Legal Briefing No. 47

Number 47
Missing media item.
(29 June 1999)

APPLICATION OF STATE LAWS TO THE COMMONWEALTH

Several recent High Court decisions have dealt with the
issue of the application of state and territory laws to
the Commonwealth or Commonwealth authorities. The recent
decisions which are analysed in this Briefing are:

  • Commonwealth v WA (1999) 160 ALR 638
  • Telstra Corporation v Worthing; Attorney-General
    v Telstra Corporation (1999) 161 ALR 489
  • Bass v Permanent Trustee Co Ltd (1999) 161
    ALR 399
  • Northern Territory v GPAO (1999) 161 ALR 318

(Case notes on the first three decisions are also contained
in Litigation Notes
No.3
, and, hence, only a shortened summary of those
cases is given here.)

The cases provide little clarification of the Henderson decision
concerning the extent of Commonwealth immunity from state
law (Re Residential Tenancies Tribunal of New South
Wales; Ex parte Defence Housing Authority (1997) 190
CLR 410) [see Legal Briefing No
36
]. That, therefore, remains a difficult area. However,
what the relevant cases do highlight is the fact that often
the issue of whether state or territory law applies to
the Commonwealth, its servants and agencies can be determined
as a matter of statutory interpretation or on the ground
of inconsistency without resort to issues of immunity.
If at all possible, the courts will prefer to do this. The cases also point
to a reluctance to give a broad operation to Commonwealth immunity from state
laws.

Commonwealth v WA

This case concerned the application of the Mining Act
1978 (WA) to land at Lancelin in Western Australia
that had been declared as a defence practice area under
the Defence Force Regulations (Cth).

The Commonwealth applied to the High Court for declarations
that Mining Wardens appointed under the Mining Act do not
have jurisdiction to consider applications for mining tenements
over land within the defence practice area, that the Mining
Act is invalid to the extent that it purports to apply
to the land within the defence practice area and that the
Mining Act does not bind the Commonwealth.

The High Court based its decision on the construction
of the Mining Act. Apart from the question of inconsistency,
most of the justices did not find it necessary to deal
with the constitutional issues. The Court held that:

  • the Mining Act does not, as a matter of construction,
    apply to freehold or leasehold land vested in the Commonwealth
    and therefore does not apply to land of this kind within
    the defence practice area
  • neither the Commonwealth Places (Application of
    Laws) Act 1970 (Cth) nor s.64 of the Judiciary
    Act 1903 (Cth) applies the Mining Act to that land
  • accordingly, no question of inconsistency or immunity
    or acquisition of property arises in relation to the
    application of the Mining Act to the freehold and leasehold
    land vested in the Commonwealth.

The parties agreed that the Mining Act applied, as a matter
of construction, to land within the defence practice area
that was not owned or leased by the Commonwealth (ie. to
the State Crown land). It was therefore necessary for the
Court to consider the question of inconsistency in relation
to this land.

The Court held (by majority) that, in relation to the
land within the defence practice area that was not vested
in the Commonwealth, there is no 'covering the field' inconsistency
between the Defence Force Regulations and the Mining Act
such as would preclude the application of the Mining Act
at all. They contemplated that 'operational inconsistency' could
arise in some circumstances - eg. if a person were authorised
to enter the land for exploration purposes at a time when
a defence practice operation had been authorised.

Kirby and Callinan JJ, dissenting, held that there was
inconsistency between the Mining Act and the Defence Force
Regulations. Both judges said the restrictions on use of
the Crown land amounted to an acquisition of property within
the meaning of s.51(31) of the Constitution. Kirby
J said 'just terms' were provided. Callinan J said 'just
terms' had not been provided.

Telstra v Worthing; Attorney-General v Telstra

These appeals arose out of an application for workers' compensation
made by an employee of Telstra (formerly Telecom) in respect
of alleged injuries to his back sustained in 1986, 1988
and 1993. The employee made the application under the Workers
Compensation Act 1987 (NSW) ('the NSW Act') rather
than under the Safety, Rehabilitation and Compensation
Act 1988 (Cth) ('the Commonwealth Act') which contains
a workers' compensation scheme for employees of the Commonwealth
and of certain Commonwealth- owned corporations, including
Telstra.

