ABC Developmental Learning Centres v Wallace

[2007] HCATrans 812

[2007] HCATrans 812

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M81 of 2007

B e t w e e n -

ABC DEVELOPMENTAL LEARNING CENTRES PTY LTD

Applicant

and

JOANNE WALLACE

Respondent

Application for special leave to appeal

KIRBY J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 14 DECEMBER 2007, AT 12.40 PM

Copyright in the High Court of Australia

MR W.R. RAY, QC:   If the Court pleases, I appear on behalf of the applicant with my learned junior, MR R.W. TAYLOR.  (instructed by Dibbs Abbott Stillman Lawyers)

MR P.G. PRIEST, QC:   If the Court pleases.  I appear with my learned friend, MR A.G. BURNS, for the respondent.  (instructed by Victorian Government Solicitor)

KIRBY J:   Yes, Mr Ray.

MR RAY:   Your Honours, this is an application for special leave to appeal a unanimous decision of the Victorian Court of Appeal.  The matters raised ‑ ‑ ‑

KIRBY J:   You have not a run on the board yet, have you?  The magistrate was against you, Justice Bell was against you and then the Full Court of the Court of Appeal was against you.

MR RAY:   Which is why this Court exists from time to time, your Honour, to right the wrongs of preceding courts.

KIRBY J:   That is true.

HAYNE J:   Why do we ever get to any of these interesting questions of attribution, of responsibility to corporations in a statute which says a company shall ensure a result, that result was not ensured, end of question, is it not, Mr Ray?

MR RAY:   With respect, your Honour, we would submit no because were that to be so, the term “adequate” would have no work to do, particularly with, for example, argued in analogy with the other terms and qualification elsewhere in the Act such as “reasonable” and elsewhere in other Acts such as “reasonably practicable”.

HAYNE J:   But that is an argument about the content of the result that is to be ensured.  The result that is to be ensured is adequate supervision.  You have a junior going over the fence.  Leave aside where that leaves the state of evidence when that little piece of evidence hits the table, but the corporation has got to ensure a result.  Why do we get into questions of attribution of responsibility ever? 

MR RAY:   Because, your Honour, here it is not an outcome‑based offence.  In other words, there could have been a breach in these circumstances without young Mr Varga departing over the fence.  There could well have been a failure to provide adequate supervision in circumstances where all other matters were complied with.  What is said here is that “adequate”, for example, varies with a range of the circumstances, the nature of the child, the knowledge of other children within the premises, proximity of other external hazards, the presence of other risks both within the yard and external to the yard.  If that is what adequacy refers to, then quite clearly, your Honour, there is a qualitative component within the test.  If there is a qualitative component within the test, then it cannot be said to be one of absolute liability.

KIRBY J:   But if one looks at the actual language of the statute, unpleasant though this is sometimes to have to do, 27(1) seems to be in very relatively clear terms to me:

The proprietor of a children’s service must ensure that all children being cared for –

et cetera.  Now, if one then considers the purpose of the statute, which is to supervise the operators of children’s services, and the importance of the success of that operation in protecting children, a matter of the highest concern of society, why would one not read the provision as the Court of Appeal did?  Even though you could start with an inclination to say, “Well, normally we require that there is an intention and a fault element”, but the language is very hard to get around, it seems to me.

MR RAY:   The language embraced is very similar to other language that imposes a mandatory obligation, that is, to ensure, as with other occupational health and safety legislation, but then introduces that qualitative component.  So the obligation – and keep in mind the obligation is on the proprietor, not the low‑level workers – what is to be ensured is the provision of adequate supervision.  That embraces the same sort of qualification that Justice Brennan declared in Chugg v Pacific Dunlop and in that declaration Justice Brennan confirmed that, as a matter of grammar, the obligation imposed cannot be an absolute obligation in circumstances where there is the qualitative component of reasonable practicability.  That is a component that exists in other regulations throughout Australia, as we indicate in one of the schedules in our application book. 

If you are dealing with the imposition of such standards to ensure, ensure what?  The adequate supervision.  It is the sort of obligation raised in He Kaw The where the Court looked at offences of mens rea.  The Court there said you can have cases that stop short of specific intent and, indeed, that was an example of one of them, but it is another step to take a further step forward and say that imposes absolute liability and, indeed, the Court in He Kaw The said that it did not.

KIRBY J:   But is not your difficulty that whatever view one takes, whether one takes the magistrate’s view or the Court of Appeal’s view, if you take the Court of Appeal’s view, well, it is pretty cut and dried, a child goes outside, so that on the face of things it would be open to the Tribunal of fact to decide that your client had not ensured adequate supervision of the child.

