Litigation Notes No. 1

Number 1
23 August 1997

From
the Interim Chief Executive Officer

Welcome
to the first issue of Litigation Notes. This
newsletter, publishing generally three times a
year, will focus on current and developing litigation
in Australia. Although there will be considerable
attention given to matters before the High Court,
we will also cover developments in cases from the
Federal Court and other Commonwealth courts and
tribunals. Subsequent issues will track litigation
of key cases, in particular results of judgments
and appeals. Trends and other points of special
interest in Commonwealth litigation will also be
monitored.

Dale
Boucher

The Commonwealth's
Implied Constitutional Immunity from State Laws

The High Court's Henderson decision
has important implications for Commonwealth activities
conducted in the States.

Re the Residential Tenancies Tribunal of New South
Wales and Henderson; Ex parte Defence Housing Authority, High
Court of Australia, 12 August 1997 (Henderson's case)

The High Court decided that the Defence Housing Authority
('the DHA') was subject to the Residential Tenancies
Act 1987 (NSW) ('the NSW Act') and rejected the broad
proposition that State laws cannot by their own force bind
the Commonwealth. However, it also rejected the argument
that the Commonwealth's constitutional immunity from State
law is no greater than the immunity which the States enjoy
from Commonwealth laws which discriminate against States
or impair their capacity to function as governments.

In defining the scope of Commonwealth immunity, four Justices
(Brennan CJ in a separate judgment, and Dawson, Toohey
and Gaudron JJ in a joint judgment) drew a distinction
between the executive capacities of the Commonwealth and
the exercise of those capacities. In the view of these
Justices, State law cannot restrict or modify the executive
capacities of the Commonwealth, but a State law of general
application can operate to regulate activities or transactions
which the Commonwealth chooses to undertake, for example,
entering into contracts. In Henderson's case, the
majority held that, to the extent (if any) that the DHA
was exercising the Commonwealth's executive capacity, the
NSW
Act 'neither alters nor denies that capacity notwithstanding that it regulates
its exercise'. Accordingly, there was no constitutional objection to the NSW
Act applying to leases entered into by the DHA.

The Court also rejected the argument that the Commonwealth's
exclusive powers under s.52(ii)
of the Constitution precluded the NSW Act from applying to the DHA. The Court
held that the intention underlying s.52(ii) was confined to ensuring that State
laws did not follow the persons or property of a department of the State public
service which was transferred by the Constitution into the Commonwealth public
service. On this view, the force of s.52(ii) is largely spent.

IMPLICATIONS OF THE DECISION

The High Court's decision means that the Commonwealth
and its agents may no longer assert a broad constitutional
immunity from State laws. State laws of general application
that seek to regulate activities carried out by the Commonwealth
in the exercise of its executive capacities may be applicable
to the Commonwealth and its agents. However, the Commonwealth
and its agents will not be bound by State laws which purport
to restrict or modify the executive capacities of the Commonwealth.
It will continue to be important to determine whether,
as a matter of statutory construction, a particular State
law is intended to bind the Commonwealth. The High Court
emphasised the legislative supremacy given to the Commonwealth
by section 109 of the Constitution and the ability of the
Commonwealth Parliament to exclude the operation of a State
law with respect to the Commonwealth executive or its agencies.

Contact for further information:

Damian Page, Counsel
Phone (02) 6253 7265

Freedom
of Speech - Is it a Constitutional Right?

These cases concern the scope of the freedom of political
communication implied in the Commonwealth Constitution.

Lange v Australian Broadcasting Corporation; Levy v
Victoria, High Court of Australia, 8 July 1997 (Lange)
and 31 July 1997 (Levy)

LANGE

In the 1994 Theophanous and Stephens decisions
a majority of the High Court decided that the implied constitutional
freedom of political communication can itself provide a
defence to a defamation action involving political material.
In Lange a joint judgment of all 7 Justices re-examined
the constitutional basis of the implied freedom of political
communication and its effect on the common law of defamation.
The judgment in substance reflects the submissions made
by the Commonwealth The Court decided that:

  • there is to be derived from the text and structure
    of the Constitution concerning Commonwealth elections
    a 'freedom of communication between the people concerning
    political or government matters which enables the people
    to exercise a free and informed choice as electors';
  • this implied freedom operates as a restriction on
    legislative and executive power but (contrary to Theophanous and Stephens)
    does not confer personal rights on individuals and therefore
    does not itself provide a private right of defence to
    a defamation action;
  • the common law of defamation should be developed to
    conform with the constitutional freedom of political
    communication and provide a defence of qualified privilege
    to a defamation action involving political material where
    the conduct of the publisher was reasonable and not actuated
    by malice.

