Acquista Investments Pty Ltd & Anor v The Urban Renewal Authority (A Statutory Corporation) & Ors

[2015] HCATrans 295

[2015] HCATrans 295

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A18 of 2015

B e t w e e n -

ACQUISTA INVESTMENTS PTY LTD

First Applicant

VEOLIA ENVIRONMENTAL SERVICES (AUST) PTY LTD

Second Applicant

and

THE URBAN RENEWAL AUTHORITY (A STATUTORY CORPORATION)

First Respondent

THE STATE OF SOUTH AUSTRALIA

Second Respondent

ADELAIDE CAPITAL PARTNERS PTY LTD

Third Respondent

Application for special leave to appeal

KEANE J
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 13 NOVEMBER 2015, AT 11.36 AM

Copyright in the High Court of Australia

____________________

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR D.R. SULAN, for the applicants.  (instructed by Griffins Lawyers)

MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia:   May it please the Court, I appear with MR M.J. WAIT, for the first and second respondents.  (instructed by Crown Solicitor’s Office)

MR M.J. RODER, SC:   May it please the Court, I appear with MR P.A. BRITTEN‑JONES, for the third respondent.  (instructed by Kain C+C Lawyers)

KEANE J:   Yes, Mr Walker.

MR WALKER:   Your Honours, in our submission, the – if I may say so – careful and orthodox disposition of the issues, according to the reasoning of the minority, Justice Debelle, highlights what, in our submission, are the important aspects of basic and significant principle upon which error was committed by the majority in a way which – and in an area, subject matter area – which calls for intervention of this Court pursuant to special leave.  May I turn first to what I will call the “amenability to judicial review point” which is the ratio, that is, the point, upon which the case was actually decided against us by the majority.

Your Honours will have seen an attempt by us to collect what are, we submit, unconvincingly various ways of describing the footing for that decision in our paragraph 16 at application book 332.  The paraphrases – partly quotation, and partly not – that one finds in items (a) to (e) in our paragraph 16 are intended to highlight what, in our submission, travels well beyond established principle.  One way to examine the importance of that and the significance of the decision against us is to suppose that if this decision was not amenable to judicial review by reason of a State statute of a privative or exclusionary kind purporting to prevent the Supreme Court from judicially reviewing it, then, in our submission, the plainest possible occasion for applying the rule in Kirk’s Case would follow.

The Supreme Court’s duty and constitutional function of reviewing for lawfulness conduct of the Executive in areas governed by statute could not be excluded.  Then we come to this case.  In the absence of a statute – except that which constitutes the Supreme Court – in the absence of a statute, it is said by the majority that the unwritten law, judge made law, if you like the common law of judicial review, prevents the lawfulness of this decision from being reviewed.  Now, it is a decision by the Executive, and it is a decision governed by statute.  True it is, it is a decision that results in a contract being made and a contract is at least partly, of course, a creature of – and to be understood in light of – the common law.  It is only partly so, because the power to contract is bestowed by legislation, in this case, just as the ownership is bestowed by legislation in this case, and the power ‑ ‑ ‑

KEANE J:   And it involves the disposition of Crown land?

MR WALKER:   Quite so.  In other words, at one level, about the most basic form of Executive conduct as can be imagined.  Now, we are not saying that when the Crown sells land which is, after all, fee for grant of much of the history of the settlement of the continent, we are not saying that without anything further that is a decision amenable to judicial review.  But to take that example, if a system of land grants required, for example, criteria of eligibility to be assessed and required designated decision‑makers in a designated and stipulated manner thus to achieve what nowadays is called transparency, meaning openness, then, in our submission, it would be a scandal to the principle underlying Kirk to suggest that there could be a judge self‑denying ordinance; a judicial self‑denying ordinance, not judicially to review.  As I say, the proposition can and should be tested by supposing that the amenability to judicial review had been imposed by statute in this case.

