Austin & Anor v The Commonwealth

[2002] HCATrans 96

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M10 of 2001

B e t w e e n -

ROBERT PETER AUSTIN

First Plaintiff

KATHRYN ELIZABETH KINGS

Second Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Directions Hearing

HAYNE J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON THURSDAY, 21 MARCH 2002, AT 9.30 AM

(Continued from 28/2/02)

Copyright in the High Court of Australia

MR G.A.A. NETTLE, QC:   If your Honour pleases, I appear with my learned friend, MR M.K. MOSHINSKY, for the plaintiffs.  (instructed by Allens Arthur Robinson)

MR D.M.J. BENNETT, QC, Solicitor‑General for the Commonwealth:   If your Honour pleases, I appear with my learned friend, MS M. SLOSS, for the defendant.  (instructed by the Australian Government Solicitor)

MR B.M. SELWAY, QC, Solicitor‑General for the State of South Australia:   If it pleases your Honour, I appear for the Attorney‑General for South Australia, intervening.  (instructed by Crown‑Solicitor for the State of South Australia)

HIS HONOUR:   Yes.

MR SELWAY:   Your Honour, could I apologise to the Court and my learned friends.  I only received those instructions yesterday.  So I have arrived unheralded.

HIS HONOUR:   There is nothing I can usefully say in response to that, Mr Solicitor.  Now, what is the position in the matter, Mr Nettle?

MR NETTLE:   Two matters, your Honour.  The first concerns the statement of claim and the second concerns the stated case.  First, as to the statement of claim, if I may, there is before you an application further to amend it.  The amendments are fairly small in volume, but I hand up to your Honour a copy of the proposed amended statement of claim.

HIS HONOUR:   Have I seen ‑ ‑ ‑

MR NETTLE:   No, your Honour has not, in that the amendments, or application for them, have come late, but if I could explain them to your Honour now briefly.

HIS HONOUR:   Yes.  I do not think I have any papers about it at the moment.

MR NETTLE:   That simplifies the matter.  First in paragraph 15 which is at page 4, your Honour will see it is proposed to add a new paragraph (b), in order to found a textual argument that, in addition to the reason already given in paragraph (a), the Constitutionally Protected Funds Act does not apply because it is attempted to be made to apply by referring to the scheme as one to which Part IX of Income Tax Assessment Act would apply were it not for section 217A.  The argument which will be sought to be made is Part IX would not apply quite apart from 217A and, therefore, as a matter of

drafting mechanism, the Constitutionally Protected Funds Act does not apply to a fund of this kind.

HIS HONOUR:   Yes.

MR NETTLE:   Second, your Honour, at paragraph 23, it is sought to add some further particulars in support of the contention that the means of determination of tax is capable of varying so widely that it ought be regarded as arbitrary and capricious and, therefore, not a tax within the meaning of the tax power.  Those particulars accord with, we will contend, material which is now almost by agreement to be included in the stated case.

HIS HONOUR:   Yes.

MR NETTLE:   Third, your Honour, at paragraph 25 ‑ ‑ ‑

HIS HONOUR:   You draw in the Imposition Act.

MR NETTLE:   Correct. Finally, at paragraph 27 and in the prayer – in paragraph 27 it is sought to add a new argument that apart from anything else the Act is unconstitutional because it constitutes tax on property of a State contrary to section 114 of the Constitution. As a result of the amendments which have been made, there are corresponding amendments to paragraph B and F in the prayer. Those amendments, as I understand it, are not opposed, your Honour.

HIS HONOUR:   Yes.  Is it convenient to deal separately with these amendments?

MR NETTLE:   If your Honour would, because that will determine the stated case.

HIS HONOUR:   Yes.  What is the position, Mr Solicitor for the Commonwealth?

MR BENNETT:   We do not oppose them, your Honour, subject to costs thrown away and reasonable time for a defence.

HIS HONOUR:   Have you a suggested time for defence, a date by which it could be done?

MR BENNETT:   After Easter, your Honour.  Perhaps Thursday, 4 April.

