Baker v Commonwealth of Australia
[2012] FCAFC 121
•31 August 2012
FEDERAL COURT OF AUSTRALIA
Baker v Commonwealth of Australia [2012] FCAFC 121
Citation: Baker v Commonwealth of Australia [2012] FCAFC 121 Parties: BARBARA AVALON BAKER, EVELYN RUTH BENDER, JAMES HAROLD BREWSTER, PHILLIP DONALD BURCHARDT, MICHAEL JOHN FRANCIS BURNETT, GILES ANTHONY COAKES, MICHAEL KEVIN CONNOLLY, ANNE ELIZABETH DEMACK, NORAH HELENE HARTNETT, LOUISE HELEN HENDERSON, KATE HELENA HUGHES, CHARLOTTE MARIE SIMEON KELLY, STUART HAMILTON LINDSAY, TERRENCE JOHN MCGUIRE, DANIEL PATRICK O'DWYER, MAURICE BEAUMONT PHIPPS, GRANT THEO RIETHMULLER, HEATHER MARGARET RILEY, STUART ALDEN ROBERTS, JEFFREY FRANK EDWARD TURNER, JOHN MYER WALTERS, DOMINICA MARY WHELAN, RONALD DAVID CURTAIN and MATTHEW DAVID MYERS v COMMONWEALTH OF AUSTRALIA File number: NSD 1658 of 2011 Judges: KEANE CJ, LANDER AND PERRAM JJ Date of judgment: 31 August 2012 Corrigendum 17 December 2012 Catchwords: CONSTITUTIONAL LAW – Judicial pensions – Federal Magistrates – s 72(iii) of the Constitution – constitutional requirement of judicial independence – apprehension of dependence or partiality by reasonable well-informed lay observer Legislation: Constitution Ch III, ss 71, 72
Acts Interpretation Act 1901 (Cth) s 15A
Federal Magistrates (Consequential Amendments) Act 1999 (Cth) s 3, cl 1 of Sch 18
Federal Magistrates Act 1999 (Cth) ss 2, 3 and 8, cl 5(1), 8(1), 9H of Sch 1
Judges’ Pensions Act 1968 (Cth) ss 4, 6
Judiciary Act 1903 (Cth) s 44(3)Federal Magistrates (Terms and Conditions of Appointment) Determination 2000 (Cth) cl 2(1)
Cases cited: Attorney-General (NSW) v Brewery Employees Union (NSW) (1908) 6 CLR 469 cited
Austin v Commonwealth (2003) 215 CLR 185 considered
Colquhoun v Brooks (1888) 21 QBD 52 cited
Ebner v Official Trustee (2000) 205 CLR 337 cited
Forge v ASIC (2006) 228 CLR 45 applied
Houssein v Under-Secretary of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 cited
In re Judiciary and Navigation Acts (1921) 29 CLR 257 cited
Kable v Director of Public Prosecutions (NSW) (1995-1996) 189 CLR 51 applied
McGinty v Western Australia (1996) 186 CLR 140 discussed
North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 cited
Pidoto v Victoria (1943) 68 CLR 87 cited
Provincial Court Judges’ Association of New Brunswick v The Queen (2005) 2 SCR 286 cited
Provincial Court Judges’ Case (1997) 3 SCR 3 cited
Re Patterson; ex parte Taylor (2001) 207 CLR 391 cited
Re Remuneration of Judges of the Provincial Court of Prince Edward Island (1998) 1 SCR 3 cited
Re Wakim; Ex parte McNally (1999) 198 CLR 511 cited
TheQueen v Kirby and Others; Ex parte Boilermakers’ Society of Australia (1955-1956) 94 CLR 254 citedTheophanous v The Commonwealth (2006) 225 CLR 101 cited
United States v Hatter (2001) 532 US 557 cited
Valente v The Queen (1985) 2 SCR 673 cited
Date of hearing: 9 August 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 98 Counsel for the Applicants: BW Walker SC, AW Street SC, RA Yezerski Solicitor for the Applicants: Yeldham Price O’Brien Lusk Counsel for the Respondent: NJ Williams SC, NL Sharp Solicitor for the Respondent: Australian Government Solicitor FEDERAL COURT OF AUSTRALIA
Baker v Commonwealth of Australia [2012] FCAFC 121
CORRIGENDUM
In paragraph 27 of the Reasons for Judgment of Keane CJ and Lander J, in the second last sentence, the words “that principle, as” should read “the principles”.
