Hall, Matt --- "The Judiciary Act and the Future of Commonwealth Immunity" [2001] ALRCRefJl 15; (2001) 78 Australian Law Reform Commission Reform Journal 63

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Reform Issue 78 Autumn 2001

This article appeared on pages 63 – 67 of the original journal.

The Judiciary Act & the future of Commonwealth immunity

By Matt Hall*

Since early in the last millennium, pre-dating the first courts, the Crown has enjoyed rights and privileges over and above those of ordinary citizens. In its earliest manifestation, the doctrine that ‘the King can do no wrong’, protected the monarch from claims by its subjects for loss or damage which it may have caused.

With the advent of a judicial system came the procedural impediment that ‘the King could not be sued in his own courts’. The creation of parliament and the development of enacted legislation then led to the presumption that the Crown could not be bound by a statute.

Whether modern governments may call upon the immunities of the Crown when sued by ordinary citizens is a complex and controversial question. The issue is examined in detail by the Australian Law Reform Commission in its most recent discussion paper,¹ arising from the review of the Judiciary Act 1903 (Cth) and other legislation regulating the exercise of federal judicial power. Re-thinking the future of Crown immunity, in particular Commonwealth immunity, requires an examination of fundamental policy issues regarding the role and function of executive bodies in their dealings with the people, and the degree to which governments are to be treated equally to their citizens.

Crown immunity in a modern context

The immunity of the Crown is not a discrete concept, but a constellation of separate immunities, which are enlivened at different stages of the litigation process. The immunity from being sued is an initial procedural hurdle, which, in principle, prevents a suit from being commenced regardless of the cause of action. If this immunity can be overcome particular substantive immunities may then come into play. These substantive immunities include immunity from the ‘unwritten’ law – such as common law claims in tort and contract – and from the written law, that is from the application of statutes that apply to the community generally. In cases where a plaintiff’s claim against the Crown is successful, one further presumption of immunity must be rebutted. Despite a general obligation to honour a judgment debt, the Crown is immune from execution against its assets, which limits a successful plaintiff’s enforcement options.

In Australia, colonial legislation removed the Crown’s immunity from being sued, and its substantive immunity from tort and contract, long before this occurred in the United Kingdom. With the formation of the Commonwealth in 1901 a new political entity was formed. There are now nine separate legislatures and nine separate executive governments – including the Commonwealth. The extent to which each of these legislatures can bind any of the other executive governments is highly complex. As well, the position of the Commonwealth Crown, relative to the states and territories, adds a further layer of complexity to the issue.

Until recently, sections 56 and 64 of the Judiciary Act were thought to remove the Commonwealth’s immunity from being sued and its immunity from common law liabilities.² Since federation, therefore, it has been relatively straightforward to sue the Commonwealth for damages arising from a common law claim in most circumstances (although the Commonwealth remained free to legislate so as to reinstate its immunity from being sued and from liability).

In 1997, however, the High Court’s decision in Commonwealth v Mewett³ held that the Commonwealth’s immunity from being sued is removed by s 75(iii) of the Constitution. This decision entrenched the procedural right to commence an action against the Commonwealth but not the Commonwealth’s substantive liability. The effect of Mewett is that the Commonwealth parliament may still legislate to remove its substantive liability but cannot create a procedural bar to actions against the Commonwealth Crown.

The decision in Mewett as to whether the procedural right to sue the Commonwealth is constitutionally entrenched was by a bare 4-3 majority, and its long-term impact is uncertain. On one hand, the decision may be easily reversed by a different High Court and it can be argued that – to all intents and purposes – such immunity had already been removed by the Judiciary Act. On the other hand, the judgment is evidence of the High Court’s narrow reading of Crown immunities generally in recent years.

Whether removed by the Constitution or by the Judiciary Act, the Commonwealth’s immunity from being sued is rarely in issue. In addition, the High Court has consistently held that the Judiciary Act removes the Commonwealth’s substantive immunity from common law claims. However, the Commonwealth’s immunity from statute remains highly controversial and often difficult to determine. This is largely because the relevant Judiciary Act provisions – sections 56, 58 and 64 – do not refer to statutory claims, as they do common law claims. Whether these provisions interact with the terms of a statute so as to bind the Crown has produced nearly a century of conflicting High Court jurisprudence.