HIS HONOUR:   Is that going to be adequate?  I just wonder whether it may be safer to tip it over to, say, Monday 8 or Tuesday 9, just to give a weekend ‑ ‑ ‑

MR BENNETT:   Yes, that would be better, your Honour, yes.  I am grateful for that suggestion, your Honour, and I accept it.  It was being made simultaneously from my right.

HIS HONOUR:   If then I were to order that the plaintiffs have leave to amend the statement of claim substantially in the form initialled, which would remain on the file, the defendants have leave to file and serve an amended defence in answer to that amended statement of claim on or before 9 April, 2002 and the plaintiffs to pay the costs thrown away by reason of the amendment, do counsel wish to be heard about orders in that form?

MR NETTLE:   No, thank you, your Honour.

HIS HONOUR:   Then orders will be made in that form.

MR NETTLE:   If your Honour pleases.  Secondly, as to the case stated, might we hand up to your Honour what represents the present but not yet finally agreed draft of it.  There has been a lot of work done since we were last before your Honour on 28 February, and there have been some seven detailed meetings, including actuaries, in order to try to get some resolution of matters which are dealt with particularly in section H.

HIS HONOUR:   When is it going to be agreed?  The night before?

MR NETTLE:   No, your Honour.  My confident prediction is that it will be agreed by Wednesday of next week.

HIS HONOUR:   The point has come where the parties are to be told, “Enough.  Do it.  Get on with it, now.”  Do I make myself quite plain to both sides of the table?

MR NETTLE:   Perfectly plain, your Honour, and I think the fault at this point might be said to lie with us to some extent, but we have interests which need to be considered before a final imprimatur can be given to what is before your Honour.  May I say though, by way of submission, the consequence of all the work which has been done, which has been extraordinarily extensive, to get agreement on matters which are extremely complex factually, has resulted in something which is virtually for all intents and purposes agreed now, subject only to the formal approvals to come.  It is only because of the breadth of interests which are involved that it will take until next Wednesday to be confident about it.

Might I say to your Honour that by and large the greatest difficulty in reaching agreement has been with respect to the extent to which actuaries, acting purportedly in accordance with the standards, would produce different results.  In particular, if your Honour were to turn to pages 36 and following, your Honour will see something representative of the drafting changes we have been through, although by no means all of them, in order to try and get some sort of agreed statement of facts for the purposes of this exercise only.

HIS HONOUR:   Yes.

MR NETTLE:   The largest two areas, I suppose, of dispute have been the question of mortality – and that is to say whether there is likely to be improvement in it – and retiring ages and the ‑ ‑ ‑

HIS HONOUR:   Improvement in the mortality of judges, that might depend on your point of view, I would have thought, Mr Nettle.

MR NETTLE:   Exactly the point, your Honour.

HIS HONOUR:   Yes.

MR NETTLE:   So that two actuaries, acting reasonably and in attempted compliance with the standards, would still produce vastly differing results leading ultimately to the conclusion for which we contend.  In any event, your Honour, that is the nature of the thing which has been involved and because of its complexity it has taken a very great amount of time despite the extensive co‑operation of the Commonwealth in attempting to comply.

HIS HONOUR:   Now, I have not read this.  What I say has to be understood against that background.  The difficulty in a stated case of this kind, I fear, which is subject to so much extended negotiation between parties, is that the parties bring to it, by the time they get to the last draft, so much learning and so much baggage that they are perhaps prone to make assumptions about how the reader can understand it.  It is very difficult, I think, for those who draft the document at the end of the process to stand back and reread it with the eyes of the judges who will come to it completely afresh. 

All I would say to the parties is that to the extent that you can do that, bearing in mind that you have now steeped yourselves in the history of the drafting that now emerges as far as you have, if you can do that, there is obvious advantage to your doing it.  Simply that my eyes light on expressions like “proportions married Victorian assumptions”, “mortality improvements Victorian assumptions” and the like.  I am sure if I sit down and read the thing properly, as I will have to, it will be self‑evident what the

parties are talking about, but at some point before you both sign off on it, could you read it with that firmly in mind.We will be coming to it utterly cold.  If it can be cast in terms that are self‑evident to the reader, so much the better.  If it cannot, it cannot and you will just have to undertake the task of educating us in matters, in so many other matters.

