to restrict the influence of their earlier decisions if they no longer reflect current legal theory and practice. Despite the scope offered by these procedures, there are times when a court must simply declare an existing statement of common Jaw to be wrong and to correct it. In that event it will overrule or reverse the prior authority, a process properly reserved for the appeal courts. After all, it was observed as long ago as 1853 that “we must [not] consecrate the mere blunders of those who went before us, and stumble every time we come to the place where they have stumbled. A palpable mistake, violating justice, reason and law must be corrected, no matter by whom it may have been made” (McDowell v Oyer 21 Pa Sup 417 at 423 (1853)). The view was also refreshingly put by Baron Bramwell in 1872 (in 82
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Andrews v Styrap 26 LT 704 at 706 (1872)), in overruling his own prior decision when he said that “the matter does not appear to me now as it appears to have appeared to me then”. Contemporary authority as to the view that judges do not make or change the law, but simply apply it, is found in the comments of Sir Anthony Mason (a former Chief Justice of the High Court) in Merritt C, “Making law is what the judges of the High Court do” Australian Financial Review (17 March 1994) who declared that such a view is a “fairytale” and that: It is no longer feasible for courts to decide cases by reference to obsolete or unsound rules which result in injustice and await future rules at the hands of the legislature … There is a growing expectation that courts will apply rules that are just, equitable and soundly based except in so far as the courts are constrained by statute to act otherwise. Nothing is more likely to bring about an erosion of public confidence in the administration of justice than the continued adherence by the courts to rules and doctrines which are unsound and lead to unjust outcomes.
Where there is no prior authority [2.160] The pervasive growth of the common law owes a great deal to the ability of judges to use the accepted processes of legal reasoning, and to develop law by analogy and by methods of induction and deduction. To assist in this process, they may refer to useful prior decisions not only of courts within the Australian common law hierarchy, but also those of courts of other common law countries. Reference is not restricted to analogous decisions and courts may take other matters, including policy decisions, into account. A recent example of the judicial approach to a previously unresolved situation was Bryan v Maloney [1995] HCA 17. The High Court had to determine whether the builder of a home owed a duty of care (not to construct it negligently) to subsequent owners of the home and not only to the client for whom it was built. In deciding that such a duty did exist, the High Court argued by analogy from other related situations, referred to relevant decisions from other common law jurisdictions, and applied considerations of policy relating to the issue of imposing such a liability. The consequences of this decision were limited by the subsequent case of Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16. Both decisions are discussed in more detail in Chapter 8.
Persuasive authorities [2.170] The reference above to decisions from other common law jurisdictions is a reference to persuasive authorities. Part of the complexity of the system of binding precedent arises from the number of judgments that may be referred to. Not only are the rationes decidendi of binding precedents to be considered but also there is the great mass of authority, which, although not binding is regarded as persuasive. The decisions of all superior courts in common law countries can be argued as persuasive, even although they do not fit strictly within the doctrine of binding precedent (because they come from outside the particular judicial hierarchy). In Australia, for example, decisions of the House of Lords and the English Court of Appeal are treated with great respect and in many cases reference is also made to American, Canadian and New Zealand judgments. In New South Wales, for
What is the argument on the other side? Only this, that no case has been found in which it has been done before. That argument does not appeal to me in the least. If we never do anything which has not been done before, we shall never get anywhere. The law will stand still whilst the rest of the world goes on; and that will be bad for both. Packer v Packer [1953] 2 All ER 127 at 129 per Denning LJ.
Novelty of argument is not a reason for judicial inaction where the law permits action and justice requires it. X v Amalgamated Television Services Pty Ltd (1987) 9 NSWLR 575 per Kirby J.
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example, the decisions of the Courts of Appeal of the other States are not binding but are nevertheless persuasive authorities, and will be treated with respect. Given the similarity of State laws in most areas and similar policy considerations, decisions in other States are of particular interest. If, then, we find the law to be plainly in conflict with what we or any of our predecessors erroneously thought it to be, we have, as I conceive, no right to choose between giving effect to the law and maintaining an incorrect interpretation. It is not, in my opinion, better that the Court should be persistently wrong than that it should be ultimately right. Australian Agricultural Co v Federated Engine-Drivers Firemen’s Association of Australia [1913] HCA 41 per Isaacs J.
“Every decision is a step in the process of legal growth” [2.180] Whereas a statute operates from the general to the particular, cases operate from the particular to the general. Goodhart’s statement that “every decision is a step in the process of legal growth” (from Essays in jurisprudence and the common law (The University Press, 1931)) explains that the common law method is not simply the routine application of binding precedents. The quest for certainty in the law does not conflict with the continual development of the law by the judges. The common law has been described as “living law” because (Derham DP et al, An Introduction to Law (6th ed, Law Book Company, 1991)): the precise scope and application of a principle or rule established in one case … may be worked out through many subsequent cases. Experience of the value of the principle or rule, and further thoughts about it may well affect the way such subsequent working out proceeds.
[2.190] The common law’s ability to develop to meet the changing needs of society can be illustrated by reference to the law of contract. The principles of the law of contract have almost entirely arisen from judicial decisions and, until recently, the role of the legislature was very limited. It is a remarkable achievement of the common law that the complex body of contract law that exists today has developed over 200 years or so through decisions in individual cases. The demands of the late twentieth century are very different from the demands of the late eighteenth century when, as England changed from an agricultural society to an industrial society, the modern law of contract developed. But through the constant and continual re-examination of principles laid down in earlier cases the common law has adapted to the changed needs of society. Where parliament has intervened, the foundation of the law on which the statutory schemes are laid is found in the decisions of the courts. Some commentators have alleged that in the area of the law of contract the common law has not always reflected changing situations but it is remarkable that the rules and principles of the common law of contract today can be traced back hundreds of years to their beginnings in a vastly different marketplace. That the common law has a constant capacity for growth is elucidated by the statement that (Derham DP et al, An Introduction to Law (6th ed, Law Book Company, 1991)): a particular case can produce a rule of law which, on the one hand provides authoritative answers to some questions, and, on the other, provides a general principle which can be used as an authoritative starting point, for reasoning in similar cases.
[2.200] The doctrine of precedent provides certainty in the common law but does not preclude its capacity for continual development to meet the changing needs of society. Precisely because the law has been developed through decisions in individual cases it contains a wealth of detail and it is of a practical character – it is derived from the problems which have actually arisen on experience rather than on logic. Not surprisingly there are certain disadvantages. The advantage of certainty may have the corresponding 84
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disadvantage of rigidity; the advantage of wealth of detail has the disadvantage of bulk and complexity; the advantage of practical character has the disadvantage that it lacks the capacity to prescribe a comprehensive set of rules.
IN CONTEXT Judicial law-making [2.210] It has become evident from the previous discussion not only that judges make law but that their ability to do so is fundamental to the strength of the common law system. The clash between the traditional declaratory theory that clings to the fiction that judges do not make the common law but merely apply and declare it and the undoubted reality of judicial law-making simply has to be accepted. A paper by Justice McHugh (“The law-making function of the judicial process”, (1988) 62 ALJ 15), then a member of the New South Wales Court of Appeal, later a Justice of the High Court, is remarkable for its plain speaking on a subject about which many judges are publicly reticent and its cogent argument for the need for and justification of judge-made law. Justice McHugh acknowledges the limitations on judicial law-making: “A judge does not have authority to remake law generally”. Some limitations are practical – the adjudicative process confines the area in which the judge can legislate and the judge in any event does not have the resources of parliament in assessing alternative law reform proposals. Other limitations are philosophical – “A judge-made rule must be systematically related to the whole class of rules, principles, concepts, standards and doctrines which make up the general body of the common law”. Any rule made by a judge must be integrated in the “often removed but always unbroken line with the past”.
There was a time when it was thought almost indecent to suggest that judges make law – they only declare it. Those with a taste for fairytales seem to have thought that in some Aladdin’s cave there is hidden the common law in all its splendour and that on a judge’s appointment there descends on him knowledge of the magic words “open sesame”. Bad decisions are given when the judges muddle their password and the wrong doors open. But we do not believe in fairytales any more. “The judge as lawmaker”, (1972) JSPTL 22 at 25 per Lord Reid.
In a democracy, more radical reform as to how society should be ordered is properly the function of the legislature. Justice McHugh explains (at p 120) that judge-made law is incremental: The law is not a landscape containing gaps or crevices which the judge can fill. Common law and statute law are more like adjoining fields surrounded by uncleared growth. The boundaries of statute law are permitted to expand in all directions. Sometimes separate, new fields are opened, but the common law is restricted to re-working what remains of its existing field and occasionally to extend its area by clearing a part of the adjoining growth. Common law, unlike statute law, always retains its essential unity. New ground can only be claimed if it can be joined to the old.
A number of objections may be raised to the legitimacy of the model of judicial law-making. Justice McHugh acknowledges and answers the “anti-democratic” objection (that legislative power should be exercised, not by judges, but by popularly elected officials), the “retroactivity” objection (that the retrospective 85
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application of a new rule is unfair to the party affected and undermines the values of certainty and predictability in the law), and the “incompetence” objection (that judges are incompetent to make judgments about complicated social, economic and political problems). None of these objections are absolute or fatal to a theory of judicial lawmaking. In any event, the “ultimate limitation” on judicial law-making is legislative amendment. The reality of judicial law-making has long been apparent. Within the parameters laid down by Justice McHugh, the need for the legitimacy of this process is undeniable. Recent major decisions of the High Court have signalled its adoption of an increasingly activist role. The doctrine of precedent does not compel your Lordships to follow the wrong path until you fall over the edge of the cliff. As soon as you find that you are going in the wrong direction, you must at least be permitted to strike off in the right direction, even if you are not allowed to retrace your steps. And that is what I would ask your Lordships to do. Ostime v AMP Society [1960] AC 459 at 489 per Lord Denning.
The above discussion has focused on the role of the judges in developing the common law. However, in interpreting legislation the courts also make a significant contribution. In the blunt words of Lord Devlin (Samples of lawmaking, 1962, p 2): The law is what the judges say it is. If the House of Lords were to give to an Act of Parliament a meaning which no one else thought it would reasonably bear, it is their construction of the words used in preference to the words themselves that would become the law.
Parliament of course has the option of amending legislation to overcome the effect of the interpretation of its legislative language (which amendments may, of course, in turn have to be interpreted). In some cases the role of the judge is simply one of directly applying the words of legislation to the specific facts. In other cases the legislature may leave policy matters for the consideration of the courts. There is a debate between those who prefer detailed “black letter” law which leaves little discretion to the judges and those who favour “fuzzy” law – drafting which incorporates general principles – which confer a more creative developmental role on the judges. The opponents of “fuzzy” law claim the general principles sacrifice legal certainty for the sake of simplicity. Its advocates counter by pointing out that black-letter law generates its own uncertainties by fostering the search for loopholes. The true role of the courts was described by Justice Michael Kirby, then President of the NSW Court of Appeal, when he said that: Especially in the highest court, there is a proper and legitimate role in creation and expansion of the common law and broad interpretation of the Constitution and statutes. It is only in this way that the Australian Constitution and the common law have been adapted to the vastly different society of today, when compared to the turn of the century.
Eighth Sir Earle Page Memorial Lecture, reported in The Australian (26 November 1993).
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IN CONTEXT Legal analysis and problem solutions [2.220] The researcher must first analyse the factual material, casting aside matters which are not truly relevant to the problem. This procedure will be followed by the uncovering of the applicable legislation and the discovery of judicial decisions either binding or persuasive. Attention should then be focused on applying these to the issues as they have unfolded. This discipline fosters the isolation in the researcher’s mind of the important issues and subsidiary issues. Then the writing must begin. The writing process itself will again help concentrate the mind on the essential things and it will show up gaps in the research or understanding of the problem and the appropriate law. The process just described is an established technique usually taught to students as the procedure for legal problem-solving in assignments and examinations where the facts are not in dispute. This method is known as the IRAC method. I, identify the issue; R, review the law; A, apply the law to the facts; and C, come to a conclusion. Simply put, the four steps are: (a)
identification of the relevant issues emerging from the problem;
(b)
ascertainment and review of the law applicable to those issues;
(c)
application of that law to those issues which have been isolated; and
(d)
come to a tentative conclusion about whether the rule applies to the situation and what the outcome is in the situation.
This is one of the cases in which His Majesty’s judges, through no fault of their own, are unable to do justice and can but gloomily enforce the law and respectfully condemn the Legislature. The Lord Chief Justice, R v Smith in HerbertAP, Wigs at work. (Harmondsworth, 1966).
Step 1 is often a two-part process. In a complex problem it is first necessary to identify the broad problem areas. This process of subdividing into main headings facilities the second part which requires a precise formulation of the legal issue or issues arising. When the step 1 process is complete, part of step 2 will have been accomplished, as isolating the issues will involve identifying the relevant law. To complete step 2 then requires a comprehensive listing of the relevant statute and case law, including precedent, and any policy arguments that may apply. An understanding of why and how that law will determine the problem must be developed. Once again, at this stage the work required by step 3 has begun. To complete step 3 requires not only a statement of the important principles of law but also an application of that law to the significant facts. That requires precise and valid reasoning. Where an issue seems incapable of resolution it should be discussed and reasons for the difficulty put forward. Step 4 of the process requires the researcher to come to a tentative conclusion about whether the rule or law applies to this situation and what will be the likely outcome. It is important to remember to use the IRAC method for each issue identified in a legal problem. All tentative conclusions are then logically connected to come to a final conclusion. 87
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It is when the colours do not match, when the references in the index fail, when there is no decisive precedent, that the serious business of the judge begins. Cardozo BN, Nature of the judicial process (1921) p 21.
The rules associated with legal analysis are of critical importance, particularly in the determination and application of the relevant law. The law applicable to a solution may be found in legislation. There may be specific Acts drafted by parliament that cover the situation. Alternatively, the parliament may have delegated the rule-making power to another body and then the answer will be found in those rules and regulations – commonly referred to as delegated legislation. However, the answer may also be found in cases, and the method used to find the law in those cases is known as case analysis. Cases must be used either because there is no legislation on the relevant topic and it is the common law that is still relevant in that area or, alternatively, parliament may have left to the courts the task of solving a particular problem on a case-by-case approach. From the relevant cases, ratio decidendi and obiter dicta must be used used to extract principles for application in the current factual situation. The correlation of facts between the earlier cases and the case at hand, the status of the court determining the issue, and the jurisdiction will all then become relevant (see the rules associated with the doctrine of precedent at [2.250] ff). For the determination of the law found within legislation the “rules of statutory interpretation” must be applied, ie the rules that govern how a court will view the words that make up legislation. Together with the primary sources, secondary sources will assist in that interpretation process.
Contemporary judicial activism [2.230] Reference was made above to the reality of judicial law-making. While the common law traditionally develops in an incremental manner, there are occasions when more complete reform is affected. At those times the process is not so much one of evolution as of revolution. A changing society demands a changing law and, at times, a new law. While there is a judicial capacity to achieve this, it must respect the necessary balance between the need for change and the authority of the common law system itself. It is Parliament not the courts to which the responsibility to make law is allocated. Although the traditional proposition that judges merely apply the law and not make the law is today seen to be a fiction there does come a point where legal change is so radical that it should be left to Parliament. The argument has been put in these terms (Hyde, The Australian (4 August 1995)): Law-making is the province of democratically derived power, that is political power, and it ought to be unthinkable that those who make laws cannot readily be sacked. There is, thus, no place for philosopher kings and there ought to be no place for activists, unelected, unrepresentative, law-making judges. Law-making is controversial but, so long as it resides in the Parliament, the people are protected, albeit imperfectly, by their vote.
Justice Dyson Heydon prior to his appointment to the High Court expressed his disapproval of judicial activism in these terms in “Judicial Activism and the Death of the Rule of Law” (2003) 47(1) Quadrant 9: 88
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Radical Legal Change is best effected by professional politicians who have a lifetime’s experience of assessing the popular will. They might not be an ideal class, but they are fitter than the courts to make radical legal changes.
Jerrold Cripps expressed it this way (“Judicial activism rears its ugly head”, The Australian (6 June 2014)): The role of the judiciary in our constitutional arrangement is to administer justice according to law and that is a reference to what the law is and not what socially aware judges think it should be. Like most freedoms, freedom of communication is not absolute. So who should decide what are the exceptions? The popularly elected and accountable members of the legislature or seven non-elected and unaccountable members of the legal profession?
[2.240] Two of the most notorious examples of judicial activism in the High Court have already been referred to in Chapter 1 – Australian Capital Television Pty Ltd & New South Wales v Commonwealth [1992] HCA 45 (the Political Advertising case) and Mabo v Queensland (No 2) [1992] HCA 23. They were both decided in 1992 by the High Court presided over by Mason CJ and gave rise to a sustained debate as to the proper limits of judicial law making. In the Political Advertising case, the validity of Commonwealth legislation prohibiting political advertising during certain periods was challenged. The challenge relied on an implied constitutional freedom of speech about matters of politics and government. The High Court upheld the challenge. In the words of Mason CJ at [16], [33]-[34]:
Judge Willis: What do you suppose I am on the Bench for, Mr. Smith? Smith: It is not for me to attempt to fathom the inscrutable workings of Providence. Smith FE, Later Earl of Birkenhead.
The consequence is that Part IIID severely impairs the freedoms previously enjoyed by citizens to discuss public and political affairs and to criticise federal institutions … [It] is difficult, if not impossible, to establish a foundation for the implication of general guarantees of fundamental rights and freedoms. To make such an implication would run counter to the prevailing sentiment of the framers that there was no need to incorporate a comprehensive Bill of Rights in order to protect rights and freedoms of citizens. That sentiment was one of the unexpressed assumptions on which the Constitution was drafted. However, the existence of that sentiment when the Constitution was adopted and the influence which it had on the shaping of the Constitution are no answer to the case which the plaintiffs now present. Their case is that a guarantee of freedom of expression in relation to public and political affairs must necessarily be implied from the provision which the Constitution makes for a system of representative government. The plaintiffs say that, because such a freedom is an essential concomitant of representative government, it is necessarily implied in the prescription of that system.
After discussing at some length the concept of representative government and freedom of communication as an indispensable element in that government, the Chief Justice held at [42] that: Freedom of communication in the sense just discussed is so indispensable to the efficacy of the system of representative government for which the Constitution makes provision that it is necessarily implied in the making of that provision.
A great deal of comment followed the decision and the weight of public opinion fell behind the court. Editorials proclaimed the age of the activist High Court. The implication has arisen that the High Court will now, as cases provide opportunities, develop what is virtually a Bill of Rights. 89
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There “was never a more sterile controversy than that upon the question whether a judge makes law. Of course he does. How can he help it?” Lord Radcliffe, Law Society’s Gazette.
[2.250] The other example of this judicial law-making is the judgment of the High Court in Mabo v Queensland (No 2) [1992] HCA 23. In rejecting the continued application in Australia of the long-established doctrine of terra nullius, Brennan J (with whom Mason CJ and McHugh J agreed) observed (at [41], references omitted) that: If the international law notion that inhabited land may be classified as terra nullius no longer commands general support, the doctrines of common law which depend on this notion that native peoples may be “so low in the scale of social organization” that it is “idle to impute to such people some shadow of the rights known to our law” can hardly be retained … If it were permissible in past centuries to keep the common law in step with international law, it is imperative in today’s world that the common law should neither be, nor be seen to be, frozen in an age of racial discrimination.
He further declared (at [28]) that: According to the cases, the [English] common law itself took from indigenous inhabitants any right to occupy their traditional land, exposed them to deprivation of the religious, cultural and economic sustenance which the land provides, vested the land effectively in the control of the Imperial authorities without any right to compensation and made the indigenous inhabitants intruders in their own homes and mendicants for a place to live. Judged by any civilised standards, such a law is unjust and its claim to be part of the common law to be applied in contemporary Australia must be questioned.
It is important that the reality of judicial law reform and judicial law-making be recognised. However, it is equally important that the limits to this reality be recognised. The need for predictability in law requires that change should be a confined, gradual process and that only rarely should a change like that in Mabo (No 2) be effected. The right balance between the traditional view that a judgment of long standing should not be overturned and the alternative view that the common law must not be “frozen” in prior ages must be achieved. [2.260] On the occasion of his swearing in as Chief Justice of the High Court in 1995 Sir Gerald Brennan acknowledged that: It is inevitable … that the decision of this court would be seen by many to have a legislative flavor. But this court is not a parliament of policy; it is a court of law. Judicial method is not concerned with ephemeral opinions of the community.
A decade later a Justice Michael Kirby opined (in Judicial Activism: Authority, Principle, and Policy in the Judicial Method, The Hamlyn Lectures, Fifty-Fifth Series, Lecture 3 (2003) p 1) that, “we need a middle ground that reflects the pragmatic character of the common law in contemporary time”: The extremes of unbound judicial creativity and invention will be tamed. But so too will be the extreme of mechanical application of pre-existing law without considering the context in which it must operate and its justice and conformity to basic principle.
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IN CONTEXT Judicial activism and the death of the rule of law [2.270] [A] court faced with the choice of doing justice according to the existing law and seeking to overcome injustice by effecting a significant change in the law should, apart from cases where no conflict with the legislature or the general legal and political order may arise, and no financial problem is likely to be created for public bodies, generally apply the existing law and leave it to parliament to make a new and more just law if it desires. If judicial law making does conflict with legislative policy, or the general legal and political order, or creates financial problems which the judicial branch cannot solve but must leave to others to grapple with, it intrudes into the true role of other arms of government. It conflicts with the separation of powers. In the words of Lord Devlin: “It is essential to the stability of society that those whom change hurts should be able to count on even-handed justice calmly dispensed, not driven forward by the agents of change.” Loyalty to precedent is important because it increases the chance of obtaining some certainty. The common law is not always clear, but in most fields it is reasonably ascertainable. It would have much less certainty if it were thought to be readily open to change … Disloyalty to precedent in effect gives judges uncontrolled discretionary power. Lord Camden said in Hindson v Kersey:
Every unjust decision is a reproach to the law or the judge who administers. If the law should be in danger of doing injustice, then equity should be called in to remedy it. Equity was introduced to mitigate the rigour of the law. Re Vandervell’s Trust (No 2) [1974] 1 Ch 269 at 322 per Lord Denning MR.
The discretion of a Judge is the law of tyrants: It is always unknown: It is different in different men: It is casual, and depends upon constitution, temper, passion – In the best it is often times caprice: In the worse it is every vice, folly and passion, to which human nature is liable. The doctrine of precedent is a safeguard against arbitrary, whimsical, capricious, unpredictable and autocratic decision making. It is of vital constitutional importance. It prevents the citizen from being at the mercy of an individual mind uncontrolled by due process of law.
Justice Dyson Heydon, “Judicial activism and the death of the rule of law”, (2003) XLVII(1-2) Quadrant Magazine.
2.3 THE COURT SYSTEM [2.280] The structure of courts within the Australian judicial system is complicated by the duality resulting from State, Territory and Federal courts having, to some extent, overlapping roles. That complexity is increased by the fact that most courts possess both original jurisdiction, ie to hear and determine a matter for the first time (ie at “first instance”) and appellate jurisdiction, ie to hear and determine an appeal from the decision of a lower court. Nevertheless the basic structure of our courts has retained the essential features of its English parent and has remained relatively constant since its inception.
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IN CONTEXT Courts The silence awoke Mr Justice Stareleigh, who immediately wrote down something with a pen without any ink in it, and looked unusually profound to impress the jury with the belief that he always thought most deeply with his eyes shut. Dickens C, The Pickwick Papers (1837).
[2.290] Courts are independent of the executive arm of government and determine disputes by conclusively declaring the state of law between the parties. The decisions of courts are enforceable. Courts have a role in resolving the most complex and entrenched disputes, and those where the amounts or issues at stake are significant and justify the high cost of litigation. However, the importance of the courts’ role is not just limited to commercial litigation. Only courts have the capacity, by a judge’s decision, to enforce the law irrespective of the power imbalance that might otherwise exist between the parties. In doing so courts provide the quintessential forum to achieve justice, and consequently have the capacity to not just declare the law in any particular matter before it but also change behaviour. Private informal mechanisms cannot do this: Sometimes nothing less than court orders are needed to protect minorities, stigmatised groups and people who suffer from discrimination. Settling disputes behind closed doors involving those who repeat harassment or discrimination may not serve the purpose of preventing breach of the law, redressing legitimate grievances and educating the offender and the community. Unfair outcomes can potentially arise through the use of informal mechanisms due to the private nature of negotiation and the settlement process. Inequalities may not be brought to light or questioned in a system that relies too heavily on informal processes. For this reason, litigation is not only concerned with dispute resolution but also fulfils the important function of dispute prevention and creates binding precedents, so that parties can predict the likely outcomes in their choice whether to pursue disputes.
Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System (2009).
Federal courts Unelected, unrepresentative and substantially irremovable, it is no bad thing their function is not to legislate. Sir Ninian Stephen, on High Court Judges, The Age (15 May 1982).
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[2.300] Reference has already been made to the growing scope and complexity of federal law and to the existence of Federal courts alongside the State system. Federal courts derive their authority from the Australian Constitution.
High Court of Australia [2.310] The Constitution itself established the High Court of Australia. The original court of three was expanded to seven at an early date and has since remained at that number. It is the highest judicial tribunal in Australia and, since the abolition of Privy Council appeals, it is the final court of appeal from the decision of any Territory, State or Federal court, and from any High Court Justice exercising original jurisdiction. As Padraic McGuinness has pointed out (“Scrutiny of the Judiciary”, Sydney Morning Herald (30 March 1995)):
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For it must not be forgotten that the powers of the High Court are now in principle unchallengeable – not only is it the final court of appeal for all litigation in Australia, it is also the final and supreme arbiter on the meaning and scope of its own powers. It is not as if the court has been modest in its claims – its ascendancy, and even the meaning of the judicial power and the separation of powers, is arguably far greater than that originally envisaged by the Constitution.
With the singular exception of certain appeals from the Family Court, since 1984 any appeal to the High Court requires special leave. An application must be made which establishes the importance of the issue in question before the High Court will proceed to hear the appeal itself. In the exercise of its appellate jurisdiction, the High Court can hear appeals from: a)
any justice exercising the original jurisdiction of the court;
b)
any federal court or court exercising federal jurisdiction; and
c)
the Supreme Court of any State.
This jurisdiction is granted by s 73 of the Constitution and is exercised by High Court benches, usually consisting of three, five or seven judges depending upon the nature and significance of the appeal. The process by which an applicant seeks special leave to appeal to the High Court gives to the court an opportunity to filter the cases coming before it and to hear those which will further the process of legal development and reform, rather than simply provide an opportunity to dispense justice in the particular instance. In addition to its appellate jurisdiction, the High Court possesses original jurisdiction which is derived from the Constitution itself and is expandable as set out in s 76. It has been permanently located in Canberra since 1980, although occasionally it hears cases in other capital cities.
Family Court [2.320] Until the last quarter of the twentieth century, the High Court enjoyed virtually sole jurisdiction, industrial matters aside, within the federal court system. That situation changed with the Family Law Act 1975 (Cth) which created the Family Court of Australia to preside over the divorce process and the ancillary matters that arise as to property, maintenance and custody of children. In order to complete the power of this court to deal with ex-nuptial children, various States have referred their powers to the Commonwealth under s 51(xxxvii) of the Constitution. It is interesting to note that these references of power were necessary because the Constitution did not contemplate children born outside a marriage relationship. Section 51(xxii) grants power over custody issues only in relation to divorce and matrimonial powers.
There has been some concern expressed that the judges of the High Court, rather than the Australian people and their elected parliamentary representatives, seem able, in effect, to bring about changes through interpretation of the Constitution in the light of what they regard as changing national circumstances. Yet this is a trend that is not only unavoidable but also desirable. It prevents our being bound irrevocably by the, in part, dead letter of the founding fathers, who can have had little perception of the complexities of our modern world. Hawke B, Adelaide Advertiser (12 July 1983).
The Family Court exercises its appellate jurisdiction by sitting as the Full Family Court to hear appeals either from a single judge of the Family Court or from a magistrate in a State court exercising jurisdiction under the Family Law Act, that Act investing such jurisdiction in the lower courts (the local courts or magistrate’s courts) in matters relating to custody of 93
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and access to children and maintenance. The appeal from a single judge lies only on a question of law as opposed to a question of fact. No judge writes on a wholly clean slate. Frankfurter F, The commerce clause (1937). In December 1902, after Oliver Wendell Holmes had been appointed and confirmed as associate justice of the US Supreme Court, the Middlesex Bar Association in his home state of Massachusetts honored him with a send-off banquet. At the end of the festivities, one of his supporters said: “Finally, justice will be done in Washington”. “Don’t be too sure”, replied Justice Holmes, “I am going there to administer the laws”. Gilbert M (ed), Oxford book of legal anecdotes (Oxford University Press, 1986).
The creation of the Family Court represents a shift in attitudes to family law matters, which resulted in continuing and often heated debate for the reason that the new law was conceptually ahead of community thinking. The Family Court is also associated with Australia’s first instances of fatal violence against judges and their families.
Federal Court [2.330] The Family Court represents a major societal addition to the Australian court structure; however, from a legal standpoint, the most significant development has been the creation of the Federal Court in 1976 by the Federal Court of Australia Act 1976 (Cth). The Act provides for both original and appellate jurisdiction. The court’s original jurisdiction is conferred by over 150 statutes. In the conduct of its appellate work, the Federal Court sits as a full court to determine appeals from the decision of single Federal Court judges, from the territorial supreme courts and from single justices of State Supreme Courts in cases involving federal matters – in particular, income tax.
Federal Circuit Court [2.340] In 1999 the Federal Government established the Federal Magistrates Court as a lower-level federal court. In 2013 it became known as the Federal Circuit Court of Australia. The features of the court as explained by Daryl Williams QC, the then Attorney-General, are (Australian Financial Review (3 December 1999)): to provide a cheaper, faster and more efficient method of dealing with less complex civil and family law matters. It will help ease the pressure on the Family Court and reduce waiting lists in family law matters. It will also allow Federal and Family Court judges to concentrate on more complex matters. The Government’s aim is to keep people out of courts where possible, encouraging them to use other dispute resolution processes to deal with their problems. The Federal Magistrates Service will strongly encourage the use of conciliation, counselling arbitration and mediation in appropriate cases. The Federal Magistrates Service will also encourage the use of community-based counselling and mediation services, to give clients as wide as possible a choice The Government does not want the Federal Magistrates Service to be an expensive new court with its own staff, buildings and infrastructure. It will therefore use the infrastructure of existing courts as much as possible. Accessibility is also crucial. As well as basing some federal magistrates in regional locations, they will also travel extensively on circuits to bring their services within reach of as much of the community as possible.
State courts [2.350] Each State and Territory has its own separate court system established pursuant to the constitution of each jurisdiction. Although the names and jurisdictional limits of the 94
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courts are not consistent, the basic features of the structure, hierarchy and operation of the court system within a jurisdiction are common to each. Each jurisdiction has a hierarchy comprising three levels – the superior court (the Supreme Court), an intermediate court (the District or County Court) and a lower court (the Local or Magistrates Court). For each of the States and Territories, the High Court of Australia is the highest court of appeal. In each jurisdiction, there are a number of tribunals that exist outside the court system. [2.360]
The structure of the Australian court system
It is no longer appropriate to react with outraged dignity when a litigant propounds a novel theory judiciously constructed from elements of received doctrine. Champtaloup v Thomas [1976] 2 NSWLR 264 at 271 per Glass JA.
Superior courts [2.370] The highest court in each State or Territory is the Supreme Court. The first of such courts, the Supreme Court of New South Wales, has its origin in the 1824 Charter of Justice. The court comprises the Chief Justice of New South Wales, the President of the Court of Appeal, the other judges of appeal and ordinary judges. The court is separated into divisions exercising original and appellate jurisdictions. Its original jurisdiction is exercised by a single judge. Where an appeal is taken from a decision of such a judge, the Court of Appeal is constituted by three judges. (Appeals from lower courts are normally disposed of by a single judge of the Supreme Court.) Criminal appeals are dealt with in the Court of Criminal Appeal which is usually constituted by any three 95
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judges, sometimes including the Chief Justice. In terms of judicial hierarchy, it should be noted that there is the office of Chief Justice of the Supreme Court and the separate office of President of the Court of Appeal. I do not doubt that there are some cases in which an ultimate court of appeal can and should vary or modify what has been thought to be a settled rule or principle of the common law on the ground that it is ill-adapted to modern circumstances ... [But] the court is neither a legislature nor a law reform agency. Its responsibility is to decide cases by applying the law to the facts as found. The court’s facilities, techniques and procedures are adapted to that responsibility; they are not adapted to legislative functions or to law reform activities. State Government Insurance Commission v Trigwell [1979] HCA 40 at [19] per Mason J.
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In other Australian States and Territories, appeals from single judges of the Supreme Court are heard by a Full Court of the Supreme Court, usually comprising three members of that court, except Queensland, which since 1991 has a Court of Appeal as a separately constituted division of its Supreme Court, similar to the New South Wales structure. These courts have the power to supervise the proceedings and review the decisions of inferior courts, and also exercise supervision over the admission into and subsequent conduct of members of the legal profession. With respect to State law, the Supreme Courts have inherent jurisdiction unlimited as to amount and type of crime. In addition to State jurisdiction, these courts have had their authority extended to cover some areas of federal jurisdiction, granted specifically by federal law. [2.380] There are, however, limits to the authority of Supreme Courts. The first category of limitation is territorial. Generally speaking, it is necessary for the defendant to be able to be served within the State and for those against whom an order may be made either to be physically present or own property within the State so that effect may be given to an order. The other category of limitation is more specific. At times, the efficient administration of justice may require a statutory transfer of jurisdiction to another court. Thus specialist courts are encountered in each jurisdiction to deal, for example, with land and environment matters, or industrial matters.
Intermediate courts [2.390] On the next tier below the Supreme Courts one encounters the District Court. On its establishment in 1853, courts were allocated to geographical districts within New South Wales. In 1973 the District Court Act 1973 (NSW) created one statewide court replacing both the earlier district courts (for civil matters) and the courts of quarter sessions (for criminal matters). The civil jurisdiction of the court is limited to $750,000 unless the restriction is waived by consent of the parties. In its criminal jurisdiction the court hears most matters committed for trial by the local court with the exception of the most serious crimes such as murder, which are dealt with by the Supreme Court. Equivalent District Courts are established in Queensland, South Australia and Western Australia, while in Victoria they are known as County Courts. They do not exist in Tasmania, the Australian Capital Territory and the Northern Territory. The monetary limits on claims vary only slightly, with the exception of South Australia where there is no limitation on the amount of claim that may be made.
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Lower courts [2.400] At the lowest level in the State Court hierarchy are those courts presided over by magistrates and known as local courts (in New South Wales, South Australia and Western Australia), courts of petty sessions (for the criminal jurisdiction of Western Australia and Tasmania), courts of summary jurisdiction (for the criminal jurisdiction of South Australia), courts of requests (in Tasmania) and magistrates courts (in Victoria and Queensland). The civil jurisdiction of these courts is limited to claims below a certain amount (ranging throughout Australia from $10,000 to $100,000), the point being that such courts should deal primarily with issues of fact, rather than law, and for modest amounts of money. In the exercise of their criminal jurisdiction, these courts deal with committal proceedings, sometimes in cases of serious crime, in which they decide whether the accused person should face a full trial for the matter charged or whether, there being insufficient evidence, the charges should be dismissed. They also possess the jurisdiction to hear and determine charges alleging offences of a minor nature.
Jurisdictional conflicts [2.410] Nine discrete but related legal systems exist within Australia – Federal, State and Territory. Each system has its own court structure and it is hardly surprising that there is, from time to time, jurisdictional conflict as to which legal system and which court is the appropriate point of reference. A number of mechanisms exist to minimise the inconvenience and scope for disputation. Federal legislation may confer authority on State courts in relation to particular matters (ss 71 and 77 of the Constitution) and, pursuant to what is referred to as the accrued jurisdiction, the Federal courts may decide issues arising under State laws when such issues form part of the matter in respect of which jurisdiction is specifically conferred on the Federal Court. A common example of accrued jurisdiction occurs under the Competition and Consumer Act 2010 (Cth). The jurisdiction of the Federal Court granted by that Act in relation to eg misleading or deceptive conduct (under s 18 of the Australian Consumer Law) extends to associated issues of contract law and torts law that fall within State rather than Federal jurisdiction.
In times of social change and tensions in the world, great are the demands upon the courts and the challenge to them in reconciling competing interests and in accommodating traditional rules to new circumstances. HM The Queen, opening of the High Court, Canberra, 26 May 1980.
The most significant development for some time was nevertheless the cross-vesting procedure. Consultation between Federal and State governments finally led to the enactment by each jurisdiction in 1987 of the Jurisdiction of Courts (Cross-vesting) Acts which, together, provide for State and Territory courts to be vested with federal civil jurisdiction (except in certain industrial and trade practices matters) and for the Federal Court to be vested with the jurisdiction of the State and Territory Supreme Courts. In Re Wakim; Ex parte McNally [1999] HCA 27 it was held that the Acts providing for the conferring of jurisdiction in State matters in federal courts were invalid.
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2.4 TRIBUNALS [2.420] In addition to the federal courts, the Commonwealth has also created tribunals that exercise non-judicial but nonetheless significant powers. These various tribunals are not courts: the High Court determined in 1956 that the “judicial power of the Commonwealth” could not be granted to an administrative (ie non-judicial) body, and that the power to punish for contempt of court was reserved to the courts: R v Kirby; Ex parte The Boilermakers’ Society [1956] HCA 10. This consequence flows from the separation of powers under the Constitution – federal tribunals can review decisions and mediate resolutions but do not have the power to make and enter orders. The Australian Law Reform Commission Report, For your information: Australian privacy law and practice, Report No 108 (2008) explains (at [35.35]) that: Courts of justice do not pretend to furnish cures for all the miseries of human life. They redress or punish gross violations of duty, but they go no farther; they cannot make men virtuous; and, as the happiness of the world depends upon its virtue, there may be much unhappiness in it which human laws cannot undertake to remove. Evans v Evans (1790), Hag Con 35 at 38 per Sir William Scott.
Since federal tribunals are part of the executive arm of government, they are prohibited from exercising the judicial power of the Commonwealth under s 71 of the Australian Constitution. They lack the power to make determinative findings of law, and their decisions are subject to scrutiny by the courts, either through judicial review or statutory appeal on questions of law. The decisions-making powers of tribunals are drawn from, and cannot exceed, those of the primary decision maker. Tribunals only may interpret law incidentally in the course of their proceedings, and such interpretations are not binding on the parties as a declaration of right and obligations. They also have no power to enforce their own decisions.
One of the most important federal tribunals is the Administrative Appeals Tribunal (AAT) which conducts independent merit reviews of administrative decisions made under more than 400 Commonwealth laws (see [4.310]). On 1 July 2015 the Migration Review Tribunal, Refugee Review Tribunal and the Social Security Appeals tribunal were merged with the AAT. As there is no strict separation of powers under State constitutions there is not the same restriction on State and Territory tribunals exercising adjudicating functions in the determination of civil disputes. A range of tribunals exercising specialist jurisdiction in relation to particular areas of law have been established. A more recent development has been the establishment of “super tribunals” – multi-jurisdictional tribunals with the power to review administrative decisions under State legislation and resolve consumer and commercial disputes. In New South Wales the “super tribunal” is the NSW Civil and Administrative Tribunal which was established in 2014 and which consolidates the work of 22 former tribunals into a single point of access for specialist tribunal services in NSW that operates through four divisions – Administrative and Equal Opportunity Division, which reviews administrative decisions made by NSW Government agencies and resolves discrimination matters. Consumer and Commercial Division, which resolves a wide range of everyday disputes such as tenancy and other residential property issues, and disputes about the supply of goods and services. Guardianship Division, which determines applications about people with a decision-making disability and who may require a legally appointed substitute decision maker.
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Occupational Division, which reviews decisions by government agencies about licensing and complaints concerning professional conduct and discipline.
2.5 TERMINOLOGY AND CITATION [2.430] The existence of the doctrine of precedent depends upon the relevant decisions being recorded and being available for subsequent reference. It was not possible to commence the common law tradition in any meaningful way until the development of printing, thus allowing the creation and reproduction of the necessary judgements and the reasons supporting them. Electronic publishing now assists that process. Because of the breadth of scope of cases making up the common law system in Australia (federal, State and Territory), and of the persuasive authority of decisions comprising comparative common law jurisdictions, eg the United Kingdom, Canada, the United States and New Zealand, it is necessary to adhere to an established system for the identification and citation of cases of various courts at various times, thus enabling their easy location.
Civil cases [2.440] A case is reported in the names of the parties eg Terry v Giugni. That citation means that the matter before the court has been brought by Terry against Giugni. If this action is before a State court, Terry will be the plaintiff and Giugni the defendant. In the Federal Court, Terry is the applicant and Giugni is the respondent. On appeal, the party appealing (the appellant in both State and federal courts) is named first so the case may now be reported as Giugni v Terry if Giugni was dissatisfied with the original decision and has appealed against it. In appellate proceedings, the party defending the appeal is known as the respondent in both State and federal courts. The “v” of course stands for versus, but is always spoken as “and”, ie Terry and Giugni not Terry versus Giugni. The convention is always that the case name be italicised. In some cases there may be a number of plaintiffs/applicants and defendants/respondents.
To give judgment privately, is to put an end to Reports. And to put an end to Reports is to put an end to the law of England. Burke, Impeachment of Warren Hastings: Report on the Lords’ Journals, 1794.
The citation Terry & Ors or Terry et al (abbreviations for Terry and others) means that Terry is simply the first of a number of plaintiffs. The brief citation often disguises a more complex citation. The litigation in the Federal Court surrounding the establishment of the Super League is simply reported in the CCH service a News Limited v Australian Rugby Football League Limited & Ors [1996] FCA 1256, but the transcript of the judgment discloses two entire pages of details of the applicant and 19 respondents, as well as these parties in various combinations as cross-claimants and cross-respondents.
Criminal cases [2.450] Criminal actions are usually instituted by the Crown on behalf of the State. The citation of a criminal case may thus be R v Terry, “R” being an abbreviation of regina, Latin for queen (or, rex, Latin for king), and Terry being the person accused and known as such. However, in some instances the proceedings may be instituted by the Director of Public Prosecutions for the Commonwealth, a State or Territory and may be cited as Director of 99
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Public Prosecutions (or DPP) v Terry. Conventionally the case R v Terry will subsequently be referred to as Crown and Terry or simply as Terry.
The case report [2.460] Technology has impacted on the reporting of judgments as it has on all other aspects of contemporary life. Cases continue to be published in the volumes of the official reports for each court and jurisdiction – eg the Commonwealth Law Reports for decisions of the High Court – as well as the unofficial reports of commercial publishers – in relation to particular areas of law – but this text has adopted medium neutral citation which has evolved as a result of increased use of electronic law research and reliance on the various electronic databases. A medium neutral citation allows a resource such as a decision of a court to be citied irrespective of its publication medium, namely, in print form, or in electronic form available on the Web. In essence, a medium neutral citation consists of three main components: [] . Further, if paragraph numbers have been incorporated into the resource, a specific location within the resource can be identified using the paragraph numbers. For example, the official citation for Thomas v Mowbray is (2002) 233 CLR 307. The medium neutral citation is [2007] HCA 33. This text adopts, where possible, medium neutral citation to facilitate access via austlii.edu.au. Readers are nevertheless advised that, if arguing a case before a superior court, reported cases must be cited with reference to the relevant authorised official report.
QUESTIONS 1.
“The role of the judges is simply to apply the law – whether legislative or judge-made – and they have no role in developing the law beyond its current boundaries.” To what extent does this proposition reflect the constitutional scheme and practical reality?
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2.
The doctrine of stare decisis means that judges are bound by the decisions of a court higher in the hierarchy. Explain the operation of the doctrine. What are its advantages and disadvantages?
3.
How does judicial law making balance flexibility and certainty?
4.
What is the difference between a court and a tribunal?
Chapter 2 The Courts and Common Law
WEB REFERENCES Federal Circuit Court of Australia http://www.federalcircuitcourt.gov.au Federal Court of Australia http://www.fedcourt.gov.au High Court of Australia http://www.highcourt.gov.au
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CHAPTER 3
The Parliament and Statute Law Andrew Terry THE BUSINESS CONTEXT Statute law (legislation) now constitutes that part of the law which most dominates our social and commercial lives. The words of French CJ (“Bending words” (20 March 2014)) spoken to an audience of law graduates are also applicable to business students given the significance of statutes in all business activities: It is of fundamental importance that all law graduates, whether going into practice or other forms of law job, should be aware of the central significance of statutes in the Australian legal system. They should be aware of the interactions between the common law and statue law. There are very few problems which are purely common law problems … They should be able to apply the provisions of a statute to a particular fact situation and be able to make inferences about rights, powers, duties and liabilities which may arise out of that application.
