Litigation Notes No. 5

Number 5
28 July 2000

Prosecution of Corporate Law Offences

These decisions concern the legislative and constitutional
basis for the exercise of State functions or powers by
the Commonwealth DPP under the national corporations
scheme and the former co-operative scheme.

The Queen v Hughes
High Court of Australia, 3 May 2000
[2000] HCA 22 [(2000) 74 ALJR 802; 171 ALR 155]

Bond v The Queen
High Court of Australia, 9 March 2000
[2000] HCA 13 [(2000) 74 ALJR 597; 169 ALR 607]

Byrnes v The Queen
High Court of Australia, 12 August 1999
[1999] HCA 38 [(1999) 73 ALJR 1292; 164 ALR 520]

These three cases involved challenges to the power of
the Commonwealth Director of Public Prosecutions to deal
with corporate law offences. In Byrnes and Bond, the
High Court held that neither State legislation (Byrnes)
nor Commonwealth legislation (Bond) permitted the
Commonwealth DPP to bring appeals against sentence in relation
to offences against the (now repealed) State Companies
Codes.

The High Court held in Hughes that, in the circumstances
of that case, the Commonwealth DPP had power to prosecute
Mr Hughes with the particular alleged offences against
a State Corporations Law, but left open the possibility
that there might be circumstances in which the DPP would
not have the constitutional power to do so.

Background and Court’s Decisions

The current national corporations scheme commenced on
1 January 1991, and consists of complementary Commonwealth,
State and Northern Territory legislation. The scheme was
established after the High Court had ruled in New South
Wales v The Commonwealth (1990) 169 CLR 482 that the
corporations power in s.51(xx) of the Constitution did
not authorise a Commonwealth law providing for the incorporation
of trading and financial corporations. One significant
object of the scheme is for the Corporations Law of each
jurisdiction to be administered and enforced on a national
basis. It was decided that all corporate law offences would
be prosecuted and appeals against sentence conducted by
the Commonwealth DPP, whereas previously State Companies
Code offences had been prosecuted by State DPPs. These
three cases addressed the extent to which the Commonwealth
DPP could perform these functions.

The High Court’s decision in R v Duncan; Ex parte
Australian Iron and Steel Pty Ltd (1983) 158 CLR
535 established that a Commonwealth officer (such as
the Commonwealth DPP) may perform a State function if:

(a) a State law ‘conferred’ that function
on the Commonwealth officer; and

(b) a Commonwealth law ‘authorised’ the officer
to perform that State function.

The purpose of the Commonwealth ‘authorisation’ was
explained as removing any inconsistency which would otherwise
exist under s.109 of the Constitution where a State law
purports to confer a function on a Commonwealth officer.

Byrnes and Bond

The appellants in Byrnes and Bond had been
sentenced for offences against the Companies Code of South
Australia and Western Australia, respectively. The Commonwealth
DPP had successfully appealed against the sentences imposed,
which were increased.

The High Court in Byrnes found that the State law
in question (transitional provisions in the Corporations
(South Australia) Act 1990 (SA) which sought to bring
within the scope of the national scheme prosecutions for
offences against the former co-operative scheme) did not
confer the necessary authority on the Commonwealth DPP
to bring an appeal against sentence in relation to offences
against the SA Companies Code (step (a) referred
to above).

In Bond, the High Court found that, even if authority
for an appeal could be found under WA law in that case,
the Commonwealth law in question (s.17 of the Director
of Public Prosecutions Act 1983 (Cth)) did not authorise
the Commonwealth DPP to bring an appeal against sentence
in relation to WA Companies Code offences (step (b)
referred to above). The special nature of an appeal against
sentence (namely, the potential jeopardy to the defendant’s
liberty) meant that very specific authority was required
to enable an appeal to be brought, and the general conferrals
of power relied upon by the Commonwealth DPP were not sufficient.
Accordingly, the High Court allowed both appeals with the
effect that the original (lesser) sentences were reinstated.