LEVY

In this case the High Court upheld the validity of the
Wildlife (Game) (Hunting Season) Regulations 1994 (Vic).
The Regulations prohibited a person from entering a permitted
hunting area during a prohibited time without authority
to do so. The plaintiff argued that the Regulations were
invalid as they infringed the implied constitutional freedom
of political communication by restricting his capacity
to engage in conduct to protest against duck shooting.
The Court unanimously held that the Regulations were valid.

In Lange and Levy the High Court said that
the constitutional freedom of political communication was
not absolute and a law would not be invalid for infringing
the freedom if it was reasonably appropriate and adapted
to serve a legitimate end, the fulfilment of which is compatible
with the maintenance of the constitutionally prescribed
system of representative and responsible government.

The Court held that the Regulations in Levy were
valid as, even if they burdened political communication,
they were reasonably appropriate and adapted to securing
a legitimate end, being the protection of public safety.

The Court accepted that conduct (such as that at issue
in Levy) could amount to political communication
and therefore attract the constitutional protection.

The decision does not resolve issues such as the extent
to which the freedom implied in the Commonwealth Constitution
protects communications on State political matters and
whether any freedom of political communication is implied
in the Victorian Constitution.

IMPLICATIONS OF THE LANGE DECISION

The Attorney-General issued a press release welcoming
the High Court's decision in Lange.
The decision affirms an approach to constitutional interpretation which involves
basing implications securely on the text and structure of the Constitution
and not on free-standing concepts such as 'representative and responsible government'.

The decision also affirms that the constitutional freedom
of political communication is not a source of personal
rights but a restriction on legislative and executive power
and that development of a common law defence of qualified
privilege is the appropriate means for protecting free
political speech in the defamation context.

Contact for further information:

David Bennett, Senior Government Solicitor
Phone (02) 6253 7063

Removal
of Aboriginal Children - The Legal Issues

The High Court's Kruger decision rejects the
plaintiffs' claims based on constitutional invalidity
of the Aboriginals Ordinance 1918-1953 (NT).

Kruger v Commonwealth; Bray v Commonwealth, High
Court of Australia, 31 July 1997

In this case the High Court upheld the constitutional
validity of the now repealed Aboriginals Ordinance 1918-1953 (NT).
The Ordinance authorised the removal of Aboriginal children
from their families during the period when the Northern
Territory was administered by the Commonwealth. The plaintiffs
had sought a declaration that the Ordinance was constitutionally
invalid and also damages for breach of their constitutional
rights.

Essentially, the High Court held that the Ordinance was
valid and that an action for damages for breach of a constitutional
right cannot be maintained. The Court said that the Ordinance
was authorised by s.122 of the Constitution (the Territories
power) and was not invalidated by reference to express
or implied constitutional freedoms or rights asserted by
the plaintiffs (including due process, separation of powers,
legal equality, freedom of movement and association, genocide
and freedom of religion).

Generally speaking, the Court addressed the issue of validity
on the basis that the Ordinance conferred powers to be
exercised in the interests of the Aboriginal persons affected
and not adversely to those interests. Some members of the
Court commented on the policy behind the Ordinance as,
for instance, appearing to have been ill-advised or mistaken,
particularly by contemporary standards (Dawson J) but this
did not determine validity.

IMPLICATIONS OF THE DECISION

The High Court's decision rejects the plaintiffs' claims
based on constitutional invalidity of the Ordinance.