MR RAY:   That is the very point, your Honour.

KIRBY J:   That is the Court of Appeal’s approach. 

MR RAY:   Yes, it is.

KIRBY J:   If you take the magistrate’s approach, then it was on one view of the matter open on the evidence for the magistrate to conclude that the child was not adequately supervised.  When we look at the matter, it is a local statute of Victoria and your client a long while ago was fined the handsome sum of $200.

MR RAY:   It was, your Honour.

KIRBY J:   So why does that really attract the attention of the highest court in the land?

MR RAY:   Because this Court has never dealt with the issue of corporate attribution in a criminal setting and it has very recently given special leave in relation to the attribution of mens rea to a council to determine who within the council was capable of having knowledge of a particular hazard for the future of civil liability.  We are dealing here with a specific issue, not of mens rea, but of the actus reus.  What the Court of Appeal judgment has done is to assume the attribution that we say is implicit and should not be assumed throughout the judgment.  It also has in rather interesting terms – if I can take your Honours to paragraph 14 of the judgment at page 43 of the application book, your Honours will find there the observation – and this arose in the course of an exchange with the President of the Court of Appeal:

There is no defence of honest and reasonable mistake, so the liability is properly to be regarded as absolute.

His Honour the learned President adopted a previous judgment of the Court of Appeal handed down in September of the previous year.  He said that the obligation was in fact absolute.  In the course of this discussion, we raised the existence of Justice Brennan’s qualification, if you like, of the absolute liability and his comment that it could never be in fact absolute and then the court handed down the balance of that paragraph:

Because of the practicability qualification, the obligation is not absolute but the liability for breach is absolute nevertheless. 

Now, that is difficult to grapple with and I suspect what was being done was to say, well, the obligation is absolute and then try to take into account Justice Brennan’s guidance that it should not be absolute because of the qualified duty.  For example, in environment protection cases there is an absolute duty not to, for example, permit an environmental hazard and it does not matter what is done beforehand because of the strict terms of the legislation.

KIRBY J:   Yes, we had a case like that last year in the environmental area.

MR RAY:   Yes, and therefore, consistent with the line of authorities, it does not matter who has maintained the valve or what has happened beforehand, there is no defence, if you like, of an objective reasonable conduct.  Here it is quite clear, with respect, that one cannot have an absolute liability and there is a tension between States.

HAYNE J:   Be it so, let it be assumed that the phrase “absolute liability” is inapposite to this.  Was the question before the magistrate any more complicated than to ask, was this child adequately supervised?

KIRBY J:   And the child got over the fence.

MR RAY:   Your Honour, it is not, with respect, a res ipsa loquitur, the consequence.  You can have a breach in circumstances where ‑ ‑ ‑

HAYNE J:   Yes, if a child had been struck by lightning you would say, no, there was no want of adequate supervision, but the core question for the magistrate was, was this chid adequately supervised?  He got over the fence.  Answer, no.  Did the company ensure that the child was adequately supervised?  No.  Now, you build this whole intellectual edifice on top of those essentially very simple questions, Mr Ray.  Why should we do it?

MR RAY:   The facts, we agree, are simple, but in your Honour’s observations what you have done is to say there was a want of due care.

HAYNE J:   Yes, I have.

MR RAY:   Yes, and we would agree.  We would agree, but what has not been dealt with adequately is the attribution of where that want of due care occurs and, understandably, in section 27 there are separate provisions for attribution of conduct to a proprietor and the departure can be constituted by different actus reus when one is dealing with a proprietor and the low‑level employees.  There is reference in the course of the judgment that no issue of the kind raised in this present case, that is, the issue you raise about the challenging the appropriate supervision, is present, because ABC conceded there had not been adequate supervision.  That is a concession made not in relation to the body corporate, but in relation to the two individuals who were remaining within the supervision yard. 

Your Honour, these sorts of cases with qualified obligations exist throughout Australia and they exist in a range of different levels and the attribution of a natural person’s conduct to a body corporate is a matter of great significance.

KIRBY J:   But in the facts of this case, which, as Justice Hayne says, were very simple, what is the substantive injustice to your client?  What is the reason or principle that would attract the attention of this Court in very simple facts?