Hughes

In Hughes, the accused had been charged with alleged
offences against the Corporations Law of Western Australia
(part of the national corporations scheme). He challenged
the power of the Commonwealth DPP to prosecute him with
an offence against a State law. This matter was removed
into the High Court under s.40 of the Judiciary Act
1903 (Cth). The accused ran two lines of argument – one
attacking the provisions of the various Commonwealth and
State Corporations Acts which treated Corporations Law
offences as if they were Commonwealth offences, and another
attacking the provisions which confer the function of prosecuting
State Corporations Law offences on the Commonwealth DPP.
Both of these arguments were unsuccessful in the particular
circumstances of this case.

The accused’s first argument was that the Commonwealth
and State provisions which provide that State Corporations
Law offences are to be treated as if they were Commonwealth
offences for various purposes (eg prosecution and sentencing)
were invalid because they purported actually to convert
State offences into Commonwealth offences. The Court rejected
this argument. While some continuing dissatisfaction was
expressed with the drafting of the Corporations Acts (especially
by Kirby J), the Court accepted that Mr Hughes was
being charged with alleged offences against a State law
(the Corporations Law of Western Australia).

The accused’s second argument was that there was
no valid conferral of functions on the Commonwealth DPP
to prosecute State Corporations Law offences. This argument
was rejected in relation to the particular alleged offences
with which the accused was charged.

The Court accepted that the function of prosecuting State
Corporations Law offences was conferred on the Commonwealth
DPP by the WA Corporations Act (ss 29 and 31), and
the DPP was ‘authorised’ to perform those State
functions by the Commonwealth Corporations Act (ss 47
and 73, and regulations made under those provisions).

The Court said, however, that it was necessary under the
national corporations scheme to relate the Commonwealth ‘authorisation’ to
a head of Commonwealth legislative power. (The Commonwealth
had argued that this was not necessary, on the basis that
the Commonwealth ‘authorisation’ did not have
any substantive operation.)

The joint judgment said the Commonwealth ‘authorisation’ did
have substantive operation, because it (and not the State
law) imposed a duty on the Commonwealth DPP to prosecute
State Corporations Law offences. The joint judgment appears
to derive this duty from the fact that under the national
corporations scheme the Commonwealth DPP is given exclusive
power to prosecute Corporations Law offences.

Having decided it was necessary to show a link between
the Commonwealth ‘authorisation’ and Commonwealth
legislative power, the Court canvassed a number of possible
sources of power, including the executive power, and the
corporations power (s.51(xx)). But the Court did not need
to rule on the availability of either of these powers.
Rather, it was sufficient to determine the case on a narrow
basis – the prosecution of these alleged offences
was within Commonwealth power in the particular circumstances because
the alleged conduct for which Mr Hughes was being prosecuted
involved alleged activities overseas (and therefore came
within s.51(xxix) (the external affairs power) or s.51(i)
(the overseas trade and commerce power)).

Consequences of Decisions

The decisions (especially Byrnes and Bond)
emphasise the need for Commonwealth officers who perform
State functions to satisfy themselves that they have valid
authority under both State and Commonwealth law, particularly
if the State function is coercive.

The decision in Hughes leaves some unresolved questions
about the valid operation of the national corporations
scheme. Provided the Commonwealth DPP prosecutes offences
that are sufficiently connected with trading or financial
corporations (or are within other heads of legislative
power, as in Hughes itself), these prosecutions
will clearly be valid. (The joint judgment noted that the
Commonwealth could itself enact many Corporations Law offences,
particularly under s.51(xx).) But there remain some gaps
in, and uncertainties about, the scope of the corporations
power (for example, in relation to companies which are
not themselves trading or financial corporations).

Text of the decision in Byrnes is available through
Scaleplus at: http://scaleplus.law.gov.au/html/highcourt/0/99/0/HC000390.htm

Text of the decision in Bond is available through
Scaleplus at: http://scaleplus.law.gov.au/html/highcourt/0/2000/0/HC000140.htm

Text of the decision in Hughes is available through
Scaleplus at: http://scaleplus.law.gov.au/html/highcourt/0/2000/0/HC000230.htm

Contact for further information:

Graeme Hill
Principal Solicitor

Tel: (02) 6253 7009
Fax: (02) 6253 7303
E-Mail: graeme.hill@ags.gov.au

David Bennett
Deputy Government Solicitor

Tel: (02) 6253 7063
Fax: (02) 6253 7303
E-Mail: david.bennett@ags.gov.au

Private International Law –
Intranational Torts

The High Court has changed the common law choice of
law rules applicable to ‘intranational’ torts,
so that Australian courts should now apply the substantive
law of the place of the tort. The Court also redefined
the distinction between ‘substantive’ and ‘procedural’ laws,
so that matters such as limitation periods and the amount
of damages are now regarded as ‘substantive’.