However, over 700 writs had been filed in the High Court
claiming damages in respect of causes of action (separate
from constitutional validity) such as whether detention
was ultra vires the Ordinance, breach of duty as a guardian,
breach of statutory duty, breach of a duty of care and
breach of fiduciary obligations. Some of these actions
have been remitted to the Federal Court (the Katona litigation).
These claims are not resolved by the High Court's Kruger decision
and the Commonwealth is denying liability and defending
the claims, including relying on limitation periods.

Contact for further information:

Michael Cullen, Principal Solicitor
Phone (02) 6253 7094

Can
a Commonwealth Employee Sue for Employment-Related
Injury?

Section 44 of the Safety, Rehabilitation and Compensation
Act 1988 cannot be relied upon as a defence to
any cause of action arising before 1 December 1988
where an employee sues for damages for an injury occurring
in the course of Commonwealth employment.

Commonwealth v Mewett; Commonwealth v Brandon; Commonwealth
v Rock, High Court of Australia, 31 July 1997

These three cases had been dealt with together on account
of common issues relating to s.44 of the Safety, Rehabilitation
and Compensation Act 1988 (Cth) ('SRC Act'). In each
case, the plaintiff's cause of action arose before 1 December
1988 (the date on which s.44 took effect) but proceedings
were commenced after 1 December 1988 outside the applicable
limitation period.

The Court decided in each case that s.44 could not validly
extinguish the plaintiff's claim. A majority held that
s.44 could only purport to apply to a cause of action as
it stood on 1 December 1988 (the date on which s.44 took
effect). In each case, as at 1 December 1988, either no
limitation provision applied to any of the plaintiffs' causes
of action or, if a limitation period did apply, it had
not itself extinguished the cause of action - in the sense
that either the original limitation period had not expired
or, if it had, the cause of action could still be revived
by a successful application for an extension of time.

To the extent that a limitation provision did apply, the
Court's earlier decision in Georgiadis v Australian
and Overseas Telecommunications Corporation (1994)
179 CLR 297, was applied and, as at 1 December 1988, each
plaintiff's cause of action or right to seek to have the
cause of action revived by an extension of time, as the
case may have been, constituted property protected by the
guarantee in s.51(xxxi) of the Constitution against acquisition
of property on other than just terms. Accordingly, s.44,
to the extent that it purported to take away this property
by extinguishing the cause of action without provision
of just terms, was constitutionally invalid.

IMPLICATIONS OF THE DECISION

The High Court's decision means that where a present or
former Commonwealth employee sues the Commonwealth for
damages for injury or disease arising from events occurring
in Commonwealth employment before 1 December 1988, but
the relevant limitation period has expired prior to the
institution of the suit, s.44 of the SRC Act cannot extinguish
the employee's cause of action to the extent that the employee
can still apply to have the limitation period for the action
extended.

For practical purposes, this means that s.44 cannot be
relied upon as a defence to any cause of action arising
before 1 December 1988 where an employee sues for damages
for an injury occurring in the course of Commonwealth employment.
The Commonwealth could, however, still rely on an applicable
limitation period and oppose an extension of time.

In addition, where the Commonwealth employee's action
is being determined by a court in a different State or
Territory to that in which the events giving rise to the
injury or disease occurred, the effect of legislation in
each State and Territory - for example, the Choice of
Law (Limitation Periods) Act 1993 (NSW) - is that the
court in such a case is required to apply the limitation
of action laws of the State or Territory where the events
occurred.

Contact for further information:

Rolf Driver, Senior Government Solicitor
Phone (02) 6253 7064

Duties
of Excise - The Commonwealth's Exclusive Power

The majority of the High Court acknowledged that their
decision on this topic 'has the most serious implications
for the revenues of the States and Territories'.

Ha Lim v New South Wales;
Walter Hammond and Associates Pty Ltd v New South
Wales, High Court of Australia, 5 August 1997

These cases concerned the validity of business franchise
fees imposed by the Business Franchise Licences (Tobacco)
Act 1987 (NSW) on wholesalers and retailers of tobacco.
The High Court by a 4-3 majority held that the fees were
invalid as they were duties of excise. Section 90 of the
Constitution confers on the Commonwealth Parliament exclusive
power to impose duties of excise.