[3.10]
3.1 THE NATURE AND SIGNIFICANCE OF LEGISLATION .................................................... 104
[3.80]
3.2 THE MODERN INSTITUTION OF PARLIAMENT ............................................................. 110
[3.160]
[3.250]
[3.100]
The House of Representatives ............................................................................. 111
[3.120]
The Senate ............................................................................................................ 112
[3.150]
The Crown ............................................................................................................ 115
3.3 THE LEGISLATIVE PROCESS ............................................................................................. 115 [3.170]
First reading stage ................................................................................................ 116
[3.180]
Second reading stage .......................................................................................... 116
[3.190]
Committee stage .................................................................................................. 116
[3.200]
Third reading stage .............................................................................................. 117
[3.210]
The royal assent .................................................................................................... 117
[3.220]
Disagreement between the houses .................................................................... 117
[3.230]
The date of operation .......................................................................................... 118
[3.240]
Parliamentary privilege ........................................................................................ 118
3.4 THE INTERPRETATION OF LEGISLATION ........................................................................ 118 [3.250]
The role of the courts .......................................................................................... 118 103
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[3.370]
[3.270]
The approach to the interpretative role ............................................................. 120
[3.280]
Techniques of interpretation ............................................................................... 121
[3.320]
A purposive approach to interpretation ............................................................. 123
[3.350]
The use of extrinsic materials .............................................................................. 124
3.5 PROBLEMS AND PROSPECTS .......................................................................................... 125 [3.370]
An uncodified system .......................................................................................... 125
[3.390]
A bewildering array of legislation ....................................................................... 127
[3.410]
Legal gobbledygook ............................................................................................ 128
[3.420]
Drafting techniques ............................................................................................. 128
[3.430]
The legislative process ......................................................................................... 129
[3.450]
Deregulation ......................................................................................................... 130
[3.460]
Reforming the process ......................................................................................... 131
3.1 THE NATURE AND SIGNIFICANCE OF LEGISLATION As a collection our statute book might be summed up as beyond the average citizen’s pocket to purchase, beyond his bookshelves to accommodate, beyond his leisure to study and beyond his intellect to comprehend. Carr CT, Delegated legislation (Cambridge University Press, 1921).
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[3.10] Legislation is the formal declaration of legal rules by parliament and people or bodies authorised by parliament. The legal rules made by parliament are known as enacted law, or statute law, and take the form of Acts of Parliament or statutes. Legal rules made by others empowered by parliament to make laws are known as subordinate legislation or delegated legislation and take the form of regulations, rules, orders or by-laws. Reference has been made (at [1.680]) to the principle of parliamentary supremacy – that if legislation is underpinned by a constitutional head of power it cannot be overridden or set aside. The court’s interpretative role does not infringe on parliamentary supremacy. Although Parliament in fact may be frustrated by the courts in their interpretation of legislation the Parliament can of course always amend the legislation to clarify or reframe the legislative provision. The power of the High Court to invalidate legislation made beyond the legislative powers expressly conferred on it by the Constitution similarly does not challenge the principle of parliamentary supremacy. In the Australian context where the Constitution allocates legislative power between the Commonwealth and the States, legislation is valid only if constitutionally valued.
Chapter 3 The Parliament and Statute Law
IN CONTEXT Commonwealth Acts introduced each year 1901-2012
[3.20] Australian Institute of Company Directors, Towards better regulation (White Paper, July 2013).
IN CONTEXT Australia’s legal landscape is dominated by statutes [3.30] Australia’s legal landscape is dominated by statutes. The Constitution of the Commonwealth is s 9 of the Commonwealth of Australia Constitution Act 1900, a statute of the British Parliament. The Constitutions of the States are statutes which originally derived their legal effect from Imperial Acts and were continued in force by the Commonwealth Constitution. The legislative, executive and judicial powers of the Northern Territory and the Australian Capital Territory are derived from Self-government Acts enacted for each of them by the Commonwealth Parliament. Statutes enacted under the legislative power of Commonwealth, State or Territory Parliaments take their place in a common law environment and tradition which informs the way in which they are interpreted, the meaning of terms used in them and underlying assumptions upon which they may rest … There are few, if any, cases decided by the High Court today that do not involve the interpretation of one or more statutes or are not resolved within some statutory 105
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framework. What is true for the High Court is true for the courts throughout the country. So too for law school examinations. There are few, if any, questions which one could conceive that could realistically propose a problem defined purely in terms of the common law and able to be answered entirely by reference to its principles and doctrines. French CJ in “Bending Words: The Fine Art of Interpretation”, lecture (20 March 2014).
The science of legislation is like that of medicine in one respect; that it is far more easy to point out what will do harm than what will do good. Colton CC, Lacon (1820).
[3.40] The growth in the importance of legislation in regulating contemporary society is both necessary and inevitable. The common law may have evolved into an intellectual system of great integrity but this has been a product of centuries of development. The judicial process is not equipped for an immediate response to changed circumstances. It is dependent on an appropriate case being brought before the court. It cannot lay down a new set of detailed rules to cover a broad range of activities. It cannot alter or repeal large areas of pre-existing common law or legislation. It cannot create new legal institutions to implement a new regime. It does not have the resources of parliament in formulating policy. There is of course a more basic philosophical argument – the reluctance of the courts to usurp functions that properly fall within the province of parliament. Law making is a matter for the political process rather than the courts. It is a consequence of the hard-fought struggle for democracy enshrined in what is today the Constitution that the legislature consisting of elected representatives is the institution of government entrusted with the role of lawmaking.
People say that moving the law forward should be left to Parliament, and not the judges. Of course, when you look at some of the judges they may be right. Lord Denning Sunday Times (1 August 1982).
In State Government Insurance Commissioner v Trigwell [1979] HCA 40, Mason J explained that there are powerful reasons why a court should be reluctant to modify a settled rule or principle of the common law (at [19]): The court is neither a legislature nor a law reform agency. Its responsibility is to decide cases by applying the law to the facts as found. The court’s facilities, techniques and procedures are adapted to that responsibility; they are not adapted to legislative functions or to law reform activities. The court does not, and cannot, carry out investigations or inquiries with a view to ascertaining whether particular common law rules are working well, whether they are adjusted to the needs of the community and whether they command popular assent. Nor can the court call for, and examine, submissions from groups and individuals who may be vitally interested in the making of changes to the law. In short, the court cannot, and does not, engage in the wide-ranging inquiries and assessments which are made by governments and law reform agencies as a desirable, if not essential, preliminary to the enactment of legislation by an elected legislature.
Similarly, courts are powerless to prescribe detailed regulations that may be required or to construct the necessary administrative machinery.
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PARLIAMENT OUT OF ITS TERRITORY ON PROOF OF GUILT [3.50] We are about to witness an unprecedented clash between the High Court and parliament, which has reversed two recent High Court decisions and thereby fundamentally changed the criminal justice system. Never before has such a clash occurred. The High Court decided in the first of those matters, X7 case (2013) HCA 29, and in the second, Lee’s case (2014) HCA 20, that it was a fundamental principle of common law that it was for the prosecution to prove the guilt of a person. An accused should not be compulsorily examined after being charged, nor the prosecutor provided with transcripts of any compulsory examination. Each of those decisions represents the considered and independent views of the highest court in the land. Each decision represents the end of a lengthy appeal process, where the matter has been debated, discussed and views formed by some of the most formidable minds in the country. But all of this has been set aside by parliament without any evidence that the executive or those members of parliament who passed the relevant act had considered, let alone understood, the views of the High Court.
abrogate or restrict a fundamental freedom or principle. It cannot be the basis of the amendments, only its effect. Rather, it is an attempt to clothe the amendments with some form of legitimacy. At best, it shows a complete lack of understanding of what was said by the High Court; and, at worst, an attempt to mislead parliament. One might have expected more of an explanatory memorandum. In making the amendments, parliament is proclaiming its omniscience. It has become the modern-day equivalent of King John, the subject of the Magna Carta. As University of NSW law professor Martin Krygier has said, the primary enemy of the rule of law is arbitrary power because it threatens the freedom, dignity and security of the lives of those subject to it. There is the need to temper power, moderate its exercise so that it cannot be exercised at the will and caprice of power holders and so that they are required to take into account the views, interests, defences and explanations of those their power may harm. But parliament is not omniscient and does not have absolute power. It is a child of the Constitution and not its master.
Parliament has amended sections 24A and 25A of the Australian Crime Commission Act 2002 by the Enforcement Legislation Amendment (Powers) Act 2015, which took effect from July.
Chapter III of the Constitution invests the judicial power of the commonwealth in the High Court. Parliament is given no power to infringe on that power.
This permits examinations of an accused after they have been charged, even when the questions directly relate to the subject matter of the charges and removes the commissioner’s obligation to supress the transcripts of compulsory interrogations.
It is a short step from the constitutional requirement that judicial power can be vested only in the courts identified in section 71, to the conclusion that chapter III confers judicial power on the High Court and this entails the exclusive power to protect its content.
According to the explanatory memorandum, the amendments were based on the “principle of legality”. But this principle is no more than a rule of statutory construction that requires a clear statutory intent to
In the two decisions, the High Court has gone to extraordinary lengths to explain the accusatorial nature of the criminal justice system and the 107
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fundamental importance of the prosecution having to prove the case: the presumption of innocence. In the writer’s opinion, chapter III implies that any fundamental alteration to the process of criminal justice is a matter for the High Court and not parliament. The judicial power conferred on the High Court is exclusive and necessarily involves the High Court being the guardian of the process of criminal justice. If it were otherwise, the High Court would be expected to stand by and be a witness to oppressive trials: unjust trials. That would be inconsistent with conferring of judicial power: it would leave it bereft of any substance. Nor is it simply a matter of leaving it to the discretion of the trial judge to exclude
evidence. An important principle is involved. It is not a matter for each trial judge to apply in their own discretion. To make this implication would require the High Court to be brave and take a bold step. But such a step is required in these extraordinary and difficult times when parliament is not respecting the proper process of criminal justice and is seeking to justify every statutory incursion on our fundamental freedoms behind the cry of protecting us from harm. We need the High Court to stand up and protect us from greater harm – the undermining of our fundamental freedoms. Speed R, The Australian (18 September 2015)
IN CONTEXT Common law and legislation [3.60] Until relatively recent times the main body of law was common law developed through the decisions of the courts. Today legislation is the predominant source of law and the courts’ time is increasingly devoted to its interpretation. Traditionalists regret this trend while at the same time acknowledging that the demands of contemporary society require increasing reliance on legislation. The regret is understandable and never better expressed than by Fitzgerald who states that “cases are interesting and statutes dull”. Fitzgerald suggests six reasons for this difference between the two sources of law: No new right in the law, fully-fledged with all the appropriate safeguards, can spring from the head of a judge deciding a particular case; only Parliament can create such a right. Malone v Metropolitan Police Commissioner [1979] 2 WLR 700 at 725 per Megarry VC.
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(i)
A case is about real living people: a statute is abstract and disembodied, and it is only human to prefer a story to a formula.
(ii)
A law case contains that prime ingredient of the play, novel or story – conflict. Here again a statute differs: it may provide a solution to a conflict but the conflict itself is not apparent on the face of the statute.
(iii)
The judgment in a decided case provides the reader with what is one of the most attractive and appealing features of the legal process – the feature which above all others makes law an attractive thing to study – I mean the judge’s reasoning. Much of the fascination of legal study lies in examining how far a court’s reasons justify its conclusions. With statutes it is otherwise. Here we have no reasons, only provisions – no justifications, only conclusions. Reasons and justifications can often be found, but never inside the statute itself.
Chapter 3 The Parliament and Statute Law
(iv)
There is the time dimension. Cases can be looked on as points on a line of development, and by working through a line of cases we can trace the growth, extension and continuous development of a doctrine; we can extract general principles. Statutes too have a time dimension, but the statute book presents us with a series of discrete jumps rather than the continuous growth which we find in case law. And new statutes, when they supersede their predecessors, make us overlook the importance of examining the statutes that have been superseded. As a result statute law provides no general principles, and a subject without principles is one of very little interest.
(v)
Common law cases evidence a fascinating counterpoint or dialectic between the individual disputants’ requirement for a particular decision and the society’s need of a general rule, resulting in a tension wholly absent from statute law.
(vi)
Finally of course the judgments in the law reports are not only easily readable but also at times contain prose of very high quality indeed. The same can’t be said of statutes.
Fitzgerald PJ, “Are the statutes fit for academic treatment?”, Journal of the Society of Public Teachers of Law, 1970-71, p 144.
IN CONTEXT Citing legislation [3.70] The law made by parliament (which is referred to as legislation, statutes, Acts, written law or enacted law) in effect simply consists of words giving expression to the legislature’s scheme. Legislation sometimes has a formal title (eg “An Act relating to competition, fair trading and consumer protection and other purpose”) but is invariably referred to by its “short title”, the form of which is usually the subject of one of the earliest sections of the Act. In the case of the legislation referred to above, s 1 (headed “Short title”) simply provides that “This Act may be cited as the Competition and Consumer Act 2010”. In referring to legislation the relevant jurisdiction (or an abbreviation thereof) should be added after the year, to indicate its source. The correct citation of the legislation referred to above is the Competition and Consumer Act 2010 (Cth) indicating that it is an Act of the Federal Parliament. This short title includes by implication reference to later legislation amending the principal Act. A reference to the Competition and Consumer Act 2010 (Cth) is taken to mean the Act as it stands today – complete with the amendments to it. The operative provisions of an Act are known as sections, which may be divided into subsections, which in turn may be divided into paragraphs, which in turn may be divided into subparagraphs. Depending on the complexity of the provision,
[A statute] is general and comprehensive in form, precedent particular and limited. A decision, whatever implications may be read into it by subsequent comparison and interpretation, exists primarily for the settling of a particular dispute. A statute purports to lay down a universal rule. Allen CK, Law in the making, 1958.
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further divisions may be necessary. The standard abbreviation for a subparagraph of a paragraph of a subsection of a section is eg s 52(1)(a)(i). If reference is being made to paragraph (a), the convention now adopted in federal legislation is to refer to paragraph 52(1)(a). To arrange sections into convenient groupings, an Act may be divided into Parts which may in turn be divided into Divisions and, if necessary, subdivisions. An Act may have one or more Schedules – The Australian Consumer Law (see Chapter 17) is eg enacted as Sch 2 to the Competition and Consumer Act 2010 (Cth). In the case of legislation such as the Income Tax Assessment Act 1936 (Cth), which has massively increased in volume (at least 20-fold) as amendments are constantly introduced to protect, extend and vary the tax base, the legislation can become very unwieldy and distinctly unfriendly. When new sections are added, they are inserted where appropriate and, rather than renumber all the sections which follow (which would obviously cause great confusion), the convention used is to add a capital letter or letters to the relevant section number. If a new section is to be added between s 160 and s 161, it will be introduced as s 160A. Indeed, in the case of the Income Tax Assessment Act 1936 (Cth) the introduction of the capital gains tax regime added over 200 pages of sections between s 160 and s 161. Nevertheless, the most impressive section in that Act, perhaps any Act, is s 159GZZZZE (headed “Infrastructure borrowings to be non-assessable and non-deductible”).
3.2 THE MODERN INSTITUTION OF PARLIAMENT [3.80] The institution and procedures of Australian parliaments (ie the parliaments of the Commonwealth and of the States) are closely based on the English (Westminster) system which evolved over centuries. The origins of parliament are “hidden in the dark ages of antiquity” (Blackstone, 1765) but can be traced to Anglo-Saxon England when the Great Councils, or witans – assemblies of the king’s thanes, bishops, abbots and other leaders – met to discuss and debate important matters of state and to advise the king. The origins of the name “parliament” reflect this heritage. It is derived via the French from a Latin word meaning “to speak” or “to discuss”. A Parliament is nothing less than a big meeting of more or less idle people. Bagehot W, English Constitution (1867).
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The Norman kings continued the Council, now called the Curia Regis or King’s Council, and widened its membership to include the King’s tenants-in-chief – people granted interests in land in return for certain dues owed to the King under the feudal system introduced by the Normans. In practical terms it was difficult for the King to carry on the government of the country without the advice and assistance of his Council. Blackstone (1765) suggests that the basic constitution of parliament was put in place by King John’s granting of the Magna Carta in 1215, under which the barons’ demands for a charter of liberties included obtaining the “common counsel of the kingdom” by a requirement to summon the Council to a stated place at 40 days’ notice. Of more
Chapter 3 The Parliament and Statute Law
significance to the development of parliament as a representative body was the summoning by Edward I in 1295 not only of the King’s Council but also of two knights from each county, two citizens from each city and two burgesses from each borough. Edward I was at war with Scotland and France and raising funds to continue the campaign required the support of the kingdom generally and not just the support of the unrepresentative Council. The transformation of this rudimentary assembly to the parliament of today required another 500 years of development. However, by the time of Australian Federation the Westminster model of parliamentary government was well in place. [3.90] The legislative (or law-making) power of the Commonwealth of Australia is conferred by s 1 of the Constitution on the Federal Parliament (or “the Parliament of the Commonwealth” as it is referred to in s 1). Although the term “parliament” is commonly used to refer to the two elected houses of parliament – the Senate or upper house, and the House of Representatives or lower house – under the Constitution, Parliament, the legislature, consists of the two elected houses and the Monarch (represented by the Governor-General and acting on the advice of the Executive Council – the ministers of the Crown). The discussion of the constituent elements of the Parliament at [3.100]-[3.150] is directed to the Commonwealth Parliament. However, the modern institution of parliament is similar throughout Australia (with the obvious qualification that Queensland is a unicameral rather than a bicameral legislature – it has not had an upper house since 1922).
The House of Representatives [3.100] The House of Representatives, the lower house, was designed by the Constitution’s founders to be a legislative body providing equal representation for the people of Australia (consequently, it is sometimes called the “people’s house”). This aim is achieved by Australia being divided into electorates which contain roughly equal numbers of voters, each of which elects its representative or member of parliament. In practice the electorates vary in size because of the constitutional safeguard that guarantees a minimum of five members in each of the original six States regardless of population (thus protecting smaller States) and the practical realities such as distance and population concentration. The number of members should be as nearly as practicable twice the number of the senators (Constitution, s 24 – the “nexus” provision). The House of Representatives is the house in which governments are made and unmade. Its most vital role is in supplying the members of the Executive, which administers the laws made by parliament. The political party or coalition of political parties with the majority of members in the House of Representatives forms the government, the ministers of which form the Federal Executive Council which, with the Governor-General, is entrusted with the executive function of government. Senators may be ministers and therefore formally part of the executive government but the head of government, the Prime Minister, is traditionally a member of the lower house.
Is not our government as busy still as though the work of law making commenced but yesterday? …Nearly every parliamentary proceeding is a tacit confession of incompetency. There is scarcely a bill introduced but is entitled An Act to amend an Act. The Whereas of almost every preamble heralds an account of the miscarriage of previous legislation. Spencer H, Social statistics (1870).
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IN CONTEXT Voting – House of Representatives [3.110] Each Member of the House of Representatives is elected to represent an area known as an electoral division. Each electoral division within a State or Territory contains about the same number of people on the electoral roll. The electors in each division elect one person to represent them in the House of Representatives. The order of the candidates on the ballot paper for each electoral division is determined by a random draw conducted in the office of the Divisional Returning Officer immediately after the declaration of nominations. The House of Representatives ballot papers are green in colour. To vote for a Member of the House of Representatives, a voter is required to write the number “1” in the box next to the candidate who is their first choice, and the numbers “2”, “3” and so on against all the other candidates until all the boxes have been numbered, in order of the voter’s preference. Ballot papers must be marked according to the rules for voting so that they do not create informal votes. … Counting the votes for the House of Representatives A House of Representatives candidate is elected if they gain more than 50 per cent of the formal vote. First, all of the number “1” votes are counted for each candidate. If a candidate gets more than half the total first preference votes, that candidate will be elected. If no candidate has more than half of the votes, the candidate with the fewest votes is excluded. This candidate’s votes are transferred to the other candidates according to the second preferences of voters on the ballot papers for the excluded candidate. If still no candidate has more than half the votes, the candidate who now has the fewest votes is excluded and the votes are transferred according to the next preference shown. This process continues until one candidate has more than half the total number of formal votes and is elected. Australian Electoral Commission http://www.aec.gov.au
The Senate [3.120] The Senate has been described as the symbol of the union and equality of the States. For this reason it is often known as the “States’ house”. There are an equal number of representatives (Senators) from each State (currently 12) in order to protect the interests 112
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of the less populous States. Since 1975 the Territories have also been represented (two Senators each). The main functions of the Senate are to protect the rights of the States and to act as a house of review. The Senate provides a time for “sober contemplation” and a safeguard against hasty and ill-considered legislation. In practice, the Senate operates on political lines. It retains its power and authority by virtue of its constitutional role in the legislative process but the reality of contemporary political practice is that pressures of party politics are a real factor in its operation. Governments which do not have a majority in the Senate may have difficulty in consummating their reform agenda and the circumstance of a “hostile” Senate has set the scene for some of Australia’s greatest political battles. The root cause of the events which culminated in the dismissal of the Whitlam government by the Governor-General on 11 November 1975 was the intransigence of the oppositioncontrolled Senate (see [1.560]). Irrespective of political party, the Senate nevertheless takes its “review” role seriously and has developed a comprehensive committee system to carry out this function effectively. Senate committees of inquiry have made a substantial contribution to public administration in Australia. The Senate has the same powers in relation to legislation as the House of Representatives, with the exception of the initiation of money bills and the power of amendment of certain of them. As mentioned above, by refusing to pass legislative proposals initiated in the lower house it effectively has the power to veto any proposed law. [3.130] Section 53 of the Constitution provides that proposed laws “appropriating revenues or money, or imposing taxation” (commonly referred to as “money bills”) shall not originate in the Senate. It is the prerogative of the government, which is based in the lower house, to initiate such measures. Section 53 also provides that the Senate cannot amend any proposed law “so as to increase any proposed charge or burden on the people” nor can it amend proposed laws imposing taxation or appropriating revenues or money “for the ordinary annual services of the government”. The Senate may return to the House of Representatives any proposed law which it may not amend, requesting amendments to be made. Section 53 aims to preserve for the House of Representatives the right to initiate and alter money Bills while reserving to the Senate a right of veto. It is in effect a compromise which recognises the principles of responsible government within a federal system.
It is the job of the legislature to follow the spirit of the nation, provided it is not contrary to the principles of government.De Secondat C, The spirit of the laws (1748).
IN CONTEXT Voting – The Senate [3.140] Senators are elected by a preferential voting system known as proportional representation. Candidates for the Senate stand for a state or territory. It is a Constitutional requirement that each state be equally represented regardless of its population. There are a total of 76 Senators: 12 for each state and two for each territory. Senators for each state are elected for a six year term. Senators for each territory are elected for a term equivalent to the duration of the House of Representatives. When a House of Representatives and half Senate election are held at the same
Formula for determining a Senate quota: (Number of formal ballot papers / (Number of senators to be elected + 1)) + 1 = Senate quota.
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time, 40 Senate vacancies are contested. When a Double Dissolution is declared, as there was in 1987, all 76 Senate positions are made vacant. The order of the candidates on the ballot paper is determined by a random draw conducted in the office of the Australian Electoral Officer for that state or territory, following the public declaration of nominations. Senate ballot papers are white in colour. Example of determining a Senate quota: This is how the quota for NSW was calculated at the 2013 Senate election. (4,376,143 / (6 + 1)) + 1 = 625,164. Therefore the quota, or number of votes required to be elected, in NSW at the 2013 federal election was 625,164.
The ballot paper is divided into two sections. Voters have a choice of two methods when voting for Senators; “above the line” and “below the line”. Above the line A voter may vote for a political party or group by putting the number “1” in one box only above the black line. The rest of the ballot paper must be left blank. By casting a vote this way, voters are allowing the order of their preference to be determined by the party or group they are voting for. Below the line A voter can choose to fill in every box below the line in the order of their preference by putting the number “1” in the box of the candidate they want as their first choice, number “2” in the box of the candidate they want as their second choice, and so on until all the boxes have been numbered. The top part of the ballot paper must be left blank. If a voter chooses to vote below the line, they must number every box below the line for their vote to count.
Formula for calculating the transfer value: Surplus / Number of votes for candidate = Transfer value.
Counting the votes for the senate The Senate count is more complicated than the count for the House of Representatives. To be elected to the Senate, a candidate needs to gain a quota of the formal votes. The quota is calculated by dividing the total number of formal ballot papers by the number of senators to be elected plus one, and then adding one to the result (ignoring any remainder). Counting the first preference votes Ballot papers are sorted according to which candidate or group has received the number “1” preference on each ballot paper. Candidates who receive the quota, or more, of first preference votes are elected immediately. As a general rule, when a candidate is elected with a surplus of votes, that surplus is transferred before any exclusion is undertaken. Transferring the surplus Any surplus votes from elected candidates (votes in excess of the quota they need), are transferred to the candidates who were the second choice of voters. Because it
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is not possible to determine which votes actually elected the candidate and which votes are surplus, all the elected candidate’s ballot papers are transferred at a reduced rate. As surplus votes are transferred, other candidates may be elected. However, if all surplus votes from elected candidates are transferred and there are still unfilled positions, further counting is undertaken as explained below. Exclusion of unsuccessful candidates Starting with the candidate who has the lowest number of votes, unelected candidates are excluded from the count. Their ballot papers are distributed to the remaining candidates based on preferences. If any of the remaining candidates obtain a quota through this process of distribution, they are elected. Their surplus (if any) is transferred before any other candidates are excluded. The above process continues until all Senate positions are filled. Australian Electoral Commission http://www.aec.gov.au.
The Crown [3.150] The Crown is the third element in the Australian legislative process although its role is of reduced significance because the Crown’s representative, the Governor-General, acts on the advice of the responsible ministers. This is the basis of responsible government (see [1.460]).
3.3 THE LEGISLATIVE PROCESS [3.160] The procedure for enacting legislation in Australia is closely based on the procedure evolved in the Westminster Parliament. In summary, if a Bill (that is, a legislative proposal) passes three readings in each house and receives the royal assent, it becomes an Act of Parliament, or statute, and forms part of the law of the land. Although legislative power is vested in parliament it is the majority party in the House of Representatives, the government, that controls the legislative process. Bills introduced by the government (at least a government with a majority in both houses) are unlikely to be defeated, as the party system ensures that members vote on party lines. It is rare for a member of the government to “cross the floor” and vote with the opposition, although on particular contentious issues involving moral judgment and matters of conscience, the political parties may allow their members a “free” vote. Although each house of each parliament in Australia has its rules (“standing orders”) which regulate its procedures, the fundamental stages in the passage of a Bill through both houses of parliament in the case of those parliaments with bicameral legislatures (or through the lower house in the case of Queensland’s unicameral legislature) are virtually identical. The original idea for legislative change may come from a range of sources. It may have been
Example of transferring the surplus: Candidate A gains 1,000,000 votes. If the required quota was 600,000 the surplus would be 400,000. The transfer value for candidate A’s votes would be: 400,000 / 1,000,000 = 0.4 Candidate A’s ballot papers (1,000,000) are then re-examined in order to determine the number of votes for second choice candidates. If candidate A’s ballot papers gave 900,000 second preferences to candidate B, then candidate B would receive 360,000 votes (900,000 multiplied by the transfer value). These votes would be added to the votes candidate B received in the first count. If candidate B has reached the quota, they are elected. If candidate B has any surplus votes a transfer value would be calculated and votes would be transferred in the same way.
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part of a political party’s policy which, on assuming government it has a mandate to carry out. It may come from within the government departments responsible for administering the legislation which requires amendment. It may originate from a parliamentary committee, a law reform body or criticism of legislation in a judgment. It may result from lobbying by a pressure group seeking a change in the law. Lobbying is an important adjunct to the political process. No one should see how laws or sausages are made. Otto Von Bismarck.
The reality of the political process is that as the government controls the agenda of Parliament, unless a proposal is adopted by the government it is unlikely to have an opportunity to proceed through the legislative process. Private members’ Bills (those introduced by a member of parliament outside the ministry) will not succeed without government support. The embryonic idea is translated by parliamentary law-drafters into the form of draft legislation and its journey through Parliament can begin.
First reading stage If the public thinks members of Parliament are silly, they ought to have a look at us at 2 o’clock in the morning when we are trying to deliberate on great national issues. DalyFM, MP, Sydney Morning Herald (5 September 1964).
[3.170] The first reading is simply a formal reading of the Bill’s long title by the Clerk of the House on the proposer’s motion that “the Bill be read a first time”. It simply places the Bill on the agenda of the house – there is no debate but the Bill can be circulated and its contents can become known.
Second reading stage [3.180] The minister responsible delivers the second reading speech that outlines the general principles of the Bill. At this stage these principles are debated and affirmed.
Committee stage [3.190] This is the most important stage in the legislative process because the details of the Bill are debated clause by clause and may be amended. When the house sits as a committee (the committee of the whole) the Speaker of the lower house or the President of the upper house vacates the chair and the Chair of Committees presides.
I often think it is a pity that God did not have a committee stage before he drafted the Ten Commandments. HerbertA, quoted in Pass the port again (1981).
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Much of the work of parliament does not take place in the chamber. Bills requiring detailed examination may be referred to select committees or standing committees before they are debated by the committee of the whole. Committees have become an essential feature of Australian Parliaments, and both Houses of Parliament regularly empower committees of members representing all parties, but controlled by the party controlling that house, to inquire into matters to ascertain the facts before legislation is introduced. Scrutiny of draft legislation is an important role of the committees. Committees can give specialised and detailed consideration of proposals, develop expertise by concentrating on particular areas, receive expert advice from a range of sources, promote public debate and generally support parliament in carrying out its constitutional responsibilities through the opportunity to consider matters in a less formal atmosphere than prevails in the chamber of the house.
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Third reading stage [3.200] Debate is restricted at the third reading stage. If the motion that the Bill be read a third time is passed the clerk reads the long title of the Bill. The Bill is then transmitted to the other house of parliament where it passes through the same stages. The other house may make amendments to the Bill, in which case it is returned to the originating house asking concurrence in such amendments. If, despite procedures set out in standing orders to facilitate agreement between the houses on the final form of the Bill, there is a continuing disagreement the “deadlock” provisions of s 57 of the Constitution may provide the basis for a double dissolution.
The royal assent [3.210] When a Bill has passed both houses it is presented to the Governor-General (or Governor in the case of a State) for assent. Upon being assented to, the Bill becomes an Act of Parliament. Section 58 of the Constitution provides that: When a proposed law passed by both Houses of the Parliament is presented to the Governor-General for the Queen’s assent, he shall declare, according to his discretion, but subject to this Constitution, that he assents in the Queen’s name, or that he withholds, or that he reserves the law for the Queen’s pleasure.
One of the great pleasures of private life is that I need no longer be polite to nincompoops, bigots, curmudgeons and twerps who infest local government bodies and committees such as yours. In the particular case of your committee, that pleasure is acute. Former federal Labor minister Gordon Bilney to a South Australian local government committee member, Business Review Weekly (8 April 1996).
A Bill that has passed three readings in the house is not law until it receives the royal assent but the Governor-General’s function in the legislative process is purely formal. The conventions of the Constitution demand that the Governor-General act on the advice of the Executive Council. For these reasons it has been said that “most of the time … Parliamentary debate is not a process of decision, except in a formal sense. It is one of registering, defending, and publicising decisions already taken by the majority party” (Sawer, Australian government today (1977) p 45).
Disagreement between the houses [3.220] Reference was made above to a “deadlock” between the Houses of Parliament and the rule for breaking the deadlock under s 57 of the Constitution. If the Senate rejects a Bill passed by the House of Representatives (or fails to pass it, or passes it with amendments unacceptable to the lower house) the Bill can be reintroduced in the lower house after three months. If it is again passed by the lower house but rejected by the Senate, s 57 empowers the Governor-General to dissolve both houses (a procedure known as a “double dissolution”) and call an election. If the deadlock continues with the new Parliament, the Governor-General can convene a joint sitting of both houses. If the Bill receives a majority vote it is presented to the Governor-General for assent. If not, it fails. Machinery to resolve deadlocks exists under the Constitutions of New South Wales, South Australia and Victoria, but in Western Australia and Tasmania there are no special provisions and if a compromise cannot be worked out the Bill can never become law. Deadlock provisions are obviously not necessary in Queensland, which has a unicameral legislature. While the deadlock provisions of s 57 are designed for use in situations of constitutional crisis – the best-known example being the double dissolution of the 1975
I am not like the Leader of the Opposition. I did not slither out of the Cabinet room like a mangy maggot. Paul Keating Hansard.
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Parliament on the failure of a hostile Senate to pass the government’s money supply legislation – it can be employed in other situations as a political ploy to allow the Prime Minister of the day to hold an election at the government’s preferred time. A government confronted by an uncooperative Senate may, on the Senate refusing to pass legislation, have it re-passed in the House of Representatives, thus establishing the “trigger” for a double dissolution. Wilson Tuckey: All you have done is finance growth with debt. Paul Keating: You boxhead, you would not know. You are flat-out counting past 10. Tuckey: You are an idiot. You are just a hopeless nong … Keating: Shut up! Sit down down and shut up, you pig. Tuckey: You could not even deliver Christmas presents to Warren Anderson. Keating: Why do you not shut up, you clown? … This man has a criminal intellect … this clown continues to interject in perpetuity. Hansard.
The date of operation [3.230] The Act will operate from the date specified in the Act (if the Act so specifies) or a date to be fixed by proclamation (by the Governor-General in the case of Commonwealth legislation or the Governor in the case of State legislation), which date will be announced in the Government Gazette. If the Act is silent as to its commencement, it commences from the date of the Governor’s assent in the case of a State Act, or 28 days after the Governor-General’s assent in the case of a Federal Act. It follows from the sovereignty of Parliament that the Act may even take effect retrospectively (that is, from a date in the past). This practice has been used frequently in the area of amendments to tax legislation, when the date of operation is the date of the Press announcement by the Treasurer, outlining the proposal to legislate to close a loophole in the legislation. Retrospective legislation can be criticised as undermining individual rights and for political reasons should be used sparingly. Unless a statute contains a provision within it that it will “expire” on a certain date, it remains in force until it is repealed. It is an inevitable reality that the statute book is cluttered with legislation that has long passed its “use-by” date but which, until repealed, remains law.
Parliamentary privilege [3.240] Members of Parliament have absolute privilege in respect of speeches made in Parliament. In the words of the House of Lords in Stockdale v Hansard (1839) 9 Ad & El 1: “For speeches made in parliament by a member to the prejudice of any other person, or hazardous to the public peace, that member enjoys complete immunity”. Parliamentary privilege exists because it is the public interest to allow free and frank debate on matters of government but the complete immunity granted, which means that members cannot be sued for defamation, explains why Parliament is often called the “Coward’s Castle”.
3.4 THE INTERPRETATION OF LEGISLATION The role of the courts Statutory interpretation is about a lot more than working out the meaning of words or collections of words. It lies at the centre of the administration of justice and marks off constitutional boundaries between the judiciary, the legislature and the executive. The law cannot be interpreted by executive fear. The authorised interpreters of the law are the courts.
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[3.250]
French CJ, “Bending Words”, lecture (20 March 2014).
The courts have conclusive authority to determine the meaning of legislation. Michael Kirby, the former justice of the High Court, has observed that (“Statutory Interpretation: the meaning of meanings” (2011) 35 MULR 113 at 113): Statutory interpretation has replaced the analysis of judicial reasons about the common law as the most important task ordinarily performed by Australian lawyers. This was inevitable as the amount of law made by, or under, legislation increased and the room for the residual common law narrowed.
Legislation has replaced the common law as the major source of law today and as the volume and scope of legislation expands, an increasing proportion of the courts’ time is devoted to what an eminent judge (Lord Evershed, The judicial process in twentieth century England (1961) p 763) has described as the “intellectually exacting but spiritually sterilizing duty of interpret[ing] the enacted law”. It is unlikely that legislation will ever be drafted with such precision, foresight and clarity that the need for interpretation will not arise. Imperfections are inevitable – the English language is not an “instrument of mathematical precision”, and drafters are not gifted with “divine prescience” (Seaford Court Estates Ltd v Asher [1949] 2 KB 481 at 498 per Denning LJ) that enables them to foresee and account for all contingencies. Translating political desires into a legislative scheme is a difficult and unenviable task and the resolution of competing interests cannot always be expressed with perfect clarity. In a symposium on statutory interpretation in 1983 Justice Lionel Murphy noted some of the “excuses” for drafting not always being what it should be: that the drafters work under great pressure; that the instructions are not always as clear as they ought to be; that the courts in the past have taken negative attitudes to the more liberal approaches to drafting and so deterred the drafters from drafting in more general terms.
[3.260] What is clear is that the courts’ interpretive role is not simply a sterile grammatical analysis. Although the courts are not legislators and have no power to override or refuse to give effect to validly enacted legislation, they have a discretion in interpreting legislation which can never be entirely removed. Their role has been explained by an English judge in this way (Corocraft Ltd v Pan American Airways Inc. [1968] 3 WLR 714 at 732 per Donaldson J): The duty of the courts is to ascertain and give effect to the will of Parliament as expressed in its enactments. In the performance of this duty the Judges do not act as computers into which are fed the statutes and the rules for the construction of statutes and from whom issue forth the mathematically correct answer … They are not legislators, but finishers, refiners and polishers of legislation which comes to them in a state requiring varying degrees of further processing.
Unhappily, however, for the power-hungry occupant of the Judicial Bench the days have long since vanished when the law was thought to reside in the bosoms of the judges … today by far the greatest majority of judicial decisions on points of law are essentially decisions on the construction of statutes and by and large the role of the judge has been downgraded from that of law-maker to that of interpreter. Few would regard this as other than a welcome development. Dugdale D, “The absurd pretensions of the law of torts” (1982) NZ Recent Law 260.
The courts’ role in developing the common law is very different from their role in interpreting legislation. When a judge seeks to discover a rule of the common law the precise words chosen by other judges to express that rule are not the law itself: the common law is to be found in the ideas and principles underlying a particular combination of words that other judges have used to formulate the law. In the case of legislation, the words used by the legislator are the law. The courts cannot give effect to an intention or policy or idea or principle underlying the legislation if it cannot be accommodated within the language used by the legislator. The courts’ task is to 119
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determine the legislative intention within that language. The ratio decidendi of a decision interpreting a legislative provision of course sets a precedent for future cases. Stare decisis applies to decisions interpreting legislation as it does to decisions developing the common law. In this way statutes accumulate a body of case law with reference to which they must be read. We must not be too unkind to the Judges. Reading the entrails of an Act of Parliament, pondering the inner meaning of the blood alcohol legislation for example is an occupation that no doubt soon begins to pall and one can readily understand the operation of the power imperative, the mad urge to push someone around in the administrative division or the insane temptation to rush out and invent a brand new tort. But judges seized with a yen for creativity really would be far better advised to enrol for night classes in macrame or cake decoration and leave the reform of the law to the parliamentarians and those who advise them. Dugdale D, “The absurd pretensions of the law of torts” (1982) NZ Recent law.
The courts interpretative task can of course vary quite considerably depending on the legislative provision to be interpreted and applied. In many cases the interpretative role is quite narrow – is the onset of deep vein thrombosis an “accident” for which air carriers may be liable under Art 17 of the Convention for the Unification of Certain Rules Relating to International Carriage by Air (12 October 1929) (Warsaw Convention)? (No – see Re Deep Vein Thrombosis and Air Travel Group Litigation [2006] 1 All ER (Comm) 313). Or is the driver of a vehicle observed by the police holding a mobile phone to the ear (and who claims she was simply turning it off and holding it to her ear to ensure it was off) guilty of the offence of using a hand-held mobile phone while the vehicle is in motion or while it is stationary but not parked under the Australian Road Rules? (Yes – see DPP v Chresta [2005] NSWSC 233). Or is mini ciabatta – Italian flat bread – “bread”, and therefore exempt from GST or a “cracker” and subject to GST? (Presumably to the bewilderment of and horror of Italians – a cracker and subject to GST – see Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6). In other cases the interpretative role is not so much the interpretation of words but the application of community norms in determining whether conduct offends an open-ended standard. Is a shopper who calls a store employee a “fucking bitch” when challenged in relation to theft of a confectionary item guilty of the offence of using indecent language? (Yes, in the circumstances of this case – although “there are undoubtedly many occasions when a person might say the words ‘fucking bitch’ in a public place or within the hearing of a person in a public place without committing any offence” – see Gul v Creed [2010] VSC 185). In yet other cases where the Parliament legislates in very broad terms, the interpretative role closely resembles the traditional development of the common law on a case-by-case basis. An obvious example is the prohibition of misleading or deceptive conduct under the Australian Consumer Law. The statutory prohibition is only 23 words and the central concept of when conduct is “misleading or deceptive” is not defined. The interpretative function transcends traditional interpretative function. In the words of the Chief Justice of the High Court, French CJ, “There have been thousands of cases since that prohibition first entered the Australian legal universe. They have developed principles for its application in a variety of settings not imagined by those who enacted it”. (“Bending Words”, lecture (20 March 2014)).
The approach to the interpretative role [3.270] It is not surprising that there are differing approaches to the interpretation of legislation and the search for legislative intention. Attitudes to statutory interpretation may be liberal or literal. The difference of opinion between Denning LJ and Lord Simonds is
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well documented. In the Court of Appeal in Magor & St Mellons Rural District Council v Newport Corporation [1950] 2 All ER 1226 Denning LJ stated (at 1236) that: We do not sit here to pull the language of Parliament and of ministers to pieces and make nonsense of it. That is an easy thing to do, and it is a thing to which lawyers are too often prone. We sit here to find out the intention of Parliament and of Ministers and carry it out, and we do this better by filling in the gaps and making sense of the enactment than by opening it up to destructive analysis.
On appeal, Lord Simonds in the House of Lords (Magor & St Mellons Rural District Council v Newport Corporation [1952] AC 189) expressed his disapproval of this approach (at 191): the general proposition that it is the duty of the court to find out the intention of Parliament – and not only of Parliament but of ministers also – cannot by any means be supported. The duty of the court is to interpret the words that the legislature has used; those words may be ambiguous, but, even if they are, the power and duty of the court to travel outside them on a voyage of discovery are strictly limited …
Lord Simonds expressly stated that the proposition of Denning LJ – that “what the legislature has not written, the court must write” – could not be supported (at 191): It appears to me to be a naked usurpation of the legislative function under the thin disguise of interpretation. And it is the less justifiable when it is guesswork with what material the legislature would, if it had discovered the gap, have filled it in. If a gap is disclosed, the remedy lies in an amending Act.
Techniques of interpretation [3.280] Each jurisdiction in Australia has an Acts Interpretation Act which establishes some ground rules for the interpretation of that jurisdiction’s legislation. They shorten the content of other Acts by, for example, prescribing meanings for terms frequently appearing in legislation, and providing directions to resolve possible confusion. With an important exception noted later in this section they do not lay down general principles of, or approaches to, interpretation. However, centuries of statutory interpretation have produced a number of judicial rules, maxims and presumptions of interpretation.
“Rules” of interpretation [3.290]
There are four “rules” of interpretation:
• The literal rule, as the name suggests, requires the court to give literal effect to the legislative language. The literal rule has never been interpreted to require words to be read in isolation. In the words of Viscount Simonds, “words, and particularly general words, cannot be read in isolation: their colour and content is derived from their context” (Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436). The “context” includes the Act as a whole.
[W]hile it is an exercise of the legislative power of the State to make the written law, it is an exercise of the judicial power of the State, and consequently a function of the judiciary alone, to interpret the written law when made. Chokolingo v Attorney-General [1981] 1 WLR 106 at 110 per Lord Diplock.
• The mischief rule laid down in Heydon’s case (1584) 76 ER 637 allows the court to interpret the legislation so as to overcome the defect, or mischief, which the legislation was passed to overcome. The words used could be enlarged or diminished to advance the remedy and suppress the mischief. Because Heydon’s case predates parliamentary 121
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sovereignty, modern courts have been reluctant to apply it and in any event the courts’ self-imposed restriction on referring to materials outside the legislation itself has limited their search for the “mischief”. Today the mischief rule is generally regarded as having merged into the golden rule. • The golden rule as described by Lord Wensleydale provides that in construing statutes “the grammatical and ordinary sense of the words is to be adhered to, unless this would lead to some absurdity, or some repugnance or inconsistency … in which case the grammatical and ordinary sense of the words may be modified so as to avoid that absurdity and inconsistency, but no further” (Gray v Pearson (1857) 6 HLC 61). The golden rule modifies the severity of the literal rule but opens up uncertainties in interpretation. • The Purposive approach (see [3.320]), which has been given legislative recognition in Australia. Few words possess the precision of mathematical symbols. Boyce Motor Lines Inc. v United States, 342 US 337 at 340 (1952) per Clarke J.
Techniques of interpretation [3.300] There are a number of techniques of interpretation – simple technical devices with grand Latin names. The most important are: • Ejusdem generis – general matter are constrained by specific matters so that where general words follow a number of specific words, the general words are read as applying to other items in a similar category as the specific words.
IN CONTEXT The Ejusdem generis rule The principle of noscitur a sociis does not in my judgment entitle one to overlook self-evident facts. If you meet seven men with black hair and one with red hair, you are not entitled to say that here are eight men with black hair. Buckley J.
[3.310] A drafter may well not wish to spell out at length all the kinds of things or types of contract to which an Act may apply. He or she may rest on the assumption that, having indicated the main specific matters or conduct within a broad category to which it is to apply, any general words will be read down to embrace only things or conduct falling within that category. So in specifying the animals that may be carried on a ferry, the drafter may refer to “horses, cows, sheep and other animals”. It would be regarded as an improper reading of the Act if I were suggested that a tiger fell within the words “other animals”. This is the classic example of the ejusdem generis rule – the general words are limited to apply only to animals of the same kind as those specifically mentioned. It is another way of saying that words derive meaning from the context in which they appear. Contrast the position, however, if, in an Act to prohibit fights between animals, the prohibition applies to “bears, pigs, bulls, dogs, cocks, quail and other animals”. The drafter here is obviously anxious to prohibit all such contests and “other animals” is included to avoid listing the whole of the animal kingdom. Again, context indicates this to be the case but also the animals specifically mentioned do
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not fall within any particular category. The very name of the rule indicates the necessity to establish a genus before it can be applied and the courts have made it clear that this will be their first inquiry Pearce and Geddes, Statutory Interpretation in Australia (5th ed, Butterworths, 2011) p104 at [4.19].