John Pfeiffer Pty Ltd v Rogerson

High Court of Australia, 21 June 2000
[2000] HCA 36

Background

In 1989, Mr Rogerson was injured in a workplace accident
occurring in Queanbeyan, NSW. Mr Rogerson brought a tort
action against his employer (whose principal business office
was in the ACT) in the ACT Supreme Court. The tort was ‘intranational’,
in that the place where the conduct complained of occurred,
and the place where the proceedings were brought, were
different jurisdictions within Australia. The issue was
whether the amount of damages payable to Mr Rogerson
should be assessed under:

  • the law applicable in NSW (where the amount of
    damages that could be awarded was limited by Part 5
    of the Workers Compensation Act 1987 (NSW) (‘the
    NSW Act’)); or
  • the law applicable in the ACT (where there was no ‘cap’ on
    the amount of damages that could be paid); or
  • a combination of both.

Previously, the High Court had applied a choice of law
rule derived from Phillips v Eyre (1870) LR 6 QB
1, called a ‘double actionability’ rule. Under
this rule, a plaintiff could only recover in the courts
of one Australian jurisdiction for a tort committed in
another Australian jurisdiction if the conduct complained
of would give rise to a civil liability under (1) the
substantive law applicable in the place where the conduct
complained of occurred (the ‘law of the place of the
tort’; here, NSW) and (2) the substantive
law applicable in the place where the proceeding was brought
(the ‘law of the forum’; here, the ACT).

Matters of procedure were, however, governed by the law
of the forum. The High Court had previously held that the
quantification (but not the type) of damages recoverable
was a ‘procedural’ matter (Stevens v Head (1993)
176 CLR 433), which meant this amount was assessed
under the law of the forum. Both the ACT Supreme Court,
and on appeal the Federal Court, therefore applied the
law applicable in the ACT to the assessment of damages,
and awarded Mr Rogerson an amount of damages that
was more than would have been available under the NSW Act.

High Court’s decision

The High Court’s decision reconsidered both the ‘double
actionability’ requirement referred to above, and
the distinction between ‘substantive’ and ‘procedural’ laws.

‘Substantive’ vs ‘procedural’ laws

All members of the High Court overruled Stevens v Head,
and redefined the distinction between ‘substantive’ and ‘procedural’ laws
in the context of choice of law rules applicable to ‘intranational’ torts.
In a joint judgment, Gleeson CJ, Gaudron, McHugh, Gummow
and Hayne JJ indicated that matters affecting the existence,
extent or enforceability of the rights or duties of the
parties to an action were ‘substantive’, and
that ‘procedural’ laws were confined to rules
governing or regulating the mode or conduct of court proceedings.
The separate judgments of Kirby J and Callinan J
reached similar conclusions. On this basis, all questions
about damages (such as the kinds of damage recoverable,
and the amount of damages) are ‘substantive’ matters,
as is the application of any limitation period. Accordingly,
Mr Rogerson could not be awarded any more damages
than the amount payable under the NSW Act, regardless
of the position taken on the ‘double actionability’ rule.
Indeed, Callinan J confined his decision to this ground.

‘Double actionability’ rule

The Court (apart from Callinan J) also overruled
the ‘double actionability’ rule, and held that,
in determining ‘intranational’ torts, Australian
courts should apply the substantive law of the place of
the tort. In this case, this meant that liability should
be determined under the substantive law applicable in NSW.