Binding the Crown

In the days when the Crown rarely engaged in the sorts of commercial activities undertaken by its citizens, the Crown’s immunity from statutes regulating those activities was easier to justify. However, the notion that the government is above statute law is outdated in contemporary society. Despite the increasing privatisation of public services in recent years, the number of government instrumentalities and the frequency of their interaction with private entities have increased exponentially since the Judiciary Act came into effect. As the High Court put it in Bropho v Western Australia:

‘... the historical considerations which gave rise to a presumption that the legislature would not have intended that a statute bind the Crown are largely inapplicable to conditions in this country where the activities of the executive government reach into almost all aspects of commercial, industrial and developmental endeavors and where it is a commonplace for governmental commercial, industrial and developmental instrumentalities and their servants and agents to compete and have commercial dealings on the same basis as private enterprise.’⁴

Such arguments – along with those favouring equality between government and citizen; the simplification of the law in this area; and the principle that Crown immunity should not exist by default – have led several law reform agencies in Australia and overseas⁵ to recommend removal of Crown immunity from statute. Such recommendations have generally been two-fold. Firstly, the relevant Crown proceedings Act should contain a provision that clearly equates the rights of the Crown and the citizen in any legal dispute.⁶ Secondly, the interpretation legislation should state that the Crown is bound by any Act that does not expressly provide otherwise.

However, the reluctance of governments to expose themselves to liability and the fear of creating new legal complexities have prevailed. Most governments, including the Commonwealth government, maintain the presumption of immunity from statute,⁷ arguing that because it is rebuttable, it is the preferred starting point for determining Crown liability.

The Crown’s immunity from statute has been weakened considerably in recent years, particularly by the High Court’s decision in Bropho.

Bropho was a pivotal case in modernising the law regarding the application of statutes to the Crown. Prior to Bropho, the presumption of the Crown’s immunity from an Act could be rebutted only by an express term or by implication manifest in the words of that same Act. In Bropho, this rule of construction was weakened to permit implication from the subject matter, policy and purpose of the Act. However, applying the rule from Bropho in practice has proven difficult. Parties are rarely able to confidently predict whether or not the Crown is bound by a statute, in the absence of an express term to that effect. The recent High Court decision in Commonwealth v Western Australia⁸ saw a number of restatements of Bropho by the High Court and illustrates the complexities that can arise when applying the rule in practice.

Crown immunity in a federation

Prior to Bropho, the High Court in Bradken⁹ established that the Crown may be impliedly bound by a statute if a particular rule of statutory construction was satisfied, and that this rule applied regardless of whether the statute and the Crown were of the same polity, or of different polities. For example, the question whether a Western Australian Act bound the Western Australian Crown, and the question whether such Act bound the South Australian or even Commonwealth Crown, were essentially the same.

However, the High Court in Bropho did not address the question of whether the statute of one polity binds the Crown in the right of another, because the case involved the Western Australian Crown and a Western Australian Act. It is unclear what the prevailing rule of construction in respect of other polities is after Bropho, as judicial decisions have not clearly established how widely Bropho travels. The underlying policy is also vexed in this regard. While it is generally agreed that the Crown should be bound by the statutes of its own legislature, there is a strong view in many circles that polities within a federation should be presumed to be independent from each other’s statutes, unless there is a clear legislative statement otherwise. If this were not the case, for example, the NSW legislature would be free to bind the Commonwealth by its Acts, but not NSW itself.

One of the least clear aspects of the law in this area is whether s 64 of the Judiciary Act allows a party suing the Commonwealth to rely upon rights conferred by a statute which is not otherwise binding on the Commonwealth. Section 64 states:

‘In any suit to which the Commonwealth or a State is a party, the rights of parties shall as nearly as possible be the same...as in a suit between subject and subject.’