• Noscitur a sociis – the meaning of an ambiguous word or phrase is to be derived from its context. Whereas the ejudem generis rule is used for general words, the noscitur a sociis rule is used for particular words. In Pengelly v Bell Punch Co Ltd [1964] 1 WLR 1055 the court had to decide whether a floor used for storage came under the Factories Act 1961 (UK), whereby “floors, steps, stairs, passageways and gangways” had to be kept free from obstruction. The court held that as all the other words were used to indicate passage, a floor used exclusively for storage did not fall within the Act. • Expressio unius est exclusio alterius – literally the express mention of one thing excludes all others. If there is a list of words not followed by general words the Act applies only to the words used in the list and not to any others. If for example a legislative provision refers to “Holden and Ford V8 road cars” it will not include Toyotas or other competitive vehicles. However the use of a term such as “includes” or “such as” will indicate that the list is illustrative. • Generalia specialibus non derogant – where there is a conflict between general and specific provisions, the specific provisions prevail.
A purposive approach to interpretation [3.320] For some time the literal rule has been the dominant principle of interpretation, with unfortunate consequences which are discussed below. The decision of the High Court in Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation [1981] HCA 26 may be regarded as a watershed in statutory interpretation in Australia. The High Court was faced with a situation where the plain meaning of a provision of the Income Tax Assessment Act 1936 (Cth) was opposed to the apparent intention of the legislature. The court rejected a literal interpretation of the provision which would on its face have operated in favour of the taxpayer. The High Court considered that other parts of the legislation made it quite clear that parliament never intended the taxpayer to recover the deductions sought. The court was prepared to depart from the literal meaning of the section because it believed that the history of drafting changes made to neighbouring sections clearly showed that parliament had intended to alter the particular provision, but by oversight had simply failed to do so. Stephen J stated (at [8]) that:
To reach a conclusion on this matter involved the court in wading through a monstrous legislative morass, staggering from stone to stone and ignoring the marsh gas exhaling from the forest of schedules lining the way on each side. I regarded it at one time, I must confess, as a slough of despond through which the court would never drag its feet but I have, by leaping from tussock to tussock as best I might, eventually, pale and exhausted, reached the other side where I find myself, I am glad to say, at the same point as that arrived at with more agility by Lord Denning MR. Davy v Leeds Corporation [1964] 1 WLR 1218 at 1224 per Harman LJ.
If literal meaning is to be departed from, it must be clear beyond question both that literal meaning does not give effect to the intention of the legislature and that some departure from literal meaning will fulfil that intent.
In other words, if the intention of parliament was clear then the High Court would not defeat that intention simply because parliament had not been exact in its legislative 123
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language. The decision signalled not only the end of the artificial tax avoidance schemes of the 1970s which thrived on literal interpretations of the legislation but the beginning of a new era of purposive interpretation more closely attuned to attaining the object of the legislation. [3.330] The thrust of the purposive approach was vindicated later that year. In 1981 the Federal Parliament amended the Acts Interpretation Act 1901 (Cth) by the addition of s 15AA(1), with the express purpose of countering unrealistically literal interpretations: In the interpretation of a provision of an Act, a construction that would promote the purpose or object underlying the Act (whether that purpose or object is expressly stated in the Act or not) shall be preferred to a construction that would not promote purpose or object.
Where the words of the statute are clear and unambiguous, effect must be given to them by the court which “is not at liberty to mangle them to the point where they no longer mean what they say” (Turner v Moreland Finance Corp (Vic) Pty Ltd (1990) ASC 56-006 per Meagher JA). However, as McHugh JA has observed in Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292 at 302, the effect of applying a “purposive” construction is that: [T]he grammatical meaning of a provision is not to be taken to represent Parliament’s intention as to its meaning when the context or the purpose of the provision raises a real doubt about the applicability of the grammatical meaning. If purpose or context do raise real doubt as to whether Parliament intended the grammatical meaning to apply, a court is entitled to depart from that meaning. Moreover, if the grammatical meaning gives rise to injustice or anomaly, it may strengthen the conclusion that the Parliament did not intend the grammatical or literal meaning to apply. The judges are too often inclined to fold their hands and blame the legislature, when really they ought to set to work and give the words a reasonable meaning, even if this does involve a departure from the letter of them. By so doing they are more likely to find the truth. Lord Denning, The changing law (1953).
[3.340] A provision similar to s 15AA is now contained in the Acts Interpretation Acts of the States. There has been some criticism of s 15AA in that it is the function of an independent judiciary to interpret the law and any attempt to undermine this freedom is, if not unconstitutional, then at least inappropriate. The argument is that because judicial power is vested in the courts by the Constitution, interpretation is a judicial function and it is not open to the legislature to direct a court as to how to do it. Nevertheless, “purposive” interpretation is widely accepted today irrespective of any statutory direction to that effect. The process is facilitated by parliaments increasingly adopting the practice of including an “objects” clause in the context of a legislative scheme or part thereof.
The use of extrinsic materials [3.350] The 1981 amendment referred to above included in s 15AA(2) a provision that restricted courts having access to materials other than the legislation itself, in the process of interpreting that legislation. This was basically a codification of the common law position that “extrinsic materials” were generally off-limits to judges in determining legislative intention. Historically, the role of the courts has been to determine the intention of parliament as disclosed in the legislative language. Material that may seem useful in this quest (such as explanatory memoranda,
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second reading speeches and ministerial press releases) has been beyond the scope of the search for the legislative intention for the very reason that these extrinsic materials are not the expression of parliament’s intention. They may express what parliament intended to say; they do not necessarily express what parliament said. [3.360] In 1984 the Federal Parliament repealed the provision referred to above to allow consideration of extrinsic material. Section 15AB(2) of the Acts Interpretation Act 1901 (Cth) provides that materials to which the courts may refer include the following: (a)
all matters not forming part of the Act that are set out in the document containing the text of the Act as printed by the Government Printer;
(b)
any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of the Parliament before the time when the provision was enacted;
(c)
any relevant report of a committee of the Parliament or of either House of the Parliament before the provision was enacted;
(d)
any treaty or other international agreement that is referred to in the Act;
(e)
any explanatory memorandum relating to the Bill containing the provision, or any other relevant document that was laid before, or furnished to the members of either house of the parliament by a minister before the time when the provision was enacted;
(f)
the speech made to a house of the parliament by a minister on the occasion of the moving by that minister of a motion that the Bill containing the provision be read a second time in that house;
(g)
any document (whether or not a document to which a preceding paragraph applies) that is declared by the Act to be a relevant document for the purposes of this section;
(h)
any relevant material in the Journals of the Senate, in the votes and proceedings of the House of Representatives or in any official record of debates in the Parliament or either House of the Parliament.
This amendment is significant. Although the court is not required to look at extrinsic material it may do so and the search for the legislative intent is clearly facilitated. The likelihood of corresponding with the parliament’s intention is enhanced. Lawyers are not necessarily unanimous in their approval of this initiative. There is some discomfort in moving beyond the precise words of the legislation.
3.5 PROBLEMS AND PROSPECTS An uncodified system [3.370] Most of the legal systems of continental Europe are civil law systems in which the concepts and principles of Roman law have a powerful influence. A characteristic of civil law systems is codification – the legislative statement of all the law in a particular area expressed in fairly general terms. Civil law codes are exemplified by the French Civil Code promulgated in 1804. The code was established by Napoleon I (and indeed is often referred to as the “Code Napoleon”) – it was the device Napoleon used to unify the differing local laws and to rationalise and revamp the basis of French civil law. The Code does not contain
This case is a simple one. The Act means what it says, and, what is more important, it does not mean what it does not say. Secretary of Department of Health v Harvey NSW Court of Appeal, October 1990 per Meagher JA.
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narrow rules but broad principles stated at a high level of abstraction which are thus able to tie together concepts sharing only the most general characteristics. In only 2281 generally expressed and extremely brief articles (frequently only a single sentence), the code covers marriage and divorce, property, contract, torts, wills, sale and partnership. The brevity and generality of the code leaves a need for judicial interpretation in the application of its provisions to specific cases but there is a less strict regard for judicial precedent and no doctrine of stare decisis or binding precedent. Although the Code has been amended and developed by interpretation and many matters are regulated by laws outside the code, Napoleon’s Code of 1804 still forms the basis of French civil law. “Then you should say what you mean”, the March Hare went on. “I do”, Alice hastily replied; “at least – at least I mean what I say – that’s the same thing you know”. “Not the same thing a bit”, said the Hatter. “Why, you might just as well say that ’I see what I eat’ is the same thing as ’I eat what I see!’”. Lewis Carroll, Alice’s Adventures in Wonderland.
The concept of codification has never been enthusiastically embraced by common law jurisdictions. Codes are not unknown and are a useful method of overhauling the law and organising an untidy mass of customary law, statute law and case law into a single source, making the law clearer and more ascertainable. However, unlike the civil law codes, common law codes do not use broad principles but rules of relatively defined scope, and thus can cover only limited fields. The Sale of Goods Act 1893 (UK) (which forms the model for the legislation of the Australian States) may be regarded as a “code” – but it is of limited scope and is meaningless without reference to a mass of law lying outside the “code” – in particular the general law of contract, which remains almost exclusively judge-made.
IN CONTEXT A draft Australian Contract Code [3.380] In March 2012 the Attorney-General released a Discussion Paper to Explore the Scope for Reforming Australian Contract Law. Three professors of law from the University of Newcastle Law School – MP Ellinghaus, D St L Kelly and EW Wright –prepared a Draft Australian Law of Contract (ALC) which is a code of the general rules of contract law that are currently to be found only in case law. The authors state that: The most important reform of Australian contract law that would be accomplished by enacting the ALC is the replacement of a voluminous and highly complex body of case law rules expressed in the fluctuating forms of judicial doctrine, by a finite number of rules in a fixed form, expressed as simply and concisely as possible. The general rules of Australian contract law would become available in a definite form accessible to all interested parties, not just to lawyers and specialists. The effect is to do away with an indefinitely large number of technical and antiquated rules, distinctions and definitions that clutter up the law and make its application uncertain.
The authors believe that enacting the ALC “would greatly increase the accessibility of contract law to ordinary Australians and reduce the cost of legal services, especially to business”. It comprises 109 Articles.
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A bewildering array of legislation [3.390] Business today is faced with a bewildering array of legislation. Business is confronted on all sides by legislation and regulations and the accretion of case law interpreting the provisions. Despite the deregulatory environment which is said to prevail, few would argue that there has been any significant change in legislative bulk and complexity, both of which provide a challenge to the legislators of the future. To some extent the problems of legislative bulk and complexity are inherent in the legal system Australia inherited from England. Under this system a section of an Act is approached in a complete different manner to a judicial precedent. Many years ago the English courts put it out of their power to give effect to the principle underlying a section of an Act in the same manner as they gave effect to a principle underlying a judgment. In interpreting legislation the courts are concerned with words and not ideas. Although legislation is the main source of law today, this was not always so. For hundreds of years the development of English law was entrusted to the judges and it has been suggested that they did not welcome the intrusion of legislation. It has been suggested (in Hart HM and Sacks AM, The legal process: Basic problems in the making and replication of law (Cambridge, 1958)) that: the Common Law recognised the legislative supremacy of Parliament. But to the words of the Parliament whose literal authority it recognised it accorded none of that aura of respect and generosity of interpretation with which it surrounded its own doctrines … By repercussion draftsmen tend to concern themselves with minutiae, so that their intention may be manifest in every particular instance.
Therefore, from an early date in the development of legislation, the courts and parliament were locked in a vicious circle. Detailed drafting was a response to strict interpretation. The courts interpreted legislation narrowly, giving effect to the words used rather than the principles underlying those words and refusing to fill gaps in the legislation where a particular case fell outside the actual wording. The drafters’ response to this hostile attitude was to draft legislation in the fullest detail-to seek to “anticipate the restrictive interpretations of the courts by inserting the most elaborately detailed provisions to ensure that particular situations are covered” (Lloyd, Introduction to jurisprudence, p 389).
IN CONTEXT The expanding volume of regulation [3.400] The volume of regulation has grown dramatically in recent years. For example, since 1990, the Australian Parliament has passed more pages of legislation than were passed during the first 90 years of federation.
If I am asked whether I have arrived at the meaning of the words which Parliament intended, I say frankly I have not the slightest idea. Scrutton LJ.
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It cannot be pretended that the principles of statutory interpretation form the most stable, consistent, or logically satisfying part of our jurisprudence … we are driven, in the end, to the unsatisfying conclusion that the whole matter ultimately turns on impalpable and indefinable elements of judicial spirit or attitude. AllenC, Law in the making (Oxford University Press, 1927).
Rethinking Regulation: Report of the Taskforce on Reducing Regulatory Burdens on Business (January 2006).
Legal “gobbledygook” [3.410] For centuries lawyers have been criticised for their obscure and pretentious language in expounding the law. Over recent decades the movement for simpler language has accelerated but the reality of course is that complex laws cannot always be drafted so that the ordinary person can understand them. Drafting is an exercise in precision which rarely goes hand in hand with simplicity. The drafting of legislation is not an exercise in pure English. For example, in 1963 Harold Macmillan, the then British prime minister, had to answer the question of why legislation could not be drafted in simple terms. He quoted the following sentence: “when John met his uncle in the street he took off his hat” and pointed out that this “clear” sentence was capable of at least six different meanings. Nevertheless, the move to plain-English drafting is gathering a head of steam which has already carried it to the hallowed halls of the parliamentary drafting office.
Drafting techniques [3.420] In his evidence to the Committee on the Preparation of Legislation, Lord Denning (in Preparation of legislation, Cmnd 6053 (May 1975) at [19.1]) pointed the way:
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It is because the judges have not felt it right to fill in the gaps and have been giving a literal interpretation for many years that the draftsman has felt he has had to try and think of every conceivable thing and put it insofar as he can so that even the person unwilling to understand will follow it. I think the rules of interpretation which the judges have applied have been one of the primary causes why draftsmen have felt that they must have a system of over-detail, over-long sentences, and obscurity. If the draftsmen could make acts simpler, the judges could alter their approach to them … It could be done by breaking up the form of the statutes, by making them simpler, sticking more to the principles, and not going into so much detail.
It has been suggested that the ideal legislation will contain “neither a generalisation too vague nor a particularity too minute” (Diamond, “The codification of the law of contract” (1968) p 379). The main criticism of Australian legislation is that it errs on the side of particularities too small, which leads to bulk and complexity. The tradition of literal interpretation of legislation which has characterised the common law until recently has had its inevitable consequence in drafters over-refining the legislative scheme so that the parliamentary intention is apparent. The drafters’ search for exactness often produces complexities which in turn create their own difficulties in interpretation. In response to the growing pattern of legislative elaboration and proliferation it is frequently suggested that more discretion should be left to the courts. To leave a matter entirely to the discretion of the court – “throwing everything into the lap of the judge” to use the phrase of a past President of the New Zealand Court of Appeal, Sir Alexander Turner (“Changing the law” (1969) p 420) – is not desirable. But to lay down a general principle and allow the courts scope within the statutory framework to develop the law in cases falling outside the general rule is not to sacrifice certainty for flexibility. The majority of cases will always fall within the general principle but it is desirable that judges are left some scope to exercise a creative function which they cannot do if legislation is drafted with the fullest detail. As the courts develop a more purposive approach to legislation, it is likely that legislation will begin to be drafted more generally. It should no longer be necessary for legislation to be drafted to “a degree of precision which a person reading in bad faith cannot misunderstand” (In Re Castioni [1891] 1 QB 149 at 167 per Stephen J). Recent proposed reforms in the field of commercial law have polarised the commercial world into those who prefer voluminous “black letter” law reform in which specific rules are prescribed in fine detail – and those who advocate “fuzzy” law reform via simple clear drafting of statements of general principle – which leaves greater discretion to the courts in applying the principle to particular sets of circumstances. This debate is likely to intensify in the future.
The legislative process [3.430] Although law making is a “solemn and deliberate business” which should allow time for “reflection and sober second thought” (Palmer G, Unbridled power (2nd ed, Oxford University Press, 1987) p 159) the reality is often somewhat different. Under standing orders, the government has a variety of devices available to it to curtail debate and push legislation through parliament. The spectre of a government pushing its legislative program through parliament is a familiar one in Australia particularly as the end of the budget
It is never safe to construe an Act of Parliament by paying undue attention to the meaning of the words. Roxburgh J.
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session (and Christmas) approaches. Hasty legislation, unrealistic deadlines, cutting corners and curtailed debate do not make for considered lawmaking. The degradation of the parliamentary process in this way is a cause for real concern and does little to inspire confidence in the institution.
ISSUES WITH THE SENATE VOTING SYSTEM [3.440] Recent elections have ignited debate as to the fairness of the Senate preferential voting system which has seen candidates from small parties with very low primary votes elected to the Senate. In the 2013 federal election the sixth Victorian Senate seat went to Ricky Muir representing the Australian Motoring Enthusiasts Party who received only 17,083 first preference votes ahead of the Liberal Party’s candidate who received 388,178 first preference votes. This improbable result is explained by Rachel Baxendale and Liam Quinn: The improbable rise of Ricky Muir to senator-elect has been revealed, with the Australian Motoring Enthusiast Party candidate receiving more than 85 per cent of preferences from other micro-parties such as the Australian Fishing and Lifestyle Party, the Help End Marijuana Prohibition Party and the Shooters and Fishers Party to stay in the race. Mr Muir also received the overwhelming majority of preferences from the Palmer United Party and the Australian Sex Party late in the count, to beat the Liberals’ Helen Kroger to the sixth Senate seat in Victoria. Mr Muir, a 32-year-old father of five, received only 17,083 first-preference votes – a tiny proportion of the 483,076 quota required. By contrast Senator Kroger had 388,178 votes after receiving
surplus votes from the two Liberals elected early in the count, Mitch Fifield and Scott Ryan. Courtesy of preference deals negotiated on the advice of political consultant Glen Druery, Mr Muir, third last about three-quarters of the way through the count, was kept in the race – and ultimately propelled over the line. Australian Electoral Commission figures released on Wednesday reveal his first big gain came from the Fishing and Lifestyle Party’s elimination, giving Mr Muir 97 per cent of its 16,404 votes and taking him from 15th to 11th, resulting in candidates from the Katter, HEMP and Shooters and Fishers parties to be eliminated before the AMEP man. Mr Muir then got 88.1 per cent of HEMP’s 21,679 votes, taking him to seventh, past the Animal Justice, WikiLeaks and Rise Up Australia candidates. He picked up 94.8 per cent of the Shooters and Fishers’ 29,009 votes, moving him to fifth. A 71.3 per cent share of Family First’s 70,379 votes propelled him to third. After the Greens’ Janet Rice secured fifth spot, Mr Muir received 97.7 per cent of the Palmer Party’s 165,092 votes, and 86.6 per cent of the Sex Party’s 202,741 votes to reach the quota ahead of Senator Kroger.
“How micro-parties put motor fan Ricky Muir on the power grid”, The Australian (4 October 2013).
Deregulation [3.450] The highly regulated business environment of the late twentieth century bears little resemblance to the vision of society propounded by the eighteenth-century economist and philosopher Adam Smith. In The wealth of nations (1776) Smith’s thesis was the desirability of reducing the economic intervention of the State:
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According to the system of natural liberty, the Sovereign has only three duties to attend to: Three duties of great importance, first the duty of protecting the society from the violence and invasion of other independent societies; secondly the duty of protecting as far as possible, every member of the society from the injustice or oppression of every other member of it, and thirdly, the duty of erecting and maintaining certain public institutions, which can never be for the interests of any individual … to erect and maintain; (because the profit could never repay the expense) though it may frequently do much more than repay it to a great society.
Reference has been made elsewhere to the scope, bulk and complexity of legislation regulating the contemporary marketplace and it is not surprising that “deregulation” is a popular catch-cry today. There is little argument today with the proposition that even if the limited role of the state as envisaged by Adam Smith was appropriate for the eighteenth century, it is not appropriate for the twentieth century. There is similarly little argument with the proposition that the pendulum has swung too far in favour of regulation. The problem is one of achieving the appropriate balance. On the basis that the issues in the deregulation debate transcend specific areas of law, the comments of Henry Bosch when Chairman of the National Companies and Securities Commission (NCSC) (the predecessor of the Australian Securities and Investments Commission) are instructive. Bosch recognised that the critical issue is one of achieving balance. In the case of a regulatory body like the NCSC the balance had to be achieved between the competing concepts of competition, entrepreneurial freedom and free markets on the one hand and social values (such as equal opportunity and equal access to information) on the other (Bosch H, “The de-regulation of business”, Professional Administrator (Oct-Nov 1985)):
Having once more groped my way about that chaos of verbal darkness, I have come to the conclusion, with all becoming diffidence, that the county court judge was wrong in this case. My diffidence is increased by finding that my brother Luxmoore has groped his way to the contrary conclusion. MacKinnon CJ.
Too much regulation in the interests of investor protection by emphasising these social values may stifle initiative and development, while too little may undermine investor confidence in the market and result in an inefficient allocation of resources.
Ultimately, despite the lure of deregulation, it necessarily remains a fact of modern life that economic and social growth “depend on a highly complex economy which requires sophisticated rules and enforcement procedures across a wide range of activities” (Bosch, 1985). Bosch is undoubtedly correct. Deregulation may be better regarded as a demand for increasing the quality of regulation through better-considered and more carefully drafted legislation. In practical terms there is need for a great deal of regulation.
Reforming the process [3.460] The problems referred to above are not susceptible to simple solutions. It is nevertheless encouraging that governments are aware of the community’s concerns and have taken steps to introduce greater consultation and clearer legislation. The 2006 Report of the Taskforce on Reducing Regulatory Burdens on Business, Rethinking Regulation recommended that where it is:
I have very little notion of what the section is intended to convey, and particularly the sentence of 253 words. MacKinnon CJ.
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• Proportional to the problem being addressed; • Designed to minimise compliance burdens; • Not unduly prescriptive or restrictive; • Transparently and clearly communicated; • Consistent with existing laws and regulations; and • Readily enforceable.
The report stated that principles of good regulatory process require governments to apply the following six principles: • Governments should not act to address “problems” through regulation unless a case for action has been clearly established. This should include evaluating and explaining why existing measures are not sufficient to deal with the issues. • A range of feasible policy options – including self-regulatory and co-regulatory approaches – need to be assessed within a cost-benefit framework (including analysis of compliance costs and, where relevant, risk). • Only the option that generates the greatest net benefits for the community, taking into account all the impacts, should be adopted. • Effective guidance should be provided to regulators and regulated parties to ensure that the policy intent of the regulation is clear, as well as what is needed to be compliant. • Mechanisms such as sunset clauses or periodic reviews need to be built in to legislation to ensure that regulation remains relevant and effective over time. • There needs to be effective consultation with regulated parties at the key stages of regulation-making and administration. One of the mechanisms employed in the Australian government’s best practice regulation process is a Regulation Impact Statement (RIS) which contains seven elements setting out: • The problem or issues that give rise to the need for action. • The desired objectives. • A range of options that may achieve the desired objectives (at a minimum a regulatory option, a non-regulatory or light-handed regulatory option, or a do-nothing option). • An assessment of the impact (costs, benefits and, where relevant, levels of risk) of a range of feasible options for consumers, business, government and the community. • Consultation. • A recommended option. • A strategy to implement and review the preferred option. The Australian Government’s Best Practice Regulation Handbook (July 2013) explains that a RIS, “is mandatory for all decisions made by the Australian Government and its agencies that are likely to have a regulatory impact on business or the not-for-profit sector, 132
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[but] is not required if the regulatory impact is of a minor or machinery nature and does not substantially alter existing arrangements”. The RIS process is intended to facilitate accurate and meaningful assessment of the impact of options on business and other stakeholders. The process is designed to provide sufficient information for a decision on whether to change or introduce regulation. A RIS is intended as an aid for the decision-maker and ultimately, the decision-maker determines whether to accept the recommendations contained in the RIS.
QUESTIONS 1.
“The Senate is the greatest impediment to efficient federal law making.” Discuss this proposition
2.
Discuss the approach a contemporary Australian court should take to statutory interpretation.
3.
Discuss the differences between statute law and common law.
4.
To what extent does the court’s interpretation role provide the opportunity for judicial law making? In your answer consider provisions such as s 18 of the Australian Consumer Law which prohibits misleading conduct in business.
WEB REFERENCES Federal Parliament http://www.aph.gov.au
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CHAPTER 4
The Executive and Law-making by Administrative Agencies Andrew Terry THE BUSINESS CONTEXT The function of the executive branch of government is to administer and enforce the laws enacted by parliament. In a complex society such as Australia where the law impacts on virtually all aspects of our lives, the executive branch of government wields considerable power in administering these laws. However, the executive’s function extends beyond administering the law. The range and detail of legal regulation in modern society makes it impracticable for parliament. A range of legislative power is delegated by the parliament to the executive. “Delegated legislation” – the laws made by those to whom limited legislative powers are delegated by parliament – impacts heavily on all citizens. These regulations are extensive and far-reaching and have a significant impact on the conduct of business. They form a significant part of business law. It is therefore important to understand both how they come into existence and how they are subject to control.
[4.10]
4.1 THE EXECUTIVE GOVERNMENT ..................................................................................... 136 [4.50]
The Monarch and the Governor-General .......................................................... 137
[4.70]
The Federal Executive Council ............................................................................ 138
[4.80]
The Cabinet .......................................................................................................... 138
[4.90]
The Prime Minister and the ministers ................................................................ 139
[4.100]
The public service ................................................................................................ 139
[4.110]
Statutory authorities ............................................................................................ 139
[4.120]
Quangos ................................................................................................................ 139
[4.140]
4.2 THE INCREASING POWER OF THE EXECUTIVE ............................................................. 142
[4.170]
4.3 DELEGATED LEGISLATION ............................................................................................... 144 [4.170]
Cartloads of regulatory manure .......................................................................... 144
[4.180]
Delegated legislation ........................................................................................... 144
[4.210]
Reforming the process of delegated legislation ................................................ 146 135
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[4.260]
4.4 THE EXERCISE OF ADMINISTRATIVE DISCRETION AND THE REVIEW OF ADMINISTRATIVE DECISIONS ............................................................................................... 149 [4.280]
The Ombudsman ................................................................................................. 150
[4.290]
Freedom of information laws .............................................................................. 152
[4.300]
Whistleblowing ..................................................................................................... 153
[4.310]
Merit review: The Administrative Appeals Tribunal ........................................... 154
[4.320]
Judicial review of administrative decisions ........................................................ 155
4.1 THE EXECUTIVE GOVERNMENT [4.10] In all systems of government a distinction may be drawn between the legislative function, the executive function and the judicial function. This chapter deals with the executive function of government – the carrying out, administration and enforcement (the “execution”) of the law. The body entrusted with this function is known as “the Executive” or “the executive government”. Under the Commonwealth Constitution, executive power is conferred on the Governor-General (who represents the Queen) and the Ministers of the Crown appointed by the Governor-General who form the Executive Council and whose function it is to advise the Governor-General on the government of the Commonwealth. The term “Crown” is frequently used to mean the executive government – the Governor-General acting as Head of State on the advice of the Executive Council. Constitutional arrangements are very similar at State level, with executive power residing in the Governor.
IN CONTEXT Responsible government [4.20] One of the most important characteristics of the system Australia inherited from Britain is that of responsible government. The Prime Minister and the other ministers entrusted with the role of executive government are responsible to parliament. The ministers are members of parliament and hold office only so long as the government from which they are drawn has the confidence or support of the House of Representatives – the house which directly represents the people. Under the long established conventions of responsible government (which are not expressly included in the Constitution), the government of the day need not resign if defeated in the lower house on a minor matter but if, for example, it loses a vote of no confidence it must resign or seek a dissolution.
[4.30] The organisation and system of executive government is a matter of some complexity. The bare bones of the Constitution provide an incomplete picture of the process and reliance must be placed on the unwritten conventions – practices which have developed over centuries in the case of the Westminster Parliament – which are recognised as obligatory but which are not expressly contained in the Constitution. The bald proposition that the “executive power of the Commonwealth is vested in the Queen and is exercisable 136
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by the Governor-General … advised by the Federal Executive Council” (a summary of ss 61 and 62 of the Constitution) may be thought quite unhelpful in explaining the system as it actually works. Similarly, the Constitution makes no reference to the Prime Minister or the Cabinet – the parties who in practice are most central to executive power. A fuller account of executive government requires consideration of a number of institutions.
IN CONTEXT The Constitution: Chapter II Executive Government [4.40] s 61 The executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen’s representative and extends to the execution and maintenance of this Constitution, and of the laws of the Commonwealth. s 62 There shall be a Federal Executive Council to advise the Governor-General in the government of the Commonwealth, and the members of the Council shall be chosen and summoned by the Governor-General and sworn as Executive Councillors, and shall hold office during his pleasure. s 63 The provisions of this Constitution referring to the Governor-General in Council shall be construed as referring to the Governor-General acting with the advice of the Federal Executive Council. s 64 The Governor-General may appoint officers to administer such departments of State of the Commonwealth as the Governor-General in Council may establish. Such officers shall hold office during the pleasure of the Governor-General. They shall be members of the Federal Executive Council, and shall be the Queen’s Ministers of State for the Commonwealth. After the first general election no Minister of State shall hold office for a longer period than three months unless he is or becomes a senator or a member of the House of Representatives.
The Monarch and the Governor-General [4.50] A Commonwealth Parliament booklet, Parliament and the executive government (1987) p 20, explains that: Australia is a constitutional monarchy. The Queen of Australia is nominally its Head of State, but her head of state functions are actually performed by her representative, the Governor-General. The Head of State of a country is the person who is the formal head of the Executive Government. The head of government is the principal administrator of the Government – in Australia this person is the Prime Minister.
Although the Constitution makes the Governor-General head of the executive government it provides little opportunity for the Governor-General to exercise powers independently of the government of the day acting through its formal instrument, the Federal Executive Council. [4.60] Under the Constitution, certain powers are vested in the Governor-General in Council – that is, the Governor-General acting on the advice of the ministers who are
What is the Crown? One of those fogs of ambiguity so dear to the laws of England surrounds our usage of the words “King” and “Crown”. The “Crown” in this country is the symbol not only of Royalty but of the State, and distinguishes not only the palace but the village post office and police station. When we speak of the Crown we sometimes mean the Monarch himself; but more often we mean the Government or some Department of it, or some department of some Department, and sometimes in practice, it is to be feared, some subordinate clerk in some department of some Department. Bold v The Attorney-General in HerbertAP, Uncommon law (Methuen, 1935).
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members of the Executive Council (eg s 32 in relation to issuing writs for general elections and s 72 in relation to the appointment of judges to federal courts). Other powers are vested in the Governor-General alone (eg ss 5 and 57 in relation to proroguing (discontinuing) and summoning parliament and dissolving the House of Representatives and/or the Senate, s 58 in relation to assenting to or withholding assent to legislation, s 64 in relation to appointing and dismissing ministers). Constitutional convention nevertheless demands that governorsgeneral will generally act only on the advice of their ministers in the exercise of these powers. The extent and nature of powers that may be exercised by governors-general independently of the advice of their ministers – their reserve, discretionary or prerogative powers – are not clearly settled. However, the situation of 11 November 1975 when the Governor-General dismissed the government against the advice of its ministers is a powerful, albeit debatable, example of their powers.
The Federal Executive Council The GovernorGeneral should be put in his proper place – as a ceremonial figure on leave from The Merry Widow. BillHayden, subsequently GovernorGeneral of Australia, The Age (14 November 1981).
[4.70] The Federal Executive Council established by s 62 of the Constitution comprises all the ministers of the government. It is a formal advisory body which also has substantial powers to make laws under powers delegated to it by parliament.
The Cabinet [4.80] The Federal Executive Council constitutes the formal power of the government of the day. The actual power is wielded by the Cabinet. Whereas the Executive Council comprises all the ministers, the Cabinet comprises only the senior ministers. It is the centre of the government’s decision-making process and is vital to the practical operation of government. However, the significance of the Cabinet is not referred to in the Constitution. Parliament and the executive government (1987) p 24 explains that: Despite its importance as the decision-making centre of government, the Cabinet is not mentioned in the Constitution. Nor is the position of Prime Minister, the Prime Minister being the “chairman” of Cabinet. The institution of Cabinet and the position of Prime Minister are part of the conventions of responsible government, reflecting the fact that the Government is drawn from the Parliament and that it is responsible to the Parliament for its administration and its decisions. At the time of Federation these conventions were firmly established in Britain and in the Australian colonies; the constitution-makers thus took for granted their application in the Commonwealth and considered it necessary to write into the Constitution only the formal mechanisms for decision-making. There can be said, then, to be two structures of government – the structure set out in the Constitution, comprising the Governor-General and the Federal Executive Council, which provides the formal or legal framework for government decision making and implementation, and the political structure based on the conventions of responsible government, comprising the Prime Minister and Cabinet, which provides the actual or practical framework. The two come together through the fact that the ministers who are members of Cabinet are also the members of the Federal Executive Council, and through the convention that the Governor-General acts only on the advice of his ministers, with some exceptions.
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The Prime Minister and the ministers [4.90] Ministers are appointed by the Governor-General, on the advice of the Prime Minister. Although the institution of Prime Minister is not mentioned in the Constitution, the conventions of responsible government demand that the Governor-General appoints a person who can form a government enjoying the confidence of the House of Representatives (that is, the leader of the party or coalition of parties with the majority in the House of Representatives).
The public service [4.100] Although the executive power of the Commonwealth is entrusted to the Governor-General and the Executive Council, the ministers obviously cannot carry out the complex and varied operations involved in the administration of government. This is the role of the Australian Public Service which is divided into departments each having functions in a particular policy area. The minister is the parliamentary head of the department (the public servant who heads the department is known as the permanent head) and is responsible both to the parliament and to the government of which he or she is a member for the department’s activities.
If a traveller were informed that such a man was leader of the House of Commons, he may begin to comprehend how the Egyptians worshipped an insect. Benjamin Disraeli.
Statutory authorities [4.110] Unlike departments which are established by the government of the day through the formal machinery of the Governor-General appointing a minister for each department on the advice of the Prime Minister, statutory authorities are established by Acts of Parliament of the government of the day. The Australian Broadcasting Corporation is just one of the hundreds of statutory authorities that exist at the federal level, although it may not be a typical example. The vast majority of statutory authorities have a lesser public profile and few employees. Statutory authorities have a degree of independence from government control which varies according to their function. The debate as to the need for and the number of authorities has a large heritage. In Parliament and the executive government (1987, p 34) it is noted that: While all statutory authorities are in theory accountable to Parliament, the Parliament in practice cannot adequately oversee them all. A partial solution which has been suggested is to return the functions of a number of the authorities to departments. This would place them under direct ministerial control, with accountability to Parliament then being achieved through the relevant Minister. The Senate Standing Committee on Finance and Government Operations, for example, found that a number of authorities had ceased to perform any really useful function, or performed mainly residual functions which could be more efficiently performed within departments. On a broader front, the committee suggested that Parliament make greater use of “sunset clauses” in legislation creating new authorities (a “sunset clause” provides that an authority will automatically go out of existence after a certain period unless the Parliament makes a positive decision at that time to continue it).
Quangos [4.120] The term quango (quasi autonomous non-government organisation) refers to “the hazy world of non-government bodies, statutory authorities and government companies,
I do not rule Russia; ten thousand clerks do. Czar Nicholas I.
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often lumped together as quangos” (Richardson N, The Bulletin (28 November 1995) p 15). Federal Government statutory bodies, non statutory bodies and companies number many hundreds. All of these bodies have the capacity to affect the rights of individuals. [4.130]
The executive government of Australia How achieved
Sovereign
Inherited.
GovernorGeneral
Selected by the Prime Minister.
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Formal appoint- Constitutional ment pursuant to functions Constitution
Conventions applying / functions in practice Head of State. Head of Only necessary Executive Government and personal function is to appoint the one of constituGovernorent parts of the General. Parliament, but May on occasion these functions are delegated to perform acts normally carried the Governorout by the General. GovernorAppoints the General, such as Governoropening a General. May disallow an session of Act of Parliament Parliament or assenting to an (but this has Act of Parliament. never been Acts as advised done). by the Prime Minister. By the Sovereign, Represents the Performs as her representa- Queen as head of functions of Head tive in Australia. Executive of State. Government and Normally in all one of constitumatters acts as ent parts of the advised by the Parliament. In Prime Minister most matters and Ministers. must act as Has reserve advised by the powers to act Federal Executive independently in Council. emergencies. The extent of these and way they should be exercised are not agreed on.
Chapter 4 The Executive and Law-making by Administrative Agencies
How achieved
Formal appoint- Constitutional ment pursuant to functions Constitution
Prime Minister
Leader of the party which has the support of the most Members of the House of Representatives. Is elected leader through internal party processes.
By the GovernorGeneral as a Minister of State. By the GovernorGeneral as a member of the Federal Executive Council.
As for Ministers. The position of Prime Minister is not recognised by the Constitution.
Ministers
Selected by the Prime Minister from Members of the House of Representatives and Senators from the party or coalition of parties in government. The Prime Minister’s selection may be constrained by internal party processes.
By the GovernorGeneral as Ministers of State. By the GovernorGeneral as members of the Federal Executive Council. (Ministers must be appointed to the Federal Executive Council. Ministers must be Members of the House of Representatives or Senators, or become so within three months of appointment).
As Ministers, to administer Departments of State. As Executive Councillors, to advise the GovernorGeneral. The Cabinet is not recognised by the Constitution.
Conventions applying / functions in practice The GovernorGeneral commissions the leader of the party (or coalition) with the largest number of Members of the House of Representatives to form a Government. The Prime Minister chairs Cabinet and is in practice the Head of the Executive Government. Senior Ministers are in charge of larger or more important departments, and are normally members of the Cabinet. Junior Ministers may be in charge of a small department, or assist another Minister in the administration of a larger department. The Cabinet is, in practice, the heart of the Executive Government. All major policy and legislative proposals are decided by the Cabinet.
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How achieved
Formal appoint- Constitutional ment pursuant to functions Constitution
Parliamentary Secretaries
As for Ministers.
Executive Councillors
As for Ministers.
As for Ministers (Parliamentary Secretaries are a class of Ministers designated as Parliamentary Secretaries). By the GovernorGeneral (there is no constitutional restriction on who should be appointed).
As for Ministers.
To advise the GovernorGeneral.
Conventions applying / functions in practice Parliamentary Secretaries assist Ministers in the administration of their departments. Only Ministers and Parliamentary Secretaries are appointed (generally for life). Only Executive Councillors who are members of the current Government advise the Governor-General.
Source: http://www.aph.gov.au/About_Parliament/House_of_Representatives.
4.2 THE INCREASING POWER OF THE EXECUTIVE In Germany, under the law everything is prohibited except that which is permitted. In France … everything is permitted except that which is prohibited. In the Soviet Union, everything is prohibited, including that which is permitted. And in Italy … everything is permitted, especially that which is prohibited. Newton Minow.
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[4.140] The following words of Professor Geoffrey Palmer (then a law professor and later New Zealand’s Prime Minister), provide a challenging start to this section (Palmer G, Unbridled power (2nd ed, Oxford University Press, 1987)): I suggest that it is a fundamental truth of our existing constitutional arrangements that the executive has got out of control, and Parliament, the traditional check on the powers of the executive, is not performing that function in a satisfactory manner … Too often the paramount reason for introducing the regulation is the convenience of the administering department not the welfare of the citizen … The regulation is one of the most fearful instruments of executive domination. For sheer speed, lack of warning, absence of consultation and debate, nothing beats regulations … We have witnessed the eclipse of Parliament. We should try to restore its supremacy as a law-making body.
New Zealand is not alone in this trend. Under the Westminster system of parliamentary government, the essential purity of the doctrine of separation of powers is diluted because the executive is drawn from Parliament. The members of the Federal Executive Council are required to be Members of Parliament, if not when appointed then at least within three months of taking office. Indeed, Parliament is under the substantial control of the executive because the government in power holds the necessary majority to secure such control.
Chapter 4 The Executive and Law-making by Administrative Agencies
Many are critical of the “seriously flawed” system Australia inherited from England. In “The fatal flaw: Has the Westminster system produced a form of executive dictatorship?” Time Magazine (16 September 1991), Patrick O’Brien, said: In Australia [the Westminster system] is labelled “parliamentary democracy” and “responsible government” by its supporters. But it has grave deficiencies as far as democracy is concerned. In theory, Parliament is supposed to be master and the executive the servant. The system no longer works that way, and hasn’t for a long time. In reality, premiers and their cabinets – not to mention prime ministers and theirs – now form a sort of “elective dictatorship”, with vast, and often unchecked powers.
[4.150] The Westminster system stands in stark contrast to the United States model. O’Brien is not alone in arguing that the current debate as to Australian republicanism lacks real substance if the power of the executive is not addressed. Although Queensland may be regarded as a special case because of its unicameral legislature – a situation in which the executive always dominates the Parliament – it is interesting to note that the Fitzgerald corruption inquiry in that State placed at least some of the blame for the unfortunate state of affairs disclosed by the inquiry on the politicised system of government dominated by the executive under which Parliament was a compliant, powerless and largely irrelevant institution.
As an ordinary Australian, he was naturally suspicious of authority.Grainger P, Solicitor, Defending man in court in Wollongong NSW, 1970, cited by Hornadge B, The ugly Australian (Kangaroo Press, 1985).
Many consequences flow from the political reality that executive government is increasingly powerful. The two most obvious manifestations – the conferring of substantial law-making powers on the executive through the device of delegated legislation and the conferring of administrative discretion of the executive – are discussed below.
IN CONTEXT Executive power in action [4.160] A Department of Water representative stopped at a Canberra farm and talked with an old farmer. He told the farmer, “I need to inspect your farm for your water allocation.” The farmer said, “OK, but don’t go in that field over there.” The water representative said, “Mister, I have the authority of the Federal Government with me. See this card? THIS CARD MEANS I AM ALLOWED TO GO WHEREVER I WISH on any agricultural land. No questions asked or answered. Have I made myself clear? Do you understand?” The farmer nodded politely and went about his farm chores. Later, he heard loud screams and saw the water rep running for the fence and close behind was the farmer’s huge-horned prize bull. The bull was gaining on the water rep with every step. The rep was clearly terrified, so the old farmer threw down his tools, ran to the fence and shouted out. “Your card! Your card! Show him your card!” 143
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4.3 DELEGATED LEGISLATION “Cartloads of regulatory manure” [4.170] In a well-publicised speech in 1984 attacking Australian government processes, John Stone, then secretary of the treasury and later a Queensland senator, referred to the: cartloads of regulatory manure which have been spread upon those labour-market fields … to produce a great flourishing of weeds while retarding the growth of the crop of jobs which those fields might otherwise furnish.
The “weeds” included: the arbitral regulators themselves, their bureaucracies, the trade union and employer negotiators and their bureaucracies, the swollen and unbelievably bureaucratic departments of Labour at state and federal levels and so on.
Despite undoubted political motivation, the “cartloads of regulatory manure” metaphor is apt. The staggering mass of regulation that characterises Australia at the start of the twenty-first century and the equally staggering mass of authorities, corporations and other statutory bodies spawned by government permits the reach of the executive arm of government into all commercial conduct, hinders its efficiency and costs billions of dollars in compliance costs. Australians have a characteristic talent for bureaucracy. Jim Davidson, Australian democracy.
Delegated legislation [4.180] By way of justification for this mass of regulation, it is said that the activities of modern government are so varied and complex and the dilemmas facing parliament so technical that it has neither the time nor the ability to complete a comprehensive and detailed legislative program. It is for these reasons that a significant proportion of our law is contained in “delegated” or “subordinate” legislation – legislation made not by parliament itself but by a delegate upon whom, in the exercise of its sovereign power, parliament has conferred legislative power. Through delegation of legislative power a body other than parliament may make law. The identity of a delegate, the nature of the power conferred and the manner in which that power is to be exercised are prescribed in an “empowering” or “enabling” Act of Parliament. The most common recipient of legislative power – the most common delegate of parliament – is the executive government. Most Acts of Parliament today confer on the Governor, Governor-General or the minister whose department is charged with the administration of the legislation, power to make regulations for the purpose of giving full effect to the Act. The following empowering provision is frequently used in Commonwealth Legislation: The Governor-General may make regulations not inconsistent with this Act, prescribing all matters required or permitted by this Act to be prescribed or necessary or convenient to be prescribed for carrying on or giving effect to this Act.
[4.190] Although the courts cannot question the validity of legislation constitutionally enacted by Parliament they can question the validity of delegated legislation. However, if the delegated legislation is within the authority of the empowering Act (ie intra vires) the laws so made are as valid and enforceable as any Act of Parliament. The court’s 144
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interpretative function remains unaffected. But if the delegated legislation goes beyond the scope of the authority conferred by the empowering Act (ie ultra vires), it is unenforceable. Delegated legislation can be invalidated on the ground of “unreasonableness” but this power has rarely been exercised. The High Court has clearly expressed the view that it is the function of the court to determine whether the regulation (if otherwise valid) was (South Australia v Tanner [1989] HCA 3 at [12] per Wilson, Dawson, Toohey and Gaudron JJ): reasonably proportionate to the end to be achieved … a court must exercise care not to impose its untutored judgment on the legislator. It is not enough that the court thinks the regulation inexpedient or misguided. It must be so lacking in reasonable proportionality as not to be a real exercise of the power.