The Court reconsidered its earlier decisions that had
upheld the ‘double actionability’ rule in the
light of the later ruling in Lange v Australian Broadcasting
Corporation (1997) 189 CLR 520 that the common
law must conform with the Constitution. The joint judgment
concluded that several constitutional matters required
a ‘somewhat different approach’ to be taken,
in particular, the existence and scope of federal jurisdiction
in Chapter III of the Constitution, and the ‘full
faith and credit’ required by s.118 of the Constitution.

Any ‘double actionability’ requirement was specifically
rejected. The joint judgment concluded further that it
was preferable to apply the law of the place of the tort,
rather than the law of the forum, in this situation. The
former approach would apply a fixed and certain liability
consistently in all courts in Australia, whereas the latter
could expose the defendant to a range of laws imposing
different liabilities, depending on where the action was
brought. The question of whether the reformulation of the
common law choice of law rule was constitutionally entrenched
was, however, left open.

Text of the decision is available through Scaleplus at: http://scaleplus.law.gov.au/html/highcourt/0/2000/0/HC000370.htm

Contact for further information:

Graeme Hill
Principal Solicitor

Tel: (02) 6253 7009
Fax: (02) 6253 7303
E-Mail: graeme.hill@ags.gov.au

Paul Sykes
Principal Solicitor

Tel: (02) 6253 7050
Fax: (02) 6253 7302
E-Mail: paul.sykes@ags.gov.au

Public Interest Immunity –
Cabinet Documents

A Full Federal Court unanimously upheld the Commonwealth’s
claim of public interest immunity to resist disclosure
of a document which revealed the deliberations of Cabinet.

Commonwealth of Australia v CFMEU

Full Federal Court of Australia, 12 April 2000
(2000) 171 ALR 379

Background

The Commonwealth’s public interest immunity claim
was made in relation to proceedings brought in the Federal
Court by the Construction, Forestry, Mining and Energy
Union against the Employment Advocate, alleging that the
Employment Advocate threatened to coerce an employer and
unions to vary a certified agreement.

In the course of discovery of documents ordered by the
Court, the Employment Advocate disclosed the existence
of a document described as ‘Copy of Letter from the
Minister for Employment, Workplace Relations and Small
Business to the Prime Minister (undated)’. The Employment
Advocate objected to production of the letter on the grounds
of public interest immunity on the basis of its status
as a Cabinet document. The Commonwealth appeared in support
of the immunity claim.

In accordance with the Legal Services Directions, the
Department of the Prime Minister and Cabinet (PM&C)
assumed responsibility for instructing the AGS in relation
to the public interest immunity claim. An affidavit by
an Executive Coordinator (Deputy Secretary equivalent)
in the Department of the Prime Minister and Cabinet in
support of the immunity claim indicated that:

  • the letter was an unsigned (but otherwise identical)
    version of a letter from the Minister to the Prime Minister;
  • the letter sought the Prime Minister’s agreement
    to raise matters of high level government policy ‘under
    the line’ in Cabinet – ie without a formal
    submission;
  • the letter revealed issues that the Minister sought
    to have considered by Cabinet, the Minister’s proposed
    course of action in relation to those issues, and the
    arguments to be put by the Minister;
  • the letter was circulated to Ministers in the Cabinet
    room;
  • the letter was in the same position as a Cabinet submission.

The basis of the Commonwealth’s immunity claim was
that disclosure of the letter would reveal Cabinet deliberations,
thereby breaching Cabinet confidentiality, with resulting
prejudice to:

  • the need for uninhibited discussion of issues by Ministers
    in the Cabinet room; and
  • the well established convention of collective Cabinet
    responsibility whereby, once a decision is made, all
    Ministers should publicly support it.

After privately inspecting the letter, Justice Marshall
ordered production of it to the CFMEU.

The Commonwealth applied for leave to appeal that decision.
This application was based on the premise that the decision
was an interlocutory decision, in respect of which an appeal
was not available without leave.

However, as an alternative (in case leave was not granted)
the Commonwealth also purported to appeal as of right.
In relation to an appeal as of right, the Commonwealth’s
submission was that, on the basis of authorities that a
claim of public interest immunity is separate from the
subject matter of the proceeding between the parties to
the litigation, the rejection of the claim was a final
judgment on that separate subject matter.