MR NETTLE:   I do understand, your Honour, and the next few days will be used for, amongst other reasons, that purpose.

HIS HONOUR:  Yes.  Now, how do you see from your side the matter going from here?

MR NETTLE:   What we would like, if we may have it, is one further directions hearing within say a week or so, subject to your Honour’s convenience, at which time it is assumed that we would have complete agreement on the stated case and we would have the pleadings, I suppose, from the Commonwealth in so far as that changes things at all, so that your Honour could set it finally for hearing in June at the time at which your Honour indicated.

HIS HONOUR:   What I would be minded to suggest is to fix, say, Monday the 15th at 9.30 – that would give you a time after defence is filed – or I could fix Monday, 22 April, which would give you still further time.

MR NETTLE:   I suspect the discipline of the 15th is desirable, your Honour.

HIS HONOUR:   Yes.  If it then were stood over until 15, what I would, I think, require of the parties is that the agreed stated case be filed no later than the 11th because I would want to have some time to read it before making the order.  Now, is it therefore better to tip the requirement to file over to, say, 16 or 17, the second week of the April sittings, and come back on the 22nd?

MR NETTLE:   I think that we can and should aim to do it by 11 April, your Honour.

HIS HONOUR:   Yes, thank you, Mr Nettle.  Now, Mr Solicitor for the Commonwealth, what do you say about that course of action and that timetable?

MR BENNETT:   Yes, we agree with all that, your Honour.  There are some minor matters.  One concerns submissions.  Now, it may well be, your Honour, that this is a case in which the problem to which your Honour has adverted will be largely solved by intelligent and hopefully similar summaries of what the stated case means in the submissions.

HIS HONOUR:   You alarm me with submissions of what the stated case means, Mr Solicitor, but there we are.

MR BENNETT:   No, but a lot of what can be summarised – I am sorry.  A lot of it can be summarised in simple terms for the purpose of submissions, where one needs to express it more formally in the stated case.

HIS HONOUR:   Yes.

MR BENNETT:   That, I think, will assist.  Now, that, of course, will not be available to your Honour when the matter is mentioned.

HIS HONOUR:   No.  Is it therefore desirable, do you think, that we should be on the return day fixing a timetable for submissions that would get submissions in really quite significantly earlier than ordinarily would be the case?

MR BENNETT:   I was going to ask your Honour to make those directions today, but there is no reason why they cannot be made on the later occasion.  We were going to suggest perhaps a date early in May for the plaintiffs and early in June for us.

HIS HONOUR:   What I have in mind is that the submissions should be available to the Court really not much later than the end of the May sittings.  The May sittings conclude on 31 May.

MR BENNETT:   Yes.

HIS HONOUR:   If we had them at the beginning of the two weeks between May and June sittings, there may be some real advantage to us all in that course.

MR BENNETT:   Yes.

HIS HONOUR:   Now, is that achievable for the parties?

MR BENNETT:   Your Honour, I think so.  May I just say this.  I would also suggest that both parties be allowed more than 20 pages, because I do not think it is going to be practical to have the sort of submissions that both parties will require in this case in 20 pages.

HIS HONOUR:   Yes.  I am not averse to giving you leave to go for more than 20, but I would want to confine the leave in some way so that perhaps next time round if the parties had an outer limit still in two digits rather than three ‑ ‑ ‑

MR BENNETT:   Yes.  I was not suggesting three, your Honour.

HIS HONOUR:   You forget what happened in Ward, Mr Solicitor.

MR BENNETT:   Yes.  I do not think this case is as bad as Ward, your Honour.  It is not that it involves as many issues as Ward did.  It is rather that the issues are extraordinarily complex and need the mastering of an area of human endeavour which many of us have not mastered.