In paragraph 75 of the Reasons for Judgment of Keane CJ and Lander J, in the second sentence, the word “with” should read “without”.
I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Keane CJ, Lander and Perram JJ. Associate:
Dated: 17 December 2012
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1658 of 2011
BETWEEN: BARBARA AVALON BAKER, EVELYN RUTH BENDER, JAMES HAROLD BREWSTER, PHILLIP DONALD BURCHARDT, MICHAEL JOHN FRANCIS BURNETT, GILES ANTHONY COAKES, MICHAEL KEVIN CONNOLLY, ANNE ELIZABETH DEMACK, NORAH HELENE HARTNETT, LOUISE HELEN HENDERSON, KATE HELENA HUGHES, CHARLOTTE MARIE SIMEON KELLY, STUART HAMILTON LINDSAY, TERRENCE JOHN MCGUIRE, DANIEL PATRICK O'DWYER, MAURICE BEAUMONT PHIPPS, GRANT THEO RIETHMULLER, HEATHER MARGARET RILEY, STUART ALDEN ROBERTS, JEFFREY FRANK EDWARD TURNER, JOHN MYER WALTERS, DOMINICA MARY WHELAN, RONALD DAVID CURTAIN and MATTHEW DAVID MYERS
ApplicantsAND: COMMONWEALTH OF AUSTRALIA
Respondent
JUDGES:
KEANE CJ, LANDER AND PERRAM JJ
DATE OF ORDER:
31 AUGUST 2012
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The questions referred to the Full Court by Order 5 of the orders of Buchanan J dated 1 June 2012 be answered as follows:
Question One: Are the applicants entitled to the relief sought in the amended application and the second further amended statement of claim?
Answer:No.
Question Two: What order as to costs should be made with respect to the Special Case?
Answer:The applicants should pay the Commonwealth’s costs as taxed or agreed.
Question Three: What order as to costs should be made with respect to the proceedings before referral of the Special Case to a Full Court?
Answer:The applicants should pay the Commonwealth’s costs as taxed or agreed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1658 of 2011
BETWEEN: BARBARA AVALON BAKER, EVELYN RUTH BENDER, JAMES HAROLD BREWSTER, PHILLIP DONALD BURCHARDT, MICHAEL JOHN FRANCIS BURNETT, GILES ANTHONY COAKES, MICHAEL KEVIN CONNOLLY, ANNE ELIZABETH DEMACK, NORAH HELENE HARTNETT, LOUISE HELEN HENDERSON, KATE HELENA HUGHES, CHARLOTTE MARIE SIMEON KELLY, STUART HAMILTON LINDSAY, TERRENCE JOHN MCGUIRE, DANIEL PATRICK O'DWYER, MAURICE BEAUMONT PHIPPS, GRANT THEO RIETHMULLER, HEATHER MARGARET RILEY, STUART ALDEN ROBERTS, JEFFREY FRANK EDWARD TURNER, JOHN MYER WALTERS, DOMINICA MARY WHELAN, RONALD DAVID CURTAIN and MATTHEW DAVID MYERS
ApplicantsAND: COMMONWEALTH OF AUSTRALIA
Respondent
JUDGES:
KEANE CJ, LANDER & PERRAM JJ
DATE:
31 AUGUST 2012
PLACE:
SYDNEY
REASONS FOR JUDGMENT
KEANE CJ AND LANDER J
Each of the applicants is a Federal Magistrate. The applicants commenced proceedings in the High Court of Australia seeking relief in relation to the Commonwealth’s failure to provide them with a fixed and certain post-retirement life-long pension of the non-contributory kind provided to judges of the High Court of Australia, the Federal Court of Australia and the Family Court of Australia. In particular, the applicants challenge the validity of Schedule 18 of the Federal Magistrates (Consequential Amendments) Act 1999 (Cth) (Amendments Act) which amended the Judges’ Pensions Act 1968 (Cth) (Pensions Act) to exclude Federal Magistrates from the pension available to all other Ch III Judges.