Apart from opposing the merits of the Commonwealth’s
appeal, the CFMEU argued that the Commonwealth had no standing
to appeal, as it was not a party to the substantive proceeding.

The Decision

Commonwealth’s standing to challenge Justice
Marshall’s decision

The Full Court referred to ‘a long line of cases’ that
a non-party can appeal by leave. The Court also noted statements
in other cases that no order rejecting a public interest
immunity claim should be enforced until the relevant government,
State or Federal, has had an opportunity to appeal the
order or test its correctness by some other process.

The Court stated that it was clear that the Commonwealth
should be granted leave to appeal, thus finding it unnecessary
to decide whether the Commonwealth could appeal as of right.

Public Interest Immunity Test

The Court traversed the public interest bases for maintaining
the confidentiality of Cabinet documents, namely the nature
of responsible government, the principle of collective
Cabinet responsibility and need for uninhibited decision-making
and policy development by Cabinet. The Court also noted
the following statements by the High Court in Commonwealth
v Northern Land Council (1993) 176 CLR 604 at 617–8:

In the case of documents recording the actual deliberations
of Cabinet, only considerations which are indeed exceptional
would be sufficient to overcome the public interest in
their immunity from disclosure, they being documents with
a pre-eminent claim to confidentiality. ...

Indeed, for our part we doubt whether the disclosure of
the records of Cabinet deliberations upon matters which
remain current or controversial would ever be warranted
in civil proceedings.

The NLC case related to Cabinet note books which
actually recorded what was said by Ministers in the Cabinet
room. In the CFMEU case, on the basis of the PM&C
officer’s affidavit, the Full Federal Court accepted
that, although not recording actual deliberations,
the letter revealed what would have been discussed. The
Court also held that the CFMEU had not established exceptional
circumstances outweighing those militating against disclosure.
In this regard the Court stated that:

  • although serious allegations were made, the letter
    was not central to the resolution of the substantive
    dispute;
  • the fact that a copy of the letter was sent to the
    Employment Advocate did not amount to a waiver of public
    interest immunity as it was sent and received as a confidential
    communication.

The Full Court found that Justice Marshall:

  • erred in forming the view that the letter did not attract
    the high degree of protection which attaches to Cabinet
    documents which disclose or are likely to reveal Cabinet
    deliberations; and
  • erred in the balancing process by emphasising to an
    unwarranted extent the need for the letter to be produced
    in the substantive proceedings.

Implications of the Decision

Standing

The Full Court’s decision leaves open the question
whether a challenge to a rejection of a public interest
immunity claim can occur without needing the Court’s
leave. This can be important in situations (eg some criminal
cases) where leave to appeal is not available.

Public Interest Immunity Test

The decision emphasises the need for confidentiality of
documents revealing what Ministers can reasonably be expected
to have said in the Cabinet room. The decision has particular
application to Cabinet submissions. However, as the Court
noted, such protection is not absolute, nor does it last
forever. A court must always consider the circumstances
of each case, including:

  • the nature of that case (eg whether the case is civil
    or criminal);
  • the importance of the issues in that case;
  • the relevance of the Cabinet information to those issues;
  • the currency of the issues.

Text of the decision is available through Scaleplus at: http://scaleplus.law.gov.au/html/feddec/0/20002/0/FD000410.htm

Contacts for further information:

Libby Haigh
Senior Government Solicitor

Tel: (03) 9242 1499
Fax: (03) 9242 1483
E-Mail: libby.haigh@ags.gov.au

Standing to Bring Proceedings Under the
Trade Practices Act

In this case the High Court unanimously upheld the
validity of ss 80 and 163A of the Trade Practices
Act 1974 (Cth) which allow ‘any person’ to
bring certain trade practices proceedings. The decision
allows considerable scope for Commonwealth laws to modify
the common law principles of standing, in particular
to achieve public interest objects such as in the Trade
Practices Act.