The Compensation Court and, on appeal, the NSW Court of
Appeal found that the NSW Act validly applied to give jurisdiction
to the Compensation Court to determine the application
for workers' compensation. The result of the Court of Appeal
decision (if it had stood) would have been that, in respect
of its employees, the Commonwealth would have been potentially
subject to the workers' compensation schemes of each of
the states and territories as well as its own scheme, including
possible application to the Commonwealth of the provisions
of the state and territory schemes in relation to licensing
and insurance of employers. A Commonwealth employee could
have chosen whether to make their claim for workers' compensation
under the Commonwealth Act or under an otherwise applicable
state or territory workers' compensation statute.

The High Court allowed the appeals. A Full Court of 7
Justices of the High Court (Gleeson CJ, Gaudron, McHugh,
Gummow, Kirby, Hayne and Callinan JJ) unanimously held
that the Compensation Court did not have jurisdiction to
determine the workers' compensation application.

In relation to the 1986 and 1988 injuries (which were
sustained when the employer was Telecom) the High Court
held that the NSW Act (and the 1926 predecessor Act which
governed the 1986 injury) did not as a matter of construction
apply to the Commonwealth. At that time, Telecom was not
subject to any liability to which the Commonwealth was
not subject (Telecommunications Act 1975 (Cth),
s.21(3)) and the NSW Act therefore did not apply to render
Telstra liable in relation the 1986 and 1988 injuries.

In relation to the 1993 injury (when Telstra was the employer
and the NSW Act would otherwise have applied to it, as
it fell within the ordinary definition of an employer)
the High Court held that the NSW Act was inconsistent with
the Commonwealth Act to the extent that it provided for
the determination of a workers' compensation application
of an employee to whom the Commonwealth Act applied.

Bass v Permanent Trustee Co Ltd

This appeal arose out of the NSW Home Fund low cost housing
loan scheme. The appellants took out loans under the scheme.
They claimed that the respondents (the State of NSW and
others, such as building societies, who participated in
the scheme) breached provisions in Parts IVA and V of the Trade
Practices Act 1974 (Cth) and the Fair Trading Act
1987 (NSW) in the course of effecting transactions
under the scheme.

The Full Federal Court considered a number of preliminary
questions. The Full Court decided that the State was not
bound by the relevant provisions of the Trade Practices
Act, and that the other respondents were not bound by the
Trade Practices Act to the extent that they were acting
at the direction or request of the State.

The appellants appealed to the High Court from the Full
Federal Court's decision. All 7 Justices of the High Court
held that the proceedings under the Trade Practices Act
against the State of NSW could not be maintained. This
was because the relevant provisions of the Trade Practices
Act were not to be construed as applying to a state.

The High Court also rejected arguments that the relevant
provisions of the Trade Practices Act were applied to the
State of NSW by s.64 of the Judiciary Act 1903 (Cth)
or s.5(2) of the Crown Proceedings Act 1988 (NSW)
(provisions which seek to ensure that, in litigation to
which the State is a party, the rights of the parties are
as nearly as possible the same as in a suit between subject
and subject).

The Court avoided deciding an issue considered by the
Full Federal Court, namely the extent to which laws which
do not apply to the Commonwealth or a state do not apply
to persons who contract with or act as agents for the Commonwealth
or a state.

NT v GPAO

This case concerned the application of s.97(3) of the Community
Welfare Act 1983 (NT) to a subpoena issued for purposes
of proceedings under the Family Law Act 1975 (Cth).
The High Court held (Kirby J dissenting) that s.97(3)
was not rendered inoperative by the provisions of the
Family Law Act (dealing with the best interests of a
child, introduced in their current form in 1995) or the Evidence
Act 1995, and was binding on the Family Court by
reason of the operation of s.79 of the Judiciary Act
1903.

Section 97(3) of the Community Welfare Act prevented a
person from producing in court a document that had come
into their earlier possession in performance of duties
or functions under the Act. The Court took the view that
the Evidence Act did not deal with obligations of a party
to whom a subpoena is addressed. No conflict therefore
arose with the NT law. In relation to the Family Law Act,
the Court (Kirby J dissenting) took the view that the 'best
interests of the child' principle in s.65E of the Family
Law Act did not operate so as to override or prevent the
operation of s.97(3) of the NT Act.

Section 79 of the Judiciary Act therefore applied the
Territory law to the proceedings of the Family Court, which
was held 5:2 to be exercising federal rather than territory
jurisdiction. The issue of jurisdiction will not be further
considered in this Briefing.