The proceeding was referred by the High Court to the Federal Court of Australia under s 44(3) of the Judiciary Act 1903 (Cth). It comes before this Full Court on a special case agreed by the parties.
The applicants’ arguments draw upon provisions of the Constitution, the Pensions Act, the Federal Magistrates Act 1999 (Cth) (Federal Magistrates Act) and the Amendments Act. It is convenient to set out those provisions now. We will then summarise the facts which are common ground between the parties before moving to a discussion of the arguments agitated by the applicants.
THE CONSTITUTION
Parliament is empowered to create federal courts under Ch III of the Constitution. In that regard, s 71 of the Constitution provides:
71 Judicial power and Courts
The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction. The High Court shall consist of a Chief Justice, and so many other Justices, not less than two, as the Parliament prescribes.
Section 72 makes provision for the appointment, tenure and remuneration of the justices of courts created by parliament as follows:
72 Judges' appointment, tenure, and remuneration
The Justices of the High Court and of the other courts created by the Parliament:
(i) shall be appointed by the Governor‑General in Council;
(ii) shall not be removed except by the Governor‑General in Council, on an address from both Houses of the Parliament in the same session, praying for such removal on the ground of proved misbehaviour or incapacity;
(iii) shall receive such remuneration as the Parliament may fix; but the remuneration shall not be diminished during their continuance in office.The appointment of a Justice of the High Court shall be for a term expiring upon his attaining the age of seventy years, and a person shall not be appointed as a Justice of the High Court if he has attained that age.
The appointment of a Justice of a court created by the Parliament shall be for a term expiring upon his attaining the age that is, at the time of his appointment, the maximum age for Justices of that court and a person shall not be appointed as a Justice of such a court if he has attained the age that is for the time being the maximum age for Justices of that court.
Subject to this section, the maximum age for Justices of any court created by the Parliament is seventy years.
The Parliament may make a law fixing an age that is less than seventy years as the maximum age for Justices of a court created by the Parliament and may at any time repeal or amend such a law, but any such repeal or amendment does not affect the term of office of a Justice under an appointment made before the repeal or amendment.
A Justice of the High Court or of a court created by the Parliament may resign his office by writing under his hand delivered to the Governor‑General.
Nothing in the provisions added to this section by the Constitution Alteration (Retirement of Judges) 1977 affects the continuance of a person in office as a Justice of a court under an appointment made before the commencement of those provisions.
A reference in this section to the appointment of a Justice of the High Court or of a court created by the Parliament shall be read as including a reference to the appointment of a person who holds office as a Justice of the High Court or of a court created by the Parliament to another office of Justice of the same court having a different status or designation.
THE PENSIONS ACT
Prior to the enactment of the Amendments Act, the Pensions Act had provided that every justice of a federal court was, by virtue of that office, entitled to receive a post-retirement, life-long, salary-based, pension, subject only to minimum eligibility requirements related to the justice’s age of retirement and length of service.
Section 6 of the Pensions Act provides that judges shall receive pensions. It is relevantly in the following terms:
6 Pensions of Judges
(1) Where:
(a) a Judge … who has attained the age of 60 years;
…
retires after serving as a Judge for not less than 10 years, he or she is entitled to a pension in accordance with subsection 6A(2) or 6B(2).It is not necessary to notice the text of subsections 6A(2) or 6B(2). It is sufficient to note that, where an entitlement to a pension arises under s 6, the rate of pension is determined in accordance with ss 6A and 6B of the Pensions Act.
The entitlement to a pension under the Pensions Act operates only in favour of a “judge” as defined in the Pensions Act. Immediately prior to the creation of the Federal Magistrate’s Court, “judge” was defined in s 4 of the Pensions Act to include “a Justice or Judge of a federal court”. Each of the applicants would have been a “judge” within that definition, but this definition was amended to include the qualifying phrase “(other than the Federal Magistrates Court)” by s 3 and Schedule 18 of the Amendments Act. As a result of that amendment, the applicants and other Federal Magistrates were excluded from the pension benefit provided for in the Pensions Act. Section 4 of the Pensions Act, as amended by Sch 18 of the Amendments Act now defines a “judge” relevantly as follows:
4 Interpretation
Judge means:
(a) a Justice or Judge of a federal court (other than the Federal Magistrates Court)…The Amendments Act commenced on 23 December 1999, ie, the same day as the Federal Magistrates Act commenced. At that time no Federal Magistrate had yet been appointed.