Now, in our submission, that is the solid basis upon which the issues thrown up by the manner of determination of this case cry out for special leave.  The facts concerning the amenability to judicial review are neither obscure nor detailed, nor are the subject of any sensible possibility of contest in this Court.  Of course, there are quite special circumstances to the facts such as, for example, the participation, supposedly, on one view of one of the arguments against us, as a delegate of Cabinet.  It need hardly be said that, intuitively, in the government of a State, Cabinet is rarely, if ever, anyone’s delegate.  Cabinet, rather, is the smallest, most concrete, location of the ultimate power of a political kind in a State.

The case did not go off on that point.  The case went off on amenability to judicial review.  But I draw to attention the special facts concerning the supposed role of Cabinet because, in our submission, that comes then to the second aspect of the grave importance of what we sought ‑ what Justice Debelle regarded as not only open to us but requiring relief – that is, holding the Executive to what the enacted law said about what was done.

Now, this is an area where, as we have drawn to attention in paragraph 34 on pages 335 and 336 of the application book and in paragraph 45 on page 337, there is another what I would be bold enough to call a category error by the majority.  This is not a case to be determined by adopting what I thought was outmoded language of directory and mandatory, as the long distant case of ABC v Redmore illustrated when applying simply principles of illegality to the enforceability of a contract.

KEANE J:   This is a case about the disposition of Crown land, otherwise and in accordance with the statute.

MR WALKER:   Yes, and that, in our submission, contains a number of strands, each of which is strong enough to sustain a special leave application and, indeed, in due course we submit a successful appeal.  Redmore was a contract case about illegality.  It was not judicial review at all.  But (c), with respect, your Honours, is how the majority has used or we would say gravely misused what they take from it.  It is said that a statute that stipulates (a) who owns and (b) how it may deal with this land is directory, which, not to mince words, means “does not have to be obeyed.”  That is a crucial proposition in judicial review proceedings, particularly in the course of holding that there cannot be judicial review proceedings.

So, the courts are denying themselves the jurisdiction to examine whether there has been compliance with what enacted law requires in relation to dealing with the land of the State.  It is for those reasons, in our submission, that this is a case apt for special leave quite regardless of the fact that there are, I think, three depending on how you count them, separate stages that might need to be considered.  On amenability to judicial review there is, in our submission, a self‑contained point, apt for special leave, appropriate if the appeal is allowed, at worst for us to result in a remitter.

We do not argue that that would be what should follow because we say that in relation to the way in which Justice Debelle disposed of the matter, once admitted to judicial review the failure of the conduct and, I stress, conduct apparently where the State relies upon what Cabinet did – and your Honours appreciate that what Cabinet did is not susceptible of proof in the same way as any other fact in the country ‑ that what Cabinet did plainly did not comply with the provisions of the law including those in relation to property delegations.  That, in our submission, is a matter entirely apt for this Court on a documentary record uncontested to consider.

KEANE J:   Mr Walker, I think it might be of more assistance if we heard from Mr Hinton.

MR WALKER:   If it please the Court.

KEANE J:   Mr Solicitor.

MR HINTON:   If the Court pleases.  In a sense, this entire matter can be viewed through the prism of the Redmore decisions and the more recent Polish Club Case.  By that I mean, without deciding the question of standing which remains live or amenability or the validity of the delegation or whether there was compliance with section 11(1) of the Public Corporations Act or whether the decision was unreasonable, one could ask there is – there was an unlawful contract, in any of the respects contended for, there being no lawful delegation or a failure to comply with section 11 or unreasonableness, then would the contract necessarily be invalid?  That, applying Redmore and the Polish Club Case, and the Polish Club Case was a case about statutory power, directs one immediately to the statute.

The consequence of unlawfulness is dictated by the statute.  We are then involved ultimately in a standard question of statutory interpretation.  That standard question of statutory interpretation, undertaken by the majority with respect to the question of unreasonableness and the possible breach of section 11(1) and the trial judge, amounted in a finding that the statute would not render unlawful a contract that breached the requirements of the Housing and Urban Development Act, or the Public Corporations Act.