MR RAY:   The unfairness is this.  If you are a proprietor and the definition of “proprietor” within the Act, and it is found in section 3, relates to a degree of control.  In relation to that degree of control, the proprietor is clearly responsible for a range of things.  One can look at, for example, compliance with staffing levels, fence heights, a range of things, qualifications of staff.  If you then look at this, what has really been done is the attribution of the isolated act of oversight or negligence by a low‑level employee against a body corporate in circumstances where the body corporate can say, “What more can I do?” and the fundamental ‑ ‑ ‑

HAYNE J:   There is not a very comfortable fit between these provisions and a large‑listed company owning and operating many of these centres.  I understand that.  But the question is, what does the Act mean?

MR RAY:   One then questions, your Honour, what work the term “adequate” has to do and, in these circumstances, perhaps I could put this.  If a natural person was the proprietor – question, obviously, the consequence of a natural person being the proprietor - ordinarily one does not have vicarious liability in the criminal law to attribute against a natural person the conduct of others.  We would, with respect, submit that there are significant difficulties both in relation to the absence of consideration of corporate attribution and the definition of this as an absolute liability offence, given the reference to the term “adequate”. 

Your Honour can see that throughout the judgment there is the assumption – indeed, may I say the same, perhaps, understandable assumption that Justice Hayne has made – if it is proved there is not adequate supervision, it is immaterial in the organisation where it occurs.  If you are attributing criminal liability rather than vicarious civil liability, then

you are going to convict a natural person or a body corporate of a criminal offence, then you must look to whose conduct it is that is going to be held against the other person from the liability.

KIRBY J:   I understand that argument, but from the point of view – and I say this respectfully because I know you have to advance the concern of your client – of the High Court, the case in which to look at this tricky question of principle would, would it not, be the case of a large corporation with many employees and with many outlets and the practical impossibility of ensuring adequate supervision and that that is the circumstance in which we would grapple with the issue of principle?

MR RAY:   Your Honour, that, in fact, reflects the company that is before you.  The ABC Developmental Learning Centres has ‑ ‑ ‑

KIRBY J:   Yes, but it is in the particular playground of a very small environment with particular employees and very simple facts.

MR RAY:   The facts are simple, but the consequences for the applicant are far from simple.  If you are looking at, therefore, the administration of the very type of company you refer to with hundreds of sites around Australia, the question is, if you do as a proprietor – and there are separate duties within section 27 – that which you are obliged to do ‑ ‑ ‑

KIRBY J:   Yes, but you happen to have got yourself into a business which naturally enough requires extremely high duties of care.  The Parliament has used mandatory language.  We do see “must” in statute sometimes now but not all that often.  It is expressed in objective terms.

MR RAY:   Yes, that is the key.  If it is expressed in objective terms, with respect, your Honour, the duty is to ensure, but to ensure what?  Adequate.  With respect ‑ ‑ ‑

KIRBY J:   Yes, we understand the argument.

MR RAY:    ‑ ‑ ‑ that is variable subject to a range of other issues.  If there is an objective component in the test, then, with respect, the immediate attribution of the isolated act of departure by the employee creates very significant issues for a defendant company or an applicant company such as ABC, to deal with.  It is typical of regulatory offences around Australia in a range of different legislation which is why it is a matter of appropriate national significance for this honourable Court.

KIRBY J:   Yes, thank you very much.  The Court does not need your assistance on this occasion, Mr Priest.

This application concerns the meaning and application of the Children’s Services Act 1996 (Vic). The applicant company, which operates a licensed children’s care centre, was convicted of an offence against section 27 of the Act of failing to ensure that all children being cared for in its children’s services were adequately supervised at all times while on the premises.

The prosecution arose out of an event in April 2003 when a child temporarily absented himself from the centre.  The child was unharmed.  However, as a consequence the applicant was convicted of an offence against section 27 of the Act and fined $200.

Appeals were taken to a single judge of the Supreme Court of Victoria, Justice Bell, and to the Court of Appeal of Victoria.  Many of the applicant’s arguments were addressed to the attribution of criminal liability to the applicant.  On that issue the magistrate examined the conduct of the employees in the centre to decide whether the failure of the staff members was attributable in law to the applicant.

The Court of Appeal, however, preferred the view that the offence was constituted by the failure of the applicant to ensure a result.  We also prefer the Court of Appeal’s analysis.  Given the important objectives of the Act and the language of the Act, we are unconvinced that an appeal to this Court, in a case involving such simple facts, would succeed in disturbing the orders entered against the applicant. 

The application is therefore dismissed and the applicant must pay the respondent’s costs.

MR PRIEST:   If the Court pleases.

MR RAY:   If the Court pleases.

KIRBY J:   We will now adjourn until 2.00 pm to continue with the Melbourne special leave list.

AT 12.59 PM THE MATTER WAS CONCLUDED