THE FEDERAL MAGISTRATES COURT
The Federal Magistrates Court was created by Parliament under the Federal Magistrates Act. The first sitting of the Federal Magistrates Court was held on 3 July 2000.
Sections 3 and 8 of the Federal Magistrates Act provide:
3 Objects
(1) The main object of this Act is to create the Federal Magistrates Court under Chapter III of the Constitution.
(2) The other objects of this Act are:
(a) to enable the Federal Magistrates Court to operate as informally as
possible in the exercise of judicial power; and
(b) to enable the Federal Magistrates Court to use streamlined procedures; and
(c) to encourage the use of a range of appropriate dispute resolution processes.…
8 Creation of Federal Magistrates Court
(1) A federal court, to be known as the Federal Magistrates Court, is created by this Act.
(2)The Federal Magistrates Court may also be known as:
(a) the Federal Magistrates Service; or
(b) the Federal Magistrates Court of Australia;
or both.
(3) The Federal Magistrates Court is a court of record and is a court of law and equity.
(4) The Federal Magistrates Court consists of the following justices:
(a) a Chief Federal Magistrate;
(b) such other Federal Magistrates as from time to time hold office in accordance with this Act.
As is apparent s 8 creates the Federal Magistrates Court as a “federal court”, “a court of record”, and “a court of law and equity”.
COMMON GROUND
It is common ground that the applicants are justices of a federal court appointed under Ch III of the Constitution.
The Federal Magistrates Court is vested with original jurisdiction concurrent with that of the Family Court in respect of matrimonial causes (other than proceedings for a decree of nullity of marriage, or proceedings for a declaration as to the validity of a marriage, divorce, or annulment of a marriage) and de facto financial causes under the Family Law Act 1974 (Cth), matters arising under the Child Support (Assessment) Act 1989 (Cth), and matters arising under the Child Support (Registration and Collection) Act 1988 (Cth).
The Federal Magistrates Court is vested with original jurisdiction concurrent with that of the Federal Court in respect of applications brought under the Administrative Decisions (Judicial Review) Act 1977 (Cth), bankruptcy matters under the Bankruptcy Act 1966 (Cth), civil matters under the Fair Work Act 2009 (Cth), civil matters arising under s 46 or Part IVB of the Competition and Consumer Act 2010 (Cth), in personam actions under the Admiralty Act 1988 (Cth), matters brought under the Australian Human Rights Commission Act 1986 (Cth), civil matters under the Copyright Act 1968 (Cth), applications under the Independent Contractors Act 2006 (Cth), matters under the National Measurement Act 1960 (Cth), and proceedings to enforce a determination of the Information Commissioner under the Privacy Act 1988 (Cth).
The Federal Court and Family Court are empowered to transfer certain matters to the Federal Magistrates Court.
Appeals from the Federal Magistrates Court lie to the Federal Court, the Family Court and ultimately to the High Court. Decisions of Federal Magistrates are amenable to judicial review under s 75(v) of the Constitution and s 39B of the Judiciary Act.
The Federal Magistrates Act provides at clause 5(1) of Sch 1 that “a Federal Magistrate is to be paid such remuneration as is determined by the Remuneration Tribunal”.
Clause 8(1) of Sch 1 of the Federal Magistrates Act provides that:
A Federal Magistrate holds office on such terms and conditions (if any) in relation to matters not covered by this Act as are specified in a written determination made by the Governor-General for the purposes of his subclause.
Pursuant to clause 8(1) of Sch 1, on 2 February 2000 the Governor-General made a determination that Federal Magistrates would be entitled to a contribution by the Commonwealth of a sum equal to a prescribed percentage of annual salary to a complying superannuation fund. Federal Magistrates now receive the benefit of contributions by the Commonwealth to their superannuation. Since 1 July 2011, those contributions are set at 15.4% of annual salary. Prior to 1 July 2011 the contributions were 13.1% of salary.
Clause 9H of Schedule 1 to the Federal Magistrates Act replicates the provision in
s 72(iii) of the Constitution against diminishing the remuneration of a Federal Magistrate during his or her continuance in office.