Truth About Motorways Pty Ltd v Macquarie Infrastructure
Investment Management Ltd

High Court of Australia, 9 March 2000
[2000] HCA 11; [(2000) 74 ALJR 604; 169 ALR 616]

Background

The respondent sought to raise funds for the Eastern Distributor,
a toll road in Sydney, through a prospectus which included
forecasts about the volume of traffic. The applicant commenced
proceedings in the Federal Court claiming that the respondent
had contravened s.52 of the Trade Practices Act by engaging
in allegedly misleading and deceptive conduct. The applicant
sought a declaration that the respondent had contravened
s.52 and an order to compel corrective advertising.

On 20 November 1998, on the application of the respondent,
the High Court removed the proceedings into that Court.
Gaudron J stated a case to the Full High Court reserving
several constitutional questions for decision. In the end,
as the High Court upheld the validity of ss 80 and 163A
it was unnecessary for the Court to consider the other
issues. The Commonwealth Attorney-General intervened in
support of the validity of ss 80 and 163A. The Attorney-General
was represented by AGS Chief General Counsel Henry Burmester
QC (who at the time was acting Solicitor-General of the
Commonwealth) and Mark Moshinsky of the Melbourne Bar.
The Attorney-General’s intervention was conducted
by Grahame Tanna and David Bennett of AGS’ Constitutional
and Native Title Unit, Office of Litigation.

Section 80 of the Trade Practices Act provides that the
Court may, on the application of the Australian Competition
and Consumer Commission ‘or any other person’, grant
an injunction relating to a contravention of Parts IV,
IVA or V of the Act. Section 163A provides that ‘a
person’ may institute a proceeding in the Court
seeking, in relation to a matter arising under the Act,
a declaration in relation to the operation or effect of
specified provisions of the Act or in relation to the validity
of any act or thing done or proposed to be done under the
Act.

Validity of ss 80 and 163A of the Trade Practices
Act 1974

At common law, an individual has no standing to seek an
injunction or declaration to prevent the violation of a
public right or to enforce the performance of a public
duty where he or she has no interest beyond that of any
other member of the public in upholding the law. In order
to establish standing, an individual must show interference
with a private right, or a ‘special interest’ in
the subject matter of the action. However, an applicant
for an injunction under s.80 of the Trade Practices Act
need not show that he or she has a proprietary interest
that is affected, or that he or she has suffered special
damage or has suffered any damage at all.

Chapter III of the Constitution limits the conferral of
jurisdiction on federal courts to ‘matters’.
The requirement of a ‘matter’ is that there be
a justiciable controversy as to some ‘immediate right,
duty or liability to be established by the determination
of the Court’. The respondent challenged the validity
of
ss 80 and 163A on the basis that, in conferring standing on ‘any person’ to
bring proceedings for an injunction or declaration, including a person with
no direct or special interest in the subject matter of the proceedings, the
sections purport to confer on the Federal Court jurisdiction in proceedings
which do not give rise to a ‘matter’ for the purposes of Ch III.
The applicant admitted for the purposes of the removed proceedings that it
had no direct or special interest in the subject matter of the dispute. The
respondent argued that it followed that there was no justiciable controversy
and hence no ‘matter’.

The High Court unanimously rejected these arguments in
six judgments. Although the applicant had no special interest
in the subject matter of the proceedings, its disputed
assertion that the respondent had breached s.52 of the
Trade Practices Act and its claim for remedies under ss
80 and 163A involved the court in the determination of
a ‘right, duty or liability’ and hence gave rise
to a ‘matter’ for Ch III purposes. It was not
necessary that the applicant and respondent have correlative
interests in the rights and duties in issue.

Questions of standing might still be relevant to the constitutional
requirement of a ‘matter’ where, for instance,
the absence of standing means that there is no legal remedy
or appropriate relief for the wrong in question. Discretionary
considerations might also arise in relation to deciding
whether to grant relief such as a declaration or injunction
in a particular case. However, it appears to follow from
the judgments in this case that, broadly speaking, Commonwealth
legislation may confer standing on any person to seek remedies
to enforce public rights, duties and liabilities arising
under statute (and, it may be, the general law).

The Court did not find assistance in the more restrictive
approach taken in the decisions of the United States Supreme
Court on Art III of the United States Constitution, which
uses narrower language in limiting federal judicial power
to the resolution of ‘cases’ and ‘controversies’.