On one side of the argument sit those described by the opponents as the minimalists who believe councils should stick to the three Rs of local government – roads, rats and rubbish. Daily Telegraph (New Zealand) (24 August 1996).
EVANS V STATE OF NEW SOUTH WALES [4.200]
Evans v State of New South Wales [2008] FCAFC 130
The World Youth Day Act 2006 (NSW) was enacted in connection with the visit of the Pope to Sydney in 2008 for World Youth Day – a major annual gathering of young members of the Catholic Church. Clause 7 of the World Youth Day Regulation 2008 (NSW) made under the Act empowered authorised persons to direct that conduct causing “annoyance or inconvenience” to participants should cease. A challenge to the validity of the regulation was made by the applicants who proposed to, inter alia, dispute stickers and badges with slogans such as: • I know that condoms saves lives – Is that annoying? • I am not a Catholic! – Is that annoying? • I know Gays are great – Is that annoying? • I had premarital sex! Is that annoying? • I don’t believe Mary was a virgin! Is that annoying? • I don’t believe the Pope is infallible! Is that annoying? • I have a condom on me! Is that annoying? • I am gay! Is that annoying? It was held that the regulation was not a valid exercise of the regulation making power under the Act, which in s 58(1) conferred on the Governor the power to make regulations not inconsistent with the Act for or with respect to any matter required or permitted to be prescribed, or necessary or convenient to be prescribed, for carrying out or giving effect to the Act. Section 58(2) specially authorised the making of regulations for or with respect to regulating the conduct of the public at World Youth Day venues and facilities. The court cited the High Court in Coco v The Queen [1994] HCA 15 at [10]: 145
Business and the Law The courts should not impute to the legislature an intention to interfere with fundamental rights. Such an intention must be clearly manifested by unmistakable and unambiguous language. General words will rarely be sufficient for that purpose if they do not specifically deal with the question because, in the context in which they appear, they will often be ambiguous on the aspect of interference with fundamental rights.
The court held (at [83]) that: [c]onduct regulated by cl 7 so far as it relates to “annoyance” may extend to expressions of opinion which neither disrupt nor interfere with the freedoms of others, nor are objectively offensive in the sense traditionally used in State criminal statutes. Breach of this provision as drafted affects freedom of speech in a way that, in our opinion, Is not supported by the statutory power conferred by s 58 properly construed.
Because the court found the regulation to be beyond the regulation-making power granted it did not have to consider the challenges to the regulation on the basis that it infringed to implied freedom political communication under the Constitution (see [1.520]).
Reforming the process of delegated legislation Pythagorean theorem: 24 words. Lord’s Prayer: 66 words. Archimedes’ Principle: 67 words. Ten Commandments: 179 words. Gettysburg address: 286 words. US Declaration of Independence: 1300 words. US Constitution with all 27 Amendments: 7818 words. EU Regulations on the sale of cabbage: 26911 words.
[4.210] Reference has been made to the overwhelming nature of delegated legislation, both as to the number of rules involved and as to their wide-ranging implementation. The problem is one of accommodating both democratic principles and administrative efficiency. The problem is major and it is one which is escalating as Parliament more readily delegates legislative powers which authorise not only the “filling-in” of procedural defects but also the creation of substantive law. It is becoming increasingly common for Acts of Parliament simply to provide a general framework for the law, leaving delegated legislation the task of “filling the gaps” not only by devising procedural machinery but also by supplementing the substance of the law itself. The greatest source of Australian law is delegated law. The weight of material to be dealt with and the technical complexity of the subject matter mean that parliament cannot accommodate it. Of course, the essential paradox is that our parliamentary representatives are elected to make the law and that, therefore, the process of producing legislative rules by unelected people defeats the aims of responsible government. In particular, criticism may be levelled at the process by which regulations become law. Not only are regulations the products of bureaucrats rather than members of parliament, but they can become law simply by an administrative act followed by publication in the Government Gazette. On the other hand, that legislation which is passed by parliament through proper procedures must endure a far more rigorous examination. Not only is new legislation examined by both sides of parliament, it also has to be “read” three times in the house and be subject to debate, after which it must be passed by both the houses of parliament in order to become law. These safeguards do not surround the creation of delegated legislation. Again, it is necessary to acknowledge that the administration of a country such as Australia will not take place without an effective bureaucracy. The principle is exemplary: the parliament should produce laws which express in broad terms the wish of the people, and which leave to some given agency the task of filling in the details. That task requires particular expertise in the area in question and also the flexibility to deal with individuals in ways not normally available to courts enforcing legislation.
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The actual procedure for the passage of a proposed regulation into law not only lacks those safeguards which surround the enactment of legislation, it is virtually a matter of achieving the desired result by default. In the federal sphere the usual practice is that the regulation is drafted by an administrative officer within a Minister’s department and is then submitted to the Executive Council. Afterwards it is signed by the Governor-General, notified in the Government Gazette, and laid before – tabled in – each House of Parliament. The difficulty is that the Parliamentary scrutiny is passive. To be rendered void, one of the Houses of Parliament must take action to disallow the regulation. There is no requirement that the regulation receive any positive acceptance, the requirement is simply that no impediment be raised.
We work on the assumption that people are sensible, intelligent creatures and will fill up forms the way they are asked.British Home Office Spokesman, Sydney Morning Herald (4 October 1969).
IN CONTEXT Disallowance of Regulation [4.220] “[T]he power of disallowance is to ensure the control and supervision of Parliament over regulation … [T]he object of the legislature is to preserve the legislative power of … Parliament over regulations made by the Executive … Not to give a new legislative power, but to maintain the … Parliament as the dominant authority in legislative matters.” Dignan v Australian Steamships Pty Ltd [1931] HCA 9 per Starke J
[4.230] The only active scrutiny in Federal Parliament is that by the Senate Standing Committee on Regulations and Ordinances. One of the oldest committees of the Federal Parliament, it was established in 1932 and it applies a four-part test to the delegated legislation that comes before it: (a)
that the regulations are in accordance with the statute;
(b)
that the regulations do not trespass unduly on personal rights and liberties;
(c)
that the regulations do not unduly make the rights and liberties of citizens dependent upon administrative decisions which are not subject to adequate review by a judicial or other independent tribunal; and
(d)
that the regulations are concerned with administrative detail only and not with matters of substance which would be more appropriate for parliamentary enactment (as statutes).
This Standing Committee no doubt does its best. The volume of material coming before it is enormous – several thousand legal instruments annually. It is obviously not in a position to advise the Parliament properly as to the meaning and effect of all regulations. Indeed, most are put forward with little or no explanatory information from the department concerned. As noted earlier, the active opposition of Parliament to a new regulation is required to disallow it. Acquiescence means it becomes part of the law.
The parliamentary process has changed. To a large extent we’ve got executive government. Parliament is a sham. I just observe the fact that the man on the bus thinks all politicians are bloody idiots. JacobsS, Business Review Weekly (5 November 1993).
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IN CONTEXT Regulatory review [4.240] The Senate itself describes the role of the Standing Committee as follows: The Standing Committee on Regulations and Ordinances Many of the matters on which Parliament makes laws are extremely complex and it is neither possible nor desirable to include all the details in an Act of Parliament. Many acts therefore contain a provision that delegates to the government the power to draw up regulations covering detailed or technical matters required for the purpose of the act. This is known as delegated legislation. For example, the Health Insurance Act under which the Medicare scheme operates establishes broad principles and sets out the way the scheme is to be administered, but many of the fine details, including the scheduled fees for various medical procedures, are prescribed by regulation. A regulation carries the full force of the law – it has the same effect as an Act of Parliament. The power to make regulations is therefore an important one which needs to be monitored closely to ensure that it is not abused. For this reason the Acts Interpretation Act of 1901 requires the regulations be tabled in both houses of Parliament and gives either house the right to disallow (that is, veto) them. The Regulations and Ordinances Committee, with the assistance of an independent legal adviser, meets every week that the Senate sits to check all items of delegated legislation tabled in the Senate (around 1600 per year). This is to ensure that each item is in accordance with the Act of Parliament under which it is made, that it does not trespass unduly on personal rights and liberties and does not contain matter more appropriate for parliamentary enactment. The Committee works in a bipartisan manner and since its establishment in 1932 the Senate has not rejected a committee recommendation that a regulation be disallowed.
Senate Briefs, No 4 – Senate Committees
PAPERWORK REDUCTION BILL Persons or organisations wishing to make submissions on the above bill should forward 20 copies to this office by 2 October 1995. Evening Post (New Zealand), (7 August 1995).
[4.250] Over recent years both State and Federal Government have confronted the problem of the growth of delegated legislation through both administrative and legal initiatives. The major administrative initiative is the Regulatory Impact Analysis framework laid down in the government’s Best Practice Regulation Handbook which ensures that Australian Government regulation – both primary and delegated legislation – is both efficient and effective through rigorous analysis and consultation. The main feature of the scheme is the Regulation Impact Statement which is intended to facilitate informed and better regulation through consideration several elements: assessing the problem, objectives of government action, options that may achieve the objectives, impact analysis – costs, benefits and risks, consultation, implementation and review. The most significant legal initiative relating to the reform of delegated legislation – Legislative Instruments Act 2003 (Cth) – the object of which is set out in s 3:
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The object of this Act is to provide a comprehensive regime for the management of Commonwealth legislative instruments by: a)
establishing the Federal Register of Legislative Instruments as a repository of Commonwealth legislative instruments, explanatory statements and compilations; and
b)
encouraging rule-makers to undertake appropriate consultation before making legislative instruments; and
c)
encouraging high standards in the drafting of legislative instruments to promote their legal effectiveness, their clarity and their intelligibility to anticipated users; and
d)
improving public access to legislative instruments; and
e)
establishing improved mechanisms for Parliamentary scrutiny of legislative instruments; and
ea)
repealing spent legislative instruments or provisions that merely amend or repeal other legislative instruments, or provide for the commencement of legislative instruments or Acts; and
f)
establishing mechanisms to ensure that legislative instruments are periodically reviewed and, if they no longer have a continuing purpose, repealed.
Similar initiatives are being introduced at state level – eg the Subordinate Legislation Act 1989 (NSW) and the Subordinate Legislation Act 1994 (Vic).
4.4 THE EXERCISE OF ADMINISTRATIVE DISCRETION AND THE REVIEW OF ADMINISTRATIVE DECISIONS [4.260] The growth in the size and the intricacy of Australian society has meant that role of the executive government has been magnified. The bureaucracy has, in fact, developed a life of its own. The problem of delegated legislation has been described, but another significant concern is the extent of administrative discretion. Decisions made by the executive or administrative branch of government increasingly affect citizens and business. It is a regular occurrence that when the parliament, and in particular the Commonwealth Parliament, passes the legislation, that legislation will grant to ministers, or persons within their departments, discretionary powers to make decisions which may have a significant impact on those subject to them. Familiar examples range from the frequent and usually controversial matter of the refusal to grant a driver’s licence, to the more serious matter of the refusal to renew (for example) the licence of a truck or taxi driver, who thus loses the means of making a living. There are many other discretionary powers, which include the power to grant or refuse a pension, the power to impose a penalty, the power to register or license premises as suitable for certain activities, and so on. Very few members of the Australian community would not have been affected by the exercise of discretionary administrative powers. Acknowledging that fact involves recognising not just the breadth of administrative discretion but also how essential it is to the process of government. For practical purposes, the capacity to decide individual rights has to go beyond the parliament and the judiciary. What is essential, however, is that procedures should exist which allow for those disadvantaged by the exercise of an administrative discretion to have that decision 149
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reviewed in accordance with some legal process. The machinery that has developed to allow citizens to challenge the exercise of administrative discretion is therefore of great importance. All sorts of people (lawyers, computer people, systems managers) will tell you all sorts of reasons why forms cannot be simplified. Don’t believe them.Young MJ, Special Minister of State (23 February 1984).
The laws which have developed to regulate the decisions and actions of government agencies and officials are referred to collectively as administrative law.
IN CONTEXT The role of administrative law in Australia’s civil justice system [4.270] The Australian system of administrative laws is made up of the following elements: • Primary decision-making: the original decision which is made by an agency or body • Internal review: the review of a decision by the agency or body which made the decision • Tribunals: independent bodies which provide “merits review”; that is, examining government decisions and altering them if necessary • Courts: which provide judicial review of the decision • The Commonwealth Ombudsman: whose role is to consider and investigate complaints about Australian Government departments and agencies, and • Freedom of information: specific laws which create a general right of access to official information upon application, subject to exclusions. Attorney-General’s Department, Access to Justice Taskforce, “A strategic framework for access to justice in the Federal Civil Justice System”, Report (Sep 2009) p 129.
The Ombudsman [4.280] The Ombudsman is a Scandinavian invention from the early nineteenth century which has since been adopted widely throughout the world. The Ombudsman is, in effect, a public watchdog appointed by Parliament to check for administrative abuses. The position of Ombudsman was established federally by the Ombudsman Act 1976 (Cth). He or she wears a number of hats as the Commonwealth Ombudsman, the Defence Force Ombudsman, the Postal Industry Ombudsman, and the Private Health Ombudsman. Each State and Territory have appointed an Ombudsman. The legislation creates the office of Ombudsman and charges the person holding that office with the task of ensuring that complaints against officers of government agencies are investigated and that remedial action is taken where required. Although the Ombudsman has 150
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no power to make binding decisions, there is a comprehensive power to report and make recommendations where the Ombudsman is of the opinion (Ombudsman Act 1976 (Cth), s 15(1)): (a)
that the action: (i) appears to have been contrary to law; (ii)
was unreasonable, unjust, oppressive or improperly discriminatory;
(iii)
was in accordance with a rule of law, a provision of an enactment or a practice but the rule, provision or practice is or may be unreasonable, unjust, oppressive or improperly discriminatory;
(iv)
was based either wholly or partly on a mistake of law or on fact; or
(v)
was otherwise, in all the circumstances, wrong
(b)
that, in the course of the taking of the action, a discretionary power had been exercised for an improper purpose or on irrelevant grounds; or
(c)
in a case where the action comprised or included a decision to exercise a discretionary power in a particular manner or to refuse to exercise such a power: (i) that irrelevant considerations were taken into account, or that there was a failure to take relevant considerations into account, in the course of reaching the decision to exercise the power in that manner or to refuse to exercise the power, as the case may be; or (ii)
that the complainant in respect of the investigation or some other person should have been furnished, but was not furnished, with particulars of the reasons for deciding to exercise the power in that manner or to refuse to exercise the power, as the case may be.
The Ombudsman’s role is to receive and investigate complaints and to make suitable recommendations. While the Ombudsman cannot direct the behaviour of bureaucrats, her or his recommendations and their accompanying publicity give force to her or his position. If remedial action is not taken by the agents being investigated, the Ombudsman may report directly to the Prime Minister (in the case of the federal scheme) as well as to Parliament in her or his Annual Report.
The elected Parliament is a weak and weakening institution … the Executive Government is the principal beneficiary of the Parliament’s decline; and … the judiciary is tending to compete with the Executive Government in exploiting the Parliament’s weakness but it is having its own independence undermined through the initiative of Executive Government. The question is “does it matter?”. Reid GS, in Tay and Kamenka, Law-making in Australia (Edward Arnold, 1980).
Professor Dennis Pearce, a lawyer and former federal ombudsman, has expressed concern that when the courts act to correct bureaucratic misbehaviour, in many instances government departments either ignore them or refuse to obey them. During his term as ombudsman, Pearce encountered circumstances in which an agency was not prepared to adhere to judicial rulings or was prepared to ignore opinions about the effect of the laws that were inconvenient to it. “There was an impatience with what was considered to be the imposition of pedantic and expensive requirements”: Pearce D, “Executive versus judiciary”, (1991) 2 PLR 179 at 179. He also referred to cases where departments refused to “adhere to the rule of law because it does not accord with the view that the agency takes of the law”. Specialist Ombudsman also exist for particular industries (such as the Telecommunications Industry Ombudsman and the Financial Service Ombudsman) and industry funded “ombudsman” schemes which confer powers to resolve complaints have been set up for 151
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inter alia the banking industry (Australian Banking Industry Ombudsman) and the insurance industry (the Insurance Industry Ombudsman).
Freedom of information laws Before I became President I realized and was warned that dealing with the Federal bureaucracy would be one of the worst problems I would have to face. It’s been even worse than I had anticipated. JimmyCarter, New York Times (26 April 1978).
[4.290] The ideal of open government is obviously facilitated if citizens have the opportunity to gain access to administrative files. Australia was the first country with a Westminster-style government to introduce, in 1982, freedom of information laws – the imperative of open government outweighing concerns as to the adverse effect of such laws on the operation of the Commonwealth bureaucracy. The Freedom of Information Act 1982 (Cth) (FOI Act) has the objects expressed in s 3: (1)
The objects of this Act are to give the Australian community access to information held by the Government of the Commonwealth or the Government of Norfolk Island, by: (a) requiring agencies to publish the information; and (b)
(2)
The Parliament intends, by these objects, to promote Australia’s representative democracy by contributing towards the following: (a) increasing public participation in Government processes, with a view to promoting better-informed decision-making; (b)
Australia is an island surrounded by Navigation Acts … and vexatious regulations of all descriptions. John Edward Burke, Australian dictionary of biography.
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providing for a right of access to documents.
increasing scrutiny, discussion, comment and review of the Government’s activities.
(3)
The Parliament also intends, by these objects, to increase recognition that information held by the Government is to be managed for public purposes, and is a national resource.
(4)
The Parliament also intends that functions and powers given by this Act are to be performed and exercised, as far as possible, to facilitate and promote public access to information, promptly and at the lowest reasonable cost.
The FOI Act provides for the individual’s right of access to documents, defined to include any written or printed matter and any photograph held by any Commonwealth government body. Exemptions were provided, allowing secrecy to be maintained for various maters including financial confidentiality of the Commonwealth, Security, Cabinet and Executive Council documents on the minister issuing an “inclusive certificate” that an exemption applied. However, the efficacy of the FOI Act was severely compromised by the 2006 decision of the High Court in McKinnon v Secretary, Department of Treasury [2006] HCA 45 which held that the Administrative Appeals Tribunal did not have power to substitute its opinion for that of the relevant minister about whether disclosure would be contrary to the public interest or to assess for itself what the public interest required. Amendments to the FOI Act were introduced in 2010 appointing an Information Commissioner with power to review government decisions to deny access and to monitor the performance of the FOI process. Exemptions are now subject to a new single public interest test weighted to disclosure. Access to a conditionally exempt document can only be denied if, in the circumstances, access at the time would on balance be contrary to public interest. Under this test factors favouring disclosure include the objects of the FOI
Chapter 4 The Executive and Law-making by Administrative Agencies
Act, informing debate on matters of public importance, promoting effective oversight of public expenditure and allowing a person access to their own personal information. Factors that cannot be considered include potential loss of confidence in or embarrassment to the government, and the high seniority of the author of a document.
Whistleblowing [4.300] The United States consumer activist Ralph Nader has described “whistleblowing” as “an act of a man or woman who, believing the public interest overrides the interest of the organisation he or she serves, publicly blows the whistle if the organisation is involved in corrupt, illegal, fraudulent and harmful activities”. There has been a growing awareness in Australia of the issues associated with whistleblowing and the importance of protecting those who risk personal and professional retaliation for making public disclosures of corruption or maladministration. Each State and Territory has “whistleblower” legislation to provide protection for public officials disclosing corrupt conduct, maladministration, and waste. The Public Interest Disclosures Act 1994 (NSW) for example has the following object: (1)
(2)
The object of this Act is to encourage and facilitate the disclosure, in the public interest, of corrupt conduct, maladministration, serious and substantial waste, government information contravention and local government pecuniary interest contravention in the public sector by: (a) enhancing and augmenting established procedures for making disclosures concerning such matters, and (b)
protecting persons from reprisals that might otherwise be inflicted on them because of those disclosures, and
(c)
providing for those disclosures to be properly investigated and dealt with.
Nothing in this Act is intended to affect the proper administration and management of an investigating authority or public authority (including action that may or is required to be taken in respect of the salary, wages, conditions of employment or discipline of a public official), subject to the following: (a) detrimental action is not to be taken against a person if to do so would be in contravention of this Act, and (b)
beneficial treatment is not to be given in favour of a person if the purpose (or one of the purposes) for doing so is to influence the person to make, to refrain from making, or to withdraw a disclosure.
A federal whistleblower law was enacted in 2013. The Public Interest Disclosure Act 2013 (Cth) has the following objects (s 6): (a)
to promote the integrity and accountability of the Commonwealth public sector; and
(b)
to encourage and facilitate the making of public interest disclosures by public officials; and
(c)
to ensure that public officials who make public interest disclosures are supported and are protected from adverse consequences relating to the disclosures; and
(d)
to ensure that disclosures by public officials are properly investigated and dealt with. 153
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Merit review: The Administrative Appeals Tribunal The possibility of avoiding decisions increases in proportion to the square of the number of members on the committee. Rangnekar SS, The wonderland of Indian managers (South East Asia Books, 1998).
[4.310] The Administrative Appeals Tribunal (AAT) was established in 1976 under the Administrative Appeals Tribunal Act 1975 (Cth) with wide-ranging jurisdiction to hear appeals from the decisions of Ministers, officials and agencies made under more than 400 Commonwealth Acts and legislative instruments. The potential range of jurisdiction is enormous; from the refusal to renew a pilot’s licence to the deregulation of a tax agent or a deportation order. In July 2015 the Migration Review Tribunal, the Refugee Review Tribunal and the Social Security Appeals Tribunal merged with the Administrative Appeals Tribunal which now has wide jurisdiction to review a wide range of decisions made by the Australian Government. Administrative tribunals differ significantly from courts: in particular they form part of the executive government, and are not – as courts are – independent of it. From that distinction flows a most important consequence. The AAT may exercise all the powers and discretion conferred on the person who made the decision being reviewed. The AAT may resemble a court in many aspects of procedure and structure but its essential distinguishing characteristic is that it exercises administrative authority, not judicial authority. Part of the significance of that distinction has been explained by the Federal Court in Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 68, in these terms: The function of the Tribunal is … an administrative one. It is to review the administrative decision that is under attack before it. In that review, the Tribunal is not restricted to consideration of the questions which are relevant to a judicial determination of whether a discretionary power allowed by statute has been validly exercised. Except in a case where only one decision can lawfully be made, it is not ordinarily part of the function of court either to determine what decision should be made in the exercise of an administrative discretion in a given case or, where a decision has been lawfully made in pursuance of a permissible policy, to adjudicate upon the merits of the decision or the propriety of the policy. That is primarily an administrative rather than a judicial function. It is the function which has been entrusted to the Tribunal.
In Heaven there will be no law, and the lion will lie down with the lamb … in Hell there will be nothing but law, and due process will be meticulously observed. Grant Gilmore.
It follows that the AAT, reviewing the exercise by the bureaucracy of the powers and discretions conferred upon it, may substitute its own decision in place of that of the bureaucrat, whereas a court will normally be confined to ensuring that that person has followed proper procedures. The review by the AAT is “on the merits”. As the AAT states on its website (http://www.aat.gov.au) “this means that we take a fresh look at the facts, law and policy relating to the decision and arrive at our own decision”. The Tribunal may substitute what it regards as the “right or preferable decision” (Re Becker and Minister for Immigration and Ethnic Affairs (1977) 1 ALD 158 at 161 per Brennan J). The role of the AAT is performed in the States and Territories by a range of tribunals with similar roles. Increasingly these tribunals have morphed from Administrative Tribunals to Civil and Administrative Tribunals with the power not only to review administrative decisions but also to resolve commercial and consumer disputes.
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Judicial review of administrative decisions [4.320] Judicial review plays an important role in Australia’s system of government as a means of ensuring the accountability of public officials for the legality of their actions Judicial review is generally concerned with the lawfulness of an administrative decision. As Brennan J stated in Church of Scientology v Woodward [1982] HCA 78 at [5]: Judicial review is neither more nor less than the enforcement of the rule of law over executive action; it is the means by which executive action is prevented from exceeding the powers and functions assigned to the executive by law and the interests of the individual are protected accordingly.
[4.330] The enormous scope and significance of decisions taken by the administration has meant that for a long time the common law has made available remedies for those who have suffered damage because of a wrong administrative decision. Traditionally, the remedy has been for the court to issue a prerogative writ. Such writs are of ancient origin and provide a mechanism whereby the court may order an administrative officer, or tribunal, to act or to refrain from acting in a particular manner. Historically, the most significant of these writs have been:
Judicial review in Australia has been described as an “extremely dense and complex patchwork”, which is “daunting to an outsider peeking into Australian judicial review law”. Taggart M, “Australian ’exceptionalism’ in Judicial Review” (2008) 36 Federal Law Review 1 at 6.
• habeas corpus, whereby a person imprisoning another is directed to bring that other before a court; • mandamus, whereby the performance of an administrative duty is ordered; • certiorari, whereby a record of an administrative decision must be produced to permit its review by the court; and • prohibition, whereby the administrative officer or tribunal is forbidden from exceeding its powers. [4.340] In addition to the prerogative writs historically available in the common law courts, the equity courts also developed remedies for administrative excess, in particular the injunction. All of these remedies are available only at the discretion of the court, which may refuse an applicant for many reasons, including delay, the availability of alternative remedies, bad faith and that the remedy sought is too harsh. [4.350] The constraints imposed on the courts by the antiquity of these remedies led, in 1977, to the introduction into Federal Parliament of the Administrative Decisions (Judicial Review) Act 1977 (Cth). The then Attorney-General (R J Ellicott QC) described the proposed operation of the Act as follows (House of Representatives, Hansard (28 April 1977) at 1394-1395): The present law relating to the review by the courts of administrative decisions is in a most unsatisfactory state … The law in this area is clearly in need of reform – indeed, it could be said to be medieval … What the present Bill seeks to do is to establish a single simple form of proceeding in the Federal Court of Australia for judicial review of Commonwealth administrative actions as an alternative to the present cumbersome and technical procedures for review by way of prerogative writ, or the present actions for a declaration or injunction … Judicial review by the Federal Court of Australia will not be concerned at all with the merits of the decision or action under review. The only question for the Court will be whether the action is lawful, in the sense that it is within the power conferred on the relevant Minister or official or
Civilisation is doomed unless some way can be found to check the growth of bureaucracy; and the only hope for the human race is for the rate of population increase to continue to exceed that of bureaucratic growth. Arthur Robinson.
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body, that prescribed procedures have been followed and that general rules of law, such as conformity to the principles of natural justice, have been observed. The court will not be able to substitute its own decision for that of the person or body whose action is challenged in the court. It will be empowered to enjoin action or to quash a decision it finds unlawful and to direct action to betaken in accordance with the law. It will also be able to compel action by a person or body who has not acted, but who ought to have done so. We must see to it that the stream of British freedom – which has been kept clear by the decisions of the judges – does not perish in the bogs of departmental decisions. Lord Denning, Freedom under the law (Stevens & Sons, 1949).
Give me your tired, your poor, your huddled masses, yearning to be free … Inscription on the Statue of liberty, New York.
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[4.360] As explained above, it is the function of the court, when reviewing an administrative decision, to determine the existence of a ground for review, not to debate the merits of the decision itself. The grounds for review are set out in s 5(1) of the Act as follows: (a)
that a breach of the rules of natural justice occurred in connection with the making of the decision;
(b)
that procedures that were required by law to be observed in connection with the making of the decision were not observed;
(c)
that the person who purported to make the decision did not have the jurisdiction to make the decision;
(d)
that the decision was not authorised by the enactment in pursuance of which it was purported to be made;
(e)
that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which it was purported to be made;
(f)
that the decision involved an error of law, whether or not the error appears on the record of the decision;
(g)
that the decision was induced or affected by fraud;
(h)
that there was no evidence or other material to justify the making of the decision;
(i)
that the decision was otherwise contrary to law.
[4.370] Where the court is satisfied that a sufficient ground is established and that the decision was not a lawful decision it may set aside that decision and make an “order of review”, the statutory substitute for the old common law remedies. Making the order of review is a discretionary matter for the court which will do so if it is in the interests of justice. In essence the order of review may quash the decision, remit the decision to the original decision-maker to remake the decision in accordance with the law or make an order (s 16): (a)
declaring the rights of the parties; or
(b)
ordering them to refrain from doing something; or
(c)
to perform some act.
Chapter 4 The Executive and Law-making by Administrative Agencies
IN CONTEXT Natural justice and judicial review of the executive [4.380] The matters set in s 5(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) as grounds for judicial review require the court to be satisfied that the administrative decision was a proper exercise of administrative power, in particular, that there was no breach of natural justice. This doctrine enshrines principles of a fair hearing and the absence of bias. These two principles were explained by Marks J in Gas and Fuel Corporation of Victoria v Wood Hall Ltd [1978] VR 385 at 396: The first is that an adjudication must be disinterested and unbiased … The second principle is that the parties must be given adequate notice and opportunity to be heard … each of the two principles may be said to have sub-branches or amplifications. One amplification of the first rule is that justice must not only be done but appear to be done … Sub-branches of the second principle are that each party must be given a fair hearing and a fair opportunity to present its case. Transcending both principles are the notions of fairness and judgment only after a full and fair hearing given to all parties.
However, the precise content of “natural justice” is capable of adapting for contemporary notions of administrative fairness. Justice Kirby observed in Ormond v Public Service Board (1984) NSW Court of Appeal (unreported) that: The development of administrative law by the judges in England, Australia and elsewhere has frequently seen the advancement of the notion of natural justice by reference to the criterion of “fairness”. True it is this criterion is uncertain of content. But that has advantages as well as disadvantages. It permits the courts to give the obligation appropriate content, according to the notions of fairness and justice as discerned by the judges from time to time. What may have been required by standards of fairness in a world of relatively few tribunals, circumscribed statutory privileges, lower levels of general public education and community expectations of the public service, will change with the growth of administration, the conferment of numerous statutory privileges, the advancement of public education and the enlargement of the community’s demand for accountability on the part of public administrators. These social changes elicit responses from the legislatures, as has been mentioned. But they also elicit development of administrative law by the judges, responding in accordance with our legal traditions, to the changing times. Such responses will occur, not in the face of legislative intent to the contrary but to supplement legislation, by rules developed to meet the myriad of circumstances presented in cases coming before the courts.
Give me your tired, your poor, your huddled masses yearning to be free, provided they have satisfactorily filled out forms 3584A through 3597Q. DwightMacDonald, Against the American grain (1963).
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ISBESTER V KNOX CITY COUNCIL [4.390]
Isbester v Knox City Council [2015] HCA 20
The High Court considered an appeal from the Victorian Court of Appeal concerning an application for judicial review of a decision to have the appellant’s dog destroyed, where, the appellant alleged, one of the decision-makers was biased as she was the council officer who had given the instruction to prosecute in relation to an attack by the dog as well as the decision to have it put down. The High court held (at [50]) that: A fair-minded observer might reasonably apprehend that Ms Hughes might not have brought an impartial mind to the decision under s 84P(e) [to have the dog put down]. This conclusion implies nothing about how Ms Hughes in fact approached the matter. It does not imply that she acted otherwise than diligently, and in accordance with her duties, as the primary judge found, or that she was not in fact impartial. Natural justice required, however, that she not participate in the decision and because that occurred, the decision must be quashed.
QUESTIONS 1.
What is the role of the executive arm of government?
2.
Discuss the reasons for, and the problems inherent in, delegated legislation. What procedures are available to review delegated legislation?
3.
“I suggest that it is a fundamental truth of our existing constitutional arrangements that the executive has got out of control …”: Palmer G, Unbridled power (2nd ed, Oxford University Press, 1987). Give your reasons for agreeing or disagreeing with this proposition.
4.
Outline and assess the procedures available for a citizen to seek relief or challenge an administrative decision.
WEB REFERENCES Australian Lawyers’ Alliance http://www.lawyersalliance.com.au Commonwealth Ombudsman http://www.ombudsman.gov.au Whistleblowers Australia http://www.whistleblowers.org.au
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CHAPTER 5
Commercial Dispute Resolution Andrew Terry THE BUSINESS CONTEXT Disputes are regrettably inevitable in business. In the words of the September 2009 Access to Justice Report (Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System) “people have, and will continue to have, disputes”. Fortunately most disputes are resolved “without recourse to formal legal institutions or dispute resolution mechanisms” though communication, compromise and common sense. Indeed the relationship between the disputing parties may actually be enhanced by this exercise. But it may not be and resort to the formal dispute resolution processes may be necessary. This chapter reviews the main available mechanisms – litigation, arbitration and alternative dispute resolution (ADR).
[5.10]
5.1 RESOLVING COMMERCIAL DISPUTES ........................................................................... 160 [5.50]
[5.60]
Small Business Commissioners ............................................................................ 162
5.2 LITIGATION ....................................................................................................................... 163 [5.80]
Legal process and proceedings ........................................................................... 164
[5.110]
Burden and standard of proof ............................................................................ 165
[5.140]
The pleadings ....................................................................................................... 166
[5.170]
Interrogatories and discovery ............................................................................. 167
[5.210]
Facilitating litigation: Class actions and litigation funding .............................. 168
[5.290]
5.3 ARBITRATION .................................................................................................................... 175
[5.320]
5.4 ALTERNATIVE DISPUTE RESOLUTION ............................................................................. 176 [5.330]
The development of ADR .................................................................................... 176
[5.340]
Definition of ADR ................................................................................................. 176
[5.350]
The advantages of ADR ....................................................................................... 177
[5.360]
Activating ADR ...................................................................................................... 178
[5.370]
ADR techniques .................................................................................................... 178
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5.1 RESOLVING COMMERCIAL DISPUTES Discourage litigation. Persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often a real loser – in fees, expenses, and waste of time. As a peace-maker, the lawyer has a superior opportunity of being a good man. There will be business enough. Abraham Lincoln.
The dispute resolution system IN CONTEXT Access to Justice and the Rule of Law [5.10] Access to justice is central to the rule of law and integral to the enjoyment of basic human rights. It is an essential precondition to social inclusion and a critical element of a well-functioning democracy … An effective justice system must be accessible in all its parts. Without this, the system risks losing its relevance to, and the respect of, the community it serves. Accessibility is about more than ease of access to sandstone buildings or getting legal advice. It involves an appreciation and understanding of the needs of those who require the assistance of the legal system. While courts are an important aspect of the justice system, there are many situations where courts are the last place people will get the outcome they are looking for to resolve issues. Often a full blown court case will be completely disproportionate to the issues in dispute … The critical test is whether our justice system is fair, simple, affordable and accessible. It is also important that the system provides effective early intervention to help people resolve problems before they escalate and lead to entrenched disadvantage. People must be able to understand the law if it is to be effective.
It will be remembered that the earliest appearances of law was as a substitute for the private feuds between families or clans. Oliver Wendell Holmes.
160
McClelland R, Attorney-General, Foreword to Report by Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System (September 2009)
[5.20] There is a spectrum of mechanisms available for commercial dispute resolution. This chapter addresses the three most significant mechanisms – litigation, arbitration and ADR.
Chapter 5 Commercial Dispute Resolution
IN CONTEXT Dispute Resolution Processes [5.30]
The National Alternative Dispute Resolution Advisory Council advise that when choosing the best dispute resolution process, a number of issues need to be considered: • how the other people involved want to manage the dispute • whether you want an independent person involved and, if you do, what you want them to do • how structured you want the dispute resolution process to be • what sort of relationship you want to have with the other people involved • how much you are prepared to spend – in time and money • how much control you want over the process • how much control you want over making a decision or agreement. NADRAC, Your Guide to Dispute Resolution (2012) p 7 http://www.ag.gov.au/ LegalSystem/ 161
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IN CONTEXT Access to justice [5.40] People have, and will continue to have, disputes. Mostly these are resolved without resorting to the machinery of formal justice (such as lawyers, courts or dispute resolution services). Access to justice should include resilience: reinforcing and enhancing the capacity of people to resolve disputes themselves. However, the Government has a role in ensuring that there are mechanisms available to resolve disputes lawfully, peacefully and fairly, and to reinforce the fundamental principles that are embodied in laws. An accessible and effective way of resolving disputes is therefore central to the rule of law. Without it, disputes are either unresolved or dispute resolution is driven underground. In either case, the outcome is a loss of confidence in the rule of law and the expectation that society has the capacity to ensure cooperation is respected and rewarded. In this scenario, those with resources or other strengths would tend to prevail, regardless of the fairness of the outcome, depriving people of the enjoyment of legitimate rights and interests and encouraging lawlessness. That has impacts for individuals in respect of immediate disputes, but is more generally damaging on social cohesion and the fundamental basis of the economic cooperation that is the basis of social progress. Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System, (September 2009).
Small Business Commissioners [5.50] While the primary responsibility for litigation-proofing a business lies in the due diligence and compliance practices of individual businesses, the real challenges for small business are acknowledged. Over the last few years most States have established Small Business Commissioners to represent the interests of small business. Small Business Commissioners can investigate complaints about unfair market practices affecting small business, and provide low-cost or subsidised ADR services for small businesses, to facilitate the mediation of disputes. The website of the NSW Small Business Commissioner explains that: The Office of the NSW Small Business Commissioner is your first stop if you have a commercial dispute. Our role is to help you find a solution, ideally through the use of negotiation, information and/or mediation, rather than litigation. The first thing we do is listen to you and try to help you identify the key parts of the problem. We can give you strategic and procedural advice to help you “help yourself” and sort out whatever issues are getting in the way of your business success. If the problem continues, we are happy to also talk to the other side about it, to hear their perspective and help identify what needs to be addressed to allow both parties to get on with 162
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their businesses. We call this our informal mediation service. We can help you identify the key areas of focus and most importantly, we help you take your own side effectively. Where problems are too complex to be dealt with over the phone we arrange a formal mediation session for everyone to sit down and work through the issues. Our staff are formally trained to mediate commercial disputes, and we help all parties. In addition, we have a panel of independent professional mediators with a wide range of commercial experience. With our help, most parties can work out their problems before needing a court or tribunal decision.
At the federal level in June 2015 the government introduced the Australian Small Business and Family Entrepreneur Ombudsman Bill 2015 (Cth). The Ombudsman will act as an advocate for and advisor to small business and family enterprises, and will have two key functions in relation to advocacy and policy development and assistance with dispute resolution.
5.2 LITIGATION [5.60] Although the development of a system of courts for the resolution of disputes is one of the finest achievements of mankind and a bastion against arbitrariness, despotism and the need for disputants to take the law into their own hands, there are disadvantages within the traditional system. Obstacles as cost and delay, coupled with questions as to the suitability of the adversarial process in the resolution of modern commercial issues, have led to the evolution of techniques known as alternative dispute resolution (ADR) (see [5.320]). In many, perhaps most cases, going to court over a dispute is the least satisfactory way to resolve a dispute. It is costly, stressful, time consuming, public, formal, inflexible and leads to a win/lose result in which even the “winner” is a “loser” having regard the cost and time and diversion from normal business and damage, usually fatal, to any ongoing business relationships.
IN CONTEXT The role of the courts in the federal civil justice system [5.70] The importance of courts in the justice system reflects their essential role in the maintenance of the rule of law and their status as one of the three constitutional arms of Government. The courts properly decide the most complex, vexed and entrenched disputes not capable of resolution by other means or where the parties need or desire an adjudicated statement of the law. The role of courts in the federal civil justice system is heavily informed by their constitutional role (under Chapter III of the Commonwealth Constitution) as the institutions empowered to exercise the judicial power of the Commonwealth. This informs, particularly, the role of the courts in deciding disputes where the issue in dispute is the content of the relevant law.
Last year Aboriginal artist Terry Yumbulul from Arnhem Land revealed that he was caught by surprise when his design turned up on the $10 note. Yumbulul is interviewed on this Sunday’s Review on ABC-TV, during which he observes that in the distant past he wouldn’t have had to resort to legal avenues. “People who copied designs,” he said, “simply got speared on the spot”. Sydney Morning Herald (29 March 1990).
The exclusive role of the courts is: • deciding disputes about the content of the … law 163
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• creating or altering legal rights where that power is exclusively granted to the court by statute (where a court order is the only means by which it can be achieved…, and • use of coercive powers. I’m all for the lawyer-led recovery, the economy needs something, but perhaps there could conceivably be some other way lawyers could be kept off the streets than spending a year or so doing cases. Rogers J, Business Review Weekly (7 August 1992).
Access to Justice Taskforce, A Strategic Framework for Access to Justice in the Federal Civil Justice System Access to Justice Report (September 2009) p 99.
Legal process and proceedings The adversary system [5.80] When an issue – either civil or criminal – requires resolution by a court, a trial takes place. The normal method of trial in the past has been by judge and jury. In fact for some years now, few civil cases have been tried in this way. Now they are usually resolved by a judge alone. (The Federal Court of Australia Act 1976 (Cth) allows a jury trial if “the ends of justice appear to render it expedient” (s 40) but the normal mode of trial is by judge alone). Whether a jury is involved or not, an Australian trial proceeds on what is called the adversary principle. Each party to a dispute presents their case to the court (through their lawyers) and the more successful is the winner. The rules of procedure and evidence are so complex that, quite apart from the difficulties in ascertaining the law according to precedent, the system may frequently deliver a result in favour of the party who wins the procedural battle, without discovering the real truth. What can be said in favour of it is that its primary function is not just to reach a decision and prevent the extension of conflict, but rather to discover the merits of the case and decide accordingly. Nevertheless, in many respects it is more a contest between the parties than an inquiry into the truth.
IN CONTEXT The adversary system [5.90] The essential features of the adversary system have been listed by Sir Richard Eggleston (“What is wrong with the adversary system?” (1975) 49 ALJ 428 at 428), a former justice, as including the following: • The conduct of litigation up to the point of trial is left entirely in the hands of the parties. • The procedure is designed to concentrate the judicial function into one continuous hearing. • Evidence at the trial is elicited by the parties asking questions in turn, the judge being generally forbidden to call witnesses or to examine them other than to clarify their evidence where it is unclear.
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• The parties decide for themselves which evidence to bring forward and which to endeavour to conceal. • The procedural and evidentiary rules place difficulties in the way of a witness trying to give evidence naturally. • The party who can pay the highest fees will have an advantage, just as physical attributes rather than truth may have decided the duel [in past centuries].
The inquisitorial system [5.100] The alternative procedure is the inquisitorial system common in the civil law jurisdictions of continental Europe under which the judge or investigator, usually a government official rather than one appointed from the ranks of practising lawyers, is an inquisitor actively seeking out the facts rather than acting as an impartial referee in hearing the cases put by the opposing parties. Lawyers for the parties have limited roles and in many instances, even in criminal trials, juries are dispensed with. Inquisitorial procedures are being increasingly adopted in non-judicial dispute resolution processes.
Burden and standard of proof Burden of proof [5.110] In any case, the burden or onus of proving the truth of what is asserted rests on the party asserting it. The “burden” of proving an issue in criminal trials rests on the prosecution. In civil trials the general burden of proof rests on the plaintiff. However, if particular issues are raised by the defendant, the onus of proving them shifts to the defendant. In civil cases the burden may shift at different times during the hearing as one party establishes her or his case or a relevant part of it. The burden generally rests on the plaintiff at the start of proceedings to assert her or his case and thereafter it rests on whichever party would lose if the court gave its decision without hearing further evidence.
[T]he reality must be recognised that litigation may not be a practical option for all disputants and may not deliver its promised protections. What is required is a range of effective and efficient dispute resolution processes, including both litigation and alternatives to litigation, which complement the formal justice system and all of which are readily available to disputants. Astor Hand Chinkin CM, Dispute resolution in Australia (Butterworths, 1992).
Standard of proof [5.120] The degree to which the facts must be established depends upon whether the case is a civil or a criminal case. It is well-established law that while in civil cases the standard of proof requires a simple preponderance of evidence, criminal charges must be proved by the prosecution beyond reasonable doubt; that is, a higher onus is imposed. The civil standard simply requires the plaintiff to establish the case on a balance of probabilities – that it is more likely than not that she or he should succeed. Because of the more serious consequences of criminal charges the higher standard is imposed in criminal cases.
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IN CONTEXT Complex litigation [5.130] The case of RACV Insurance Pty Ltd v Unisys Australia Ltd [2001] VSC 300 is the subject of a case study in Chapter 18 (see [18.1070]). For present purposes it is interesting to note the comments of the trial judge as to the conduct of the case and the contemporary context of legal proceedings. He observed (at [3], [8]) that: these two corporations, apparently possessed of sufficient if not spare resources to enable them to do so, have now devoted relatively huge amounts of time and money in slugging it out in court for 32 days in an unedifying and possibly pointless fight over past events, in a contest as to who was at fault … It is appropriate to make some reference to the nature and size of the trial which took 32 sitting days … The evidence was of a factual and technical nature concerning the computer system. To the close to evidence the transcript ran to 2,731 pages. It extended to 3,178 pages by the close of final addresses in which counsel spoke to written submissions which ran to 378 pages and five supporting files of authorities … At the outset of the trial the court book consisted of 49 lever arch files (vol 1 devoted to the pleadings) which contained 18,935 pages. I also was given another lever arch file which contained the December 1993 agreement and which seemed to comprise several hundred pages at least. When finally tendered at the conclusion of evidence the court book was reduced, by the agreed discarding of thousands of pages, to 28 volumes including vol 1 containing the pleadings. I am, however, left with many thousands of pages of oral and documentary evidence. In the practical world, in which other litigants are prevented, by litigation such as the present indulged in by parties with deep pockets, from getting their cases on, or the time I can take to discuss and analyse the documents and the evidence in this judgment, let alone scour the thousands of pages to see what is there to which little or no reference has been made. I am, as I must be, guided by counsel’s final addresses in identifying the issues and the relevant materials. I emphasise though, that even then, they did not at that stage refer to every possible piece of evidence. That is for the obvious reason that it was impractical to do so and because so much of it was not necessary to refer to for the resolution of the issues as they were finally left for determination.