KEANE J:   Mr Solicitor, can I just ask you to pause there, because the way it would be put against you would be the question is not whether the statute renders the dealing unlawful, but rather, I gather from what Mr Walker has said, that he would frame the case as being whether Crown land has been disposed of in accordance with the statutory regime which governs its disposition.  So that invoking cases like O’Keefe v Williams and Cudgen Rutile v Chalk, the real question is whether the disposition of Crown land has occurred in accordance with the statutory provisions that regulate its disposition.

MR HINTON:   If your Honour pleases, I understand that, but we would recast the real question in these terms.  It is, assuming Crown land has been disposed of, failing to comply with the statute that prescribes the method of disposition, the question that then arises is, is the contract affecting the disposal invalid?  There is a second question that takes you straight back to the statute.  Ultimately, whether or not the effect of the failure to comply gives rise to an invalid contract is a question of statutory interpretation.  That is why we say whilst the amenability question is a very interesting one, this is not the case for it.

KEANE J:   You say it is a case of statutory interpretation, but is there not an issue between the parties as to how one approaches that question of statutory construction?  On your approach, it is does the statute impliedly sterilise the transaction.  On Mr Walker’s approach, it is has there been a disposition of Crown land without statutory authority.  So that depending on the approach one takes in terms of principle, one may have a different answer.

MR HINTON:   With respect, our answer would be Mr Walker’s approach is step one, but does not lead you to the ultimate conclusion, because you then must take our approach, which is step two.  So we draw a distinction between unlawfulness and invalidity.  We rely upon – and that distinction was drawn in Project Blue Sky.  You can have unlawfulness but not, pursuant to a statute, necessarily have invalidity.  That is why we say here, ultimately, through the prism of Redmore and the Polish Club Case we end up with a stock standard question of statutory construction.  For that reason we say it is not, it being a stock standard question, a case of general public importance.

Mr Walker says the question of amenability is one of general public importance and I agree with him.  This is not the vehicle for it.  He puts it so high as to say if the majority in this case are correct then praying in aid Kirk we have – and he will forgive me if I have misunderstood him – in effect courts refusing or declining to exercise the supervisory jurisdiction.  In my submission, in answer to that, Kirk does not stand for the proposition that all decisions of an administrative nature are necessarily reviewable.  Kirk, of course, operates within the framework of what is appropriate to the exercise of the judicial power.

Here, critical to the finding as to amenability, was the fact that policy decisions were involved as to employment prospects, development prospects, opening up the State, and so on, that the court – that the judicial power was not suitable to resolve, and that is the underlying, underpinning principle that leads to the decision with respect to amenability.

So, with respect to my learned friend, Mr Walker, he puts it too high.  I cannot say that amenability is not a question of importance, but what I can say is this is not the vehicle to deal with it because ultimately we are left with a stock standard question of statutory construction and there is no reason to think, in my submission, that the conclusion arrived at by the majority in undertaking that stock standard question is attended by sufficient doubt, that conclusion being either the Public Corporations Act nor the Housing and Urban Development Act operated such that the contract, despite the possibility of unlawfulness, is invalid.  In my submission, for that reason this is not a suitable vehicle to flesh out that most interesting question.

My learned friend says, of course, the reliance upon Redmore is overstated by virtue of the use of the now outdated language of “directory” as opposed to “mandatory”.  But, with respect, what Redmore tells us – like Project Blue Sky, like the Polish Club Case – is that the consequence of unlawfulness is to be derived from the statute.  That is what their Honours did.  So, whilst they used that outmoded language, all they use it for is to describe the outcome of their undertaking that process.  If the Court pleases, in my submission, for the reasons we put in print and the submissions I have made, this is not a suitable vehicle to deal with the one question – one question – that is a question of law of general public importance.

The remainder all resolve into questions of statutory construction, or the construction of delegations or, indeed, factual findings underpinning the construction of delegations.  There is nothing, with respect, in the reasonableness argument.  It is said, for example, that this is an opportunity to consider the reasonableness – legal unreasonableness, I should say – outside the migration cases.  But, of course, the principle in Lee, the principle in Wednesbury, have equal application.  The principle does not change, no matter where you are.  In my submission, special leave should be refused.  If the Court pleases.