HIS HONOUR:   Yes.  Then if I were to direct parties to file any draft agreed case stated by 11 April and stand the matter over for further directions at 9.30 on 15 April, or such other time as may be directed, and reserve costs, would that accommodate all that needs to be done today?  I am a bit hesitant about giving directions today about submissions, but certainly my present thinking is that if we can then, on 15 April, set a timetable that would have at least the last of the principal submissions – perhaps not replies, but the last of the principal submissions before the Court by close of business on 31 May, there may be great advantage in that.

MR BENNETT:   My only concern about that, your Honour, is that by that time, of course, it will be a fairly short period from the date we are suggesting for the plaintiffs’ submissions, whereas if the date is indicated or fixed now, that vice is not present.

HIS HONOUR:   No, but the plaintiffs would be bold, I suspect, if they were to come on 15 April and say, “This is the first we have heard of the suggestion that we should file submissions by” – what would you suggest, Mr Solicitor?

MR BENNETT:   Early May, your Honour, perhaps ‑ ‑ ‑

HIS HONOUR:   Monday 6 or Wednesday 8?

MR BENNETT:   Perhaps Monday, 6 May and then us by Monday, 3 June.

HIS HONOUR:   I am anxious that they come in on the Friday so that they can be distributed on the Friday.

MR BENNETT:   Yes, 31 May then, your Honour.  It would be churlish I suppose to ask that the plaintiffs then go back to 3 May.  I will not press it.

HIS HONOUR:   And then a reply submission probably, what, 7 June or 5 June or some date like that, do you think?

MR BENNETT:   Yes.  If your Honour regards Fridays as the best day, perhaps 7 June.  That gives a further week for that.  There is also a question of intervener’s submissions.

HIS HONOUR:   Yes.

MR BENNETT:   Perhaps an appropriate limit might be 50 pages.

HIS HONOUR:   Yes.

MR BENNETT:   Bearing in mind that I do think both submissions will need to explain actuarial concepts and methods of calculation, perhaps an informal and clear ‑ ‑ ‑

HIS HONOUR:   Are these matters that could be the subject of common ground?  Do not answer if it would in the least way embarrass you, but does the state of debate between the parties suggest that there are some basic elements of actuarial practice that are both relevant and capable of agreement and explanation in an agreed submission?  They need not, I take it, form part of the case stated.

MR BENNETT:   The stage we have reached, assuming that we end up with something very close to the document your Honour has, is such that we have reached substantial agreement on most of the highly technical questions.  The sort of thing that needs to be explained is the way calculations work and the various provisions of the Acts work, in the case of judges, in the case of other funds which are not funded where there is a private employer, in the case of public unfunded funds like the – if I could use that phrase – like the Federal Court one, in the case of private funds which are funded.  There are a range of comparators one needs to examine.  In order to do that, one needs to understand to some extent the way the Act works in a lot of different situations.

HIS HONOUR:   Yes.

MR BENNETT:   The actuarial matter will be – and almost is at the moment – the subject of agreement, but again it requires some explanation to understand the sort of calculation.  Because my friend’s submission is at the end of the day, on that aspect, actuaries may vary by a huge amount.  Our submission at the end of the day is there is obviously room for difference, as there is in any valuation exercise, but it is not that much.  Now, that is a subjective submission your Honour will receive from both sides, on the basis of, no doubt, slightly different approaches to what the

stated case says about the actuarial material.  The only other matter is to ask your Honour to reserve costs – I think your Honour referred to it – and certify for counsel.

HIS HONOUR:   Yes.  Now Mr Nettle, if I were to pursue a course of the kind indicated, namely, make orders directing the filing of the draft agreed case stated by 11 April, standing directions over to 9.30 on 15 April, indicating now but not directing that the likely timetable for submissions will be 6 May, 31 May, 7 June, and it is likely that the 20‑page limit will be dispensed, but the half century put forward by the Solicitor for the Commonwealth is not yet adopted, would you have anything further you wish to say on the matter?