The superannuation scheme to which Federal Magistrates belong produces a post-retirement annual income in the range between 15.98% and 25.78% of their current judicial salary as compared with 60% of salary generally provided under the Pensions Act. And the amount of their superannuation income is subject to the vagaries of the market: the rate of return may be negative, and even when positive, may lag behind the rate of inflation.
It is agreed in the special case that, notwithstanding the issues raised in this case, each of the applicants has used his or her best endeavours to properly discharge his or her judicial functions consistent with the Federal Magistrate’s oath of office, and to exercise properly the judicial power of the Commonwealth, and has never acted in a partial manner in the conduct of proceedings before them by reason of any actual or perceived financial uncertainty.
THE APPLICANTS’ CLAIMS
The applicants claim relief as follows:
1.a declaration that Schedule 18 of the Amendments Act is invalid, void and inoperative;
2.a declaration that the definition of “Judge” in s 4 of the Pensions Act includes the applicants in their capacity as Justices of a federal court, appointed under s 72 of the Constitution; and
3.a declaration that the applicants are entitled to the benefit of the Pensions Act as of their respective dates of appointment as justices of a federal court, appointed under s 72 of the Constitution; and
4.a declaration that the Federal Magistrates Act and/or the Amendments Act are invalid to the extent that they purport to limit the remuneration of Federal Magistrates to the period in which a Federal Magistrate holds that office and to extinguish such remuneration upon a Federal Magistrate’s cessation of office.
In the alternative, if the Court determines that the Pensions Act does not apply to the applicants in their capacity as Justices of a federal court, the applicants seek a declaration that Ch III of the Constitution requires the provision of a life-long guaranteed pension to all Federal Magistrates as an incident of their status as justices appointed under Ch III of the Constitution.
THE APPLICANTS’ CASE
As is apparent from the applicants’ primary claim for relief, their principal contention is that the amendment to the Pensions Act, whereby Federal Magistrates were excluded from the definition of “Judge” for the purposes of that Act, was invalid. By attacking the Amendments Act in this respect, the applicants seek to avoid the difficulty that the fixing of judicial remuneration is, by s 72(iii) of the Constitution, the province of the Parliament, not of the judiciary. In the decisions of the High Court invoked by the applicants, legislation inconsistent with that principle, as embodied in Ch III of the Constitution, is simply invalid; there is no scope for the judicial substitution of an alternative provision. This difficulty is fatal to the applicants’ alternative claim to relief.
The applicants’ case proceeds on the basis that the Constitution requires that justices appointed under Ch III of the Constitution must be, and be seen to be, independent of the other branches of government. An aspect of the constitutional requirement of judicial independence is said to be that justices appointed under Ch III must be afforded a measure of remuneration-based financial security, which includes a fixed and certain remuneration sufficient to ensure actual and apparent independence and impartiality.
This remuneration-based financial security must not be undermined, so it is said, by insecurity or uncertainty as to a judge’s post-retirement financial position. Such uncertainty may give rise to the appearance, to a reasonable and well-informed observer, that the judge may not be independent and impartial in discharging the judicial power of the Commonwealth. The prospect of the need for a judge to take post-retirement employment might create the appearance that the judge is not independent and impartial when deciding cases involving potential future employers, especially where these might include agencies of the executive government.
The applicants argue that post-retirement remuneration-based financial security for Ch III justices became an essential aspect of judicial independence, at the latest, with the constitutional amendment removing life tenure for Ch III justices in 1977. After the amendment, new Ch III justices could not depend upon guaranteed lifetime employment to ensure their financial security, thus increasing the risk that Ch III justices might need to seek post-judicial employment in order to secure their financial well-being in retirement.
The applicants also point to the circumstance that the Parliament has fixed their remuneration at the lowest level across the federal judiciary and that they alone are not entitled to a pension under the Pensions Act. They argue that to remedy this failure in the arrangements made for their remuneration, only a pension “broadly equivalent” to that enjoyed by judges of other Federal Courts would meet the constitutional requirement.