The pleadings Instituting legal action [5.140] Civil proceedings are commenced by summons or statement of claim. These documents form part of the pleadings and outline the claim or demand of the plaintiff. The document will normally only assert the facts and not the evidence which will later be used to prove them. For this reason it is open to the criticism that it may not be particularly informative. In response to the statement of claim the defendant files a defence which responds to each allegation in the statement of claim, either admitting or denying them. If the defendant relies on facts other than those in the statement of claim, these must be asserted in her or his defence. If the defendant also asserts some wrongdoing on the part of 166
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the plaintiff, then a counterclaim will be filed. In many cases, significant parts of the pleadings are drafted for procedural and tactical reasons rather than in a real endeavour to identify and resolve the matters in dispute, so that obstacles are put in the way of the parties resolving their dispute at an early stage. [5.150] Criminal proceedings, on the other hand, are initiated by the launching of a prosecution against the defendant. The initial pleading procedure here is usually replaced by the police investigation and interrogation of those “helping them with their enquiries”. It’s not only the police and the state that can institute criminal proceedings; any citizen may prosecute for an offence of a “public nature” although private prosecutions are rare. Criminal prosecutions generally commence by summons or a process whereby the accused is arrested and charged. Serious criminal prosecutions are generally preceded by committal proceedings in which a magistrate is required to determine whether the case should proceed to trial.
IN CONTEXT Civil litigation reform [5.160] The Civil Dispute Resolution Act 2011 (Cth) was enacted with the aim of facilitating civil dispute resolution. Its object, as expressed in s 3 is, “to ensure that, as far as possible, people take genuine steps to resolve disputes before certain civil proceedings are instituted”.
Defense counsel: Are you sure you did not enter Seven-Eleven on 40th and NE Broadway and hold up the cashier on June 17 of this year? Defendant. I’m pretty sure. Jones R, Sevilla M and Uelmen GF , Disorderly Conduct: Verbatim excerpts from actual cases (WW Norton, 1989).
Interrogatories and discovery [5.170] While pre-trial procedures in criminal matters are brief, except for the matter of obtaining an order for the release of the person charged upon appropriate bail arrangements, there may be further action to be taken in civil cases. With a view to narrowing the issues and establishing some of the facts one party may deliver interrogatories to the other. These constitute a series of questions requiring written answers on oath. The discovery procedure may also be used. It requires a named person to declare on oath all relevant documents in her or his possession and to state the whereabouts of other documents not in her or his possession. Inspection of those documents is then allowed, to speed up the proceedings. Interlocutory orders may also be sought from the court. These may simply involve obtaining an order for the correction of incomplete pleadings or for compliance with requests for interrogatories or discovery. More importantly, the court has power to grant either interim injunctions, which are granted as a matter of urgency to preserve an existing position until there is time to hear the other side, or more permanent injunctions which are granted after both sides have been heard and which restrain the other party from acting in a particular way (for instance selling a painting) until the case has been finalised.
The trial [5.180] After pre-trial matters are completed the case moves to a hearing in a civil matter the plaintiff (usually through a barrister) opens the case by explaining it and foreshadowing 167
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the evidence to be called. The plaintiff’s witnesses are then called to give evidence. Their initial evidence is known as evidence in chief. On completion of evidence in chief the witness may be cross-examined by the other party. Thereafter the party who called the witness is entitled to re-examine that witness, but only on matters arising out of the cross-examination or to clarify answers given during cross-examination. In criminal trials the evidentiary procedure is similar. The case will be opened by the prosecution. In criminal trials, and in civil trials with a jury, the decision on the facts will be made by the jury. In a criminal case therefore, the jury decides on the question of guilt or innocence after receiving legal directions and a summing-up from the judge. The judge will then decide upon the sentence. In civil trials the jury will determine which version of the facts has been established on the balance of probabilities and the judge will then apply the law. Where no jury has been used the judge decides the questions of fact also.
The prisoner had been truculent throughout the trial, even to the extent of dismissing his counsel. The judge was about to pass sentence but firstly asked the prisoner if he had anything to say. “Bugger all” muttered the prisoner. The judge leaned over to his clerk and said, “Did I hear the accused say something?” “He said ’bugger all’, my lord”, replied the clerk. “That’s strange”, said the judge, “I could have sworn I saw his lips move”. Phillips E, The world’s best lawyer jokes (Fontana Press, 1993).
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The court order [5.190] A court order in a civil case is legally binding and can be entered in a number of ways including a writ for levy of property (under which a sheriff or bailiff can seize assets which can be sold to pay the debt) and garnishee orders (under which money can be taken from bank accounts and wages).
Appeals [5.200] After the decision in the initial trial the parties have rights of appeal, although in most instances these are restricted to re-examining questions of law rather than matters of fact. With respect to the High Court, in nearly all cases, the special leave of that court must be obtained before an appeal can proceed. That special leave is not readily granted. The appellant usually has to show compelling reasons of justice or that a question of law of public importance is involved. If leave is granted the appeal may be heard by the whole court of seven justices or by a smaller number. Most appeals within the State and federal courts are heard by three justices. Unanimity in the decision is not necessary and from the appellant’s point of view the important thing is simply to convince a slim majority at the last appeal.
Facilitating litigation: Class actions and litigation funding [5.210] Those readers who have watched the movie Erin Brockovich (for which Julia Roberts won the best actress Academy Award) will be familiar with the power of contingency fee class actions to bring a civil action for damages which for reasons of cost and practicality would not otherwise be available. Class actions – in which a group of people can join together to pursue legal action against a common defendant – and contingency fees – in which the legal action is funded by the plaintiff’s lawyer in return for an agreed percentage of any damages awarded – have long been features of the US legal system. They are now, with some qualifications, part of Australia’s legal system. The most obvious difference is that while contingency fees are not part of our legal system (except to
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a limited extent under which a lawyer can present a case on a no-win-no-fee basis for a premium on the normal fee but not for a percentage of damages awarded) a third party litigation funder can.
Class actions [5.220] Class actions allow groups of people to join together to pursue legal action against a common defendant where their claims are substantially similar, and there is a common issue of law. Such actions are available in the States to a limited extent and under the federal jurisdiction. The federal procedure introduced by the Federal Court of Australia Amendment Act 1991 (Cth) allows a class action wherever at least seven people join in a claim. It is not necessary for those initiating the proceedings to obtain the prior consent of all potential members of the group of plaintiffs. Those who would otherwise be members of the group are entitled by written notice to choose not to be members. Failing that they are joined in the action whether they are aware of it or not. There are many situations when a group of people may be similarly affected by the actions of another – eg shareholders in a company or passengers on a cruise ship. While it may not be practicable for reasons of cost for an individual to bring a legal action, an action by an individual on behalf of the class of persons affected, and to which all contribute, changes the dynamics dramatically. Ligation funding in which the litigation is funded by a third party on a no-win, no-fee basis, the class action is an even more powerful strategy.
Litigation funding [5.230] Litigation funding was sanctioned by the High Court in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41. Retailers of tobacco products joined together and sought repayment of millions of dollars of illegally collected excise from the wholesale tobacco companies with whom they dealt. The High Court held that the action should succeed despite the fact that the class action had been funded by a specialist litigation funder (IMF (Australia) Limited). The court held that the class action fell within the Rules of the NSW Supreme Court.
The class action is mushrooming throughout the courts of our land. It has become one of the most socially useful remedies in history. Now, the class action is striking at the malefactors’ nerve-endings: their pocket books. There is no more persuasive sanction. Pomerantz A, “New developments in class actions: Has their death knell been sounded?” (1970) 25 Bus lawyer 1259 at 1259.
Litigation funding of class actions has proven to be a very effective strategy for “small” plaintiffs to hold “large” defendants with deep pockets to account. A litigation funder – several are listed on the ASX – funds the litigation at its expense and takes a percentage of any damages awarded. If the action is unsuccessful, it carries the costs of litigation. Currently lawyers themselves cannot fund legal action through contingency fee arrangements as in the US but now that litigation funding is well established in Australia it may not be long before Australia follows.
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IN CONTEXT Fostif’s decision opens contingency-fee can of worms [5.240] In Campbell’s Cash and Carry Pty Ltd v Fostif, the High Court lifted the cloud of uncertainty hanging over the litigation-funding industry. Most commentators have focused on the decision’s immediate effects: an increase in the cases promoted by litigation funders, more class-action litigation – particularly in the securities and investment scheme claims – and more capital entering the litigation-funding market. But the real significance of Fostif lies in the future of contingency-fee agreement in Australia. Litigation funding agreements are contingency-fee agreements that provide funding for a plaintiff to engage a lawyer and pursue a claim in exchange for an agreed percentage of the proceeds. That percentage varies; 30% or 40% is common although the figure has been as high as 75%. In most cases, the litigation funder also takes the benefit of any cost order awarded to the defendant. In many cases, litigation funding ensures that litigation that would otherwise never have been commenced now finds its way to the courts. Fostif didn’t just end the dispute in relation to the legality of litigation funding. It also implicitly endorsed the concept of US-style contingency-fee agreements being used to promote litigation in Australia – at least in the case of litigation funders. Australian plaintiff’s lawyers have long sought the removal of the restrictions that prevent them from entering into true contingency-fee agreements. Now that it has been established that there is no good public policy reason for preventing litigation funders using contingency-fee agreements to promote litigation, what legitimate policy considerations can possibly justify such a prohibition applying to lawyers? Australian lawyers are among the most highly regulated in the world. They are subject to an extensive consumer protection regime and intense supervision by both their own professional bodies and independent regulators. This is in stark contrast to the litigation-funding industry, which is totally unregulated. Australian lawyers are now seeking the right to compete with the litigation funders by offering to conduct litigation on a true contingency-fee basis. When class actions were introduced in 1992, many feared the changes would, inevitably, lead to a rise in US-style, lawyer-driven litigation. Those campaigning for the introduction of class actions argued that the prohibition on contingency-fee agreements was a crucial factor that would ensure Australia did not take that direction. Indeed, the Australian Law Reform Commission expressly rejected the concept of true contingency-fee agreements in its report on the proposed new regime. 170
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The decision in Fostif has ensured the future of contingency-fee agreements for litigation funders. The position of lawyers cannot be distinguished. The contingency fees campaign that has long been simmering among plaintiffs’ lawyers has resumed, and the issue identified in the context of the Victorian Law Reform Commission’s Civil Justice Review. Few doubt that the barriers will fall. Lawyers promoting litigation on the back of US style contingency-fee agreements will inevitably become part of the Australian legal landscape in the same way as class actions and securities litigation. The real question is whether this is in the best interests of Australia as a whole or simply Australian lawyers. Stuart Clark, National Managing Partner of Clayton Utz’s Litigation and Dispute Resolution Department, Australian Financial Review (29 September 2006)
CALLS MOUNT FOR REFORM TO CLASS-ACTION PROTOCOL [5.250] Corporate Australia paid out nearly $1 billion in settling class-action disputes in the past year, a trend lawyers say shows no signs of slowing as they warn of a broadening range of claims by litigation funders. Pressure is mounting on the federal government to reform the class action regime after the courts indicated support of the regulation of litigation funding. Defendant firms say class actions have picked up across the board including in securities, mass torts and consumer claims, fuelled by the growth of litigation funding and an increased readiness of large institutional investors to take chase. “Class actions are becoming an increasing risk for Australian businesses across a range of sectors,” said
King & Wood Mallesons partner Moira Saville. “Considering a class action is now one of the first responses to unexpected events across a wide range of industries.” A report co-authored by Ms Saville, said 33 new class actions were launched in the 2015 financial year compared with 17 in 2014 and 18 in 2013. At least 13 had third-party funding. Plaintiff firm Maurice Blackburn brought most cases, recovering $889 million in settlements. It announced on Thursday it filed a shareholder class action against Vocation Limited over the listed education provider’s share price collapse in October last year. Papadakis M, Australian Financial Review (21 August 2015).
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CRITICISM OF CLASS ACTION FEES UniSuper criticises class action funders over fees [5.260] One of Australia’s largest institutional investors, the $50.3 billion industry superannuation fund UniSuper, has strongly criticised funders of class actions, saying there is little justification for them taking such a handsome share of settlements. UniSuper head of legal and risk Luke Barrett said Australia’s litigation funding landscape was dominated by a few players that quickly partnered with the law firms leading class actions, which meant that when a class action was put to shareholders there was only ever the option of one litigation funder. “The big question is, why are litigation funders able to charge 30% to 40% of the recovery amount?,” said Mr Barrett … “That can often be a multiple of what the legal fees were, and then in the big shareholder class action normally they will be.” Mr Barrett said he was yet to see evidence of any need for litigation funders to take such a big slice.
“The litigation funders will say that their 30 to 40% commission – for want of a better word – is fair compensation for their value add.” “My question back to them is what is the value add and is 30 to 40% of the compensation a fair amount of compensation for that?” However, Mr Barrett said bringing in more litigation funders to Australia was not “always a positive development” as it was hard to compare their fee structures to the incumbents and would not go to the heart of the issue surrounding the lack of competition. “At the moment, even though there may be multiple litigation funders, the first litigation funder to partner up with a law firm to bring a particular class action enjoys a formidable position,” he said. Danckert S, “Unisuper Criticises Class action fees”, Sydney Morning Herald (21 August 2015).
QBE’S WOES COME BACK TO BITE AS CLASS ACTION SURGE [5.270] QBE chief executive John Neal will likely be disappointed but not surprised to find himself on the end of a shareholder claim over the global insurer’s December 2013 profit warning, which wiped $4 billion from its market value.
from Neal to shareholders at the annual meeting that the company would vigorously defend any claim over its actions in the lead-up to the downgrade.
Just when it looked like he had got on top of a litany of problems – including the sale of the US lenders mortgage insurance business that was the source of so many losses – the company faces revisiting the issues all over again in the Federal Court.
Nearly 18 months on the company faces a claim from 700 shareholders for more than $200 million in compensation for the 22.3% fall in the share price the day the warning was issued. Shareholders allege the company misled the market by failing to disclose information it knew, or should have known ahead of the downgrade.
Plaintiff law firm Maurice Blackburn began touting for the action in April last year, drawing a pledge
The claim is just the latest in a long line of class actions that last year netted plaintiff’s lawyers and
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funding groups almost $1bn in settlements. Maurice Blackburn has been among the leading proponents, settling five cases for more than $100m, and last month launching a claim against private education group Vocation for withholding information about the loss of a $300m government contract from the market. To experienced former insurance executive and director John Lamble, the spread of class actions against companies for such alleged lapses are a blight on the market and an offence to the idea that a buyer should beware when buying. “It is a past bruised shareholder effectively suing present shareholders,” Lamble says of lead plaintiff Richard Bungey. “And they make out that they are innocent but they shouldn’t be buying shares unless they are properly advised or knowledgeable. I am a strong believer in buyer-beware on shares.” That may be a rather old-fashioned view, with Australia now seen as the third most litigious country in the world after the US and Canada and attracting interest from international investors willing to fund claims against companies. According to the Australian Institute of Company Directors there have been 250 class action cases launched since 2011 when the class action regimen was introduced in the Federal Court. There are a long list of gripes against the spread of class actions: that they distract management from the job of what is usually having to turn around a company having a bad run: that since many are settled before getting to court they amount to little more than a bid for “go-away” money; that they only enrich the funders and lawyers; that because the payouts come from the directors’ and officers’ insurance policy rather than the pockets of directors and executives there is little genuine redress, and that they effectively pit one lot of shareholders against the other. The QBE action comes at a time when Attorney-General George Brandis is still considering how to respond to last year’s report by the Productivity Commission that calls for changes that corporate lawyers believe will spur the growth of class actions.
That report, on Access to Justice, called for the introduction of US-style contingency fees that would allow class action lawyers to take a proportion of any financial damages they win for their clients. Australian lawyers are currently not permitted to use this form of billing. But that rule does not apply to the booming litigation funding industry, which remains relatively unregulated. While a handful of plaintiff law firms are the public face of the class action industry, the financial backing for most big claims against corporate Australia is generally provided by litigation funding companies in return for a share of the proceeds. These companies frequently take about 35% or more of whatever companies outlay to settle claims and ensure they do not appear on their accounts as contingent liabilities. If plaintiff lawyers are allowed to switch to contingency fees, corporate law firm King & Wood Mallesons believes one effect would be to increase the viability of lower-value claims, exposing smallto medium-sized businesses to the sort of litigation risk that currently confronts big business. “Such a change would increase the number of class actions,” King & Wood Mallesons said in its annual survey of the class action landscape. In May, another corporate law firm, Allens, warned of a growing tendency for class action law firms to sidestep the oversight of the courts by “launching” class actions in the media – with press conferences and information packs for journalists – before they file official documentation with the courts. “Of the 29 claims we identified as having been launched by Maurice Blackburn and Slater & Gordon in the period between 2011 and 2013, less than half had been filed by the end of April, 2015,” Allens said in a survey of class actions over the past ten years. “At least three ‘launched’ class actions have been settled before they were filed,” the survey said. Allens partner Ross Drinnan said launching class actions in the media raised real issues because court 173
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rules require litigants to take genuine steps to resolve disputes before court proceedings are commenced. Jason Betts of Herbert Smith Freehills said class actions had become a mainstay of the litigation environment facing Australian business and new entrants to this sector were looking for areas of commercial activity that had so far remained untouched by the phenomenon. He believed one of these new areas was claims alleging companies had engaged in “environmental toxic torts”. “Everything builds out of what the litigation funders do. They have focused on shareholder suits to date but consumers and others are next on the horizon.” Mr Betts, co-author of Class Actions in Australia, said the ultimate question for Australia was whether it was content with policy settings that were having the effect of mobilising domestic and foreign capital for investment in class actions. “That’s the right question to ask and it is a bit weird we are not having a debate about that question – not just in the legal profession but within the broader community,” he said. He said Australia had the world’s most developed market for litigation finance. “We are not behind America, we are in front of America. We are it when it comes to litigation funding and we also have probably the lowest level of regulation (for litigation funders) in the world,” Mr Betts said. The AICD wants the government to rein in class action litigation funders, pegging the rise of commercially-motivated funding as a major problem for corporations. “… Many class actions are now promoted by plaintiff’s lawyers and litigation funders, not be (sic) aggrieved persons seeking to commence proceeding (sic) to quell a real controversy,” the AICD said in a submission to the Productivity Commission. But even some critics of class action system (sic) acknowledge it serves a purpose. Stewart Levitt of Levitt Robinson says class actions are often filling a void left by the “dereliction of duty” by ASIC. The 174
corporate regulator, he says, does not do enough to pursue the top end of town, noting that it is extremely rare for senior executives to ever be sent to jail. “In this country too much is being left up to motivated individuals to take action themselves and unfortunately ASIC seems to get caught up in peripheral matters,” says Levitt, who has run class actions including one against Macquarie Group over the collapse of Storm Financial. He says the action is about vindicating the rights of shareholders to be properly and fully informed when making a decision whether to invest or not invest. “There is a public interest in this action. But on the other hand, it might have been more appropriate for ASIC to have moved on this one.” While that hasn’t happened, the downgrade hasn’t gone without consequence for the company. None of the board that was in place in 2012 when John Neal replaced Frank O’Halloran has survived and none of top 11 executives under him have been appointed on his watch. Belinda Hutchinson fell on her sword as chairman on the same day the dramatic profit downgrade (sic). Dennis Shore, a company monitor and former director of the Australian Shareholder’s Association, says it is some comfort to investors to see that degree of accountability, but it doesn’t take away the financial loss. “At least with a class action you can expect to have some financial compensation for a wrong that was committed by the company”. Alas for shareholders the December 2013 profit warning – which turned expectation of a $1 billionplus annual profit to a $250m loss – and Hutchinson’s sacrifice was not the last of QBE’s travails. In June last year the company produced yet another profit warning, sparking an 11% fall in the share price in one day and commentary that downgrades from QBE were one of the few certainties in the unpredictable business of insurance. Brett Le Mesurier, one of the broking analysts who listened in on the series of results calls hosted by
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Neal that are catalogued in the statement of claim, says the new management was struggling to get its arms around the problem.
White A and Merritt C, The Australian (12 September 2015).
Tribunals [5.280] Reference was made at [2.630] to the establishment of tribunals which operate alongside but which are not formally part of a state or territory’s court system. Civil and administrative tribunals nevertheless have extensive powers to resolve consumer and commercial disputes and offer a number of advantages over traditional courts. They are less formal and offer quicker and cheaper dispute resolution. There is a particular emphasis on alternative dispute resolution and on an inquisitorial approach which encourages self-representation in contrast to the exclusively adversarial approach of the courts.
5.3 ARBITRATION [5.290] Arbitration is the determination of a dispute by an independent third party. Arbitration was the first recognised alternative to litigation in the modern age. In principle, it was to be an alternative which provided a faster, cheaper and, perhaps, more commercial remedy to disputes. However, arbitration is now virtually another form of litigation especially in matters of commercial importance. It is often as costly, as complicated, as time-consuming and as delayed as the original. Nevertheless, arbitration has the advantage that it is conducted in private so that the publicity of a trial is avoided. A further advantage is that the strict legal rules of evidence do not normally apply. Questions are determined accordingly to law unless otherwise agreed by the parties who may agree that any question is determined by reference to natural justice and fairness. The process of arbitration involves referring the matter in dispute to a third party – the arbitrator – whose function it is to hear the evidence and make a decision which the parties have agreed to accept as final. It has the advantage that in technical cases the arbitrator need not be a lawyer but may instead be an expert in the discipline in which the dispute has arisen. Commercial contracts frequently contain an arbitration clause which provides that any dispute arising should be referred to arbitration and not to a court. The result of the arbitration – the arbitral award – is enforceable in the same manner as a judgment of a court. Arbitration offers the advantages of choice of decision maker, efficiencies, privacy, convenience (as hearings are arranged at times and places to suit the parties), flexibility (as the procedures are within the control of the parties and the arbitrator), and finality.
Arbitration as a method of dispute resolution is seen to offer the major benefits of enforceability, neutrality, speed and expertise over court based determinations; and, because arbitration is quicker and more expert, it is likely to be cheaper than the lengthier and more elaborate proceedings in court. KeanePA, “Judicial Support for Arbitration in Australia” (2010) 34 Australian Bar Review 1.
[5.300] Domestic commercial arbitration throughout Australia is governed by uniform provisions. In 2009 the Standing Committee of Attorney-Generals adopted a model commercial Arbitration Bill based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. The aim was to unify and modernise domestic arbitration regimes and to align them with international regimes. New South Wales was the first state to enact the model law in the Commercial Arbitration Act 2010 (NSW) and other states have since legislated similarly. 175
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The objective of the Act is “to improve commercial arbitration processes to facilitate the fair and final resolution of commercial disputes by arbitration without unnecessary delay or expense”. The parties have greater freedom than previously to agree on the procedures to be used in an arbitration and there are fewer grounds on which an arbitration award may be set aside. An award may be set aside on for incapacity, invalidity, and breaches of natural justice but not, as previously, for errors of law. Appeals to a court can be made only with the consent of both parties and the leave of the court.
Once promoted as a means of avoiding the contention, cost and expense of court trial, binding arbitration is now described in similar terms – ’judicialized’, formal, costly, time-consuming, and subject to hardball advocacy. Thomas J Stipanowich, Arbitration: The New Litigation (2010) U Ill L Rev 1.
[5.310] International commercial arbitration is regulated in the International Arbitration Act 1974 (Cth) which governs Australia’s obligations to recognise and enforce foreign arbitration agreements and arbitral awards.
5.4 ALTERNATIVE DISPUTE RESOLUTION [5.320] Although the development of independent courts free of political control and applying and resolving disputes in accordance with the law is one of the greatest achievements of our legal system, it cannot be pretended that litigation through the courts is a beautiful thing. Litigation is costly and time consuming and stressful and public. It has the advantage that a dispute is resolved – or at least will be once the appeal process has been exhausted – but in the process the relationship between the parties is damaged, normally terminally. Arbitration suffers the same disadvantages. The disadvantages of litigation have led to development of ADR – processes for the resolution of disputes, principally but not exclusively commercial, without the intervention of a court. The procedures are aimed at producing a resolution by agreement between the parties rather than through the imposition of a judgment.
The development of ADR [5.330] The basic ADR techniques of mediation and conciliation originally developed early last century in relation to industrial disputes. The techniques were later applied in the areas of anti-discrimination, family and neighbourhood disputes in the United States in the 1960s, and in Australia a decade later, to deal with disputes unresponsive to the traditional legal processes. The use of ADR in commercial disputes is a more recent initiative. Today ADR has developed from a private mechanism for resolving commercial disputes to a device frequently required by legislation, voluntary codes of industry practice or rules of court as an adjunct to the court system.
Definition of ADR [5.340] ADR embraces a wide, flexible and varying range of mechanisms for resolving disputes which are characterised by structured negotiation and consensus. Although arbitration is commonly regarded as an ADR technique it is a formal adjudicative and adversary technique – essentially a private litigation process – which has more similarities 176
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to litigation than the more innovative consensual processes which characterise ADR. As explained by Angyal (“Alternative dispute resolution”, Legal Issues (Australian Legal Group) (3 December 1987)): The key difference between ADR and those traditional techniques of litigation and arbitration is that ADR techniques are used to produce a resolution to a dispute through a negotiated agreement while litigation and arbitration are processes by which a result is imposed on the parties.
There remains a problem with terminology. Sir Laurence Street, a former Chief Justice of the Supreme Court of New South Wales and one of Australia’s strongest proponents of ADR, has commented (in “The language of alternative dispute resolution” (1992) 66 ALJ 194) that:
Let us never negotiate out of fear, but let us never fear to negotiate. John F Kennedy.
It is not in truth “Alternative”. It is not in competition with the established judicial system. It is an Additional range of mechanisms within the overall aggregated mechanisms for there solution of disputes. Nothing can be alternative to the sovereign authority of the court system. We cannot tolerate any thought of an alternative to the judicial arm of the sovereign in the discharge of the responsibility of resolving disputes between state and citizen or between citizen and citizen. We can, however, accommodate mechanisms which operate as Additional or subsidiary processes in the discharge of the sovereign’s responsibility. These enable the court system to devote its precious time and resources to the more solemn task of administering justice in the name of the sovereign.
It is important not to regard ADR as just a poor relation to the real world of the courts. It is a complex, structured approach aimed at bringing the parties to a consensual solution by way of settlement, with a real possibility of preserving the commercial relationship. The fact is that most cases are settled anyway. The ADR process simply aims at achieving that result at minimal cost and as quickly as possible. ADR does not, however, prevent legal action. If the dispute is not resolved by ADR the parties can take the matter to the courts. The success of ADR nevertheless suggests that resort to the courts is much less likely if an ADR process was used.
The advantages of ADR [5.350] The Australian Disputes Centre Ltd – a non-profit company established in 1986 by the New South Wales Government to assist business and government enterprises to resolve their commercial disputes without the necessity of going to court – claims the following among the advantages of ADR over litigation:
The beauty of compromise. Mahatma Gandhi.
• Most disputes are resolved at 10% of the cost of litigation. • Most disputes are resolved in about 5% of the time of litigation. • The Centre resolves over 90% of its cases. • The parties themselves can decide who will be the independent third party from lists of specialists complied by the ADC. • The third party is often an expert as well as a mediator eg a construction specialist can be provided to mediate a building dispute. • The parties come together at a time convenient to them, not at a time nominated by a court. 177
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• The disputing parties may use their lawyers, if they wish, to prepare information for the process, attend meetings, give legal advice and prepare settlement papers. • The goodwill of the parties is preserved and often improved by the resolution process. This is of particular importance where the parties need to continue a business relationship. • The parties may talk separately and in total confidence to the third party. This results in the disclosure of underlying interests which leads to a more satisfying resolution. • Because the process is confidential, the organisations and individuals involved maintain their privacy. • The real interests of the parties are satisfied because the parties develop a business solution to a business problem, rather than ending up with a court-imposed solution to a business problem. The disadvantages of litigation are obvious – cost, delay, formality, risk – and need little elaboration. Litigation tends to keep disputing parties apart. Although the threat “I’ll see you in court” marked a significant step forward from more primitive means of dispute resolution, it is limited and forces parties to take adversarial positions. Litigation, by definition, ensures a win/lose scenario. A particular dispute may be resolved but the future for any continuing relationship is bleak. ADR by contrast aims at a win/win situation.
Activating ADR [5.360]
Perfect justice is a mirage. In the pursuit of the illusion of perfect justice we jeopardize the justice that lies within our grasp. Macklin Fleming.
178
ADR can be activated in four main ways:
1.
By the appropriate provision being included in the original contract (out of which the dispute has arisen). Such a clause will require that, if a dispute arises, no court or arbitration proceedings may commence until the parties have employed ADR to resolve the dispute. If ADR should fail, then the usual legal processes are available.
2.
By the parties agreeing to attempt its resolution using ADR techniques after the dispute has arisen. In this situation the parties will agree on the method to be used and the way in which it is to be implemented. If, for example, mediation is chosen, they will appoint the mediators, define the mediator’s role, and arrange for conduct of the mediation, its termination and enforcement of any settlement reached.
3.
Through Codes of Practice regulating commercial behaviour in various industries (eg banking and franchising).
4.
As an adjunct to court proceedings. Courts increasingly have the power (through legislation) to order the parties to attempt ADR.
ADR techniques [5.370] Because ADR depends on consensus it enshrines flexibility both in the procedures and the settlements, and it is up to the parties and the ADR adviser to determine the most efficient and satisfactory method of resolving the dispute. There are nevertheless a number of common techniques.
Chapter 5 Commercial Dispute Resolution
IN CONTEXT ADR Process [5.380]
There are three main types of ADR processes:
• facilitative • advisory • determinative. Facilitative
This process is where a dispute resolution practitioner assists the parties to a dispute to identify the disputed issues, develop options, consider alternatives and try to reach an agreement about some issues or the whole dispute. Examples of facilitative processes include mediation, conciliation, facilitation and facilitated negotiation. Advisory
This process is where a dispute resolution practitioner considers and appraises the dispute and provides advice as to the facts of the dispute, the law, and, in some cases, possible or desirable outcomes and how these may be achieved. Examples of advisory processes include: case appraisal, conciliation (where advice is offered or used) and (early) neutral evaluation. Determinative
This process is where a dispute resolution practitioner evaluates the dispute (which may include the hearing of formal evidence from the parties) and makes a determination. Examples of determinative processes include: arbitration, expert determination and private judging. Attorney-General www.ag.gov.au)
Department,
Arbitration,
Dispute
Resolution.
(http://
Facilitated negotiation [5.390] Direct negotiation is commonly used as a strategy for informally settling disputes. The statistics – that only 6% of disputes result in the commencement of legal proceedings and only 0.2% of the totality of commercial disputes proceed to court adjudication (Fulton MJ, Commercial alternative dispute resolution (Law Book Co, 1989) p 14) – suggest that direct negotiation between the parties is widely used at an informal level. Direct negotiation is rarely a structured mechanism and many such “negotiations” originate from one party forcing a settlement on the other party rather than the parties proceeding by way of negotiation to a consensual solution. 179
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Facilitated negotiation is a structured, but informal, negotiation process which involves the assistance of an independent third-party facilitator. The two main techniques are conciliation and mediation. These non-coercive, non-compulsory, non-final and nonconfrontationalist processes have three features in common (Street L, “The language of alternative dispute resolution” (1992) 66 ALJ 194): It takes no great understanding of the mysteries of high finance to make obvious the futility of spending a thousand dollars in order to get a thousand dollars. Douglas J, “Protective committees in railroad reorganisations” (1934) 47 Harv LR 565 at 567.
Both originate in an agreement between the disputants to call in the aid of a facilitator to assist in the structuring and conduct of settlement negotiations which will include, as part of their very essence, private consultations with each disputant. The facilitator has no authority to impose a solution on the disputants as does a judge or arbitrator. The whole process remains at all times entirely flexible and dependent upon the continuing willingness of the disputants to continue it until such time as either they themselves agree upon the terms of a settlement or one or other of them terminates the negotiations.
The difference between the processes lies in the role of the third-party facilitator whose role may be passive (in the sense of assisting to isolate the issues of the dispute and assisting the parties in reaching a consensual agreement but without providing opinions or advice) or active (in the sense of taking a more active role in the discussions, providing suggestions regarding settlement and possibly even providing a non-binding determination which may lead to a consensual agreement). Sir Laurence (at 196) points out that while conciliation is “active”, and mediation is “passive”, little turns on the terminology: The extent and nature of the facilitator’s involvement in order to optimise the prospects of a successful outcome of the process will inevitably be more or less active according to the nature of the dispute, the personalities involved, the stage of deterioration of relations between the parties and the stage of the negotiation itself. Practitioners recognise the wisdom of the facilitator adopting a passive attitude at the outset. Likewise, they recognise both the expectations of the parties for a more active involvement as the negotiations progress, as well as the value of a positive contribution by the facilitator at the time the facilitator judges this to be propitious.
Mediation [5.400] The National Alternative Dispute Resolution Advisory Council (“NADRAC”) defines mediation as: a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the mediator), identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement. The mediator has no advisory or determinative role in regard to the content of the dispute or the outcome of its resolution, but may advise on or determine the process of mediation whereby resolution is attempted
Mediation is most common of the more formal ADR techniques. It involves a trained mediator facilitating a negotiation designed to help the parties better understand the other side’s position and consider any compromises that may be necessary for the parties themselves to resolve their dispute. Mediators do not normally give advice, unless the parties have requested an advisory/evaluative mediation or conciliation. The mediator does not making a binding decision – indeed the mediator does not have the authority to make a binding decision. Any party is free to leave the mediation at any time and pursue her or his rights through litigation. If the mediation results in an agreement the parties will enter into a contract reflecting their agreement which can be enforced through the 180
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courts if not honoured. Mediation has proven to be a very effective dispute resolution process. It is confidential, it leads to win-win solutions, it has the potential to preserve the relationship between the parties and disputes are resolved at a fraction of the cost and time that of litigated dispute resolution. Mediation is usually voluntary, but can be ordered by a court or tribunal. Where mediation is voluntary, the parties usually split any costs.
Conciliation [5.410] Whereas mediation is a purely facilitative process where the mediator has no advisory role, in conciliation the conciliator has an advisory role. As explained by the NADRAC: Conciliation is a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the conciliator), identify the issues in dispute, develop options, consider alternatives and endeavour to reach an agreement. The Conciliator may have an advisory role on the content of the dispute or the outcome of its resolution, but not a determinative role. The conciliator may advise on or determine the process of conciliation whereby resolution is attempted, and may make suggestions for terms of settlement, give expert advice on likely settlement terms, and may actively encourage the participants to reach an agreement.
Early neutral evaluation [5.420] Early neutral evaluation (ENE) (also called neutral evaluation) is a non-binding technique in which a neutral party, often a retired judge or senior lawyer, will evaluate and comment on the merits or otherwise of the parties’ legal position and arguments and provide a balanced and neutral evaluation of the dispute. It provides the parties with a “reality check” which can assist the parties in assessing their case and may influence them towards a settlement. NADRAC defines ENE as: A process in which he parties to a dispute present, at an early stage in attempting to resolve the dispute, arguments and evidence to a dispute resolution practitioner. That practitioner makes a determination on the key issues in dispute, and most effective means of resolving the dispute without determining the facts of the dispute.
Expert appraisal or determination [5.430] A Discrete mechanism with ADR is a process whereby an independent expert in the relevant area advises on the resolution of the dispute by means of a non-binding opinion or recommendation. The parties may accept or reject the opinion or use it as the basis for further negotiation. This process is generally known as expert appraisal or case appraisal. Alternatively, the parties at the time of agreeing on the use of this process may have also agreed to abide by the decision of the expert, in which case the process is more accurately expert determination. Both processes are quick, expedient and decisive and are of particular utility in relation to disputes arising in the course of an ongoing contractual relationship.
A survey in the UK journal Legal Business asked QCs, junior barristers and solicitors to identify the five best and five worst judges in England, reports The law Society Bulletin (SA). Voted worst was Mr Justice Harmon, described as “jumping wildly to conclusions and being unpredictable”. Runner-up was Mr Justice Cresswell who was criticised for his inability to make decisions. One lawyer said, “if his wife puts out two bowls of cereal for him, he never gets to work”. Law Society Journal (September 1994).
Mini-trials [5.440] A mini-trial is a highly structured information exchange and settlement negotiation process. It is described by Andrew Rogers QC, formerly of the Supreme Court of New South Wales, in an unpublished paper in these terms: 181
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Each of the disputants presents its best case to a negotiating panel representing both sides, generally assisted by a neutral adviser. Following the presentation, the negotiation panel meets to attempt to reach a pragmatic settlement. The rationale which underlies the process is that a reasonable solution to most problems can be structured by the disputants themselves if they are in full possession of the facts.
Each party has the opportunity to evaluate its respective strengths and weaknesses. Because the panel comprises senior executives of the disputing parties who have the authority to resolve the dispute and who may bring a fresher perspective to the dispute than the middle executives who may have been more intimately involved, the process is often called senior executive appraisal. The term “structured negotiation” is also used. This method is fast, cost-effective, and flexible in that the parameters for the conduct of the mini-trial are within the discretion of the parties. The solution will depend on the circumstance but will be business-oriented and may be innovative. The relationship between the parties is likely to be preserved.
QUESTIONS 1.
What are the advantages and disadvantages of alternative dispute resolution in relation to litigation?
2.
What are “class actions” and “litigation funding”? Should they be applauded for facilitating access to the court or condemned for encouraging litigation?
3.
Explain the nature and operation of commercial arbitration and its role as a dispute resolution strategy.
4.
Your legal advisors indicate that you have a 90% chance of successfully prosecuting a breach of contract action against a supplier with whom you have had irregular and less than satisfactory dealings. Do you sue or agree to the supplier’s request to institute an ADR process. What factors are relevant to your decision? What ADR method may be appropriate?
WEB REFERENCES National Alternative www.nadrac.gov.au
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Resolution
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Council
http://
Part 2 GENERAL PRINCIPLES OF BUSINESS LAW
CHAPTER 6
Contracts: Concepts of agreement Andrew Terry Cary Di Lernia THE BUSINESS CONTEXT This chapter describes the law of contract – that area of the civil law which is concerned with the enforcement of agreements. Whereas the other main branch of the civil law – the law of torts – is concerned with the obligations the law deems it appropriate that one person owes to another, the law of contract is firmly based in the concept of agreement. A contract is the legal expression of the agreement between the parties. It is the central concept in commercial law and provides the mechanism under which parties to a definite arrangement can regulate their transaction or relationship. It is the raw material from which commerce is constructed. For certainty, predictability and convenience, society places great importance on contracts. Commerce could not operate without a comprehensive and settled body of contract law. Particular business contracts, and recurring issues in business contracts, are further addressed in Chapter 7.
[6.10]
6.1 WHAT IS A CONTRACT? .................................................................................................. 187
[6.30]
6.2 THE NATURE AND ROLE OF CONTRACT LAW .............................................................. 189
[6.80]
6.3 TYPES OF CONTRACTS ................................................................................................... 192
[6.130]
[6.80]
Unilateral contracts and bilateral contracts ....................................................... 192
[6.90]
Simple contracts and formal contracts (deeds) ................................................ 192
[6.100]
Oral contracts and written contracts ................................................................. 193
[6.110]
Negotiated contracts and standard form contracts ......................................... 193
[6.120]
Consumer contracts and commercial contracts ............................................... 193
6.4 AGREEMENT ..................................................................................................................... 194 [6.180]
Rules relating to the making of an offer ............................................................ 195
[6.190]
Offers distinguished from invitations to treat ................................................... 195
[6.320]
Offer distinguished from a supply of information ............................................ 200
[6.340]
An offer can be made to any number of people .............................................. 200 185
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[6.820]
[6.920]
[6.370]
Rules relating to termination of an offer ............................................................ 202
[6.510]
Rules relating to the acceptance ........................................................................ 206
[6.700]
Revocation of acceptance ................................................................................... 213
[6.710]
Electronic communication .................................................................................. 213
[6.720]
Conditional agreements ...................................................................................... 213
[6.750]
Vague, uncertain and incomplete agreements ................................................. 216
6.5 INTENTION TO CREATE LEGAL RELATIONS .................................................................. 220 [6.850]
Social and domestic arrangements .................................................................... 222
[6.900]
Commercial agreements ..................................................................................... 224
6.6 CONSIDERATION ............................................................................................................. 224 [6.930]
What is consideration? ........................................................................................ 225
[6.960]
A practical concept .............................................................................................. 227
[6.980]
Consideration must be sufficient but need not be adequate .......................... 227
[6.1000] Consideration must be sufficient ........................................................................ 228 [6.1180]
Promissory estoppel ............................................................................................. 236
[6.1280] Waiver of contractual rights ................................................................................ 241 [6.1290] 6.7 DEFECTS IN THE CONTRACT ......................................................................................... 241 [6.1300] Lack of contractual capacity ................................................................................ 241 [6.1350] Illegal contracts .................................................................................................... 244 [6.1500] Lack of required formalities ................................................................................. 250 [6.1530] Absence of genuine consent ............................................................................... 252 [6.1550] 6.8 MISREPRESENTATION INDUCING THE CONTRACT ..................................................... 253 [6.1560] Misrepresentation ................................................................................................ 253 [6.1600] Rescission for misrepresentation ......................................................................... 255 [6.1620] Damages for misrepresentation .......................................................................... 256 [6.1630] The significance of the statutory misrepresentation action ............................. 257 [6.1640] 6.9 MISTAKE ............................................................................................................................ 257 [6.1650] Non est factum ..................................................................................................... 258 [6.1685] Unilateral mistake (one party makes a mistake which the other party knows) ................................................................................................................... 258 [6.1740] Mutual mistake (both parties at cross-purposes) .............................................. 263 [6.1760] Common mistake (both parties make the same mistake) ............................... 264 [6.1820] 6.10 DURESS ........................................................................................................................... 266 [6.1830] Physical duress ...................................................................................................... 266 [6.1850] Economic duress .................................................................................................. 267 [6.1870] 6.11 UNDUE INFLUENCE ....................................................................................................... 268 [6.1930] 6.12 UNCONSCIONABLE CONDUCT .................................................................................. 270 186
Chapter 6 Contracts: Concepts of agreement
[6.1950] 6.13 CONTENTS OF THE CONTRACT ................................................................................. 272 [6.1960] Express terms ........................................................................................................ 272 [6.2120] Implied terms ....................................................................................................... 279 [6.2230] 6.14 EXEMPTION AND SIMILAR CLAUSES ........................................................................... 284 [6.2280] The contractual effect of exemption clauses ..................................................... 285 [6.2400] The interpretation of exemption clauses ........................................................... 294 [6.2460] Exemption clauses rendered ineffective by statute ........................................... 297 [6.2470] Other contractual clauses .................................................................................... 297 [6.2480] Variation of contract ............................................................................................. 298 [6.2500] 6.15 THE DOCTRINE OF PRIVITY OF CONTRACT ............................................................... 298 [6.2570] 6.16 CONTRACTS NEGOTIATED THROUGH AGENTS ........................................................ 301 [6.2580] 6.17 ASSIGNMENT AND NOVATION .................................................................................... 302 [6.2590] 6.18 ENDING THE CONTRACT ............................................................................................. 302 [6.2600] Discharge by performance .................................................................................. 302 [6.2620] Discharge by agreement ..................................................................................... 303 [6.2630] Discharge by operation of law ............................................................................ 303 [6.2680] Discharge by frustration ...................................................................................... 304 [6.2740] 6.19 REMEDIES FOR BREACH OF CONTRACT ..................................................................... 307 [6.2750] Termination of the contract ................................................................................ 307 [6.2810] Damages for breach of contract ......................................................................... 311 [6.3020] Other remedies for breach of contract .............................................................. 318
6.1 WHAT IS A CONTRACT? [6.10] A common textbook definition of a contract is “an agreement which the courts will enforce”. This answer obviously suggests a further question: When will an agreement be legally binding and enforceable? The answer is that several requirements must be satisfied to form a valid contract.
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Contract law has had an abiding appeal for those desirous of probing the inner workings of the common law … In part the appeal is due to the universal logic of a set of rules fashioned by a society to support the institution of consensual agreements among its members … But, in part, the appeal is also sustained by the parochial peculiarities of a set of rules evolved over centuries by pragmatic judges working within their particular historic confines … Above all, however, contract law has an accessibility, free of the technicalities that encumber more advanced commercial subjects and it lacks the complexities of the political systems that complicate areas of public law … E Allan Farnsworth, United States Contract law.