KEANE J:   Thanks, Mr Solicitor.  We do not need to hear from you in reply, Mr Walker.  There will be a grant of special leave in this case.  Can I ask ‑ ‑ ‑

MR HINTON:   If your Honour pleases, there is a – sorry to go over your Honour – there is a third party.

MR WALKER:   There is a third respondent, your Honour.

MR HINTON:   Mr Roder is here.

KEANE J:   Well, we had better hear from him.  Yes, well, Mr Roder.

MR RODER:   Thank you, your Honour – I will have to – it is obviously not a very promising start to my submissions.

KEANE J:   You will need to be particularly persuasive.

MR RODER:   I follow that, your Honour, and I will not travel over any of the ground that Mr Hinton has travelled over, and I will not seek to set out in detail matters which are already set out in our written submissions.  Your Honour, Mr Hinton has made the submission that section 11 – sorry, I will run it a different way.  In terms of the Act governing the sale of Crown land, it is a specific Act.  There are no particular limits on the power which are vested in the Authority.

There is a general statute, which is the Public Corporations Act, which applies to all public instrumentalities in respect of all of their dealings, and it contains provisions which deal with the way in which they deal with their commercial affairs and non‑commercial affairs, and they include a performance principle that public authorities should act in accordance with prudent commercial principles.  That is the legislative setting, as it were.  The finding of the trial judge and of the majority on the appeal is that, even if there were factually a contravention of section 11, it would not result in invalidity.  Mr Hinton has referred to that.

Your Honours, in addition to that there are, with respect, factual issues with respect to that section 11 issue.  That section 11 is thought to be used by the applicant to sustain a conclusion of legal unreasonableness.  There is a clear finding by the majority – for reasons which we would submit are unassailable – that the decision was not legally unreasonable.  The principles that it applies are not in doubt.  We would submit, your Honour, that unless one gets over those points, one does not get to the issue of amenability.  The issue of amenability does not arise.

Indeed, when one actually analysis what the majority did, and when it considered the question of an amenability, it reasoned by first looking at whether or not the grounds of challenge had been made out and whether or not, in particular, section 11 of the Act contained a limitation on power.  One can see the reasoning that was adopted by the majority on that point, at paragraphs 91 to 93 of their reasoning.  This is under the part of the judgment that deals with amenability.

Your Honours, can I make the point that before the majority has got to this part of its reasoning, it has already considered the various substantive heads of challenge that were made and found, as a matter of fact, that the challenge to authority was not made out and found, as a matter of fact, that the challenge on the grounds of legal unreasonableness were not made out.  They are the only two substantive grounds as we apprehend it that would be relied on before the High Court.  Then, the court turns and deals with the issue of amenability, and it refers at paragraph 90 to the argument before it and at paragraph 91:

We start with the assumption that judicial review may be available in respect of certain decisions and actions of the Executive exercising prerogative, statutory, or common law powers.

Where the power being exercised arises from statute, judicial review may be available to determine the limits of that power and whether the decision went beyond those limits –

That statement of principle cannot be…..clearly, there could be no complaint about that.  The reasoning of the majority is ‑

We have found that s 11 did not operate to restrict the Authority’s powers to contract and so the question of compliance with it is a matter for the Executive, rather than the courts.

That reason might be circular, in a sense.  I would accept that, your Honour, but the reasoning turns on what, we would submit, is clearly the correct construction of section 11, for the reasons given by the majority and by the trial judge, that section 11 does not go the question of power, that a power to contract includes a power to make a contract which is imprudent and that, therefore, there is no limit on power, it is not reviewable.

That is what, we would submit, the reasoning is rather than going to the general point of whether the contract was amenable to review per se.  We would submit that it is clear that in respect of the question of authority, which the majority deals with in the next paragraph at 93, that they adopted a similar approach.  They had already found as a matter of construction that the contract was entered into validly, pursuant to, at least, the property delegation.  There were other sources of power that were identified in argument for it.  The Court went on to say, we have found that it was entered into validly although we doubt it is for the Court to examine that issue other than at the instance of a party to the contract.  The Court then expresses a view that it is difficult to see a role for the Court.