In respect of the common law, this provision has generally been held to subject the Commonwealth to the law in the same way as any other party. However, there is controversy as to the extent to which the ‘rights’ referred to by this provision include rights created by statute. In other words, if a statute is not binding on the Commonwealth as a matter of construction, it is unclear in many cases whether or not it is binding by virtue of s 64. That is, if a statute is binding in a suit ‘between subject and subject’, s 64 could require that the statute is binding in a suit against the Commonwealth.¹⁰ This depends in part upon the meaning of the phrase ‘as nearly as possible’, which has been held to imply there is a limit to the degree of equality between the Commonwealth and its subjects. It is also argued that s 64 applies only once a suit has commenced, and therefore that a suit which is commenced in pursuance of a future right (such as the grant of a mining lease) is outside the ambit of s 64.¹¹ Regardless of the conclusion reached regarding the status of Crown immunity generally, there is little doubt that s 64 requires amendment so as to clarify the precise limits of its operation.

When the Crown in right of the Commonwealth is sued pursuant to a state Act, the situation is more complex still. Until the recent case of Re The Residential Tenancies Tribunal of NSW and Henderson; ex parte Defence Housing Authority (Henderson),¹² the Constitution was held to broadly invalidate state legislation purporting to regulate the activities of Commonwealth instrumentalities. So even if a state Act clearly bound the Crown according to the rules of statutory construction, the Act would be constitutionally invalid if it affected the ability of the Commonwealth executive to carry out its functions, or conflicted with a valid Commonwealth law. In Henderson, however, the High Court gave these constitutional prohibitions a far narrower operation. The Commonwealth may generally be bound by any state legislation that is not expressly directed at it, does not ‘detract from or adversely affect the very governmental rights of the Commonwealth’¹³ and does not conflict with a valid Commonwealth law. Again, the nebulous components of this test are often difficult to apply in practice.

The constitutional issues raised by Henderson are beyond the reach of legislative amendment and thus outside the scope of the ALRC’s possible recommendations at the conclusion of its review. However, like Mewett, Henderson is symptomatic of a growing body of High Court jurisprudence that suggests most forms of Crown immunity have little place in contemporary Australian society.¹⁴ More importantly, the effect of Henderson is that the general principle of a blanket immunity of the Commonwealth from state laws has been jettisoned – if state legislation binds the Crown in right of the Commonwealth as a matter of construction then the Commonwealth will in most cases be bound, subject to any relevant inconsistency under s 109 of the Constitution.

From this morass of conflicting rules, the ALRC is left with a complex task in attempting to clarify the law in this area. The key questions it must face are:

• Should the presumption that the Commonwealth executive is immune from Commonwealth statutes be reversed, so that it is bound unless a statute expressly states otherwise?

• To what extent should the Commonwealth be subject to state and territory statutes?

• Should the presumption that the Commonwealth is immune from state and territory statutes be reversed? If so, what exceptions should apply? Should the Commonwealth have to exempt itself by statute, or could it do so merely by regulation?

• If the Commonwealth’s immunity from the statutes of other polities is to remain, should a rule of construction be enacted to clarify the circumstances in which the Commonwealth is impliedly bound by those statutes that do not expressly address the question?

*Matt Hall is a Legal Officer, working on the Australian Law Reform Commission’s review of the Judiciary Act 1903 (Cth) and related legislation.

Endnotes

1. ALRC Discussion Paper 64 The Judicial Power of the Commonwealth: A Review of the Judiciary Act 1903 and related legislation Sydney 2001 (DP 64).

2. For example Mutual Pools Pty Ltd v Commonwealth [1994] HCA 9; (1994) 179 CLR 155.

3. (1997) 191 CLR 471. See also Smith v Australian National Line Ltd [2000] HCA 58.

4. [1990] HCA 24; (1990) 171 CLR 1, 19.

5. Including those of South Australia, New South Wales, New Zealand, Canada, Ontario, British Colombia, Prince Edward Island and Alberta.

6. If such a recommendation were made in relation to the Commonwealth, the relevant Crown proceedings Act would be the Judiciary Act.

7. Only in South Australia, Prince Edward Island and British Colombia has the immunity been removed.

8. [1999] HCA 5; (1999) 160 ALR 638.

9. Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd (1979) 145 CLR 107.

10. See Commonwealth v Evans Deakin Industries Ltd [1986] HCA 51; (1986) 161 CLR 254.

11. eg Commonwealth v Western Australia [1999] HCA 5; (1999) 160 ALR 638.

12. (1997) 190 CLR 410.

13. id, per Gummow J, 437.

14. Immunity from execution being the exception.