• Agreement between the parties, which is usually constituted by the acceptance of an offer; • Intention to create legal relations, which characterises the parties’ intention to be legally bound by their agreement; • Consideration, which amounts to the “price” one party provides in return for the promise of the other; • Legal capacity, which requires that the parties are not restricted in their right and power to make a contract; • Genuine consent, which refers to a number of situations in which the validity of a contract may be affected by what the courts call a “vitiating factor” which removes any real and genuine consent to the agreement; • Legality of objects under which the validity of a contract may be questioned because its object is not supported by the law; • Formal requirements under which the law may impose particular requirements on which the validity or enforceability of the contract depends. These requirements are discussed in this chapter along with other aspects of the law of contract including the contents of the contract, the parties to the contract, ending the contract and remedies for breach of the contract. [6.20] The law of contract exists primarily to determine the question of when promises will be enforced by the courts. The answers are found primarily in the common law. The law of contract is essentially a common law development in which the basic rules were worked out by the common law courts. This is the reason that there are so any English cases from the nineteenth and twentieth century to be found in this part of the text. These cases are still authoritative in Australia today. Legislation nevertheless increasingly affects the operation of particular contracts, either by implying terms in them, by declaring them to be unlawful or unenforceable or by permitting the courts to modify or terminate them. Reference is made throughout this chapter to two particular provisions of the Australian Consumer Law (ACL) – Australia’s national consumer law enacted as a schedule to the Competition and Consumer Act 2010 (Cth). The prohibition of unconscionable conduct in s 21 significantly impacts on the traditional principles of the freedom and sanctity of contacts in trade and commerce and the prohibition of misleading or deceptive conduct in s 18 impacts greatly on general areas of traditional contact law but, in particular, on liability for pre-contractual representations. Despite these provisions being enacted as part of the ACL they apply to all conduct in business whether business to consumer (B2C) or business to business (B2B). In the words of the Chief Justice of the High Court, French CJ (Bending Words, lecture (20 March 2014)): There are few, if any, contract cases run in the courts today which do not involve an associated claim for misleading or deceptive conduct in pre-contractual negotiations, or breach of a statutory warranty, or invocation of some regulatory or formal requirement, which may go to the legality and thereby the enforceability of the contract.
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Chapter 6 Contracts: Concepts of agreement
6.2 THE NATURE AND ROLE OF CONTRACT LAW [6.30] In Attorney General’s Department, Discussion Paper to Explore the Scope for Reforming Australian Contract Law (Attorney General’s Department, March 2012) it was stated that: Efficient and just systems of contract law play a central role in successful economies. Contract law increases people’s autonomy by allowing them to make enforceable agreements, and supports economic growth by giving businesses and individuals the stability and predictability they need to trade and invest. Contract law also upholds basic standards of fairness in people’s dealings with each other.
[6.40] The contract is the most common legal transaction in society and each day most people make a significant number eg buying a newspaper, a bus ticket or groceries. In each case the arrangement made is governed by the law of contract, which provides a way of answering a series of questions concerning the exercise of the contractual will of the parties (Allan DE and Hiscock ME, Law of contract in Australia (CCH Australia, 1987) p 29): 1.
Is there a binding contract between these parties?
2.
What are the terms of that contract?
3.
What do those terms mean?
4.
Who is affected by the contract?
5.
What is the effect of non-performance of the contract?
6.
Can non-performance be excused?
7.
What is the reach of the law to fulfil disappointed contractual expectations?
The law of contract may be described as the endeavour of the state, a more or less imperfect one by the nature of the case, to establish a positive sanction for the expectation of good faith which has grown up in the mutual dealings of men of average rightmindedness. Sir Frederick Pollock, Principles of contract (1885).
Given the straightforward nature of the majority of contracts that are entered into in a consumer society, it is hardly surprising that the law of contract is not uppermost in the thoughts of the average consumer as he or she makes the routine transactions of daily life. Carter and Harland nevertheless conclude that business people are also prone to making contracts without reference or with minimal reference to the applicable legal principles. Various reasons were suggested (Carter JW, Peden E, Tolhurst GJ, Contract law in Australia (5th ed, Butterworths, 2007) at [1-16]): • [s]heer pressure of day-to-day business made formality and explicitness in contracting an unwelcome burden; • insistence on such formality and explicitness offends by suggesting distrust; • the possible need of business people in dispute to have commercial dealings and relations with each other in the future; • distrust of lawyers or a perception that they charge too much; • the fact that when negotiating a settlement, disputants are in control of both the direct result and its foreseeable consequences whereas litigation is nothing if not uncertain; • the possibility of disclosure;
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• that litigating itself, irrespective of the result, may damage one’s commercial reputation by suggesting that the litigant is not “realistic” or “commercial”; a perception by the disputant and by others that inability to settle is a mark of failure and defeat. Comparatively few people regard the everyday transactions we all make as proper contracts, comparable with the awfully solemn ritual involved in acquiring a place to live. But buying an evening paper or a ride on a bus are all contracts too. Generations of people dissatisfied with what they have bought have really created the English law of contract. Anthony Nicholson, Esprit de law.
In The terrible truth about lawyers: What every business person needs to know (Collins, 1987), Mark McCormack, a former lawyer and founder of the International Management Group (and widely recognised as having founded the sports-marketing industry), comments (at p 12):
Distrust the men who make bargains. They are a disgrace to humanity. No man ever saw a dog swap a bone with another dog. Marcus Clarke, “On borrowing money”, in A Marcus Clarke reader (Lansdowne Press, 1963).
McCormack nevertheless argues (at 12) that:
190
I think, quite frankly, that the best agreements I have ever made have been those with no contract or written agreement attached to them – no legalese, no what-ifs, no fine print.
McCormack refers in particular to a “handshake” deal made with the famous golfer Arnold Palmer in 1960: [a] handshake that, more than any other single event, ushered in the era of mutual profit between professional athletes and professional managers. Basically, Arnold and I had an understanding. We were reasonable people. We trusted each other and had a common goal. Our arrangement was simplicity itself. In the 27 years since that handshake, a lot has happened that neither Arnold nor I could have anticipated. But for all that has changed, we have rarely had to take more than a minute or two to resolve any issue.
[6.50] Unfortunately, the cut and thrust of the real world does not always throw up that combination of personalities and circumstances, and even McCormack acknowledges that business deals cannot always be so amicably concluded (at p 12): [e]ven assuming the best faith and most congenial of circumstances, there is still the grim but real possibility that one party or the other will be hit by the proverbial bus. People change. People forget. People die, but deals, especially when the stakes get high, live on and on. So the terrible truth is that the lawyers cannot be kept out of the picture forever. Even deals that start with a handclasp and a big smile eventually take on the baggage of signed documents and memos back and forth.
[t]he contract – no matter how much the lawyers hum and haw over detail, and how shamelessly they murder the English language in the name of legal precision – can only be an approximate description of the understanding between the parties. A deal is a living thing, a contract is static. And the purpose of a contract is to support the living, evolving deal, not supplant it.
McCormack’s criticism is, of course, not of the law of contract but of the drafting of contracts. It may be that the ideal contract is yet to be drafted. McCormack is critical that “in business contexts, where clear communication is crucial, lawyers hide behind mumbo jumbo that nobody else understands”. On the other hand, the agreement drafted by well-meaning business people may be severely flawed. The answer, as usual, is between the two extremes. The lawyer’s function is to reflect the commercial reality, whatever that may be, in a contractual document. The parties involved must reach a consensus on their rights and obligations, and must communicate the commercial deal to the drafter with sufficient detail to enable it to be translated into an effective document. If the parties have proper input into their contracts, commercial disputes are much less likely.
Chapter 6 Contracts: Concepts of agreement
[6.60] Every business action or inaction has a legal consequence that is primarily determined by reference to contract law. In this sense the law of contract may be regarded as a mechanism for resolving disputes by reference to denned boundaries. The most important role of the law of contract is nevertheless to prevent disputes. Its primary function is to provide the mechanism for certainty and predictability on which commerce depends. In Allan DE and Hiscock ME, Law of contract in Australia (CCH Australia, Sydney, 1987) p 29 it was said that: The function of the law [of contract] is to provide a framework within which individuals or commercial entities can plan and take decisions concerning the future course of their activities, in the confidence that the premise on which they began, that the law would indicate the extent to which it would support and carry into effect their intent, was justified. Contracts embody these intentions. It is the expectation of the parties that these intentions will be realised. It is the function of the law to ensure that they are. In this way the most significant contribution to commerce and economy that the law makes is by making this planning possible … The purpose of the law [of contract] is to secure the realisation of reasonable expectations induced by promises, and to provide certainty and predictability in the planning of commercial ventures. It establishes an elaborate legal model to support the assurance that these objects will be achieved.
IN CONTEXT From common law to code [6.70] The development of the law of contract has its origins in the simple and unsophisticated English markets of over 200 years ago. The basic foundations of modern contract law were put in place by the judges developing the common law through the doctrine of precedent in an environment that in terms of both practice and theory is dramatically different to that of today. It is a remarkable achievement of the common law that the law of contract remains essentially common law, a judge-made body of law with the basic principles and rules still enshrined in judicial decisions. (The oldest authority cited in this text is Pinnel’s case which was decided in 1605 but which, over four centuries later, remains an authoritative decision on the contractual requirement of “consideration”.)
[T]he law of contract lives, as it has always lived, in a symbiotic relationship with other legal principles that qualify or expand its scope … we may confidently expect that the legal system will not abandon the institution of contract and that the law of contract will survive in a familiar legal environment where rules are continually refined and priority is accorded to one rule over another … The exigencies of civilised intercourse call for legal sanctions to enforce obligations voluntarily assumed by parties. Brennan G, (1990) 3 JCL 85.
The challenge for the common law has been to accommodate the changing circumstances within the essential and established framework of contract law. The law of contract remains essentially judge-made, despite increasing legislative intervention to protect the disadvantaged and to redress the balance between weak and strong in terms of bargaining. Significant reforms in relation to misleading and unconscionable conduct under the ACL which impact on all contracts in business are addressed in Chapters 18 and 19. Legislation has also been enacted to “codify” areas of the law relating to specialised commercial contracts, such as sale of goods, negotiable instruments and insurance, but the relevant legislation nevertheless defaults to the common law in order to determine the essential question of whether a contract had actually been entered into. 191
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My one code, by its simplicity, has done more good in France than the mass of all the laws that preceded me. Napoleon I.
A code is an end and a beginning. Unlike a statute, which is superimposed upon the common law like a ship floating on the water, a code supersedes the common law, excluding all reference (except on very special grounds) to any source of law other than itself. It is because it writes finis to the old and permits a new start being made that a code is the given solution when extensive changes in a legal system are required. Hahlo HR, “Here lies the common law: Rest in Peace”, (1967) 30(3) MLR 241 at 243.
Reference was made in Chapter 1 to a Draft Australian Law of Contract – a document with 109 articles which codifies the general rules of contact law currently found in the case law. Its authors – Professors Fred Ellinghaus, David Kelly and Ted Wright from the University of Newcastle Law School – argue the Code would “replace a voluminous and highly complex body of case law rules expressed in fluctuating forms of judicial doctrine, by a finite number of rules in a fixed form, expressed as simply and concisely as possible”. They argue that they are “trying to replace the very unmanageable current system in which the only way in which you can ascertain the law of contract is by consulting a legal adviser, who then has to consult many volumes of case law and volumes of commentaries on that case law and when they come up with an answer there will be some degree of uncertainty” (Merritt C, The Australian, 14 March 2014).
6.3 TYPES OF CONTRACTS Unilateral contracts and bilateral contracts [6.80]
A contract must have at least two parties. There are two types;
• Bilateral contracts under which both parties assume obligations and which form the vast majority of contracts. • Unilateral contracts under which only one party assumes an obligation. The difference can be explained by the following example. If A loses her dog and hires X to find it, X has an obligation to look for the dog and A has an obligation to pay X when the dog is found. This is a bilateral contract because both parties have obligations under it. If instead, A says she will pay a reward to any person that finds the dog, no one is bound to go and look for the dog or find it. However, A must pay the reward to the person who relying on the offer made by A has searched for the dog and located it. Thus, this is a unilateral contract because it is only A that has assumed an obligation. The operation of the rules of agreement, intention and consideration in the context of unilateral contracts is illustrated by Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 (see [6.350]).
Simple contracts and formal contracts (deeds) [6.90]
This categorisation looks at the form of the contract, rather than its content.
• A simple contract may or may not be in writing but will have consideration as an essential element. • A formal contract is one which is valid because it is made using a particular written form called a contract under seal or a deed. If this form is used, consideration is not required. The Conveyancing Acts, Law of Property Acts, and other property Acts of the various States and Territories set out the requirements for a document to be a deed. The document must be written, describe itself as a deed, be signed by the parties intended to be bound, and
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the signatures must be witnessed by someone who is not a party to the deed. It is important to remember that this division relates purely to the form used. It has nothing to do with the contents of the contract – a simple contract may have very complex terms, while a formal contract maybe very “simple” in the sense of being “straightforward”.
Oral contracts and written contracts [6.100] With very few exceptions (most importantly, contracts for the sale of land – see [6.1470] ff) contracts can be written or oral. In fact many contracts are partly written and partly oral, which will be the case where a court holds that oral representations inducing a written contract have contractual effect. Good housekeeping nevertheless virtually demands that contracts with significant subject matter – and presumably, significant consideration – be written to overcome problems with proof that may otherwise arise in the event of subsequent disputation. One strategy for avoiding disputation is for the parties’ agreement to be properly negotiated and comprehensively recorded.
Contract: An agreement that is binding only on the weaker party. Frederick Sawyer.
Negotiated contracts and standard form contracts [6.110] A standard form contract is a written contact prepared by the stronger party and leaving no, or little, opportunity for negotiation. They are generally take-it or leave-it contracts. We are all familiar with the protocol – “sign here, here and here” or “click here, here and here”. In theory they can be negotiated but in practice they rarely are. They are rarely read and, even if they are, probably often only imperfectly understood. Contemporary life would be impossible – certainly difficult – without standard form contracts and it is absurd to suggest that we individually negotiate “everyday” contracts. But standard form contracts do provide the opportunity for the stronger party to impose terms on the weaker and it is hardly surprising that a comprehensive body of consumer protection law – in particular, the ACL Schedule to the Competition and Consumer Act 2010 (Cth) – confers a significant body of protection.
Consumer contracts and commercial contracts
Nowhere is the confusion between legal and moral ideas more manifest than in the law of contract … The duty to keep a contract of common law means a prediction that you must pay damages if you do not keep it – and nothing else. Oliver Wendell Holmes.
[6.120] A contract is a contact irrespective of the parties to it. There is one law of contract. The law of contact which has developed through the common law over the past two centuries does not generally distinguish between business-to-consumer (B2C) and business-to-business (B2B) contracts. Since the end of last century there has nevertheless been a preparedness to act on the reality that the law of contract does not accommodate the vulnerability of those with insufficient bargaining power to protect their own interests, particularly consumers. A legislative safety net is now provided in particular by the ACL but also through a range of particular legislative initiatives.
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6.4 AGREEMENT [6.130] It is important at the outset to understand the approach that the courts take in determining the question of agreement. The courts will ask the question: “Would a reasonable person looking at what the parties said and did, think that the parties entered into an agreement?” In other words, the courts will take into account the conduct of the parties, rather than examining what the parties thought they were doing at the time. Obviously the law of contract has a very complex job to do. As business changes with the times, the law of contract needs to change if it is to be relevant and efficient. The history of the law of contract over the last 200 years has shown a process of refinement as the needs themselves have become more elaborate. But in many places the law has not changed sufficiently to provide an adequate service for the society which depends on it. Roebuck D, The law of contract: Text and materials (Law Book Co, 1974).
[6.140] The courts also recognise that the parties very often do not rigidly compartmentalise their dealings into a strict “offer” and “acceptance” duality and are prepared to recognise that there may come a point of time in a business relationship where in fact a binding agreement has been reached. As stated in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd [2001] FCA 1833 at [369]: The essential question in such cases is whether the parties conduct, including what was said and not said including the evident commercial aims and expectations of the parties, reveals an understanding or agreement or as sometimes expressed, a manifestation of mutual assent which bespeaks an intention to be legally bound to the essential elements of a contract.
In Brambles Holdings Limited v Bathurst City Council [2001] NSWCA 61 the court found an implied acceptance through acting consistently in terms with the offer. [6.150] The first requirement of a contract therefore is that the parties to the contract (who may be natural or artificial legal persons such as companies) must have reached an agreement. In analysing situations where this requirement is disputed, the courts usually adopt a two-step approach: • Did one party (the offeror) make on offer? • Did the other party (the offeree) accept that offer? An offer is a promise to do something provided the other party does something in return. In the course of negotiations the offeror may make statements without intending them to amount to an offer. For a statement to fall within the legal definition of an offer it must constitute a firm and definite promise to do or refrain from doing something that, on an objective test, is intended to result in a contractual obligation on acceptance.
KUZMANOVSKI V NEW SOUTH WALES LOTTERIES CORPORATION [6.160]
Kuzmanovski v New South Wales Lotteries Corporation [2010] FCA 876
Despite apparently winning $100,000 on a $5 scratch lottery ticket based on Pictionary, NSW Lotteries refused to pay the prize on the basis that the express rules on the ticket were not exhaustive. Rule 16 of the lottery rules provided that the right to payment only required presentation of the ticket with a winning game. The Court held that there was a contractual right to the prize as the elements of offer and acceptance (in addition to the offer elements of a valid contract which were not in dispute in this case) were satisfied: Rule 16 194
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can be seen as a promise for an act (namely presentation of the ticket for the purposes of satisfying the requirements of the rule, including the making of a determination under it) which is accepted by the doing of the act (namely presenting the ticket). By taking the trouble to present the ticket for payment (at [32], [33], emphasis in original): Mr Kuzmanovski did everything as its holder that Lotteries required him to do under r 16 to be considered by it in making a determination whether he was entitled to be paid. The promise was to pay on presentation of a ticket if, when presented, it was determined to be a winning one: Australian Woollen Mills 92 CLR at 457 (sic). There the Court said: It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty. In such cases as the present, therefore, in order that a contract may be created by offer and acceptance, it is necessary that what is alleged to be an offer should have been intended to give rise, on the doing of the act, to an obligation. Although not much is involved in a person engaging in the act of presenting a ticket, nonetheless Lotteries’ promise to pay was conditional on that act of presentation occurring. The fact that the ticket had been purchased earlier is no answer to that act resulting in the creation of a new contract between the presenter and Lotteries for the reason given by AL Smith LJ in Carlill [1893] 1 QB at 273 namely: Now, is there not a request there? It comes to this: “In consideration of your buying my smoke ball, and then using it as I prescribe, I promise that if you catch the influenza within a certain time I will pay you £100”.
[6.170] It must be remembered that the law applies an objective theory of contract: In determining whether a binding contract has been concluded, the law is concerned not with the parties’ subjective intentions, but with the “outward manifestations of these intentions”: Taylor v Johnson [1983] HCA 5.
Rules relating to the making of an offer [6.180] Various rules have developed to help determine whether a statement amounts to an offer: • An offer must be distinguished from an invitation to treat. • An offer must be distinguished from a supply of information.
A contract is a mutual promise. Paley W, The principles of moral and political philosophy (1784).
• An offer can be addressed to any number of people.
Offers distinguished from invitations to treat [6.190] Invitation to treat is an old-fashioned term that means invitation to trade or negotiate. If a statement is regarded as an invitation to treat, the person who responds to the invitation will be treated as making the offer. This means that the maker of the invitation will be in the position of deciding whether to accept or reject any offers. Whether a particular statement is an offer or an invitation to treat depends partly on the particular words used and partly on the surrounding circumstances that indicate what a reasonable person probably intended to be the effect of the statement.
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Every sale has five basic obstacles: no need, no money, no hurry, no desire, no trust. Zig Ziglar.
Price lists, circulars and catalogues [6.200] Generally speaking statements in price lists, circulars and catalogues will be seen as invitations to treat to avoid the possibility of more responses being received than can be supplied from the available stock.
GRAINGER & SONS V GOUGH [6.210]
Grainger & Sons v Gough [1896] AC 325
A wine merchant distributed a circular that listed the prices of the wines he had in stock. It was held that the circular was not an offer to sell those wines at those prices. Rather it was an invitation for people to respond by making offers to buy certain quantities of wine at those prices. The reason given (per Lord Herschell, at 334) was that the: transmission of such a price list does not amount to an offer to supply an unlimited quantity of the wine described at the price named, so that as soon as an order is given there is a binding contract to supply that quantity. If it were so, the merchant might find himself involved in any number of contractual obligations to supply wine of a particular description which he would be quite unable to carry out, his stock of wine of that description being necessarily limited.
Advertisements [6.220] In the usual case where goods or services are advertised for sale, the advertisement is not treated as an offer but as an invitation to treat.
PARTRIDGE V CRITTENDEN [6.230]
Partridge v Crittenden [1968] 2 All ER 421
Partridge placed an advertisement in a magazine that said “Bramblefinch cocks, bramblefinch hens 25s each”. Partridge was charged under the Protection of Birds Act 1954 (UK) that prohibited “offering for sale” such birds. He was found not guilty on the basis that the newspaper advertisement was not an offer but merely an invitation to treat.
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Legislation is today more carefully drafted to accommodate the idiosyncrasies of contract law. For example, the Motor Dealers and Repairers Act 2013 (NSW) requires a sale notice to be attached to a second-hand vehicle which a motor dealer “offers or displays for sale” (s 63). In exceptional cases, statements in an advertisement will be treated as offers as is demonstrated by the Carbolic Smoke Ball case (see [6.350]).
Goods displayed in shops [6.240] Goods displayed in shop windows are generally treated the same way as advertisements.
FISHER V BELL [6.250]
Fisher v Bell [1961] 1 QB 394
The defendant was prosecuted under the Restriction of Offensive Weapons Act 1959 (UK) with “offering for sale” an offensive weapon which was defined in the Act to include flick knives. The basis of the charge was that the defendant had displayed a flick knife in his shop window with a price tag attached. He was acquitted. The reason given (per Lord Parker, at 399) was that: It is perfectly clear that according to the ordinary law of contract the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale, the acceptance of which constitutes a contract.
A similar approach is taken to the display of goods in a supermarket or other self-service shops.
PHARMACEUTICAL SOCIETY OF GREAT BRITAIN V BOOTS CASH CHEMISTS (SOUTHERN) LTD [6.260]
Pharmaceutical Society of Great Britain v Boots Cash Chemists (Southern) Ltd [1953] 1 QB 401
Under the Pharmacy and Poisons Act 1933 (UK), the sale of certain prescribed drugs was prohibited unless “effected under the supervision of a registered pharmacist”. The Pharmaceutical Society brought an action 197
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against Boots that operated a self-service pharmacy in which customers would bring the items they wished to purchase, including prescribed drugs, from the shelf to the cashier. A registered pharmacist worked near the cashier and would, if necessary, stop the sale of a particular item. It was held that the goods displayed on the shelves with price tags constituted an invitation to treat. By taking the goods to the cashier and offering to pay, the customer made the offer that the pharmacy could then accept or reject. Because a registered pharmacist supervised the actual sale – the pharmacy’s acceptance of the customer’s offer – the legislation had not been breached. The reason given (Somervell LJ at 405-6) was as follows: [The layout could] be regarded as a more organised way of doing what is done already in many types of shops – and a bookseller is perhaps the best example – namely, enabling customers to have free access to what is in the shop, to look at the different articles and then, ultimately, having got the ones which they wish to buy, to come up to the assistant saying “I want this”. The assistant in 999 times out of 1000 says, “That is all right”, and the money passes and the transaction is completed … In the case of an ordinary shop, although goods are displayed and it is intended that customers should go and choose what they want, the contract is not completed until, the customer having indicated the articles which he needs, the shopkeeper, or someone on his behalf, accepts that offer. Then the contract is completed. I can see no reason at all, that being clearly the normal position, for drawing any different implication as a result of this layout.
IN CONTEXT Invitation to treat and false advertising [6.270] Because statements in advertisements, catalogues, price lists and shop displays are normally invitations to treat and not offers, it follows that the merchant is not obliged to sell the goods to someone who purports to accept the “offer”. For example, the retailer who mistakenly advertises goods at $99 instead of the proper price of $199 is not obliged to sell them at that cheaper price. The incorrect statement is an invitation to treat and the intending purchaser’s supposed acceptance (“Great price, I’ll have a couple of those”) is in fact the offer which can be accepted or rejected by the retailer. If, as may be the case in this situation, the retailer refuses to sell at the lower price there are no contractual consequences. However, the effect of the consumer protection provisions of the ACL must be considered. This legislation does not affect the contractual status of the aborted transaction but provides both civil actions and criminal penalties for multiple pricing (where goods are not sold for the lowest displayed price: ss 47, 165); “false or misleading representations with respect to the price of goods or services” (ss 29(1)(i), 151); and bait advertising (ss 35, 157). Damages are also available to those who can satisfy the court that they have suffered loss or damage through their reliance on the misleading conduct.
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Auctions [6.280] An auctioneer’s call for bids is, in the case of an auction with a reserve price, an invitation to treat. The bid is the offer which the auctioneer can acceptor reject (Payne v Cave (1789) 100 ER 502). If the auction is “without reserve” the same rules apply, with the qualification that an auctioneer who refuses to sell to the highest bidder may be able to be sued for contravening a separate and distinct contractual obligation to sell to the highest bidder (Warlow v Harrison (1859) 120 ER 925).
Tenders [6.290] Tendering is an increasingly common commercial practice. A company’s call for tenders is an invitation to treat. The submission of a tender in response constitutes an offer. The company can reject any tender and is not obliged to accept the highest or lowest (depending on whether the tender is to buy or sell) tender. If, however, the tender documents stated that the highest (or lowest) tender would be successful the call for tenders is an offer to deal with the person submitting the best tender: see Spencer v Harding (1870) LR 5CP 561.
I never knew an auctioneer to lie, unless it was absolutely necessary. Josh Billings (1818-85).
HARVELA INVESTMENTS LTD V ROYAL TRUST CO OF CANADA LTD [6.300]
Harvela Investments Ltd v Royal Trust Co of Canada Ltd [1986] AC 207
The seller of a parcel of shares decided that it would call for sealed bids from two likely purchasers. The seller advised each of them that it would accept the highest price submitted. The plaintiff tendered $2.71 million. The defendant’s sealed bid was “$2.1 million or $101,000 in excess of any other bid whichever is the higher”. The seller accepted this latter bid. The Privy Council held that the seller had made the offer not the bidders because it agreed to accept the highest bid. However, there was an implied term that any such bid must be for a fixed amount and that the defendant did not make such a bid. There was therefore a binding contract between Harvela and the seller for the sale of the shares at $2.71 m.
Vending machines [6.310] In Thornton v Shoe Lane Parking Ltd (1971) 2 QB 163, Lord Denning held that exclusionary terms printed on a parking station ticket had no contractual effect because they were not notified to the customer prior to the contract being made. Lord Denning explained (at 169) that: The customer pays his money and gets a ticket. He cannot refuse it. He cannot get his money back. He may protest to the machine, even swear at it. But it will remain unmoved. He is
Not Too Good to Be True! We can sell your home for much less than you’d expect. Christchurch Star Property Weekly (New Zealand, 8 August 1996).
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committed beyond recall. He was committed at the very moment when he put his money into the machine. The contract was concluded at that time. It can be translated into offer and acceptance in this way: the offer is made when the proprietor of the machine holds it out as being ready to receive money. The acceptance takes place when the customer puts his money into the slot. The terms of the offer are contained in the notice placed on or near the machine stating what is offered for the money. The customer is bound by those terms as long as they are sufficiently brought to his notice beforehand, but not otherwise. H e is not bound by the terms printed on the ticket if they differ from the notice, because the ticket comes too late. The contract has already been made.
Offer distinguished from a supply of information [6.320] A person who is merely supplying information in response to an enquiry is not making an offer.
HARVEY V FACEY [6.330]
Harvey v Facey [1893] AC 552
Harvey sent a telegram to Facey asking, “Will you sell us Bumper Hall Pen? Telegraph lowest cash price” Facey replied by telegram, “Lowest cash price for Bumper Hall Pen £900”. Harvey then sent another telegram which said, “We agree to buy Bumper Hall Pen for £900 asked by you. Please send us your title deeds in order that we may get early possession”. When Facey refused to go through with the sale, Harvey sued for breach of contract on the basis that Facey had made an offer which Harvey had accepted. The action failed. It was held that Facey’s telegram was not an offer but merely a supply of information in response to an inquiry. Harvey’s second telegram amounted to an offer which Facey did not accept.
An offer can be made to any number of people There’s no such thing as a free lunch. Milton Friedman.
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[6.340] In the case of a bilateral contract, the offer will usually be made to a particular person. However, in the case of unilateral contracts, the offer will normally be made to the world at large. The leading case on the circumstances in which a newspaper advertisement can give rise to a unilateral contract is the Carbolic Smoke Ball case.
Chapter 6 Contracts: Concepts of agreement
CARLILL V CARBOLIC SMOKE BALL CO [6.350] Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 Background
The British influenza epidemic of 1891-92 extracted a heavy toll on human life. The purveyors of quack medicines it provided a wonderful opportunity. The last decade of the 19th century was the golden age of quackery and the carbolic smoke ball patented by Frederick Roe in December 1889 was merely one of a range of devices that were aggressively promoted to a naive public at that time. Roe’s patent application described his smoke ball as “An improved device for facilitating the distribution, inhalation and application of medicated and other powder”. Although the patent specification envisaged other powders being used, Roe confined himself to using carbolic acid or phenol in powder form, this being the standard germ killer of the time. Early advertisements for the smoke ball made typically extravagant claims: Will positively cure Influenza, Catarrh, Asthma, Bronchitis, Hay Fever, Neuralgia, Throat Deafness, Hoarseness, Loss of Voice, Whooping Cough, Croup, Coughs, Colds, and all other ailments caused by Taking Cold. Facts
An advertisement that offered a reward of £100, “to any person who contracts the increasing epidemic, influenza, colds, … after having used the ball according to the printed directions” gave rise to litigation. The company was so convinced of the infallibility of its product that its advertisement pointed out that it had deposited the sum of £1000 with its bank as “proof of its sincerity”. The advertisement that gave rise to the litigation first appeared in the Pall Mall Gazette on 13 November 1891. Mrs Carlill bought a carbolic
smoke ball from a chemist shop, and used it three times daily for two weeks in accordance with the written instructions. She nevertheless contracted influenza. When the company refused to pay the £100 reward, Mrs Carlill sued for breach of contract. Issues
In its defence the Carbolic Smoke Ball Co raised virtually every possible argument that was available to deny the existence of a contract. In summary the company argued that: • The newspaper advertisement was not an offer. • Even if it was an offer, Mrs Carlill had not validly accepted the offer. • Even if she had, the arrangement was not intended to create legal relations. • Even if it was, she had provided no consideration in exchange for the company’s promise. • Even if a contract had been formed, it was of no effect since it failed to meet certain statutory requirements. Decision
The English Court of Appeal dismissed all of these arguments and held that a valid contract had been formed and consequently Mrs Carlill was entitled to the £100. Implications
For present purposes, the main implications of the case are in the way that the Court of Appeal rejected the various arguments advanced to suggest that the advertisement did not constitute an offer. The company’s argument that the advertisement was not a statement that people would take seriously (it was a “mere puff”) was rejected by reference to the 201
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statement that £1000 had been deposited with the Alliance Bank to show the company’s “sincerity in the matter”. Lindley LJ (at 261) stated: Now, for what was that money deposited or that statement made except to negative the suggestion that this was a mere puff and meant nothing at all? The deposit is called in aid by the advertiser as proof of his sincerity in the matter – that is, the sincerity of his promise to pay this £100 in the event which he has specified. I say this for the purpose of giving point to the observation that we are not inferring a promise; there is the promise, as plain as words can make it.
The company argued that the advertisement was so vague and incomplete that reasonable people would not interpret it to contain any legal promise. For example, the advertisement did not specify any time limit within which a person had to contract influenza in order for them to claim the reward. Neither was there any way for the company to check that the smoke ball had been correctly used. Bowen LJ held that:
Lindley LJ conceded that the language was vague and uncertain in some respects but nevertheless considered that “business people or reasonable people” would understand it to mean that £100 would be paid to anybody who used the smoke ball three times daily for two weeks according to the printed directions, and who contracted influenza within a reasonable time after so using it. In response to the company’s argument that an offer had to be directed at a particular person or persons and could not be made to the whole world, Bowen LJ stated that:
The answer to that argument seems to me to be that if a person chooses to make extravagant promises of this kind he probably does so because it pays him to make them, and, if he has made them, the extravagance of the promises is no reason in law why he should not be bound by them.
It was also said that the contract is made with all the world – that is, with everybody; and that you cannot contract with everybody. It is not a contract made with all the world. There is the fallacy of the argument. It is an offer made to all the world; and why should not an offer be made to all the world which is to ripen into a contract with anybody who comes forward and performs the condition? It is an offer to become liable to any one who, before it is retracted, performs the condition, and, although the offer is made to the world, the contract is made with that limited portion of the public who come forward and perform the condition on the faith of the advertisement.
[6.360] It must be remembered that the contract that was found to exist in the Carbolic Smoke Ball case was a unilateral contract. The case is also important in demonstrating how the concepts of acceptance and consideration are applied in such contracts. These aspects of the case are discussed at [6.410]. The marvels of modern technology include the development of a soda can which, when discarded, will last forever – and a $7000 car, which, when properly cared for, will rust out in two or three years. Paul Harwitz, Wall Street Journal.
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Rules relating to termination of an offer [6.370] Once the court has decided that a statement amounts to an offer, it will look to see which of the following events occurred first: • The offer was revoked by the offeror. • The offer lapsed due to the passage of time. • The offer lapsed due to the death of the offeror or offeree. • The offer lapsed due to a change of circumstances. • The offer was rejected by the offeree. • The offer was accepted by the offeree.
Chapter 6 Contracts: Concepts of agreement
The offer was revoked by the offeror [6.380] The general rule is that an offer can be revoked (withdrawn or cancelled) by the offeror any time before it is accepted. This is true even if the offeror promises to keep the offer open for a certain period: Routledge v Grant (1828) 4 Bing 653. However, where the promise to keep the offer open for a certain period is given in exchange for some consideration a separate contract (called an option) arises. Revocation of the offer before the end of the period will amount to a breach of the option contract. [6.390] The general rule is that a revocation is not effective until it is communicated by the offeror to the offeree (Byrne v Van Tienhoven (1880) LR 5 CPD 344) or until the offeree becomes aware that the offer is no longer open. It is not necessary that the offeror personally communicate the revocation to the offeree. It is sufficient if a reasonable person would be aware that the offer had been withdrawn.
DICKINSON V DODDS [6.400]
Dickinson v Dodds (1876) 2 Ch D 463
Dodds offered to sell Dickinson some houses for £800. This offer was stated “to be left over Friday, 9 am”. However, Dodds sold the houses to someone else on the Thursday. Dickinson heard of this sale indirectly but still handed Dodds a formal acceptance of the offer before 9 am Friday. It was held that no contract was formed with Dickinson. The offer had been revoked before acceptance since Dickinson had actually received notice of the revocation even though this was not from the offeror. [6.410] In the case of offers that might give rise to unilateral contracts, such as that in the Carbolic Smoke Ball case, these rules are modified in two respects. First, such offers are interpreted as involving an implied promise not to revoke the offer once the offeree has started performance until there has been a reasonable time for completion. This implied promise is enforceable – it is supported by consideration through the offeree’s commencement of performance. Second, a revocation will be effective if it is made in the same manner as the offer irrespective of whether a particular person who was aware of the offer was actually made aware of the revocation. For example, A advertises in the local paper that he will pay a reward to anyone who finds his lost dog. B sees the advertisement and thinks about looking for the dog. The dog returns to A of its own accord. A then advertises in the local paper that the dog has returned and that the reward is withdrawn. B does not read the withdrawal notice but starts to look for the dog. The revocation is effective before B has commenced performance.
The law of contract is the basis of trading and many other legal relationships. Its clarity and accessibility are therefore of the greatest importance. The general principles of contract are now well established and the Commission regards it as ripe for codification. English Law Reform Commission, First Programme (1965).
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The offer lapsed due to the passage of time I don’t want a lawyer to tell me what I cannot do; I hire him to tell me how to do what I want to do. J Pierpont Morgan.
[6.420] Where the offer contains a limit on the time that it is to remain open, the offer lapses on the expiry of that time. If no time limit is specified, the offer will lapse if it is not accepted within a reasonable time.
DENCIO V ZIVANOVIC [6.430]
Dencio v Zivanovic (1991) 105 FLR 117
The plaintiff sued the defendant for damages for personal injury. On 28 September 1990 the plaintiff’s solicitor contacted the defendant’s solicitor and made an offer to settle the case for a particular amount. The defendant’s solicitor did not obtain instructions to settle the matter until 6 August 1991 when he wrote to the plaintiff’s solicitor accepting the offer. In the meantime the plaintiff’s solicitor had taken various steps to prepare the case for a court hearing, and some of these steps were known to the defendant’s solicitors. The court held that there was no binding contract between the plaintiff and the defendant, since the offer made by the plaintiff to settle the matter had not been accepted by the defendant within a reasonable time.
The offer lapsed due to the death of the offeror or offeree Comparatively few people regard the everyday transactions we all make as proper contracts, comparable with the awfully solemn ritual involved in acquiring a place to live. But buying an evening paper or a ride on a bus are all contracts too. Generations of people dissatisfied with what they have bought have really created the English law of contract. Anthony Nicholson, Esprit de law
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[6.440] The general rule is that an offer which has not been accepted is automatically terminated on death of the offeror or the offeree. There is a qualification to this rule in the case of the death of the offeror – the offer can be accepted by an offeree who is not aware of the offeror’s death unless the offer requires personal involvement by the deceased person as performance in such a case is clearly impossible. It should be noted that once an offer has been accepted, the death of one of the parties does not generally affect the contract. The rights and obligations of the deceased person are taken over by the person who is appointed to manage the affairs of the dead person (personal representative). However, if the contract involves doing things that only the dead person can do (such as painting a portrait) the contract will come to an end due to the doctrine of frustration (see [6.2650] ff).
The offer lapsed due to a change of circumstances [6.450] An offer will lapse if it expressly or impliedly depends on a particular state of affairs which ceases to exist prior to the offer being accepted.
Chapter 6 Contracts: Concepts of agreement
FINANCINGS LTD V STIMSON [6.460]
Financings Ltd v Stimson [1962] 3 All ER 386
Prior to a dealer’s acceptance of a customer’s offer to purchase a car, the car was stolen and later recovered in a damaged condition. It was held that the dealer could not then accept the offer because the car was not in substantially the same condition as when the offer was made.
The offer was rejected by the offeree [6.470] If the offeree rejects the offer, the offer comes to an end and the offeree cannot later change his mind and accept the offer (see Hyde v Wrench (1840) 49 ER 132 ([6.530])). If the offeree’s response indicates a preparedness to deal with the offeror but on slightly different terms it is treated as a counter-offer. A purported “acceptance” which is qualified and introduces a new term is not an effective acceptance (see Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498 (see [6.480]). It operates as a counter-offer which has the effect of destroying the original offer, but which can itself be accepted. (“I accept, provided that the vehicle passes my mechanic’s inspection” is a counter-offer because of the proviso added.)
TURNER KEMPSON & CO PTY LTD V CAMM [6.480]
Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498
Turner Kempson offered to supply to Camm a quantity of raspberry pulp at a certain price which was to be delivered to Camm in Melbourne, with payment within seven days. Camm replied adding terms as to the quality of the product to be delivered and staggering the delivery dates. Turner Kempson refused to deliver the pulp, arguing that there was no contract in existence. The court held that by adding new terms to the purported acceptance, Camm had made a counter-offer to Turner Kempson which it had not accepted. There was thus no contract in existence.
A different outcome will occur where the response to the offer is not seen as a counter-offer but merely as a request for further information. In these circumstances the offer remains open and may later be accepted by the offeree.
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STEVENSON JACQUES & CO V MCLEAN [6.490]
Stevenson Jacques & Co v McLean (1880) 5 QBD 346
McLean made an offer by telegram on Saturday to sell 3800 tons of iron to Stevenson “at 40s net cash per ton, open till Monday”. At 9.42 am on Monday Stevenson sent a telegram to McLean that said “Please wire whether you will accept 40s for delivery over two months or if not longest limit you would give”. When McLean did not reply, Stevenson sent another telegram at 1.34 pm accepting the offer made by McLean on the previous Saturday. By this time McLean had sold the iron to someone else but his telegram to this effect did not reach Stevenson until 1.46 pm. Stevenson sued for breach of contract. It was held that a valid contract had been formed. The 9.42 am telegram was not a counter-offer – it was merely a request for further information. It did not destroy the original offer that was validly accepted by the 1.34 pm telegram.
The offer was accepted by the offeree Perhaps one day a legal philosopher of great wisdom and knowledge of the world will be able to extract from all the differing exceptions a few golden rules which will work in all those cases of conflict which we now categorise as contractual … But until then we should be happy with our anomalies and exceptions, and look for more ways of creating new principles to deal with problems of limited scope. Roebuck D, “The crisis of contract” (1969) 3(2) UTLR 191 at 193.
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[6.500] Where the offer is accepted by the offeree before any of the other events discussed above occur, then an agreement will be formed and, subject to the other requirements of a valid contract being met, a contract will arise. At this point neither party is free to change their mind without being subject to an action for breach of the contract.
Rules relating to the acceptance [6.510] Several rules have developed in cases where the fact of acceptance has been disputed. These include that: • The acceptance must be absolute and unqualified. • The acceptance must be made in reliance on the offer. • Any conditions as to the method of acceptance must be complied with. • The acceptance only becomes effective when it is communicated to the offeror.
The acceptance must be absolute and unqualified [6.520] For a statement to be seen as an acceptance of an offer it must be a clear commitment to all the terms of the offer. As noted at [6.470], if the statement attempts to introduce any qualifications or new terms, it will be seen as a counter-offer that destroys the previous offer. A conditional “acceptance” is not in law an acceptance. There is nevertheless scope for debate on whether a response is or is not conditional. The classic example is an acceptance that is expressed to be “subject to contract” or “subject to my solicitor’s approval”.
Chapter 6 Contracts: Concepts of agreement
HYDE V WRENCH [6.530]
Hyde v Wrench (1840) 49 ER 132
The defendant’s offer to sell his property for 1000 pounds was countered by the plaintiff’s offer for 950 pounds, which was rejected by the defendant. The plaintiff’s later “acceptance” of the original 1000 pound offer was invalid. The counter-offer destroyed the original offer, and, in effect, operated as a fresh offer to buy the property for 1000 pounds. Because the defendant had not accepted this offer there was no contract.
If the response to the offer is a request for further information rather than a counter offer the enquiry has a neutral effect on the offer which remains open and available to be accepted, rejected or countered with a counter-offer. (See Stevenson Jacques & Co v McLean (1880) 5 QBD 346 at [6.490]).
The acceptance must be made in reliance on the offer [6.540] To be effective, an “acceptance” must be made in reliance on the offer. If, for example, an action for which a reward has been offered is performed in ignorance of the reward, there is no contractual entitlement to the reward. Provided, however, that the acceptor has knowledge of the offer, the particular motive in accepting is not relevant. The Australian High Court has nevertheless held that mere knowledge by itself is insufficient – the offer must also be present to the offeree’s mind at the time of acceptance:
R V CLARKE [6.550]
R v Clarke [1927] HCA 47
The plaintiff failed in an action to claim a reward offered for information leading to the conviction of a murderer. He knew of the reward but he admitted in court that he gave the information to save himself from being charged with the murder and with the reward “not present to his mind”. Higgins J stated that: The motive inducing consent may be immaterial but the consent is vital. Without that there is no contract … Clarke had seen the offer, indeed; but it was not present to his mind – he had forgotten it, and gave no consideration to it, in his intense excitement as to his own danger. There cannot be assent without knowledge of the offer; and ignorance of the offer is the same thing whether it is due to never hearing of it or to forgetting it after hearing.
As Isaacs ACJ pointed out: 207
Business and the Law An offer of £100 to any person who should swim a hundred yards in the harbour on the first day of the year would not in my opinion be satisfied by a person who was accidentally or maliciously thrown overboard on that date and who swam the distance simply to save his life, without any thought of the offer.
Any conditions as to the method of acceptance must be complied with [6.560] The offeror can prescribe a particular method of acceptance which must be complied with for the acceptance to be effective.
ELIASON V HENSHAW [6.570]
Eliason v Henshaw (1819) 4 Wheaton 225
Eliason sent a letter by wagon to Henshaw offering to buy flour and requesting that the answer be sent by the returning wagon. Henshaw purported to accept this offer through an alternative method of communication which he expected would arrive sooner but which in fact arrived six days after the wagon. Henshaw’s action for breach of contract failed as the acceptance was not in the stipulated manner. Whenever you accept our views we shall be in full agreement with you. Moshe Dayan.
If Henshaw’s reply had in fact reached Eliason as early as he hoped, the court would have had to decide whether the specified method was the only way the offer could be accepted or whether an equally advantageous method of communication could be used instead. If no particular method is specified, acceptance can be by words (spoken or written) or sometimes even by the offeree’s actions.
BROGDEN V METROPOLITAN RAILWAY CO [6.580]
Brogden v Metropolitan Railway Co (1877) 2 App Cas 666
The parties acted on the terms of a written offer which, by oversight, had never been accepted. It was held that because the parties had conducted themselves as if they were bound by the offer that had not been formally accepted there was a contract between them on those terms.