Text of the decision is available through Scaleplus at:

http://scaleplus.law.gov.au/html/highct/0/2000/rtf/2000030911.rtf

Contact for further information:

David Bennett
Deputy Government Solicitor

Tel: (02) 6253 7063
Fax: (02) 6253 7303
E-Mail: david.bennett@ags.gov.au

Grahame Tanna
Principal Solicitor

Tel: (02) 6253 7119
Fax: (02) 6253 7303
E-Mail: grahame.tanna@ags.gov.au

Defamation Proceedings and Parliamentary Privilege

This case involved questions about the construction
and constitutional validity of s.16(3) of the Parliamentary
Privileges Act 1987 (‘the Privileges Act’)
and the effect of s.16(3) on the defamation proceedings
brought by Mr Rann, Leader of the Opposition in the Parliament
of South Australia against Mr Olsen, Premier of that
State.

Rann v Olsen

Full Court of The Supreme Court of South Australia
12 April 2000 [2000] SASC 83

Background

The defamation proceedings arose out of allegations made
by Mr Olsen outside Parliament that Mr Rann had lied in
giving evidence to a federal parliamentary committee. Mr
Rann had told the committee that Mr Olsen, while a Minister
of the Government, had leaked confidential information
to the Opposition in an attempt to bring about the downfall
of the then Premier of South Australia,
Mr Brown. Mr Olsen has pleaded the defences of truth, qualified privilege and
fair comment. Mr Rann has pleaded malice against Mr Olsen.

The Court was asked to decide three issues:

  • whether s.16(3) of the Privileges Act or s.49 of the
    Constitution operate to prevent Mr Olsen from maintaining
    and supporting the defences of truth, qualified privilege
    or fair comment or prevent Mr Rann from supporting his
    plea of malice;
  • whether s.16(3) is unconstitutional on the basis that
    it constitutes an impermissible infringement of the implied
    constitutional freedom of political communication or
    impermissibly interferes with the judicial power conferred
    by Chapter III of the Constitution;
  • whether the proceedings should be permanently stayed.

The Commonwealth Attorney-General intervened and argued
that:

  • s.16(3) makes it unlawful for evidence to be tendered
    or received for the purpose of questioning or relying
    on the truth of anything forming part of Mr Rann’s
    testimony to the parliamentary committee or for the purpose
    of questioning or establishing the credibility, motive,
    intention or good faith of Mr Rann in relation to that
    testimony;
  • s.16(3) is a valid law of the Commonwealth;
  • if the exclusion of evidence under s.16(3) makes it
    impossible fairly to determine the issues between the
    parties to proceedings, then the proceedings should be
    stayed.

The Decision

The first question

The members of the Court (Doyle CJ, Prior, Perry, Mullighan
and Lander JJ) agreed that s.16(3) of the Privileges Act
will operate to prevent Mr Olsen from maintaining his defence
of truth. Further, the members of the Court accepted that
s.16(3) will limit what can be done to support the pleas
of qualified privilege and malice, but disagreed on the
extent of that limitation and whether it will prevent those
pleas from being supported.

The Court decided that:

  • s.16 has the dual purpose of preserving freedom of
    speech in parliament and the principle of non-intervention
    under which the courts and parliament recognise their
    respective constitutional roles;
  • there is no reason to read s.16(3) narrowly or otherwise
    than in accordance with its ordinary meaning;
  • in particular, s.16(3) is not subject to any implied
    limitation as to when or why it operates:
    • s.16(3) operates even if the person, the truth
      of whose words is questioned, is a plaintiff;
    • s.16(3) operates even if the effect of its application
      is to deny a defendant a defence based upon a statement
      by the defendant about what the plaintiff said
      in proceedings in Parliament;
    • s.16(3) operates even if, in the opinion of the
      Court, the particular prohibited activity does
      not in fact impair the freedom of speech in Parliament
      of the person whose statements are to be challenged;
  • the parties to a defamation proceeding cannot waive
    the operation of s.16(3).