The applicants also advance an intricate alternative argument to the effect that, while terms of s 72(iii) of the Constitution do not extend to protect retired Ch III justices from the reduction of their post-retirement remuneration, that permitted reduction does not extend to complete extinguishment of post-retirement remuneration. It is said that, if upon the cessation of office by a Federal Magistrate, his or her salary-based remuneration ceases altogether, that outcome is contrary to the implication that the complete extinguishment of remuneration is prohibited by s 72(iii) of the Constitution.
THE RESPONDENT’S CASE
The respondent contends that the text of Ch III of the Constitution does not afford any express guarantee of the kind claimed by the applicants. Further, no such guarantee is implied by the text or structure of the Constitution. A judicial pension is not necessary to reserve judicial independence as there is nothing untoward about judges seeking post-retirement employment. Indeed, it is a common occurrence even where former judges enjoy a judicial pension.
The respondent also argues that there can be no real reasonable apprehension of partiality or lack of independence on the part of an unpensioned Federal Magistrate when the panoply of institutional mechanisms, which serve to protect independence, are considered together with the substantial remuneration payable to them. These mechanisms include the express constitutional protections, the judicial oath, the culture of professionalism and ethics of Australian lawyers and judges, the open-court principle, the requirement that judges provide reasons for their decision, the susceptibility of inferior courts to superior court review, the apprehended bias rule, the fact that salary and related benefits are determined by an independent tribunal, the fact that salaries and superannuation are well above community norms and the existence of professional rules which regulate a return to practice from the judiciary.
The respondent also argues that, even if post-retirement financial security is constitutionally guaranteed, the arrangements in place for federal magistrates’ remuneration are sufficient to meet that requirement.
CONSIDERATION
We will address the applicants’ arguments directly, but before doing so we should say something about the provenance of s 72(iii) of the Constitution.
It is not surprising that the text of s 72(iii) of the Constitution does not expressly address a concern as to the arrangements which must be put in place by Parliament in respect of judicial remuneration at the commencement of a term of judicial office. That is because, as a matter of history, the principal vice at which this provision was aimed was the legislative reduction in judicial remuneration, after a judge had accepted appointment. Such a reduction was viewed as a means of punishing an independently minded judge or of ensuring a more compliant or co-operative attitude on the part of serving judges in the execution of their function as the third branch of government.
In Austin and Another v Commonwealth of Australia 215 CLR 185 at [240]-[241], Kirby J set out some historical background which identifies the vice at which s 72(iii) and its earlier analogues were aimed:
240 In the time of the Norman Kings of England, the judicial power (at least in non-ecclesiastical matters) reposed in the hands of the King personally and his immediate entourage (the Curia Regis). Royal participation in the judicial function diminished over ensuing centuries in favour of professional judges. However, those judges were, at first, dependant for their offices and remuneration upon the King's pleasure. The abuse of that power by the Stuart Kings contributed to the revolution of 1688 and the Act of Settlement 1700. By that law, confirmed by George I in 1714, it was enacted that the judges of the Kingdom should hold office during good behaviour and that their salaries should be "ascertained and established" by law. In 1760, by an Act relating to the "Commissions and Salaries of Judges", another cause weakening the position of judges was removed. It was provided that Royal appointees, including judges, would no longer vacate their offices, and lose their salaries, upon the demise of the Crown.
241 These constitutional advances, won in England, were not initially observed in England's colonies. One of the complaints made by the American colonists in the Declaration of Independence was that the King had "made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries". It was this defect in government that led, among other things, to the "Compensation Clause" in the United States Constitution, guaranteeing federal judges a "Compensation, which shall not be diminished during their Continuance in Office".
Quick & Garran confirm that the vice at which s 72(iii) of the Constitution is directed was executive or legislative action targeted at serving judges. At § 292 the learned authors said:
“… there was no statutory restriction on the Crown’s pleasure until 1700, when the Act of Settlement (12 and 13 Will. III c. 2) provided that “judges” commissions be made quamdiu se bene gesserint, and their salaries ascertained and established; but upon the address of both Houses of Parliament, it may be lawful to remove them.” In 1760, by the Act 1 George III. C. 23, it was further provided that judges’ commissions should continue notwithstanding the demise of the Crown, and their salaries were secured to them during the continuance of their commissions. These enactments for securing the dignity and independence of the Bench form the basis of the constitutional provisions to a similar effect throughout the British empire.”