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The acceptance only becomes effective when it is communicated to the offeror [6.590] The general rule, which is subject to some exceptions, is that acceptance is effective at the time it is communicated to the offeror. The general rule is that silence cannot constitute acceptance even where the offeror states that he will treat silence as acceptance of his offer.
FELTHOUSE V BINDLEY [6.600]
Felthouse v Bindley (1862) 142 ER 1037
The plaintiff had written to his nephew offering to buy a particular horse at a particular price and stating that “If I do not hear from you to the contrary, I will take it you have accepted”. The nephew, intending to accept the offer, told the auctioneer (the defendant) to withdraw the horse from the sale. The auctioneer inadvertently sold the horse at auction and was sued by the plaintiff in the tort of conversion (for wrongfully dealing with goods in a manner inconsistent with the owner’s rights). The success of this action depended on the plaintiff establishing that he had title to the horse ie that ownership had passed to him under the contract with his nephew. The action was unsuccessful, the court holding that the uncle’s offer had not been accepted. Silence cannot constitute acceptance and communication to a third party, the auctioneer, was not communication to the offeror as required. [6.610] To be effective, the acceptance must be communicated to the offeror by the offeree or someone who is authorised by them.
POWELL V LEE [6.620]
Powell v Lee (1908) 99 LT 284
The plaintiff was informed by a member of an appointments committee who was acting without authority that his application was successful. The committee later reconsidered its earlier decision and resolved to appoint another applicant. The plaintiff’s action for breach of contract was unsuccessful, with the court holding that an acceptance is not effective unless it is communicated by the offeree or their authorised agent.
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It is important to remember that this communication can take place by conduct so that in certain circumstances the silence of the offeree can equate to conduct. Thus an offeree may make it clear to an offeror that he accepts the offer made unless the offeree says something to the contrary or eg signs a document agreeing to a series of deliveries by the offeror “until further notice”.
EMPIRNALL HOLDINGS PTY LTD V MACHON PAULL PARTNERS PTY LTD [6.630]
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523
Empirnall engaged Machon Paull to develop a site it owned. After work commenced Machon Paull submitted a written contract to Empirnall which was never signed. Work on the site continued to be made. The issue of whether there was a contract between the parties arose when Empirnall went bankrupt owing Machon Paull a considerable amount. The Court confirmed the general rule that “silent acceptance of an offer is generally insufficient to create any contract” but held that silence combined with other circumstances may constitute valid acceptance (at 535 per McHugh JA): Where an offeree with a reasonable opportunity to reject the offer of goods or services takes the benefit of them under circumstances which indicate that they were to be paid for in accordance with the offer, it is open to the tribunal of fact to hold that the offer was accepted according to its terms.
This was the case here. Empirnall’s acceptance of the work was acceptance of the terms offered by Machon Paull. It was not “mere silence, but included conduct in taking the benefit of an offer, knowing the terms”.
NORTHSTATE CARPET MILLS PTY LTD V BR INDUSTRIES PTY LTD [6.640]
Northstate Carpet Mills Pty Ltd v BR Industries Pty Ltd [2006] NSWSC 1057
The first defendant wished to obtain carpet from the plaintiff on credit. A representative of the plaintiff told the second defendant who was a director of the first defendant that it required completion of a credit application. There was attached to the application form a guarantee. The credit application form was filled out but not the guarantee There was no evidence that the application or guarantee had been accepted by the plaintiff, nor was the credit application form ever returned to the first defendant. The director of the first defendant said that he deliberately did not fill out the guarantee form. The plaintiff proceeded to supply carpet to the first defendant. When the first defendant defaulted on its payment, the plaintiff sued under the guarantee, arguing that the guarantee had been accepted by virtue of the conduct of the plaintiff in supplying the carpet to the first defendant. 210
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It was held that there was no contract of guarantee between the plaintiff and the defendant. The offer made in the application was for a 45-day account and yet the plaintiff told the defendant that it had opened a 14-day account only. Even if it could be argued that returning the guarantee was an offer, it was only an offer to guarantee a 45-day account and not a 14-day account. The Court pointed out (at [40]) that: Unfortunately courts have been noticing in the past few years that commercial enterprises have been cutting corners, mostly in the name of costs reduction and it has not been uncommon for finance companies not to send the debtor or its guarantor copies of the completed finance contracts and rely on the fact that the customer has the loan or product as the case may be. It is fashionable to minimise the importance of complying with the law of contract. Unfortunately, this line of thinking while it may reduce costs, leads to the present sort of problem that is where too little attention was given to the making of the contract as a result of which what the supplier thought was a guaranteed transaction was not.
[6.650] There are two exceptions to the rule that acceptance must be actually communicated to the offeror: • where the offereror waives the requirement of communication; and • the postal acceptance rule. The first exception to the general rule that acceptance is only effective when it is communicated to the offeror relates to unilateral offers of the type that arose in the Carbolic Smoke Ball case, where it was held that common sense dictates that the offeror impliedly dispenses with the necessity to communicate acceptance and imposes some other method of acceptance. In that case the argument advanced by the company that even if the newspaper advertisement was an offer, Mrs Carlill had failed to communicate her acceptance of it to them was rejected on the basis that (per Bowen LJ at 270): If I advertise to the world that my dog is lost, and that anybody who brings the dog to a particular place will be paid some money, are all the police or other persons whose business it is to find lost dogs to be expected to sit down and write me a note saying that they have accepted my proposal? Why, of course, they at once look after the dog and as soon as they find the dog they have performed the condition. The essence of the transaction is that the dog should be found, and it is not necessary under such circumstances, as it seems to me, that in order to make the contract binding there should be any notification of acceptance. It follows … from the nature of the thing that the performance of the condition is sufficient acceptance without the notification of it, and a person who makes an offer in an advertisement of that kind makes an offer which must be read by the light of that commonsense reflection. He does, therefore, in his offer impliedly indicate that he does not require notification of the acceptance of the offer.
The second exception to the general rule that an acceptance takes effect when it is communicated to the offeror is created by the postal rule which states that where it is appropriate to use the post as the method of communicating acceptance, the acceptance takes effect at the time of posting rather than the time of receipt by the offerer. The postal rule was developed on the basis that an offeror who is prepared to accept a mailed acceptance should take the risk of loss or delay in the mail.
English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots of offer acceptance and consideration. New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd [1975] AC 154 per Lord Wilberforce.
Agree, for the law is costly. Proverb, Camden, Remains concerning Britain (1674).
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The postal rules
HOUSEHOLD FIRE & CARRIAGE ACCIDENT INSURANCE CO (LTD) V GRANT [6.660]
Household Fire & Carriage Accident Insurance Co (Ltd) v Grant (1879) LR 4 ExD 216
Grant applied by post for shares in the insurance company. The company’s letter of acceptance allotting shares to Grant was never delivered, despite being properly addressed. Because he had not received notification, Grant assumed that his offer to acquire shares had not been accepted and the amount owing on the shares was not paid. When the company went into liquidation and the liquidator demanded payment, Grant denied that he was a shareholder (and therefore not liable for the uncalled amount) because there was no contract. The court held that there was a contract, the company’s acceptance by the allotment of shares being complete on posting. I have received memos so swollen with managerial babble that they struck me as the literary equivalent of assault with a deadly weapon. Peter Baida, American Heritage, April 1985.
[6.670]
The rule applies:
• only where the circumstances are such that the parties thought that the post might be used to communicate acceptance; • in such a case even if the offeree never receives the letter. It does not apply: • if the offeree wrongly addresses the letter or puts inadequate stamps on it; • in any circumstances where the offeror requires that the acceptance must actually be received by the offeror. Nor to: • the revocation of an offer; • any instantaneous method of communication eg email or fax.
HOLWELL SECURITIES LTD V HUGHES [6.680]
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Holwell Securities Ltd v Hughes [1974] WLR 155
Chapter 6 Contracts: Concepts of agreement
An option agreement provided that the option could be exercised by “notice in writing” within a particular period. Within that period, the plaintiff hand-delivered a letter advising that it was intending to exercise its option and enclosing a cheque for the deposit. A letter formally exercising the option was later sent within the specified period but never arrived. The court held that there was no acceptance and therefore no contract. The words “by notice in writing” displaced the postal rule and made it clear that actual communication was required. The postal rule has no application to the revocation of an offer.
HENTHORN V FRASER [6.690]
Henthorn v Fraser [1892] 2 Ch 27
An offer was stated to be open for 14 days but it was revoked by mail the next day. Before the letter of revocation was delivered, the offer was accepted by post. It was held that a contract had been formed. The revocation of the offer was not effective until it was actually communicated to the offeree which occurred after the contract was formed due to the operation of the postal rule that applied to the letter of acceptance.
Revocation of acceptance [6.700] An offeree can revoke an acceptance provided that the revocation is communicated to the offeror before the acceptance is received. Since the postal rule does not apply to the revocation of an acceptance, it is not effective unless actually communicated to the offeror before the moment acceptance.
Electronic communication [6.710] The growth of e-commerce has required a legislative response relating to the transmission and receipt of electronic communication which will be relevant whenever the question of offer and acceptance arises using this method. This legislation, the Electronic Transactions Act 1999 (Cth) and its State and Territory counter parts are dealt with in Chapter 7. However, it is important to remember that the general legal principles of contract law discussed in this chapter apply equally to e-commerce contracts as to contracts made by any other form of communication (see [7.590]).
There is no surer way to find out what parties meant, than to see what they have done. Insurance Co v Dutcher 95 US 269 at 273 (1877) per Swayne J.
Conditional agreements [6.720] Parties may make a contract “subject to” a designated event such as “subject to finance” or “subject to solicitors’ approval”. Such “subject to” clauses create a condition precedent – a contingency which must occur before a contract is binding. In Perri v Coolangatta Investments Pty Ltd [1982] HCA 29 Mason J stated (at [15]) that: 213
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There is an obvious difference between the condition which is precedent to the formation or existence of a contract and the condition which is precedent to the obligation of a party to perform his part of the contract and is subsequent in the sense that it entitles the party to terminate the contract on non-fulfilment. In the first category the transaction creates no rights enforceable by the parties unless and until the condition is fulfilled. In the second category there is a binding contract which creates rights capable of enforcement, though the obligation of a party, or perhaps of both parties, to perform depends on fulfilment of the condition and non-fulfilment entitles him to terminate.
MEEHAN V JONES [6.730]
Meehan v Jones [1982] HCA 52
A contract contained a provision to the effect that it was subject to suitable finance being available. When the purchaser told the vendor they had found satisfactory finance, the vendor refused to complete, resulting in a claim for specific performance by the purchaser. The vendor argued that no binding contract had been made between the parties as the term “satisfactory” referred to satisfaction of the vendor and the purchaser, leaving vital matters yet to be agreed, and rendering what was perceived by the purchaser to be a contract a mere “agreement to agree”. It was also argued that the language in the clause was so imprecise and indefinite that it would not be possible for a court to determine what satisfactory finance meant. A further argument made was that if the agreement be read as the purchaser would prefer, the purchaser would have discretion as to whether to perform the contract meaning what appeared to be a contract was illusory. The appeal by the purchaser was allowed on the grounds that the terms were included in the contract for the purchaser’s benefit to ensure the contract would be performed (at [6], [7]): Of course it is obvious enough that every such case must depend on the particular words of the contract in question, and that it is not profitable to compare with each other cases decided on different contractual provisions. However, it may be possible to state principles which will provide some guidance through the thicket of decisions. When the words of a condition state that a contract is subject to finance, or to suitable finance, or to satisfactory finance, the question immediately arises whether the test which is required to be applied is a subjective or an objective one. On the one hand, the contract may be conditional upon the purchaser obtaining finance which he finds sufficient or satisfactory – such finance as he honestly thinks he needs to complete the purchase. On the other hand, the condition may be fulfilled if finance is available which the purchaser ought to find sufficient, or which ought reasonably to satisfy him, even though he honestly, but unreasonably, regards it as insufficient or unsatisfactory. The fact that opinions may differ as to which of these two meanings is given to the words of the clause does not mean that the clause is uncertain. If the Court, in construing the contract, can decide which of the two possible meanings is that which the parties intended, there will be no uncertainty … It is only if the court is unable to put any definite meaning on the contract that it can be said to be uncertain.
This case illustrates that the court will look to the substance and reality of the agreement made to determine each parties’ rights and obligations under the bargain they have struck (at [28]): 214
Chapter 6 Contracts: Concepts of agreement Here the expressed intention of the parties was that the purchaser would obtain finance; his obtaining of finance on satisfactory terms was necessary to give the transaction its intended efficacy. The consequence would be that he had an obligation to do all that was reasonable on his part to obtain that finance. It would make for greater consistency to say that, if the purchaser is bound to act reasonably in seeking to obtain finance, he is bound to act reasonably as well as honestly in deciding whether the finance was satisfactory. So understood the special condition would preserve an even balance between the vendors and the purchaser. However, I have no need to decide the question. Here it makes no difference whether the purchaser was under an obligation to act honestly or honestly and reasonably in deciding whether the terms of an offer of finance were satisfactory [because finance had been obtained].
An order for specific performance was made.
“Subject to contract” agreements
MASTERS V CAMERON [6.740]
Masters v Cameron [1954] HCA 72; (1954) 91 CLR 353
The memorandum evidencing a sale of real property contained a clause providing that “This agreement is made subject to the preparation of a formal contract of sale which shall be acceptable to my solicitors on the above terms and conditions”. The sale fell through and a dispute arose as to which party was entitled to the deposit. If there was an enforceable contract, the vendor was entitled to the deposit. If there was not an enforceable contract the purchaser was entitled to the deposit. It was held that no contract had arisen. In that case, the High Court considered that agreements “subject to contract” could fall into three categories. Dixon CJ, McTiernan and Kitto JJ stated (at 360) that: Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
The High Court was of the view that in the first two cases there was a contract, but that in the third case the parties did not intend to be bound until the formal contract was prepared (at 360, 361): In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal 215
Business and the Law document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution … Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own … The parties, may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document … or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed …
In determining into which category a particular case falls, the High Court held (at 362) that: The question depends upon the intention disclosed by the language the parties have employed and no special form of words is essential to be used in order that there shall be no contract binding upon the parties before the execution of their agreement in its ultimate shape … Nor is any formula, such as “subject to contract” so intractable as always and necessarily to produce that result.
In this case, it was held that the agreement fell into the third category and, despite payment of a deposit, there was no binding contract between the parties. The common law evolves not merely by breeding new principles but also, when they are fully grown, by burying their ancestors. in Hong Kong Fit Shipping Co Ltd v Kawasaki [1962] 1 All ER 474 per Diplock JJ.
The law has also had to take into account the modern practice of entering a document which is often described as a Heads of Agreement. This issue is dealt with in Chapter 7.
Vague, uncertain and incomplete agreements [6.750] From time to time the courts are faced with a situation where the parties have clearly reached an agreement but the courts are unable to decide if the agreement has been broken. This may be because the terms of the offer are too vague for the courts to decide what they mean or because the agreement leaves out something that turns out to be important. This might arise where the parties have used wording such as “reasonable” but which cannot be linked to any external standard or the parties have referred to something which has to be agreed in the future. In some instances the court will be forced to admit that the agreement is not enforceable as a contract. However, courts will try as much as possible to find that commercial agreements are binding and are reluctant to find such agreements void for uncertainty. In particular, this might mean looking at any agreement on a clause-by-clause basis to see what can be salvaged as enforceable, rather than declaring the whole agreement as unenforceable. In Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 25 Young CJ pointed out that this was part of the commercial approach which courts should take to agreements, particularly where agreements have been entered into by parties experienced in commercial dealings. He was thus able to look at each issue which the trial judge found had not been agreed on and discover an explanation which for the most part gave effect to the transaction.
IN CONTEXT The general principles [6.760] The general principles that apply in cases where agreements are vague, uncertain and incomplete – the issues frequently overlap – were recently restated 216
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by Sackville JA (with whom Macfarlan and Gleeson JA agreed) in Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 (at [59]-[64]): First, in Australia the “objective” theory of contract has been accepted. Consequently, in determining whether a binding contract has been concluded, the law is concerned not with the parties’ subjective intentions, but with “the outward manifestations of these intentions”. Thus what matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. In a case where the ordinary process of offer and acceptance has taken place, the court inquires as to what a reasonable person would infer or deduce from observing the exchanges between the parties. Secondly, it is not necessary, in determining whether a contract has been formed, to identify a precise offer or acceptance; nor is it necessary to identify a precise time at which an offer or acceptance can be identified. The questions to be asked are: in all the circumstances can an agreement be inferred? Has mutual assent been manifested? What would a reasonable person in the position of the [plaintiff] and a reasonable person in the position of the defendant think as to whether there was a concluded bargain? Thirdly, an agreement that is incomplete will not give rise to an enforceable contract. As was said in Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd [1982] HCA 53: It is established by authority, both ancient and modern, that the courts will not lend their aid to the enforcement of an incomplete agreement, being no more than an agreement of the parties to agree at some time in the future.
Agreement is brought about by changing people’s minds – other people’s. Si Hayakawa.
An alleged contract will fail for incompleteness if, even though the parties have used clear language, a term which is regarded as essential as a matter of law has not been agreed. The principle was stated by Viscount Dunedin in May and Butcher Ltd v The King [1934] 2 KB 17: To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties. If the parties have not agreed on all essential terms, for example because they have left one such term to be settled by future agreement, the contract is incomplete no matter what the parties themselves may think. Moreover, if the parties have not reached consensus on the essential terms of the contract, there will be no binding contract notwithstanding that one of the parties has commenced work referable to the agreement. Depending on the circumstances, non-contractual remedies, for example on restitutionary principles, may be available but the contract itself is incomplete and therefore unenforceable. Fourthly, for an agreement for the supply and sale of goods to constitute an enforceable contract, the parties must agree as to price, although they may leave the price to be determined by a third person or by an agreed mechanism. Thus, if a contract for the supply or sale of goods expressly provides for the price to be agreed between the parties, there is no concluded contract.
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SCAMMELL AND NEPHEW LTD V HC AND JG OUSTON [6.770]
Scammell and Nephew Ltd v HC and JG Ouston [1941] AC 251
A written agreement relating to the purchase of a truck required that a deposit be paid and that the balance of the purchase price be paid “on hire-purchase terms over a period of two years”. It was held that this agreement was not enforceable as a contract because the court was unable to give the quoted phrase any definite meaning. This was explained (per Lord Wright, at 268) as follows: the language used was so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention. The object of the court is to do justice between the parties and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words, considered however broadly and untechnically and with due regard to all the just implications, fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract. Such a position is not often found. But I think that it is found in this case. My reason for so thinking is not only based on the actual vagueness and unintelligibility of the words used, but is confirmed by the startling diversity of explanations, tendered by those who think there was a bargain, of what the bargain was.
It is clear from this passage that the courts are reluctant to deprive agreements which the parties clearly intended to be binding from having contractual effect, and any difficulty in interpreting the parties’ intention will not absolve the court from the responsibility to determine that agreement.
HILLAS & CO LTD V ARCOS LTD [6.780]
Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494
The contract was for the supply of “22 000 standards of softwood goods of fair specification over the season 1930” and included an option for a further 100,000 standards in 1931. It was held that the agreement was enforceable as a contract since the meaning of these terms could be determined by reference to the previous dealings between the parties. The court commented (at 503 per Lord Wright) that:
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Chapter 6 Contracts: Concepts of agreement Business people often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects.
If a term of the agreement that is vague or meaningless can be deleted without undermining the basis of the contract, the court will sever the term and enforce the rest of the contract (Whitlock v Brew (1968) 118 CLR 445).
NICOLENE LTD V SIMMONDS [6.790]
Nicolene Ltd v Simmonds [1953] 1 QB 543
A written contract included a provision that stated that the contract was subject to the “usual conditions of acceptance”. The court deleted the provision from the contract on the basis that there were no “usual conditions of acceptance” and deletion of the provision did not affect the rest of the contract. [6.800] Similar principles apply where the terms of the agreement are clear but the agreement leaves out something that turns out to be important in a subsequent dispute. In Scammell v Ouston [1941] 1 AC 251, in which the court held that the meaning of the phrase “on hire-purchase terms” was too uncertain to be enforced, Lord Wright held that the contract was also unenforceable due to being incomplete (at 268): But I think the other reason, which is that the parties never in intention nor even in appearance reached an agreement, is a still sounder reason against enforcing the claim. In truth, in my opinion, their agreement was inchoate and never got beyond negotiations. They did, indeed, accept the position that there should be some form of hire-purchase agreement, but they never went on to complete their agreement by settling between them what the terms of the hire-purchase agreement were to be. The furthest point they reached was an understanding or agreement to agree upon hire-purchase terms.
Successful collaborative negotiation lies in finding out what the other side really wants and showing them a way to get it, while you get what you want. Herb Cohen.
There are some common types of documents where the issue of incompleteness might arise: • agreements that are “subject to contract” were discussed at [6.740] (see Masters v Cameron); • agreements to agree are not enforceable because they clearly do not constitute a concluded bargain leaving nothing further to be settled between the parties.
When a man repeats a promise again and again, he means to fail you. Desmund Fuller.
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MAY & BUTCHER LTD V THE KING [6.810]
May & Butcher Ltd v The King [1934] 2 KB 17
A written agreement stated that the prices on which the parties agreed to deal “shall be agreed upon from time to time”. It was held that the agreement was not enforceable since there were no objective criteria or agreed formula by which the price could be made certain. A passing familiarity with the law of contracts is all you need to hold yourself out as a commercial lawyer. Leases, loan agreements, trusts and lots of other documents with highfaluting names are really just contracts. This should be borne in mind if another lawyer presents you with some document and you have no idea what it is. If it requires signing, and it isn’t either a will or something that has to be filed in court, you can call it a contract without fear of being laughed at. White and Jenks, The offıcial lawyer’s handbook (Harriman House, 1992).
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Although an “agreement to agree” is not an enforceable contract, an agreement to negotiate may be enforceable. This is further discussed in Chapter 7.
6.5 INTENTION TO CREATE LEGAL RELATIONS [6.820] An essential element for a valid and enforceable contract is an intention to create legal relations – that the parties intend to be legally bound by their agreement. This requirement applies to all contracts but is rarely an issue in practice because of presumptions – that can be rebutted – that household, domestic and social arrangements are not intended to be legally binding while business agreements are presumed to be legally binding. Both presumptions are merely starting points for analysis and evidence may be produced to rebut the presumption. Of course some situations are more difficult to classify and the court will determine whether or not there is contractual intention from the surrounding circumstances. It is clear that in many situations an offer is accepted without any intention that the agreement so reached should carry legal consequences should one person fail to abide by the agreement. The most obvious examples are the day-to-day arrangements made by members of a household. The courts have recognised this by a presumption that agreements between family members are not intended to be legally enforceable. On the other hand, in the case of agreements arrived at in a commercial context, the courts have presumed that such agreements are normally intended to be legally enforceable. Both presumptions are merely starting points for analysis and evidence may be provided to rebut the presumptions as is discussed below. However, the High Court has recently stated that less emphasis should be placed on these presumptions and that they should be looked at as part of the surrounding circumstances; that is, they were there to identify the party who had the onus of proof rather than form a hard and fast rule.
Chapter 6 Contracts: Concepts of agreement
ASHTON V PRATT [6.830]
Ashton v Pratt [2015] NSWCA 12
The ex-mistress of one of Australia’s richest men claimed that in a conversation in November 2003 Mr Pratt promised to provide $2.5 million on trust for each of Ms Ashton’s two children, pay her an allowance of $500,000 per year, as well as $36,000 for rent and $30,000 per year for travel expenses in consideration for her not returning to the escort industry but providing services to him while in Sydney for one or two nights a week. The primary issues for the court were whether the parties intended to create legal relations and whether terms were sufficiently certain to create a binding contract. The Court of Appeal concluded it was not apparent that either party intended the promises would be legally enforceable. The Court held that the parties did not intend to create legal relations, and that even if they did, the contract would be void for uncertainty due to incompleteness in a number of “essential elements” which could not be cured by a Court implying terms of reasonableness (at [82]): Although it may be readily inferred from the context in which the conversations took place that it was intended that Ms Ashton would occupy a position which could be described as Mr Pratt’s mistress, apart from concentrating on Mr Pratt’s needs and wants there is no delineation of the extent of Ms Ashton’s obligations. There was no evidence to suggest that the position of mistress imposes any particular obligation on a person occupying that position. Reasonable persons would not expect that question to be determined by a court.
ERMOGENOUS V GREEK ORTHODOX COMMUNITY OF SA INC [6.840]
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8
The defendant appointed the plaintiff as Greek Orthodox Archbishop of Australia. It paid him an agreed salary. When his employment was terminated, he sued to recover payments he alleged were due for annual and long service leave. The defendant argued (inter alia) that there was a presumption that agreements between Ministers of Religion and their churches relating to remuneration were not legally enforceable. This presumption it was argued stemmed from a number of cases that decided that Anglican clergy were not “employees” of the Church of England due to the relationship between the Church and its clergy under Canon Law. It was held that no such presumption existed and that there was in fact a contract of employment between the Archbishop and the defendant. There was a danger that a proposition such as not presuming an intent to enter legal relations could be equal to a presumption that an agreement made between a clergyman about remuneration would not give rise to an enforceable contract.
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Social and domestic arrangements [6.850] In social and domestic agreements the law presumes that the parties did not intend legal obligations to arise from their arrangement.
BALFOUR V BALFOUR [6.860]
Balfour v Balfour [1919] 2 KB 571
Mr and Mrs Balfour entered into an arrangement while on holiday in England that he would return to Sri Lanka while she would stay on in London due to health reasons and that Mr Balfour would pay his wife £30 per month until she returned to Sri Lanka. Mr Balfour paid this amount for a while but when his wife failed to return to Sri Lanka he stopped. His wife sued. Her action failed on the basis that at the time the arrangement was made the parties did not intend that the agreement would be legally enforceable. Atkin LJ noted that “the ordinary example is where two parties agree to take a walk together, or where there is an offer and an acceptance of hospitality”. In relation to such agreements, Atkin LJ commented (at 578) that: Nobody would suggest in ordinary circumstances that those agreements result in what we know as a contract, and one of the most usual forms of agreement which does not constitute a contract appears to me to be the arrangements which are made between husband and wife. It is quite common, and it is the natural and inevitable result of the relationship of husband and wife, that the two spouses should make arrangements between themselves agreements such as are in dispute in this action agreements for allowances, by which the husband agrees that he will pay to his wife a certain sum of money, per week, or per month or per year, to cover either her own expenses or the necessary expenses of the household and the children of the marriage, and in which the wife promises ether expressly or impliedly to apply the allowance for the purpose for which it is given. To my mind those agreements, or many of them, do not result in contracts at all … They are not contracts, and they are not contracts because the parties did not intend that they should be attended by legal consequences … They are not sued upon, not because the parties are reluctant to enforce their legal rights when the agreement is broken, but because the parties, in the inception of the arrangement, never intended that they should be sued upon. Agreements such as these are outside the realm of contracts altogether.
The presumption that social and domestic agreements are not intended to be legally enforceable can be rebutted by reference to the context and the consequences of the agreement.
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WAKELING V RIPLEY [6.870]
Wakeling v Ripley (1951) 51 SR (NSW) 183
The defendant, an elderly and wealthy man living near Sydney, urged his sister and her husband who were living in England to return to Australia to live with him in return for a home, a living and virtually all his property on his death. After much correspondence, the plaintiffs moved to Australia but less than a year later, the defendant refused to uphold the original agreement. It was held that presumption had been rebutted and the agreement was enforceable as a contract. The reason given (per Street CJ at 187) was that: [There] is ample evidence that the plaintiffs were insistent on having the matter put on a clear footing and in the form of a legal bargain between them before they agreed to adopt the suggestion that they should come out and live in Australia. The consequences for the plaintiffs were so serious, in taking the step that they did, that it would seem obvious that they were anxious to get a definite assurance and a definite agreement as to the provision that was to be made for them, and accepting, there being no evidence to the contrary, their account of the letters which they wrote to the defendant, and looking to the terms of the replies. I think that the parties did intend to enter into a binding and enforceable contract.
Social agreements [6.880] There is nothing to prevent an agreement between neighbours being legally binding, even though discussions between them may be held in an informal manner.
MCKEAND V THOMAS [6.890]
McKeand v Thomas [2006] NSWSC 1028
McKeand and Thomas were neighbours. When Thomas had built their home they made arrangements for various services to be supplied by underground connections laid in a trench parallel to the border of McKeand’s land but just inside their own property. At that time, McKeand’s services were supplied via aerial connections across their own property. As part of a redevelopment proposal, McKeand wanted to lay the services cabling in the trench on Thomas’ land. McKeand and Thomas had a conversation about this in which McKeand alleged that Thomas agreed to this and to grant an easement for services. When McKeand had the documents prepared, Thomas refused to sign them, claiming that no such agreement had been reached. It was held on this issue that the conversation was on a serious topic and that it was intended to be acted on without formalisation within days. McKeand was going to instruct the builder to lay the cables forthwith in the trench and Thomas should have realised that McKeand relied on the agreement to have services connected to his home. The seriousness to the promisee of taking steps envisaged by the contract is a proper matter to take 223
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into account in deciding if an agreement has been reached.
Commercial agreements [6.900] There is a strong presumption that commercial agreements are intended to create a legal relationship. However, the presumption can be rebutted in appropriate cases. One example is where an “honour” clause was inserted in the conditions attached to a commercial tipping competition.
JONES V VERNONS POOLS LTD [6.910]
Jones v Vernons Pools Ltd [1938] 2 ALL ER 626
A clause in a document issued by a football pools company stated that “it is intended and agreed that [this transaction] shall not … give rise to any legal relationship … or be legally enforceable … but all such arrangements, agreements and transactions are binding in honour only”. It was held that the “honour clause” rebutted the presumption of an intention to create legal relations and therefore no enforceable contract arose. … the gentleman’s agreement, reported to have been defined by Mr Justice Viasey as “an agreement which is not an agreement, made between two persons, neither of whom is a gentleman, whereby each expects the other to be strictly bound without himself being bound at all”. Megarry RE, A second miscellany at law: A further diversion for lawyers and others (Wildy, Simmonds and Hill, 1933).
The issue of intention to create legal relations can arise in the business context when business people make arrangements casually. In such cases, issues of uncertainty, incompleteness, and lack of contractual intent frequently overlap. These issues are further discussed in Chapter 7.
6.6 CONSIDERATION [6.920] In addition to the need for a finalised agreement it is a requirement that each party must provide consideration. Where this requirement is in doubt, the courts examine the situation from the point of view of the person (promisee) who is seeking to enforce the agreement. The crucial question is whether the promisee has provided any consideration in exchange for the promise he is attempting to enforce. If he has, then the promise may be enforced under the rules relating to simple contracts. If they have not provided any consideration, the court will describe the promise as a gratuitous promise. Gratuitous promises will only be enforced if: • they are contained in a deed; • or in circumstances where the doctrine of promissory estoppel applies (see [6.1180]); or • in a commercial context where they amount to misleading or deceptive conduct enforceable under the ACL. There are certain rules relating to the notion of consideration which are discussed below. These include:
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• consideration can be executed but not past; • consideration must be suffıcient but need not be adequate.
What is consideration? [6.930] Consideration may be described as the “price” paid in exchange for the promise that the promisee is attempting to enforce. Although it may be a sum of money, consideration can be anything that provides some benefit to the promisor or imposes some burden or detriment on the promisee. In most cases, it will be a promise in return for a promise. The two most cited definitions of consideration are Currie v Misa (1875) LR 10 Exch 153 per Lush J: A valuable consideration in the sense of the law may consist either in some rights, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.
And Dunlop v Selfridge [1915] AC 847 per Lord Dunedin: An act or forbearance of one party, or the promise thereof, is the price for which the promise of the other is bought, and the promise thus given for value is enforceable.
The definition of consideration that was adopted by Bowen LJ in the English Court of Appeal in the Carbolic Smoke Ball case was as follows (at 271): Any act of the plaintiff from which the defendant derives a benefit or advantage or any labour, detriment, or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant.
One of the issues raised in the Carbolic Smoke Ball case was whether there was a contract between the company and Mrs Carlill because she had provided no consideration (ie nothing in return) for Carbolic’s promise to pay her the £100 reward. The court found that she had provided such consideration by: • actually using the smoke ball because this provided a benefit to the company because this use promoted their sales; • undergoing the inconvenience of using the smoke ball which she was required to do before she was eligible for the reward.
No-one understands this concept. Why they call it consideration, when it has nothing to do with being nice to someone, is one of the law’s well-shrouded mysteries. Nevertheless, at least nominal consideration always has to be there. According to tradition, the delivery of a mere peppercorn would be sufficient consideration for a contract to transfer Canary Wharf complete with a “Build your own Jubilee Line” kit. (In practice, of course, no-one in their right mind would blow a whole peppercorn that way.) White and Jenks, The offıcial lawyer’s handbook (Harriman House, 1992).
Whatever the consideration in a particular case, it must be given in exchange for the promise. The concept of the bargain is central to the law of contract and the rule that consideration must be given in exchange for the promise is integral to this concept. As Isaacs J stated in R v Clarke [1922] HCA 47 quoting the American jurist Oliver Wendell Holmes: The root of the whole matter is the relation of reciprocal conventional inducement, each for the other, between consideration and promise.
The consideration required to support the promise must of course be requested, expressly or impliedly, by the promisor. The consideration is the “price” the promisor stipulates for the promise. If A says that he will give his car to B for nothing in return that is a 225
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gratuitous promise. If B later says that to A that he wants to give A some money in return, this does not amount to a contractual arrangement because A never asked B for anything. The two greatest and most characteristic achievements of English lawyers – the law of trusts and the doctrine of valuable consideration. Strahan JA, Bench and bar of England.
In practice – as in the case of negotiations leading to a concluded agreement for the sale of a car at a particular price – the consideration requested to support the promise is settled through the normal bargaining process, and ultimately in the offer that is accepted. The proposition that consideration must “move from the promisee” does not mean that the consideration must “move to the promisor”. The promisor may stipulate as consideration that the promisee provide some benefit to a third party. A friend’s promise to give you $X if you paint Y’s house is a promise given for value which you can enforce.
“Executed”, “executory” and “past” consideration It is the essence of a consideration, that, by the terms of the agreement, it is given and accepted as the motive or inducement of the promise. Conversely, the promise must be made and accepted as the conventional motive or inducement for furnishing the consideration. The root of the whole matter is the relation of reciprocal conventional inducement, each for the other, between consideration and promise. Oliver Wendell Holmes, The common law (1881).
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[6.940] Although consideration – the “price” for the promise – may have been performed (eg in the Carbolic Smoke Ball case, through using the smoke ball as requested), it may envisage an act yet to occur (eg a promise). Consideration is said to be executed if the act which constitutes the consideration has been performed or executory if it is an act yet to occur. For example, A promises to sell his motor car for $10,000 to B. Before B pays A, the consideration is executory. When B pays A, the consideration becomes executed. However, consideration is not recognised by the law as having any value in the eyes of the law if it is past, which is where the act which is said to constitute the consideration has pre-dated the promise. “Past” consideration is discussed at [6.1030].
Acts, promises and forbearances [6.950] It has already been stated that consideration can be an act or a promise. Consideration can also be constituted by a forbearance which may be defined as deliberately and intentionally not doing a particular act or exercising a particular right. In Dunton v Dunton (1892) 18 VLR 114, for example, the plaintiff successfully sued her ex-husband for not honouring his promise to pay her a monthly sum provided that she conducted herself with “sobriety, and in a respectable, orderly and virtuous manner”. Within limits imposed by the criminal law Mrs Dunton had a right to conduct herself as she chose to, and by giving up this right at her ex-husband’s request she provided consideration to support her ex-husband’s promise. A particular example of forbearance as consideration is a forbearance to sue. A party who is being sued or against whom legal proceedings have been threatened may suggest that the action not be proceeded with, or be withdrawn, in return for eg a payment of a particular amount. Although originally a plaintiff’s forbearance from bringing an honest claim was not good consideration if the court considered that the claim would have failed, this rule has been modified to accommodate the “obvious desirability of encouraging parties to compromise disputes in an honest fashion wherever possible”: Australian contract law reporter (CCH, subscription service) at [8-160].
Chapter 6 Contracts: Concepts of agreement
Today a plaintiff arguing a forbearance to sue as consideration for the defendant’s promise must prove, in relation to the claim that has been surrendered, that: • It was reasonable and not vexatious or frivolous. • There was an honest belief in the chance of its success. • No facts had been concealed from the other party, which might have affected the validity of the claim. These limits are necessary, otherwise “it would be possible for unscrupulous or absurdly unreasonable persons to threaten litigation and thus secure a promise to buy them off which would become enforceable once the baseless claim was expressly surrendered”: Australian contract law reporter (CCH, subscription service) at [8-160].
A practical concept [6.960] The proposition that the consideration found in Carbolic Smoke Ball was relatively artificial would meet with little argument from the New Zealand Court of Appeal, which suggested in Aotearoa International Ltd v Scancarriers A/S [1985] 1 NZLR 513 that consideration will be found “oneway or another where it is reasonable to infer that the parties to a commercial transaction intended to enter into a binding commitment”. This proposition simply reflects the essentially practical nature of the law of contract, which is dedicated to the underlying proposition that agreements intended by the parties to be binding should be upheld if possible. The courts are committed to upholding, not destroying bargains.
IN CONTEXT Abolition of the doctrine of consideration [6.970] The Draft Australian Law of Contract – a draft codification of the general rules of contract law recommends the abolition of the doctrine of consideration: The doctrine of consideration has long been out of date and has been reduced to a shadowy existence by such useless and confusing doctrine. It is a requirement of formation only in common law countries, and is not included in any of the model codes, except the Restatement. It has ceased to serve any useful purpose and its abolition is long overdue.
Consideration must be sufficient but need not be adequate [6.980] Although the words “adequate” and “sufficient” are normally used synonymously, they have been given distinct meanings in discussions of consideration. The proposition that consideration need not be adequate means that the law does not require that the “price” is of equal value to the promise for which it is bought. It reflects the “freedom of contract” principles which shaped the law of contract in its formative years that the parties can make
The language of benefit and detriment is, and I believe long has been, out of date. So is the idea that consideration must be an economic benefit of some kind. All that is necessary is that the defendant should, expressly or impliedly, ask for something in return for his promise, an act or a promise by the offeree. If he gets what he has asked for, then the promise is given for consideration unless there is some vitiating factor. Though lip-service has been paid to the notions of benefit and detriment, they have no substantial meaning, in the light of the principle that the court will not inquire into the adequacy of the consideration. Smith JC, “The law of contract – alive or dead?” (1979) 13 LT 73.
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their own contract on their own terms and that it is not the role of the courts to assess whether the consideration is adequate in the sense of being appropriate. The term “peppercorn” consideration is often used today to signify “token” consideration. There are many examples of “peppercorn” or “token” consideration. However, while the general principle that the courts do not look to the adequacy of consideration applies, this is eroded in two important areas; namely, by the equitable doctrine of unconscionability and by legislative regimes designed to protect consumers and small business from unfair or unconscionable contracts (see Chapter 19).
CHAPPELL & CO LTD V NESTLÉ CO LTD [6.990]
Chappell & Co Ltd v Nestlé Co Ltd [1960] AC 87
As a promotional technique, Nestle, a chocolate manufacturer, offered the public a record of a popular tune for one shilling and sixpence plus the wrappers of three bars of Nestlé’s chocolate (valued at sixpence each). Copyright in the tune was held by Chappell, and under the Copyright Act 1956 (UK) any person could use a copyright tune provided that the owner of the copyright tune was paid a royalty at the prescribed rate of 6.25 per cent of the “ordinary retail selling price”. Nestlé offered to pay royalties of 6.25 per cent of the one shilling and sixpence but Chappell argued that the true retail price was three shillings – the one shilling and sixpence plus the value of the three chocolate wrappers (one shilling and sixpence). Nestlé’s argument, that the wrappers were not part of the consideration because they were valueless and discarded, failed. The record was sold to increase sales of chocolate and the wrappers were part of the consideration. Lord Somerville held (at 114, emphasis added) that: I think they are part of the consideration. They are so described in the offer. “They”, the wrappers, “will help you to get smash hit recordings”. They are so described in the record itself – “all you have to do to get such new record is to send three wrappers from Nestlé’s 6d milk chocolate bars, together with postal order for 1s 6d”. This I would have thought irrelevant. A contracting party can stipulate for what consideration he chooses. A peppercorn does not cease to be good consideration, if it is established that the promisor does not like pepper and will throw away the corn.
Consideration must be sufficient [6.1000] Although consideration need not be adequate it must be suffıcient in the sense of being of some value in the eyes of the law. There are several well-established categories where the alleged consideration is regarded as being of no value in the eyes of the law. These include situations where the alleged consideration is: • a promise that is so vague as to be “illusory”; • an act that predates the promise; 228
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• performance of a public duty; • performance of a previous contractual obligation owed to the same party; • part payment of an existing debt. It was noted at [6.750] that where an agreement is so vague that the courts are unable to determine its meaning they will refuse to enforce the agreement. It was also noted that the courts generally presume that family arrangements are not intended to create legal relationships. In some of the older cases, such agreements were not enforced on the basis that the consideration provided by the promisee was so vague as to be “illusory”.
WHITE V BLUETT [6.1010]
White v Bluett (1853) 23 LJ Ex 36
A father promised to excuse a debt owed to him by his son if the son promised “not to bore his father”. The son had often complained that he had been treated more harshly than his brothers. It was held that the father’s promise could not be enforced on the grounds that the son’s promise was too vague to amount to consideration for the father’s promise.
This case can be contrasted with the following case.
DUNTON V DUNTON [6.1020]
Dunton v Dunton (1892) 18 VLR 114
Mr Dunton agreed to pay his divorced wife a certain amount each month provided that she conducted herself “with sobriety, and in a respectable, orderly and virtuous manner”. When Mr Dunton refused to pay the amount, Mrs Dunton sued him for breach of contract. She was successful. Two of the three judges held that her promise to give up the right to behave in any fashion she chose was sufficiently certain to constitute consideration on her part. On the other hand the dissenting judgment also seems quite logical (at 117 per Hood J (dissenting)): A promise in order to be a good consideration must be such as may be enforced. It must, therefore, be not only lawful, and in itself possible, but it must also be reasonably definite. Now, a promise by a woman that she will conduct herself with sobriety, and in a respectable, orderly, and virtuous manner, seems to me to be about as vague a promise as can well be imagined. What 229
Business and the Law are the acts which she is to do or to refrain from doing? What is the meaning to be attached to the words if looked at in the light of a definite promise? A promise by a woman that she will conduct herself with sobriety may mean that she will not drink intoxicating liquor at all, or that she will not get drunk, or it may mean that she may do either so long as she does not do so in public. So with conducting herself in a virtuous manner. Is that in public or in private, and does it include anything short of unchastity? As to respectability and order they are words of such varying meaning that I cannot understand any agreement about them. All this makes me unable to see any promise whatever made by the plaintiff in this document, and in any event forces me to the conclusion that such a promise is too uncertain to form the consideration for any legal agreement.
Past acts cannot be sufficient consideration for a later promise [6.1030] The courts will refuse to recognise as consideration acts or promises which predate the promise that is sought to be enforced. This attitude is sometimes summarised in the principle that “past consideration is no consideration”.
ROSCORLA V THOMAS [6.1040]
Roscorla v Thomas (1842) 3 QB 234
Roscorla purchased a horse from Thomas. After the sale had been concluded, Roscorla asked for an assurance that the horse was sound and Thomas assured him that the horse was “sound and free from vice”. When he later discovered that the horse was vicious, Roscorla sued for breach of contract. The action failed. It was held that Thomas’ assurance was not part of the purchase contract, which had been concluded prior to the assurance being given. As Roscorla had provided no consideration in return for the assurance, this promise could not be enforced against Thomas.
However, if that which was done in the past was done at the promisor’s request and with the intention that it would be compensated, the consideration, although “past”, may nevertheless support the later promise that guarantees the amount. In Re Casey’s Patents [1892] 1 Ch 104, for example, Bowen LJ held that: [A] promise to render future services, if an effectual promise, is certainly good consideration … the fact of a past service raises an implication that at the time it was rendered it was to be paid for, and if it was a service which was to be paid for, when you get in the subsequent document a promise to pay, that promise may be treated either as an admission which evidences or as a positive bargain which fixes the amount of that reasonable remuneration on the faith of which the service was originally rendered.
A promise merely to perform a public duty is insufficient [6.1050] A promise to perform an act that one is already obliged to perform under some public duty is not recognised as good consideration. 230
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If, however, the promise is to do something that goes beyond the obligations imposed by law, the additional performance may constitute sufficient consideration.
GLASBROOK BROS LTD V GLAMORGAN COUNTY COUNCIL [6.1060]
Glasbrook Bros Ltd v Glamorgan County Council [1925] AC 270
The owners of a colliery sought police protection during a strike. The local police authority formed the view that the duty of the police to preserve public order would be met by provision of a mobile patrol, but the colliery owner wanted a greater police presence and agreed to pay for the extra costs associated with a continuous police presence. The House of Lords held that the local police authority could sue on the colliery owner’s promise. They provided good and sufficient consideration by doing more than the Police Superintendent in charge honestly and reasonably believed was necessary to perform their existing legal duty to preserve public order.