The Legal Issues

The four cases raise issues concerning construction of
statutes to determine their scope of operation in relation
to governments or government bodies. All the cases also
raise issues of inconsistency. This issue will be discussed
first.

Inconsistency

Where as a matter of statutory construction a state law
is held to apply to the Commonwealth, or an authority or
servant of the Commonwealth, the issue arises whether s.109
of the Constitution has the effect that a law of the Commonwealth
prevails over the state law. As the Telstra case
illustrates, where a Commonwealth law directly regulates
the same issue as a state law, it may be easier to establish
inconsistency. In that case the Court pointed to two situations
where inconsistency might arise:

  1. where a state law would alter, impair or detract from
    the operation of a law of the Commonwealth
  2. where it appears from the terms, nature or subject
    matter of a federal law that it was intended as a complete
    statement of the law governing a particular matter (covering
    the field).

The Court emphasised that situation (a) might operate
to invalidate the operation of a state law regardless of
whether situation (b) also applied. By providing an alternative
right of compensation to that available under Commonwealth
law, the state law altered or impaired the rights provided
for under federal law, and it was therefore inconsistent
with that law.

The mistake of the Court below was that, having decided
the state law did qualify and impair the Commonwealth law,
it went on to consider whether the Commonwealth law covered
the field. The second issue did not arise once the first
issue was answered the way it was.

'Operational' Inconsistency

By contrast, where the Commonwealth law does not comprehensively
cover a particular field, and it confers a power on the
executive to regulate an activity, the Court may conclude
that there is only potential inconsistency - only when
the executive takes action under its statutory powers of
control or regulation will the operation of s.109 be enlivened.
This is known as 'operational' inconsistency.

Thus, in Commonwealth v WA, the Court said by majority
that there was no inconsistency between a law allowing
the establishment of defence practice areas, and providing
power to preclude the presence of unauthorised persons
in such areas during notified periods, and the State Mining
Act. The State law may give certain rights of access to
land for purposes of mineral exploration, including to
defence practice areas, but unless and until a permit was
issued under the State law authorising access and a notice
was given restricting access during a defence practice
period no actual inconsistency would arise.

This conclusion was, no doubt, influenced by a view that
the relevant Defence Force Regulations did not purport
to immunise defence practice areas from all non-defence
access at all times. Rather, the regulations created a
system to control access by conferring powers on relevant
persons to notify practice periods, and in those periods,
to exclude persons. Once that system of control was exercised,
there may well be inconsistency. The fact that a state
law might confer a general right of access to the area
in question did not impair the ability to exercise the
powers under the Defence Force Regulations to restrict
access when and if that was necessary.

Repugnancy

This reluctance by the Courts to find actual inconsistency
is also evident in NT v GPAO. This involved a conflict
between a Northern Territory law and two Commonwealth Acts,
the Family Law Act and the Evidence Act. The issue was
not s.109 inconsistency as such but an issue of repugnancy.

What was involved was a conflict between two Commonwealth
laws and a territory law enacted under powers conferred
by a Commonwealth law. Were the provisions inserted in
the Family Law Act in 1995 and the Evidence Act repugnant
to the earlier 1978 Commonwealth Act conferring certain
legislative powers on the Northern Territory Legislative
Assembly, such that the law making power so conferred had
to be qualified by reference to the later laws?

The Court held that the Territory law could operate concurrently
with the Family Law and Evidence Acts. In relation to the
Evidence Act, six judges concluded that it did not enter
the same field as that dealt with by the relevant Territory
law. In relation to the Family Law Act, the Court (Kirby
J dissenting) concluded there was no relevant repugnancy.

Relevant to this conclusion was the fact that the Family
Law Act did not deal comprehensively with the circumstances
in which a person could be compelled to produce specific
documents. There was, thus, no 'impairment' by the Territory
law of provisions in the Commonwealth law. In particular,
the restrictions on production of documents did not prevent
the Family Court applying the 'best interests' of the child
principle in deciding what parenting order to make.