The majority of the High Court (Brennan CJ, McHugh, Gummow
and Kirby JJ) reaffirmed the broad interpretation of 'excise' which
has been consistently applied by a majority of the High
Court since 1949. The majority said that an excise is any
tax on the production, manufacture, sale or distribution
of goods, whether of foreign or domestic origin. The majority
therefore rejected the view of the minority (Dawson, Toohey
and Gaudron JJ) that excise duties are limited to discriminatory
taxes on Australian manufacture or production.

Since the High Court's decision in the 1960 case Dennis
Hotels Pty Ltd v Victoria, the States have relied
on the so-called 'Dennis Hotels exception' to
the broad interpretation of s.90 to impose business franchise
fees on retailers and wholesalers of liquor, tobacco
and petroleum products where the fees were calculated
by reference to the value of past sales of those products.
In Dennis Hotels and later cases the fees were
characterised as being for a licence to engage in business
rather than a tax on the goods sold in the business and
so were not prohibited to the States by s.90. The rates
of fees imposed by the States under this exception has
steadily increased.

In the Ha and Walter Hammond cases the majority
of the High Court did not overrule the Dennis Hotels exception
but confined it strictly to the principles and circumstances
set out when that exception was developed. The majority
also held that the NSW Act under challenge clearly did
not fall within those principles and was invalid.

IMPLICATIONS OF THE DECISION

The majority of the High Court acknowledged that its decision 'has
the most serious implications for the revenues of the States
and Territories'.

The High Court's decision strictly confines the scope
of the Dennis Hotels exception to relatively modest
regulatory charges which can properly be characterised
as fees for a licence to engage in the wholesaling or retailing
of a product. The practical effect is that those State
and Territory business franchise fees which are clearly
designed as revenue-raising inland taxes on goods will
be invalid under s.90 of the Constitution.

Contact for further information:

Guy Aitken, Senior General Counsel
Phone (02) 6253 7084

Commonwealth
Acquisition of Property

This recent High Court decision has implications for
Commonwealth legislation relating to the acquisition
of property in the Territories.

Newcrest Mining (WA) Ltd v Commonwealth,
High Court of Australia, 14 August 1997

The High Court held by majority that a number of mining
leases held by Newcrest Mining (WA) Ltd over parcels of
land in the Northern Territory were in force when the land
was included within Kakadu National Park by proclamations
made in 1989 and 1991 under the National Parks and Wildlife
Conservation Act 1975 ('the Act'). The mining leases
are in the area of Coronation Hill. Under the Act, 'operations
for the recovery of minerals' are prohibited within the
Park and no compensation is payable by reason of the prohibition.

The Court also held by majority (4-3) that, by reason
of the prohibition on mining, the inclusion of the mining
lease areas in the Park would have effected an acquisition
of property from Newcrest otherwise than on the just terms
required by s.51(xxxi) of the Constitution. The Court did
not overrule its 1969 decision in Teori Tau which
held that the territories power in s.122 of the Constitution
is not subject to s.51(xxxi) of the Constitution. However,
a 4-3 majority held that s.51(xxxi) will apply where a
law relies on another head of power as well as on s.122.
In the present case, as the Act was referable to the external
affairs power in s.51(xxix) as well as to s.122, s.51(xxxi)
applied and the proclamations were invalid to the extent
to which they effected acquisitions of Newcrest's property
otherwise than on just terms.

IMPLICATIONS OF THE DECISION

The decision has implications for Commonwealth legislation
relating to the acquisition of property in the Territories.
Although the Court by majority did not overrule Teori
Tau, Toohey J (a member of that majority) was also
part of the majority which held that s.51(xxxi) will apply
where a law is referable to another head of legislative
power as well as to s.122. Toohey J observed that it is
particularly unlikely, following the grant of Northern
Territory self-government, that a Commonwealth law acquiring
property in the Northern Territory will be a law referable
only to s.122. On this basis, his Honour considered that 'any
implications overruling Teori Tau would have would
likely be for the past rather than the future.'

Contact for further information:

Frank Marris, Senior General Counsel
Phone (02) 6253 7083

ISSN 1329-458X (Print)
ISSN 2204-6542 (Online)

The material in these notes 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 these notes.

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