The simple point we make, your Honour, is there are actual findings.  There are findings of construction which, in effect, determined the majority view as to whether or not the decision was within power.  We accept there may be circularity in the reasoning about amenability but we would submit that that circularity would not be a matter that would justify a grant of special leave.  We are still going to be left with a case where, unless findings on unreasonableness and findings of fact about whether there was ministerial approval and on the construction of a delegation are overturned, that the issue of amenability just does not arise.

NETTLE J:   Mr Roder, at the bottom of 203 of the application book, in paragraph 53 of the plurality’s judgment below reference is made to Redmore and a conclusion is expressed that the terms of section 11:

appear to be directory –

which leads to a conclusion over the page that the decision is not amenable to judicial review, expressed in paragraph 56.  If the determination that the section is “directory” rather than “mandatory” were incorrect, then, I take it, you would accept that the decision would be subject to judicial review and it would remain, then, to determine whether there had been a breach of section 11.

MR RODER:   I think I would have to accept that at least it would be a sufficiently arguable point.  So, the answer to that is yes, there would still be – but can I say this, in terms of directory, in my submission, all the majority were doing was using the language that was used in Redmore whilst recognising that the language has changed.  The conclusion of the majority in substance was that on the proper construction of the statute for the reasons given by it and Justice Blue that a failure to comply with section 11 did not have the consequence that somebody who is contracting with an authority that their contract is invalid because of some internal defect in the quality of the other contractual party’s decision‑making it is not known to it and could not be known to it. 

That is the reasoning and the reference to directory is only explaining that that was the language used in Redmore, in my submission.  In addition to that, your Honour, although I would accept there would at least be an arguable question of amenability if that construction of section 11 were wrong, there would still be a very substantial factual issue because – which would need to be resolved.  The majority has found and we would say quite correctly that the decision as a matter of fact was not legally unreasonable.  When one looked through the dissenting judgment of Justice Debelle, it is replete with references to prudent vendors and whether the Authority, in effect, was negligent in its internal deliberations. 

NETTLE J:   Before we get to any question of reasonableness, there is a question of deciding whether section 11 has been complied with, is there not?

MR RODER:   That was certainly a question before the court below.  As I understand, the substantive arguments that are being raised, as I read the notice of appeal and the authority point and an unreasonableness argument which is founded on there being a contravention of section 11, so I do not want to quibble about that but that appears to be how the argument is advanced.  The only point I make is clearly there is that construction issue but there would also require a resolution of a factual issue of an evaluative nature, namely, whether or not this was legally unreasonable having regard to the obligations in section 11. 

Can I just point to the passages of the majority’s conclusions of that?  I think we have referred to that in our outline, but it was clear, your Honour, that the majority understood that the argument that was being put to it was that the decision was legally unreasonable in the context of section 11 of the PCA and the provisions of the Housing and Urban Development Act.  You can see that – the majority explicitly sets that out at paragraph 12 of its reasons and then having – you will see at paragraph 12 the Full Court identified:

The other basis of attack also relied on s 11 and sections of the HUD Act.  It is that the decision was legally unreasonable . . . We are of a different opinion.  In our view there is no basis to find that the decision was legally unreasonable.

KEANE J:   On that point, of course, if one does a judicial head count, it is two‑all of the four judges who have looked at it.

MR RODER:   I would accept that if one did a judicial head count it would be two‑all.  That is clearly the case but, in my submission, the mere fact that it is two‑all would not, of itself, be a sufficient ‑ ‑ ‑

KEANE J:   It does not mean that you are not right.  It just means that the point is arguable, seriously arguable.

MR RODER:   Yes, I do not think we are contending that the point is not arguable, but we are simply making the submission that to get – of itself, the principles are not in doubt; it is the question of the application of facts to the particular principles, and one would need to get over all of that, the construction point, before one gets, as it were, to the amenability point.

They are the matters that we wanted to advance in addition to the – and we say that when one looks at the reasoning of the dissenting judge it fails to take into account that the Authority – sorry, the decision was made on the basis of advice from the board of Authority that the offer represented good value for the land, that it achieved all of the strategic objectives that the government wanted for the land, that it removed development risk for the land because the government was going to essentially develop it itself because in the past there had been no interest from people to develop the land and bring it to market.