MR NETTLE:   Your Honour, as one who has difficulty customarily getting his submissions up to 20 pages, it is only the last of those things that alarms me.  Otherwise very satisfactory, thank you.

HIS HONOUR:   Yes.  Now, Mr Solicitor for South Australia, are you yet in a position to say in whose interests the intervention of South Australia will be made?

MR SELWAY:   The interests will be the interests of the plaintiffs.  The reason for our attendance ‑ ‑ ‑

HIS HONOUR:   I wonder if you would mind coming to the lectern.  We simply have to tape it, Mr Solicitor.

MR SELWAY:   It will be in the interests of the plaintiffs, but the reason for our attendance at an interlocutory matter, which in the normal course is a matter for the parties, is the concern that arose – I do not know if your Honour recalls – in the SGH matter argued last year where the parties agreed a case stated and there was an issue in which the States were interested which was not raised on the case stated.  The issue that I am instructed in this matter is a question of the role of – sorry, that the obligation upon the State under the statute to provide a report to the Commissioner including an actuarial calculation.  So far as one can see, that actuarial calculation is not required for any other purpose and cannot be used for any other purpose other than the Commissioner using it to calculate the tax.  We say that raises a Melbourne Corporation argument as to whether the Commonwealth can require the States in effect to assess tax on a third party, in this case a member.

So that is the limited argument we wish to appear on.  It is not an argument raised by the plaintiff.  Indeed, the plaintiffs, by raising a section 114 argument, almost put the opposite side and say that the tax applies to the State, and the premise upon which we put this argument would be that it does not; the tax falls on the member.

HIS HONOUR:   Are you able to say from whether the case stated, if it were to take a form substantially according with the present draft, would give you a factual base sufficient to put the argument?

MR SELWAY:   I am not, your Honour.  We have not seen the case stated, nor should we.  We have not been involved.

HIS HONOUR:   No.

MR SELWAY:   Can I say our expectation is that it will in the sense that the argument is a legal argument rather than a factual one.  There may be some concern about the facts that were in there and we would certainly want to have a look, but the main reason for being here was to try to ensure that the question asked, or one of the questions asked, was broad enough to enable us to put the argument.  We will have to issue a 78B notice et cetera.

HIS HONOUR:   Yes.

MR SELWAY:   Your Honour, in terms of the timetable, what has been suggested by the parties causes no concern to us.  In relation to interveners, I notice the amended pleadings do raise a section 114 issue.  Similarly, if we raise a Melbourne Corporation issue, it may be that other States may have an interest.  Could I perhaps ask, given the only interveners are likely to be the States, that the interveners have a week beyond the plaintiffs’ date, if only because ‑ ‑ ‑

HIS HONOUR:   What, to 13 May or ‑ ‑ ‑

MR SELWAY:   To 13 May.

HIS HONOUR:   Yes.

MR SELWAY:   If only because the plaintiffs’ submissions may cause some of the States to get instructions.  For our part, we would have no difficulty in complying with 6 May and will attempt to do so.

HIS HONOUR:   For my own part, I had rather anticipated that the interveners might even come in later.

MR SELWAY:   Your Honour, the reality is the case is well known.  I do not think anyone will be taken by surprise at it.  The only difficulty may be getting instructions.  But it is not at all surprising what the issues are and how they are likely to be put.

HIS HONOUR:   I am certainly not averse to suggesting interveners by 13 May, and let us see where we get to at the next directions hearing.

MR SELWAY:   Your Honour, I cannot think of any reason why any intervener would want to put in a submission anything over 20 pages.

HIS HONOUR:   Thank you, Mr Solicitor. 

I will direct that the parties file any draft agreed case stated by 11 April 2002.  Adjourn the further directions in this matter to 9.30 on 15 April 2002 in Melbourne, or such other time and place as may be directed.  I will reserve costs and certify for the attendance of counsel.

AT 9.59 AM THE MATTER WAS ADJOURNED
UNTIL MONDAY, 15 APRIL 2002