That principle did not apply to alter the rules governing
the admissibility of evidence. The Family Law Act, for
instance, also contemplated that a 'reasonable excuse' might
exist for not producing a document and this indicated that
it did not make comprehensive provision covering the broader
field dealing with evidence admissible in cases concerning
children. In these circumstances, there was no impediment
to the Territory law restricting the use of certain documents
from applying to the Family Court's exercise of federal
jurisdiction, the law being picked up for this purpose
by s.79 of the Judiciary Act 1903.

Statutory Construction

The traditional approach in relation to determining
the application of state/territory statutes to the Commonwealth
has been to ask whether the statute in question is intended
to bind the Crown in right of the Commonwealth. Bropho
v Western Australia (1990) 171 CLR 1 confirmed that
there is a presumption against a statute binding the Crown,
although it is not inflexible and depends ultimately on
a determination of legislative intent. This same principle
applies to the application of statutes to the Crown in
right of the other polities in the federation: Jacobsen
v Rogers (1995) 182 CLR 572.

The Old Approach

In Bass, six judges in a joint judgment referred
to the fact that the executive government activities often
reach into aspects of commercial, industrial and developmental
endeavour. They went on to say that these considerations
and the nature of the federal structure:

'make expressions such as "shield of the Crown", "binding
the Crown" and, more particularly, "binding the Crown
in right of the Commonwealth" and "binding the Crown
in right of the States" inappropriate and potentially
misleading when the issue is whether the legislation
of one polity in the federation applies to another.' (para
17; 161 ALR at 407)

The New Approach

The judges continued:

'Where the legislative provisions in question are concerned
with the regulation of the conduct of persons or individuals,
it will often be more appropriate to ask whether it was
intended that they should regulate the conduct of the
members, servants and agents of the executive government
of the polity concerned, rather than whether they bind
the Crown in one or other of its capacities. In other
legislative contexts, slightly different questions may
emerge. Thus, for example, where legislation regulates
the use of land or other property, it will usually be
more pertinent to ask whether the legislation was intended
to apply to land or property owned by or on behalf of
the polity in question.' (para 18; 161 ALR at 407)

These same propositions had been stated earlier in the
joint judgment of Gleeson CJ and Gaudron J in Commonwealth
v Western Australia as presumptions which should normally
apply in the construction of legislation (paras 33-36;
160 ALR at 647-648). In that case the Court considered
the second presumption, referred to above, namely that 'a
statute does not divest the Crown of its property, rights,
interests or prerogatives unless that is clearly stated
or necessarily intended' (para 34; 160 ALR at 648).

The Mining Act contained no statement about whether it
was intended to bind the Crown. However, it dealt with
mining on certain Crown land as well as private land. The
freehold and leasehold land held by the Commonwealth did
not fall within the relevant definition of Crown land.
That definition also excluded state Crown land set aside
for state public purposes from the scope of the Mining
Act. There was, however, no similar exception for land
set aside for Commonwealth public purposes. This fact was
important in the Court's reasoning. Gleeson CJ and Gaudron
J said:

'... if it has been recognised by the legislature that
it would be inappropriate for legislation to apply to
government property or personnel in the same way as it
applies to individuals, it may be inferred from its silence
with respect to other polities in the federation that
it was not intended that it should apply to their property
or personnel. That is because, if the legislature has
recognised that a statute will or may have a different
impact on government property or personnel, it ought
not be assumed that it intended to subject the property
and personnel of the other polities in the federation
to a regime which it recognised was inappropriate in
its own case.' (para 40; 160 ALR at 649)

Differential Treatment

The fact that the State had established a special regime
for state Crown land was legislative recognition that it
was not appropriate for land owned by the Commonwealth
to be dealt with in the same way as private land. 'It is
not to be assumed that the legislature considered that
land acquired by the Commonwealth for a public purpose
was to be subject to a regime considered inappropriate
for land owned or held by the State of Western Australia' (para
43; 160 ALR at 650). Gummow J pointed to another consequence
which supported the conclusion that the Mining Act did
not apply to Commonwealth land:

'If the submissions for the State be accepted, land
or interests therein which are vested in the Commonwealth
would fall within Div 3 as "private land". The differential
treatment then apparent between State and Commonwealth
public purposes would raise a serious constitutional
issue. It should be accepted that a State may not legislate
in a way that discriminates against the Commonwealth
by placing upon it a special burden or disability. The
phrase "public purposes" of the Commonwealth expresses "a
large and general idea". This comprehends the defence
purposes in pursuance of which the Commonwealth acquired
the Melbourne Locations and took the Special Lease.