This proposal essentially involved doing what the government had been considering doing for a substantial time, increasing the returns to the government and removing what had been advised to the government as being a substantial development risk of cost overruns in the projections that they had made.

We would submit when one looks at the reasons that the majority have adopted, if in fact it is the case that the government has been advised by an expert board that the proposal represents good value for money, that it meets all of the government’s policy and strategic objectives which are expressly matters to be taken into account under the Act, and that it differs from any other expression of interest that had ever been received in respect of the land, that a conclusion that the decision was so unreasonable or so lacking in a foundation that it would be legally unreasonable, we would submit that the majority was clearly right.  The reasons are there.  We have addressed them in detail in our written submission.

Again, on the authority point, your Honours, there was a delegation to Minister.  The trial judge found – sorry, there was a delegation to the CEO to execute a contract with the Minister’s approval.  The trial judge found that the Minister approved it.  The majority found that the Minister approved it.  The CEO executed the contract.

The only dissenting voice on this is the dissent of Justice Debelle and his reasoning, we would submit, on this point is clearly erroneous, that Justice Debelle read a property delegation which simply said, delegated to the CEO of the Authority to execute a contract with the Minister’s approval.  At 273 he read into that delegation a number of prior steps had to be taken and, in particular, his conclusion was that the property delegation required the Authority to decide to enter into the negotiations to sell the land.  We would submit, with respect, that that is plainly untenable.  It says no such thing.  It is a delegation of the CEO to execute a contract with the approval of the Minister.  We would submit there is absolutely no basis for the reasoning at 273.

Then, when one goes to the judge’s reasoning as to whether or not the Minister had approved entry into the contract, that is at 297 and following.  Your Honours will see at 297, Justice Debelle disagrees with the trial judge’s finding that the Minister had approved the contract, but when one goes to his reasoning, one goes down to paragraph 298.  He refers to the trial judge’s reasoning in the last sentence of the main part of 298:

However, the trial judge relied on the following facts to infer that Mr Koutsantonis, as Minister . . . had approved the Contract –

and then his Honour says –

Those facts might justify the conclusion that the Minister approved the version of the Contract that was before Cabinet . . . However, those facts do not justify the conclusion that the Minister approved the Contract as executed –

In other words, the judge does not disagree with the approach of the trial judge or the majority that one could infer that the Minister approved the

contract that was before Cabinet, but effectively he reasons that there were some material differences between that contract and the contract as executed.

With respect to his Honour, that was not only factually wrong for the reasons stated by the majority, but it was contrary to the concession that was made before the trial judge which was referred to at paragraph 35 of the majority, namely, that if in fact there had been a ministerial approval to the version of the deed which went to the Cabinet, the differences between that and the deed that was executed were within any such approval.

We would submit, again, unless that reasoning is overturned and the construction of the property delegation adopted by the trial judge and the majority and the findings of fact adopted by the trial judge and the majority are overturned, then again one does not get to the issue of amenability on the question of authority.  If the Court pleases, otherwise, I rely on my written submissions.

KEANE J:   Thank you, Mr Roder.  Mr Walker, is there anything further you want to say by way of reply?

MR WALKER:   No, your Honour.

KEANE J:   Very well.  There will be a grant of special leave in this matter.  How long, Mr Walker, will it take?

MR WALKER:   It should be a day, but that would require encouraged cooperation.

KEANE J:   Mr Solicitor, what do you think about the time?

MR HINTON:   We think there is a risk it will boil over into a second day.  It will definitely be done within a day and a half.  I can assure your Honour there will be whatever cooperation we can give.

KEANE J:   Mr Roder?

MR RODER:   We would think it would certainly go over a day, having regard to the factual issues and some of the matters that have been foreshadowed by way of contention.  We would agree that it would likely be concluded within a day and a half.

KEANE J:   Very well, thank you very much.  There will be a grant of special leave.

AT 12.18 PM THE MATTER WAS CONCLUDED