Prior J and Perry J held that Wright v Lewis (1990)
53 SASR 416 and R v Murphy (1986) 5 NSWLR 18 were
wrongly decided. Doyle CJ, with whom Mullighan J agreed,
did not find it necessary to decide this point.

Prior J held that s.16(3) of the Privileges Act was declaratory
of the operation of Article 9 of the Bill of Rights 1688
(UK). Perry J thought that s.16(3) went further than that
Article. Doyle CJ held that the meaning of s.16(3) is not
controlled by the meaning of Article 9 and assumed, for
the purposes of considering its validity, that s.16(3)
extends the protection given by Article 9. Lander J took
the same approach as Doyle CJ.

The second question

All members of the Court held that s.16(3) was supported
by s.49 of the Constitution and was otherwise a valid law.

Prior J held that the validity of s.16(3) flowed from
the fact that it was merely declaratory of the operation
of Article 9 of the Bill of Rights, which had been
expressly picked up and applied by s.49 of the Constitution,
and that any implications to be drawn from the Constitution
could not defeat a law expressly authorised by that section.

Because Doyle CJ (Mullighan J agreeing), Perry and Lander
JJ did not hold that s.16(3) was merely declaratory of
the operation of Article 9, their Honours found it necessary
to consider Mr Rann’s arguments that s.16(3) infringed
the implied freedom of political communication and impermissibly
interfered with the judicial power conferred by Chapter
III of the Constitution. Their Honours held that s.16(3)
did not have these effects.

The implied freedom of political communication

Their Honours applied the test laid down by the High Court
in Lange v Australian Broadcasting Corporation (1997)
189 CLR 520 for determining whether a law infringes the
implied freedom of political communication, namely:

  • does the law effectively burden freedom of communication
    about government or political matters either in its terms,
    operation or effect?
  • if so, is the law 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?

Their Honours answered yes to both questions. As to the
first question, the effect of s.16(3) was to deny Mr Olsen
a defence to the defamation action and so burden his freedom
of speech. That burden was characterised as significant
because it operated directly on the freedom to speak about
what happens in Parliament. In relation to the second question,
their Honours considered that:

  • s.16(3) was an appropriate means of pursuing legitimate
    objectives: freedom of speech in Parliament and the principle
    of non-intervention applying between Parliament and the
    courts; and
  • the consequent burden imposed on the freedom of communication
    was unavoidable given the desired level of protection
    for freedom of speech in Parliament. In the end, it was
    a matter for Parliament to determine the extent to which
    freedom of speech in Parliament should be protected.

The view that s.16(3) is valid was reached ‘after
much consideration’ on the part of Doyle CJ, who wrote
the leading judgment on this point.

Interference with judicial power

Their Honours held that s.16(3) was no different from
any rule of law that operates to exclude certain evidence
from consideration by the Court and did not, therefore,
impermissibly interfere with the judicial power conferred
by Chapter III of the Constitution.

The third question

All members of the Court held that it is within the Court’s
power to order a stay of defamation proceedings if s.16(3)
of the Privileges Act operates to prevent pleas of truth
or qualified privilege being maintained.

Prior J and Perry J would have granted a stay in the present
case on the basis that the operation of s.16(3) in effect
took from the Court the essence of the defamation dispute
pleaded so that it would be impossible fairly to determine
the issues between the parties.

The majority, however, refused to stay the proceedings.
In their opinion, it was not appropriate for the Court
to determine whether or not a stay should be granted in
circumstances where it must speculate upon the evidence
which might be led at trial and the precise impact of s.16(3)
on that evidence. The majority considered that whether
the stay should be granted should therefore be determined
by the trial judge.

Text of the decision is available through Scaleplus at:

http://scaleplus.law.gov.au/html/sasdec/0/20002/0/SD000030.htm

Contact for further information:

Anna Lukeman
Principal Solicitor

Tel: (02) 6253 7142
Fax: (02) 6253 7303
E-Mail: anna.lukeman@ags.gov.au

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

For assistance with supply of copies, change of address
details etc Tel: (02) 6253 7052, Fax: (02) 6253 7313,
E-mail: ags@ags.gov.au.

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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