A promise to perform a previous contractual obligation owed to the same party is insufficient [6.1070] A promisee’s actual or promised performance of a pre-existing contractual duty does not constitute a good and sufficient consideration for the promisor’s act, promise or forbearance. In Wigan v Edwards (1973) 47 ALJR 586, the High Court stated (per Mason J at 594) the general rule as follows: The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promisee under that contract, and it is to do no more than the promisor is bound to do under the contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration. And it gives no comfort to a party who by merely threatening a breach of contract seeks to secure an additional contractual benefit from the other party on the footing that the first party’s new promise of performance will provide sufficient consideration for that benefit.
Here’s the rule for bargains: Do other men, for they would do you. That’s the true business precept. Charles Dickens.
However, such a promise may be regarded as good consideration where it can be seen as conferring a commercial benefit on the promisor. This view was adopted in the UK in Williams v Raffey Bros & Nicholls (Contractors) Ltd [1999] 1 QB 1 which has been followed in the Supreme Court of NSW (Santow J) in Musumeci v Winadell (1994) 34 NSWLR 723 (see [6.1090]).
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STILK V MYRICK [6.1080]
Stilk v Myrick (1809) 170 ER 1168
A ship’s captain promised to share the wages of two deserters among the remaining crew if they agreed to sail the ship home short-handed. It was held that the captain’s promise could not be enforced. The reason for this (per Lord Ellenborough at 1169) was that: Before they sailed from London [the crew] had undertaken to do all that they could under all the emergencies of the voyage … The desertion of a part of the crew is to be considered an emergency of the voyage as much as their death; and those who remain are bound by the terms of their original contract to exert themselves to the utmost to bring the ship in safely to her destined port. Therefore … I think [the agreement to share the wages of the deserters] is void for want of consideration.
MUSUMECI V WINADELL PTY LTD [6.1090]
Musumeci v Winadell Pty Ltd (1994) 34 NSWLR 723
The plaintiff tenant took a five-year lease of premises in a shopping centre to operate them as a fruit shop from the defendant landlord. Two years later, the landlord let another shop in the centre to another fruit merchant who was part of a chain. There was nothing in the plaintiff’s lease to prevent the defendant from doing this, but as a result the plaintiff’s business suffered considerably. The defendant agreed to reduce the rent payable under the existing lease by one-third but purported to terminate this arrangement when negotiations for a new lease broke down. The Supreme Court of NSW (Santow J) held that that there was a binding agreement to vary the lease The consideration for the landlord’s promise was the practical benefit of having the plaintiff in place as a viable tenant paying a reduced rental rather than having an empty shop.
However, as with promises to perform a public duty, if the promise involves something more than is required under the previous contract, it will be treated as sufficient consideration.
HARTLEY V PONSONBY [6.1100] 232
Hartley v Ponsonby (1857) 119 ER 1471
Chapter 6 Contracts: Concepts of agreement
The facts were similar to those in Stilk v Myrick (see [6.1080]) except that in this case 17 of the crew of 36 refused to sail the ship home (and were sent to prison), and of the 19 remaining crew only five were able seamen. The captain promised to pay an additional sum on top of their wages to induce the remaining able seamen to sail the ship home. This promise was held to be enforceable. The reason given (per Lord Campbell CLJ at 1473) was that: [F]or the ship to go to sea with so few hands was dangerous to life. If so, it was not incumbent on the plaintiff to perform the work … there was therefore a consideration for the contract; and the captain made it without coercion. This is therefore a voluntary agreement upon sufficient consideration.
In the above cases the promises were between the parties to an existing contract. In cases where A and B enter into an agreement under which A promises to perform the obligations under a contract with C, A’s promise is sufficient consideration to support a promise by B.
SHADWELL V SHADWELL [6.1110]
Shadwell v Shadwell (1860) 142 ER 62
Mr Shadwell promised to marry (the future) Mrs Shadwell in return for her promise to marry him (ie they got engaged). When Mr Shadwell’s uncle heard about this, he promised to pay his nephew an annual allowance until his income reached a certain level if the marriage went ahead as planned. The uncle paid the allowance for some years and then stopped whereupon his nephew sued him for breach of contract. The action was successful. It was held that although the nephew merely carried out an existing contractual obligation to marry his fiancee, there was consideration for the uncle’s promise through the benefit to him (the marriage was “an object of interest to a near relative”) and a detriment to the nephew in that, if he changed his mind, there was the possibility that two people might sue him rather than one.
IN CONTEXT Breach of promise to marry [6.1120] The action for breach of a promise to marry which existed under the common law was abolished by legislation in 1976 (s 111A of the Marriage Act 1961 (Cth)). Thus it is no longer possible to obtain damages for a broken engagement.
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Part payment of an existing debt Contract law has such widespread application in a society such as ours, that courts do well to simplify its concepts. J & C Reid Pty v Abau Holdings Pty Ltd (1988) NSW Conveyancing Reports 55416 per Kirby P.
[6.1130] A common example of a forbearance is a promise by A not to take or continue legal action against B in return for B’s promise of some, usually undisclosed, payment. However, a complication arises where A’s legal claim against B is a debt that has already fallen due. Imagine that the debt is $100. If A promises not to take legal action to recover this amount from B in return for B’s promise to pay $60, the court will hold that B has failed to provide any consideration for A’s promise not to sue for $100. Therefore, unless A’s promise is in a deed or the doctrine of promissory estoppel applies (see [6.1180]), A can change their mind and sue for the outstanding $40. Usually the debt arises under a previous contract but the same rules apply where the debt arises under a court judgment in which case the debt incurs interest at a standard rate from the date of the judgment.
FOAKES V BEER [6.1140]
Foakes v Beer (1884) 9 App Cas 605
As a result of a previous court case, Mrs Beer had obtained judgment against Dr Foakes for a particular sum. The parties agreed that Dr Foakes would pay £500 immediately and the balance in instalments, and that Mrs Beer would not take “any proceedings whatever on the judgment”. After Dr Foakes paid all the instalments as agreed, Mrs Beer sued him for interest on the basis that all judgments bear interest from the date of judgment. Despite Dr Foakes acting on Mrs Beer’s promise (which was, in effect, that she would allow payment by instalments and not pursue her claim for interest), it was held that he had provided no consideration as his promise to pay the judgment debt was a contractual obligation he already owed pursuant to the original judgment. Lord Blackburn, acknowledged (at 622) that: All men of business whether merchants or tradesmen, do every day recognise and act on the ground that prompt payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the whole. Even where the debtor is perfectly solvent and sure to pay at last, this often is so. Where the credit of the debtor is doubtful it must be more so. Commercial convenience nevertheless did not override the time-honoured rule that one party’s act or promise given to discharge the original obligation cannot constitute good and sufficient consideration for the other party’s promise not to demand strict performance of that obligation.
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[6.1150] The time-honoured rule that was referred to by Lord Blackburn is known as the rule in Pinnel’s case (1602) 5 Co. Rep. 117a, which was decided in England in 1605 and is perhaps the oldest court case still cited in Australia. The rule in Pinnel’s case has not escaped criticism for the obvious reason that it disregards commercial convenience. In Couldery v Bartrum (1881) 19 Ch D 394, Jessel MR said (at 399) that: According to English common law, a creditor might accept anything in satisfaction of his debt except a lesser amount of money. He might take a horse or a canary, or a tomtit if he chose and that was accord and satisfaction; but, by a most extraordinary peculiarity of the English Common Law, he could not take 19 shillings and sixpence in the pound.
D & C BUILDERS LTD V REES [6.1160]
D & C Builders Ltd v Rees [1966] 2 QB 617
A small building firm accepted a debtor’s offer of £300 in full satisfaction of a debt of £482, after being told that if they did not accept the lesser amount they would get nothing. Because of financial desperation they accepted a cheque for £300 in full satisfaction for the debt of £482. On the law that had applied prior to this decision it would have been held that the promise to accept a lesser sum would have been enforceable because consideration had been provided by paying in a different manner from that originally required (ie a lesser payment by cheque as opposed to the full sum by cash). The Court of Appeal nevertheless held that the building firm could recover the balance, deciding that, under current commercial practice, payment by cheque did not constitute fresh consideration. Lord Denning MR stated (at 623) that: No sensible distinction can be taken between payment of a lesser sum by cash and payment of it by cheque … In point of law payment of a lesser sum, whether by cash or by cheque, is no discharge of a greater sum.
[6.1170]
The rule in Pinnel’s case does not apply in the following circumstances:
• If the creditor agrees to substitute “fresh” or different consideration for the original consideration – eg payment of a lesser amount at an earlier date or a different place, or if something else is substituted for the original consideration – the promise is enforceable because consideration has been provided to support it. • If a “composition with creditors” is entered into. If the majority of creditors of a particular debtor agree to accept a lesser sum in full satisfaction of their debts, the agreement is binding on them all. This rule, which is based on the principle that to allow an individual creditor to resile from the agreement would amount to a fraud on the other creditors, is now enshrined in Pt X of the Bankruptcy Act 1966 (Cth).
… novelty of argument is not a reason for judicial inaction where the law permits action and justice requires it. X v Amalgamated Services Pty Ltd (1987) 9 NSWLR 575 per Kirby P.
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• If payment of a lesser sum is by a third party on the understanding that the creditor will accept a lesser sum in full satisfaction. The justification for this exception is that if the creditor were able to sue the debtor for the balance owing this would amount to a fraud by the creditor on the third party. • If the parties record their agreement in a deed since promises contained in a deed are enforceable whether or not they are supported by consideration. • If the doctrine of promissory estoppel applies (see [6.1180]).
Promissory estoppel In the High Trees case, Denning J sought to tap a slender stream of authority which had flowed in equity since the judgment of Lord Cairns in 1877 in Hughes v Metropolitan Railway. Seddon NC and EllinghausMP, Cheshire and Fifoot’s Law of contract (9th ed, LexisNexis) p 90.
[6.1180] The doctrine of promissory estoppel was developed as a response to the unfairness that the strict rules that apply to the formation of a contract – in particular, the requirement of consideration – means that where a person makes a promise, which is not supported by consideration, he or she may revoke that promise at any time, no matter whether her or his conduct is unfair. Thus if A promises B to keep an offer open for a certain period, there is nothing to stop A from revoking the offer at any time before that time is up unless B has given some consideration to A to keep the offer open for the required time. Where the doctrine applies, such a person will be prevented or estopped from going back on the original promise. It is important to note that the doctrine has a limited application, the key requirement being unconscionable conduct by the defendant in the proceedings. If the requirements are not met, the doctrine will not apply, The doctrine of promissory estoppel does not mean that every gratuitous promise will now be enforced.
Origins of the doctrine [6.1190] In the landmark case of Central London Property Trust v High Trees House Ltd [1947] KB 130, Lord Denning in the English Court of Appeal led the law into uncharted territory with his principle that a contracting party may be prevented from insisting on her or his strict legal rights if, having regard to the dealings which have taken place between the parties, it would be inequitable to allow such insistence because the promisee has altered her or his position in reliance on the promise.
CENTRAL LONDON PROPERTY TRUST V HIGH TREES HOUSE LTD [6.1200]
Central London Property Trust v High Trees House Ltd [1947] KB 130
In 1939 Central London Property Trust (the landlord) leased a block of flats to High Trees House (the tenant) for 99 years at an annual rental of £2500. When in 1940 the tenant was unable to sub-lease many of the flats due to war-time conditions in London, the landlord agreed to reduce the annual rental by half but without stating the duration of this agreement. Once the war ended in 1945 and the flats were all let again, the landlord 236
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brought legal action to establish that the previous rental should be reinstated. The landlord was successful. Although there was no claim for the full rental during the war-time period, Lord Denning took the opportunity to state that the landlord would have been estopped (or precluded) from going back on the promise to accept the lower rental during those years despite the absence of any consideration provided by the tenant. In his view, the rules of equity prevented the landlord going back on his promise and enforcing the original contract terms because it would be “unjust to allow him to enforce them having regard to the dealings which have taken place between the parties”. [6.1210] This principle was not authoritatively accepted in Australia until the decision of the High Court in Legione v Hateley [1983] HCA 11. At this time, the circumstances in which the doctrine of promissory estoppel applied were where: • There is a preexisting contractual relationship between the parties. • One party to that relationship (the promisor) voluntarily makes a clear, precise, unequivocal and unambiguous promise to the other party (the promisee) that strict performance of that person’s obligations under the legal relationship will not be insisted upon. • The promise is made with the knowledge and intention that it would be acted on by the promisee. • The promisee acts on the promise and suffers a detriment through altering their position in reliance on the promise; and • It would be unjust or inequitable to allow the promisor to resile from (go back on) the promise. In these circumstances the promisee could defend a breach of contract action brought by a promisor who had gone back on their promise and who was suing under the original contract terms. The next issue to be dealt with was whether the doctrine was in fact wider in application than the view adopted in Legione v Hateley.
WALTONS STORES (INTERSTATE) LTD V MAHER [6.1220] Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7 Background
The High Trees case obviously shook the foundations of contract law although its effect was limited because the doctrine acted as a “shield and not a sword”. Although it provided a defence to a
breach of contract action, it did not confer any right to enforce the promise. The High Court was now confronted with the issue as to whether the doctrine applies in the absence of a pre-existing relationship and whether it extended to voluntary promises.
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Waltons (a retailer) and Maher entered into negotiations for Maher to demolish a building he owned and construct new premises which Waltons would rent. The timetable imposed by Waltons for construction and fit-out was particularly tight and negotiations proceeded on this basis. Contractual documents were drawn up which Waltons’ solicitors advised Maher’s solicitors were acceptable to Waltons. Maher signed the contract which was forwarded to Waltons’ solicitors “by way of exchange”. At this stage there was no binding contract between the parties, it being a general rule of conveyancing law that a contract involving a lease of real property is not concluded until each party has signed the agreed form of lease and exchanged it for the counterpart copy signed by the other side. Maher nevertheless proceeded to commence demolition of the building, believing its execution by Waltons to be a mere formality. This belief was induced by Waltons’ solicitor, who advised Maher’s solicitor that he believed an amended agreement would be signed and that he would advise Maher the following day if Waltons did not agree to any of the amendments. Waltons was aware that demolition had commenced, but despite uncertainty as to whether or not it would proceed, took no steps to inform Maher. It was not until demolition was completed and almost 50 per cent of the work required to complete the new building to Waltons’ specifications had been carried out that they advised Maher’s solicitors that they would not sign the contract and would not proceed with the matter.
assumption in relation to which the other party to the transaction has played such a part in the adoption of the assumption that it would be unfair or unjust if he were left free to ignore it … Equity comes to the relief of such a plaintiff on the footing that it would be unconscionable conduct on the part of the other party to ignore the assumption.
Mere failure to fulfil a promise does not of itself amount to unconscionable conduct and mere reliance on an executory promise to do something, resulting in the promisee changing position or suffering detriment, does not attract the doctrine. Mason CJ and Wilson J (at 524) considered that: Something more would be required … this may be found, if at all, in the creation or encouragement by the party estopped in the other party of an assumption that a contract will come into existence or a promise will be performed and that the other party relied on that assumption to his detriment to the knowledge of the first party.
Brennan J agreed that the object of promissory estoppel is not the fulfilment of a promise but the avoidance of an unconscionable detriment. It operated as a sword (to generate a legal action) as well as a shield (to defend an action) and could create a liability independently of the formation of a contract. Brennan J held (at [34]) that to establish a promissory estoppel it is necessary to prove that: 1.
The plaintiff assumed or expected that a particular legal relationship will exist between them, and, in the latter case, that the defendant is not free to withdraw from the expected legal relationship.
2.
The defendant has induced the plaintiff to adopt that assumption or expectation.
3.
the plaintiff acts or abstains from acting in reliance on the assumption or expectation.
4.
The defendant knew or intended him to do so.
5.
The plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled. And:
6.
The defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.
Decision
The High Court held that Waltons was estopped from denying that there was a valid and enforceable contract, despite the absence of a concluded agreement, on the basis of promissory estoppel. Implications
It was held by Mason CJ and Wilson J (at [30]) that: Equity will come to the relief of a plaintiff who has acted to his detriment on the basis of a basic 238
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The implications of the decision are that it may be dangerous to lead a party to believe that a contract will be entered into, encouraging that party to carry out acts which would be required to be carried out
under the contract and knowing full well that the other party will suffer loss from carrying out those acts if the contract is not proceeded with.
The elements of promissory estoppel [6.1230] 1.
There must be an assumption created that a contract will come into existence or a promise will be fulfilled.
2.
The assumption acted on must be the result of a clear and unambiguous representation.
3.
The assumption may be either one of fact or law.
4.
There must be a reliance on the assumption, which must involve the plaintiff acting reasonably.
5.
There must be a detriment or disadvantage which the plaintiff has suffered as a result of the representation.
Never promise more than you can perform. Publius Syrus (1st century BC).
DOWELL V TOWER CORPORATION [6.1240]
Dowell v Tower Corporation [1991] ANZ Conv R 177
The plaintiff who was about to buy a business was anxious to ensure that he would obtain a new lease after the existing lease of the business premises expired. The landlord indicated verbally that it would do this provided the tenant complied with the existing lease It confirmed this representation by letter. The plaintiff purchased the business and the landlord refused to grant a new lease even though the tenant had complied with the terms of the existing lease The High Court of New Zealand held that the landlord was estopped from denying the promise and that the plaintiff was entitled to damages as a consequence.
LEGIONE V HATELY [6.1250]
Legione v Hately [1983] HCA 11
The Legiones entered a contract to sell their property to the Hatelys. When the Hatelys failed to settle the purchase on the date required under the contract, the Legiones’ solicitors issued a notice to complete expiring on 10 August. (The consequence of failing to comply with such a notice entitles the vendor to rescind the 239
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contract.) On 9 August the Hatelys’ solicitor telephoned the office of the Legiones’ solicitor and spoke to the person handling the matter, telling her that the Hatelys had arranged finance for the purchase, but that the financing bank could not settle until 17 August. The person handling the matter said to the Hatelys’ solicitor: “I think that that will be all right but I will have to get instructions”. On 11 August, the Legiones’ solicitor issued a notice of termination of the contract based on the Hatelys’ failure to settle on 10 August. The High Court found that the statement made by the Hatelys’ solicitors was too vague to ground an estoppel.
FORAN V WIGHT [6.1260]
Foran v Wight [1989] HCA 51
The Forans entered a contract to purchase land from the Wights that required completion by 22 June, time being of the essence. Prior to completion the Forans were required to register a right of way. On 20 June the purchaser’s solicitors indicated that they wished to settle on 22 June. The vendor’s solicitors said that they could not settle on that date because the right of way was not registered and asked the purchaser’s solicitors whether the matter could be settled after 22 June when the right of way was registered. The purchaser’s solicitor indicated that time was of the essence of the contract and that he would have to get instructions. The purchaser rescinded the contract the next day. The High Court held that the Wights’ solicitor had made it quite clear that it would be unable to settle in accordance with the contract and thus had absolved the Forans of any requirement to attempt to settle on the due date.
JE MAINTIENDRAI PTY LTD V QUAGLIA [6.1270]
Je Maintiendrai Pty Ltd v Quaglia (1980) 26 SASR 101
Quaglia was the tenant in a shopping centre. The centre had empty shops and when Quaglia experienced financial difficulties, the lessor agreed to reduce his monthly rent. No consideration was made for this promise. When Quaglia left the premises, the lessor demanded payment of the full rental owing as set out in the lease. The Full Supreme Court of South Australia by majority found that Quaglia had suffered a detriment in now being required to pay the balance of the accumulated arrears as a lump sum, whereas under the lease he was required to pay by instalments.
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The doctrine of promissory estoppel as promulgated by the High Court is an important and far-reaching doctrine with great significance for the law of contract. It may be thought ironic that had the statutory action for misleading or deceptive conduct under the Trade Practices Act 1974 (Cth) (TPA) (now s 18 of the ACL) been argued, the extended doctrine of promissory estoppel might not have been developed by the High Court, the misleading or deceptive conduct action seemingly providing a more simple method of compensating the plaintiff for the loss.
The greatest threat to the law of contract comes perhaps from the expansion of the idea of estoppel. JC Smith, “The law of contract – alive or dead?”, (1979) 13 LT 80.
Waiver of contractual rights [6.1280] Waiver of contractual rights is a relatively common commercial occurrence. One party may decide not to insist on strict performance of the other party’s obligations under the contract in order to accommodate the circumstances of the other party. In many cases this is a sensible commercial alternative to initiating breach of contract proceedings. If the parties wish to alter the terms of the original contract for their mutual benefit, this is done by an agreement to vary the contract, which requires consideration and also requires a written document. This is in contrast to a waiver which is for the benefit of one party only. Waiver is so common that it is frequently formalised in the terms of the contract. A franchise agreement may, for example, provide that: No waiver by the Franchisor of a breach of this Agreement shall be effective unless in writing and any waiver by the Franchisor of a breach of this Agreement shall not be deemed to be a waiver of a subsequent breach of the same or of a different kind hereunder and no waiver by the Franchisor of any breach under any other Franchise agreement to which the Franchisor is a party shall be construed as or deemed to be a waiver under this Agreement.
However, the importance of the concept of waiver has been largely surpassed by the development of the equitable doctrine of promissory estoppel discussed at [6.1180].
6.7 DEFECTS IN THE CONTRACT [6.1290] Even where the basic requirements for the formation of a simple bilateral contract (offer and acceptance, intention to create legal relations and consideration) are all met the courts will refuse to enforce the contract in certain circumstances. These circumstances include those: • where one of the parties lacks contractual capacity; • where the contract is illegal; and • where the contract does not meet the formal requirements for that type of contract.
Lack of contractual capacity [6.1300] The common law has always recognised that contracts should not be able to be enforced against certain people, eg young children and people with mental disabilities, because such people lack the intellectual ability to understand the legal consequences of entering into a contract. It has sought to protect such people by holding that they lack contractual capacity. 241
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Mental disability [6.1310] Contracts entered into by people affected by a mental disability cannot be enforced against them where they can prove that: • they were unable to understand the nature of the contract at the time it was made; and • the other party was aware or should have been aware of this inability. A Court of Equity can mould interests differently from a Court of Law. Lord Kenyon, Clayton v Adams (1976) 6 TR 604.
The one exception to this is that even mentally disabled people are obliged to pay a reasonable amount (not necessarily the agreed price) for essential services that the common law calls necessaries. The same rules apply to people who are drunk at the time of contracting, but such people must take steps to cancel the contract at the first reasonable opportunity after becoming sober, otherwise they will be treated as confirming (ratifying) the contract and becoming bound by it (Matthews v Baxter (1873) LR 8 Exch 132). A similar approach is adopted where a person recovers after a period of temporary insanity (McLaughlin v City Bank of Sydney (1912) 14 CLR 684).
KURTH V MCGAVIN [6.1320]
Kurth v McGavin [2007] 3 NZLR 614
The New Zealand High Court distinguished between cases where a contracting party was so drunk they were incapable of making a valid contract, and (in the present case) those where drunkenness only affected the contracting party’s business sense. Given the counterparty in this case was unaware of the contracting party’s condition, the contract was binding (had he known, the contract would have been voidable). Nevertheless, the court held that it would be inequitable to enforce this contract because of the hardship which would greet the contracting party as a result of the sale of land, and so the would-be purchaser was entitled to damages.
Minors [6.1330] At common law, minors were people under 21 years of age, but this has been changed by legislation throughout Australia to mean anyone under 18 years of age under age of majority legislation in each state and territory. Contracts entered into by minors can be enforced by the minor but are not generally enforceable against the minor. The common law provided two exceptions to this general rule so that minors would be able to obtain things necessary for their survival and education: • Minors were obliged to pay a reasonable amount (not necessarily the contract price) for necessaries which are goods or services that are necessary to the safety, health or wellbeing of the minor. 242
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• Minors were bound by beneficial contracts of service which are contracts, such as apprenticeships, which provide education or training and are also judged to be for the minor’s benefit. In the case of other contracts, a minor was not bound unless he or she confirmed (ratified) the contract after their 18th birthday. Furthermore, a minor could not be sued under any other rule if this was an indirect way of enforcing an unenforceable contract. Thus a minor could not be sued in the tort of deceit for fraudulently misrepresenting her or his age. However, in limited circumstances, the rules of equity could be used to compel the fraudulent minor to return property to its rightful owner. The common law rules described above have been modified in some States by legislation. The Minors (Property and Contracts) Act 1970 (NSW) replaces all the common law rules with a comprehensive code which provides that: • Any contract for a minor’s benefit is presumptively binding (s 19). • Such contracts will be enforced unless entered into while the minor was “lacking by reason of youth, the understanding necessary for participation” (s 18). • Either the minor or the other party may apply to the court to authorise the contract (ss 26, 27 and 30). • A contract that is presumptively binding on a minor which is not repudiated within a year of their 18th birthday binds the minor (s 31). • A guarantor of a minor’s contract is liable as if they had guaranteed an adult’s contract (s 47).
Other categories of contractual incapacity [6.1340] At common law, the concept of contractual incapacity also extended to prevent certain people from enforcing contracts although this had nothing to do with any lack of intellectual abilities. For example, both persons convicted of a crime which carried the death penalty, and foreign nationals (aliens), were denied contractual capacity as a means of preventing them from suing for breach of a contract. These examples of contractual incapacity have been changed by legislation so that now convicted felons and aliens are both treated as having full contractual capacity and consequently can sue for breach of a contract. The one remaining exception to this is that, in time of war, an enemy alien cannot sue in an Australian court.
The law won’t enforce certain categories of contracts, regardless of the presence of consideration, the absence of breach, or anything else. One example is a contract which is deemed “contrary to public policy”. Shylock’s pound of flesh bargain would not nowadays be enforced south of the border (some Scottish courts remain very strict), and most courts would not require the loser of a bet on the Five Nations Cup to streak three times round Twickenham with a pound of sausages on his head. White and Jenks, The offıcial lawyer’s handbook (Harriman House, 1992).
It is important to note that bankruptcy does not affect contractual capacity. The trustee in bankruptcy will take the benefit of any beneficial contract that the bankrupt entered into prior to the bankruptcy. The trustee in bankruptcy has a right to disclaim onerous contracts but can only disclaim others with the leave of the court (Bankruptcy Act 1966 (Cth), s 133). As far as post-bankruptcy contracts are concerned, there is protection for persons dealing in good faith and for valuable consideration if the contract is completed before the intervention of the trustee (Bankruptcy Act 1966 (Cth), s 126). However, because of this potential risk, it is an offence for an undischarged bankrupt to enter into some types of contracts involving more than $3000, such as obtaining credit or leasing or hiring goods without disclosing the 243
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Public policy is in its nature so uncertain and fluctuating, varying with the habits and fashions of the day, with the growth of commerce and the usages of trade, that it is difficult to determine its limits with any degree of exactness. It has never been defined by the courts, but has been left loose and free of definition, in the same manner as fraud. This rule may, however, be safely laid down, that whenever any contract conflicts with the morals of the time, and contravenes any established interest of society, it is void, as being against public policy. William W Story, A treatise on the law of contracts (1847).
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bankruptcy (Bankruptcy Act 1966 (Cth), s 269). If a bankrupt enters into a contract in breach of this provision, the contract is unenforceable by the bankrupt and can be rescinded by the other party. It perhaps might be argued that while not technically a matter relating to the bankrupt’s capacity, it has that effect de facto.
Illegal contracts [6.1350]
Illegal contracts fall into two categories:
• Contracts which are illegal or void by statute. • Contracts which are illegal as a result of being contrary to public policy at common law.
Contracts that are illegal by statute [6.1360] In Equuscorp Pty Ltd v Haxton [2012] HCA 7 the High Court explained that an agreement may be unenforceable for statutory illegality in three categories of case, where (at [23]): (i)
the making of the agreement or the doing of an act essential to its formation is expressly prohibited absolutely or conditionally by the statute;
(ii)
the making of the agreement is impliedly prohibited by statute. A particular case of an implied prohibition arises where the agreement is to do an act the doing of which is prohibited by the statute;
(iii)
the agreement is not expressly or impliedly prohibited by a statute but is treated by the courts as unenforceable because it is a “contract associated with or in the furtherance of illegal purposes.” In the third category of case, the court acts to uphold the policy of the law, which may make the agreement unenforceable. That policy does not impose the sanction of unenforceability on every agreement associated with or made in furtherance of illegal purposes. The court must discern from the scope and purpose of the relevant statute whether the legislative purpose will be fulfilled without regarding the contract or the trust as void and unenforceable.
Statutory provisions may affect the validity of a contract. The particular effect of a statutory provision on a contract is dependent on the presumed intention of parliament and there is no general rule that covers every situation. As with common law illegality, a distinction is drawn between contracts illegal by statute and contracts void by statute. The consequences are the same as for illegality or voidness under the common law with the qualification that, when a contract becomes void because of the effect of a statute, the statute frequently provides for the consequences. A statute may expressly outlaw certain types of contracts. For example, Pt IV of the Competition and Consumer Act 2010 (Cth) prohibits corporations from entering into contracts that substantially lessen competition. It is common for statutes to require that certain businesses only be undertaken by people who have the appropriate licence. Usually the statute imposes a fine on those who carry on those businesses without such a licence. Questions commonly arise as to the validity of contracts entered into by unlicensed operators.
Chapter 6 Contracts: Concepts of agreement
RE MAHMOUD & ISPAHANI [6.1370]
Re Mahmoud & Ispahani [1921] 2 KB 716
Legislation in England restricted the sale of certain commodities. An order made under this legislation stated that “a person shall not buy or sell or otherwise deal in” linseed oil unless they had a licence. A contract was entered into for the sale of linseed oil in which the buyer did not have a licence. When the buyer broke the contract by refusing to accept delivery of the linseed oil, the seller sued. The action failed. The court held that since the order expressly prohibited such a contract being formed, neither party could sue for its breach.
The modern approach of the courts is to treat these situations as simply one of statutory interpretation and to ask whether parliament intended to invalidate the contract or whether it intended the fine to be the only penalty for unlicensed trading.
YANGO PASTORAL CO PTY LTD V FIRST CHICAGO AUSTRALIA LTD [6.1380]
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd [1978] HCA 42
The Banking Act 1959 (Cth) prohibited a body corporate from carrying on the business of banking unless it had a banking licence and provided a fine of $10,000 for each day of the contravention. First Chicago, which had no such licence, lent Yango Pastoral $132,600 secured by a mortgage and a number of personal guarantees. Yango Pastoral defaulted on the loan and First Chicago sued. It was held that the loan, mortgage and guarantees were enforceable. To interpret the Banking Act as impliedly invalidating all contracts by an unlicensed bank, including both loans and deposits, would defeat the purpose of the Act which was to protect people, including depositors, from unlicensed bankers.
Many statutes do not seek to prohibit contracts but rather regulate the way certain contracts can be performed.
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MASTER EDUCATION SERVICES PTY LIMITED V KETCHELL [6.1390]
Master Education Services Pty Limited v Ketchell [2008] HCA 38
A franchisor entered into a franchise agreement in contravention of the requirements of the Franchising Code of Conduct. If this was held to constitute an illegal contract at common law it would have been void and the franchisee would have been released from its obligations and, inter alia, not liable for royalties unpaid. The High Court held that the harsh consequences provided by the common law did not apply and that the remedies were those provided by the Competition and Consumer Act 2010 (Cth) under which the Franchising Code was prescribed. Ketchell’s case is discussed in more detail in Chapter 17.
GYNCH V POLISH CLUB LTD [6.1400]
Gynch v Polish Club Ltd [2015] HCA 23
A restaurant retail lease which had been granted in contravention of liquor licensing laws was not void and not unenforceable.
ST JOHN SHIPPING CORPORATION LTD V JOSEPH RANK LTD [6.1410]
St John Shipping Corporation Ltd v Joseph Rank Ltd [1957] 1 QB 267
The contract was to carry a cargo of grain from the United States to England. The ship was overloaded in contravention of the Merchant Shipping (Safety and Load Line Conventions) Act 1932 (UK). The owner of the grain refused to pay a part of the freight costs on the basis that the overloading constituted an illegal method of performing the contract. The shipping company successfully sued to recover the full freight costs. It was held that the overloading was merely incidental to the way the contract was performed. Devlin J held that having regard to the considerable commercial inconvenience that would result from the transgression, the legislature did not intend the contract to be avoided through statutory illegality.
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[6.1420] Some statutes do not prohibit contracts but merely declare them to be void. For example, s 56(1) of the Unlawful Gambling Act 1998 (NSW), which is similar to legislation in other jurisdictions, provides that: Any agreement whether oral or in writing that relates to any form of gambling that is prohibited under this Act has no effect and no action may be brought or maintained in any court to recover any money alleged to have been won from, or any money paid in connection with any such form of gambling.
The effect of this section is that no legal action can be taken against the defaulting loser; conversely the paying loser cannot recover the payment. There are, however, many forms of betting which are authorised under separate legislation. Often statutes simply declare that certain types of contractual clauses are void in which case the provision is deleted and the rest of the contract can be enforced. For example, s 64 of the ACL provides that a term that purports to exclude, restrict or modify a consumer guarantee under the ACL is void.
Gambler: Is this a game of chance? Cuthbert J Twillie: Not the way I play it. My Little Chickadee (1940).
Contracts that are illegal at common law [6.1430] The common law has always held that certain contracts or contractual provisions are unenforceable on the basis that they offend public policy. In the case of common law illegality, the courts have identified a number of heads of illegality, which have the common theme of public policy. In Janson v Driefontein Consolidated Mines Ltd [1902] AC 484 Isaacs J in the High Court observed (at 491): The “public policy” which a court is entitled to apply as a test of validity to a contract is in relation to some definite and governing principle which the community as a whole has already adopted either formally by law or tacitly by its general course of corporate life, and which the courts of the country can therefore recognise and enforce.
The community’s conception of what public policy requires will, of course, vary over time. In Nagle v Feildon [1966] 2 QB 633, Danckwerts LJ stated that:
Negotiation in the classic diplomatic sense assumes parties more anxious to agree than to disagree. Dean Acheson.
The law relating to public policy cannot remain immutable. It must change with the passage of time. The wind of change blows upon it.
In this regard, the common law also draws a distinction between contracts that are illegal and those that are void. Illegal contracts are those: • to commit an unlawful act – a crime, a tort or a fraud on a third party; • that are sexually immoral; • that prejudice public safety; • that prejudice the administration of justice; • that tend to corruption in public life; • that defraud the revenue. Void contracts (or more commonly contractual clauses) are those: • that attempt to oust the jurisdiction of the courts; • that tend to prejudice the status of marriage; 247
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• that constitute an unreasonable restraint of trade.
IN CONTEXT Contracts that are sexually immoral [6.1440] The category of contracts that are “sexually immoral” provides an obvious example of the courts being influenced by changing social attitudes. A contract for the hire of a horse-drawn carriage entered into between a prostitute and her client was held to be illegal in 1866 because the vehicle was used for the purpose of prostitution (Pearce v Brooks [1861] All ER Rep 102). Even as recently as 1938, in Fender v St John-Mildmay [1938] AC 1, the House of Lords held (per Lord Wright, at 42) that: The law will not enforce an immoral promise, such as a promise between a man and a woman to live together without being married, or to pay a sum or give some other consideration in return for personal association.
However, changed social attitudes to de facto relationships have resulted in contracts such as those to pool income, jointly acquire assets or share rent no longer being regarded as contrary to public policy (see eg Seidler v Schallhofer [1982] 2 NSWLR 80). The issue has been put beyond doubt in jurisdictions such as New South Wales where s 45 of the Property (Relationships) Act 1984 (NSW) provides that “Notwithstanding any rule of public policy to the contrary, two persons who are not married to each other may enter into a domestic relationship agreement or termination agreement” and if such agreement is otherwise valid, it may be enforced according to the ordinary law of contract.
IN CONTEXT Pre-nuptial agreements [6.1450] Since the year 2000, couples (married or de facto) have been able to enter into pre-nuptial agreements, also known as Binding Financial Agreements (BFAs). However a 2008 decision of the Full Court of the Family Court in Black v Black [2008] FamCAFC 7 cast doubt on the validity of such agreements through a restrictive interpretation of the BFA provisions of the Family Law Act 1975 (Cth) leading to much uncertainty. Retrospective legislation was passed to deal with issues raised by the decision but the changes raised further technical legal issues with the validity of BFAs, making it difficult to find a lawyer to draft one due to the potential risk of being sued. In April 2015, the Attorney-General released proposed amendments to “remove existing uncertainties around requirements for entering, interpreting and enforcing these out-of-court private arrangements”. Given a general lack of judicial resources, finding a solution to this particular problem – when parties have voluntarily entered such arrangements on legal advice 248
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and in the absence of duress – is of high importance in view of the proportion of failed relationships which rely on such agreements.
Different consequences flow from illegality and voidness. A distinction needs to be made between contracts that:
• are illegal when formed; • are illegal when performed; and • are void. Contracts that are illegal when formed [6.1460] These contracts are totally void so that neither party can sue on them (see Re Mahmoud & Ispahani at [6.1350]). Money or property transferred under them cannot be recovered unless the action relies on either: (i)
a claim which is independent of the illegality; or
(ii)
the illegality only arises because the person falls within a category of persons intended to be protected and he or she brings such a claim; or
(iii)
the contract has not been substantially performed and the claimant has repented of it and abandoned it.
Never put anything on paper, my boy, and never trust a man with a small black moustache. Wodehouse PG, Cocktail time (1958).
PAYNE V MCDONALD [6.1470]
Payne v McDonald [1908] HCA 40
The plaintiff claimed that the defendant held certain land for her as trustee because she had provided the purchase money. The defendant was the executor of the will of Ellen Payne in whose name the land was registered. The defendant claimed that the plaintiff had arranged for the Certificate of Title to the land to be issued in the name of the deceased to ensure that it was not available as an asset to pay the plaintiff’s creditors. This was an illegal purpose under bankruptcy law and the defendant argued that no order should be made. Evidence was given that the plaintiff had never been in a position where she was likely to have been made bankrupt. It was held that the plaintiff should succeed. The existence of an unlawful intent was irrelevant because none of it had been put into effect.
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Contracts that are illegal in performance [6.1480] Under this type of contract the guilty party cannot sue (unless they can recover money or property on a ground independent of the illegal contract) but the innocent party keeps all the usual rights and remedies (see St John Shipping Corporation Ltd v Joseph Rank Ltd at [6.1410]).
Contracts that are void A verbal contract isn’t worth the paper it’s written on. Samuel Goldwyn.
[6.1490] This is unenforceable by either party. Where part of a contract is void, then if the void provision can be severed from the remainder of the contract the rest can be enforced. For example, a contract may have a clause which prevents an ex-employee from competing with the former employer for five years and another clause enabling that ex-employee to use the employer’s parking facilities for 12 months. If the restraint of trade clause is too wide, it may be void, yet the clause relating to use of the car park may be valid and enforceable.
Lack of required formalities [6.1500] As noted above, a person who has not provided any consideration in exchange for a promise cannot sue for breach of that promise unless the promise is contained in a document that meets the requirements of a deed. On the other hand, provided each party to a contract supplies consideration, the common law does not impose any requirements as to the form of the contract – it can be oral or written, or partly oral and partly written, or it may even be implied from the conduct of the parties without any words at all. This common law rule has, however, been modified by statute.
Contracts which must be evidenced in writing [6.1510] The first statutory inroad was the Statute of Frauds 1677 (IMP), which was enacted by the English Parliament in 1677 with the aim of reducing the scope for fraud by people pretending or denying that they had entered into an oral contract. For example, where the defendant has since died and there is no written record of a contract, it is very difficult for a court to decide if an alleged oral contract really was formed since the court might only get to hear one side of the story. The Statute of Frauds required certain contracts to be in writing or evidenced in writing and signed, The statute applied to several types of contracts including: • contracts for the sale of land; • contracts of guarantee; • contracts that are not performed within one year; • contracts for the sale of goods for more than £10.
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The Statute of Frauds became part of the received law of the Australian colonies, but it has since been modified in different ways by legislation in each State and Territory so that now the only provision that is common across Australia concerns the sale of land. The relevant provisions are: • Conveyancing Act 1919 (NSW), s 54A; • Instruments Act 1958 (Vic), s 126; • Property Law Act 1974 (Qld), s 59; • Law of Property Act 1936 (SA), s 26; • Conveyancing and Law of Property Act 1884 (Tas), s 36; • Law Reform (Statute of Frauds) Act 1962 (WA), s 2; • Civil Law (Property) Act 2006 (ACT), s 201; and • Law of Property Act 2000 (NT), s 221.
A lawyer boasts of a 300-page contract the way a sportsman boasts of a 300-pound fish. He’ll show it to his family and friends like a little boy showing off the hole he’s dug in his back garden. White and Jenks, The offıcial lawyer’s handbook (Harriman House, 1992).
The NSW provision, for example, provides that No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.
A contract that does not satisfy the Statute of Fraud requirements is unenforceable but not invalid. This means, for example, that an oral contract for the sale of land cannot be undone if it has been fully performed but neither party can sue the other if the contract is breached. In most cases, the writing requirement will be satisfied by the formal contract for the sale of land, but as long as the material terms are in writing and mere is an express or implied acknowledgement that the agreement is intended to be contractual, the requirement of the note or memorandum in writing is satisfied. The requirement is satisfied even if the material terms are contained in several linked documents each containing part of the agreement. The requirement that the note or memorandum be signed by the party to be charged or that person’s lawfully authorised agent has been interpreted broadly so that a printed name, or initials, anywhere on the document will satisfy the requirement. Ironically, the statute which was intended to prevent fraud provided an opportunity for fraud to be perpetrated by devious defendants who could enter into contracts not complying with the requirement of writing take the benefit of that contract, and then defend the action for breach of contract brought against them on the ground that the contract was unenforceable. For this reason equity developed a doctrine of part performance under which specific performance of the contract could be ordered despite the Statute of Frauds requirements not having been satisfied, if the plaintiff had partially performed the obligations under the contract.
Contracts subject to other formal requirements [6.1520] In addition to the writing requirements originally found in the Statute of Frauds, various Commonwealth statutes require certain transactions to be conducted via written documents. Most relate to: 251
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• cheques (under the Cheques and Payment Orders Act 1986 (Cth)); • bills of exchange and promissory notes (under the Bills of Exchange Act 1909 (Cth)); • share transfers (under the Corporations Act 2001 (Cth)); • assignments of copyright (under the Copyright Act 1968 (Cth)); • contracts of marine insurance (under the Marine Insurance Act 1909 (Cth)). Furthermore, a variety of State and Territory statutes, and the Commonwealth ACL, prescribe forms that must be completed in certain situations to advance the cause of consumer protection.
Absence of genuine consent [6.1530] Although contract law requires an agreement between the parties, it does not require a subjective meeting of minds – a consensus ad idem – on all terms of the agreement. The common law has developed an objective theory of contract law which was expressed by Blackburn J in Smith v Hughes (1871) LR 6 QB 597 in these terms (at 607): If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms. Half the promises people say were never kept, were never made. Edgar Watson Howe.
There are nevertheless a number of situations in which, despite the outward appearance of an agreement, the courts will not allow the contract to be enforced against one of the parties because of circumstances surrounding the formation of the contract. These situations include: • where one party was induced to enter the contract by a misrepresentation by the other party; • where one or both parties only entered the contract because of a fundamental mistake; • where one party pressured the other party into agreeing to the contract (duress); • where one party possessed undue influence over the other party at the time the contract was made; • where one party engaged in unconscionable conduct in gaining the consent of the other party. Before these situations are examined, it is useful to consider the terminology used by the courts in discussing these situations. Unfortunately the courts are not always consistent in their terminology but they might hold that a particular contract is either: • void; • voidable; or • unenforceable.
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[6.1540] The term “void contract” is really a self-contradiction since a contract that is declared to be void is regarded as never having come into existence. It follows that neither the parties themselves nor anyone else (third parties) can acquire any rights under the contract. A “voidable contract” is one that is treated as valid in every respect except that one party has a right to change their mind and back out of (rescind) the contract. A party wishing to use this option needs to consider whether to do this very carefully. It is lost if the party either (i) does nothing or (ii) confirms the contract; or if (iii) rescinding the contract would harm a third party. An “unenforceable contract” is one that is treated as valid in every respect except that one party (or sometimes both parties) cannot be sued in court for breaking the contract. In some court cases, eg where the defendant is seeking to avoid paying damages for a breach of the contract, it will not make any difference whether the court declares the contract void, voidable or merely unenforceable. All such pronouncements will achieve the same result for the defendant and for that reason courts do not always stick to the explanations outlined above. In other cases, however, the difference between the three terms will be crucial. For example, if a court declares that a contract for the sale of a motor vehicle is void then any attempted “resale” by the “purchaser” to a third party has no legal effect. The original owner can recover the vehicle (under the tort of detinue) or its value (under the tort of conversion) from the third party who is then left to try to recover the purchase price from the person who “sold” them the car. If, on the other hand, the original sale of the motor vehicle is merely voidable, the third party acquires the legal ownership (title) to the car if the resale has been made before the contract is set aside by the original owner. In this situation, the original owner cannot recover the vehicle and is limited to a personal action against the original purchaser whose conduct rendered the contract voidable.
… once a contract has been made, that is to say, once the parties, whatever their inmost states of mind, have to all outward appearances agreed with sufficient certainty in the same terms on thesome subject matter, then the contract is good unless and until it is set aside for failure of some condition on which the existence of the contract depends, or for fraud, or on some equitable ground. Solle v Butcher [1950] I KB 671 per Denning LJ.