If the construction advanced by the State as to the
scope of Div 3 of Pt III of the Mining Act were correct,
the Part would operate by reference to a distinction
which some overriding law, namely the Constitution, decrees
to be impermissible. A construction which avoids that
result is to be preferred.' (paras 122-3; 160 ALR at
668-669).

A similar reluctance to construe a statue so it has a
differential operation on the enacting polity and other
components of the Australian federal polity is also evident
in the Bass case. The Court was required to determine
whether the State was a 'person' in certain sections. The
fact that the Commonwealth was expressly treated as a 'corporation' for
certain limited purposes led the Court to conclude that
it could not be bound by references to 'person'. Given
that, the Court concluded that Parliament cannot have intended
that a State was to be 'person' and bound by provisions
which did not bind the Commonwealth.

Criminal Laws

The Telstra case confirms that where criminal provisions
are involved 'It will require the clearest indication of
a legislative purpose to demonstrate that...penal provisions
attach' to the Commonwealth or States (para 22; 161 ALR
at 496).

Judiciary Act s.64

Section 64 of the Judiciary Act 1903 provides that
in a suit to which the Commonwealth or a State is a party, 'the
rights of the parties shall as nearly as possible be the
same...as in a suit between subject and subject'. Although
the operation of s.64 remains a matter of some uncertainty,
in Bass the Court made clear that it cannot operate
so as to defeat a clear statutory intention contained in
a later Commonwealth law. Thus, once it was determined
that the provisions of the Trade Practices Act in
question did not bind the State, those provisions being
provisions of a later Commonwealth law impliedly repealed
s.64. Thus, s.64 did not operate to apply the provisions
to New South Wales.

In Commonwealth v Western Australia, consideration
was also given to s.64. For various reasons, the Court
in that case did not consider s.64 could operate to subject
the Commonwealth to the State Mining Act and to proceedings
before the State Mining Wardens. While Commonwealth
v Evans Deakin Industries Ltd (1986) 161 CLR 254 has
not been overruled, the Bass and Western Australia decisions
indicate that various principles of statutory interpretation
may limit the application of s.64.

Immunity

The approach to statutory construction, and in particular,
the two presumptions outlined earlier, are attempts by
the courts to avoid the difficult area of immunities. The
presumptions are valuable interpretative tools, but will
not always provide an answer that avoids immunity issues.
For instance, increasingly statutes are expressed to apply
to the Crown in all its capacities. Where this is the case,
there may be little scope to apply the presumptions. The
fact that a statutory body may enjoy the shield of the
Crown for some purposes connected with application of a
statute, does not necessarily mean that if the statute
deals expressly with the 'Crown', that that expression
will be taken to extend to statutory bodies. In Henderson,
McHugh and Gummow JJ said that the Defence Housing Authority
as a creature of statute could not enjoy immunities of
the Crown that arose in relation to the exercise of executive
or prerogative powers.

This position now appears to have some support from other
members of the Court in the Telstra case. In that
case, all seven members said that the Australian Telecommunications
Commission (ATC) 'whose powers and duties were founded
in statute, did not exercise the executive power of the
Commonwealth' (para 15; 161 ALR at 495). This led the court
to say that it may not be 'the Crown' in s.6 of the NSW
Act which purported to bind the Crown in all its capacities.
Rather, ATC as an incorporated body fell clearly within
the definition of 'employer'. If the Commonwealth itself
was the relevant employer it may have been able to argue
that, even though the Act bound the Crown, because the
Act contained special provision for NSW government employers,
similar government employers in other bodies politic were
not to be classed as 'employers' for purposes of the Act.

The treatment of this issue in Telstra suggests
that once a state statute is found to apply to the Commonwealth
Crown and its emanations, this may not be sufficient to
extend to a statutory body created by the Commonwealth
the same rights as the Commonwealth itself might have to
support an argument that particular provisions of the state
statute do not apply to it.

There is certainly no sympathy evident in Telstra for
excluding state laws from applying to Commonwealth statutory
bodies, if reliance cannot be placed on inconsistency.

ISSN 1448-4803 (Print)
ISSN 2204-6283 (Online)

The material in this briefing is provided
for general information only and should not be relied
upon for the purpose of a particular matter. Please contact
AGS before any action or decision is taken on the basis
of any of the material in this briefing.

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