(Footnotes omitted). (The Annotated Constitution of the Australian Commonwealth (1901 ed, Legal Books Reprint, 1995)The possibility that sufficiently capable candidates would not be disposed to accept appointment to judicial office on the ground that it might not offer sufficiently attractive remuneration was certainly not at the forefront of the thinking reflected in the debates which framed Ch III of the Constitution. At the 1897 Australasian Federation Conference, when the delegates were considering whether the number of High Court judges should be fixed by the Constitution or left to the Parliament, the following instructive exchange occurred:
Mr. CARRUTHERS: I ask members how it is that they leave it to the Federal Parliament to fix the remuneration of the judges, which is a far more important matter than the numbers of the judges.
Mr. WISE: We have not left it to the Parliament once the remuneration is fixed.
Section 72(iii) was intended to ensure that the Parliament may not enact a law to diminish the remuneration entitlements of justices over the term of their service in exercising the judicial power of the Commonwealth. In this regard, it operates expressly by reference to the entitlements fixed at the commencement of that service. With that background in mind, we turn to consider the applicants’ challenge to the validity of the Amendment Act.
The validity of the Amendment Act
It may be accepted that the term “remuneration” in s 72(iii) of the Constitution includes non-contributory pension plan entitlements of the kind which accrue under the Pensions Act: Austin v Commonwealth (2003) 215 CLR 185 at [72]. Nevertheless, in our respectful opinion, the applicants’ case in relation to the invalidity of the Amendment Act must be rejected. The short answer to the applicants’ case is that the Amendment Act did not “diminish” the remuneration of any judge during that judge’s continuance in office. That is because the Amendment Act took effect before the appointment of any of the applicants. The Amendment Act did not diminish the remuneration of any Ch III justice then continuing in office. It came into operation before any of the applicants were appointed. Insofar as the applicants’ argument depends on the express provisions of s 72(iii) of the Act, the Amendment Act did not offend these provisions for the simple reason that, at that time, there was no Federal Magistrate in office. If the applicants’ argument were to be accepted, it would, taken to its logical conclusion, produce a consequence for which neither party contends, namely the invalidity of the appointment of each of the applicants. In an attempt to avoid the logic that leads to that result, the applicants argue that the invalidity of the amendment to the Pensions Act to exclude the applicants from the pension entitlement is severable from the provisions of the Federal Magistrates Act. But these provisions are the very basis on which they were appointed to their office. Any force which the applicants’ argument might appear to have on this score depends on the circumstance that, as Senior Counsel for the applicants emphasised, the Parliament chose to exclude the applicants from the entitlement to a pension by amending the Pensions Act rather than by a provision in the Federal Magistrates Act. To accept this argument would be to exalt form over substance. That is a complete answer to the applicants’ contentions based on the text of s 72(iii).
There are two further difficulties with the primary case advanced by the applicants. First, the applicants do not seek to demonstrate that their situation is inconsistent with valid appointment to the office of a Ch III judge. Secondly, even if they were disposed to put that proposition, the consequence of its acceptance would not be that their situation could be remedied by the order of a court: as the Canadian cases to which we will refer demonstrate, the consequence would be that they are not able validly to exercise the judicial power of the Commonwealth. These two difficulties also stand in the way of the applicants’ alternative claim to relief.
During the course of argument, the applicants shifted focus from the express prohibition in the text of s 72(iii) of the Constitution to the more general proposition that s 72 contemplates that federal justices will be remunerated. It may well be that if Parliament were to fix a level of remuneration for federal justices so low as to leave the federal judiciary as the exclusive preserve of the idle rich or the corruptible poor, the courts in question would not be recognisable as Ch III courts. But no party sought to suggest that the Federal Magistrates Court is not recognisable as a Ch III court. Indeed such a contention would be contrary to the principal thrust of the applicants’ case which is that, as Ch III justices, they are entitled to the same pension benefits as other Ch III justices. This shift of emphasis brings into high relief the difficulty on which the applicants’ alternative claim to relief also founders.
The applicants’ alternative claim for relief
Legislation that is inconsistent with the provisions of Ch III is invalid; but, importantly, the text of Ch III of the Constitution distinctly does not contain any provision that expressly states what the Parliament must enact as law. The applicants’ argument is that their entitlement is conferred by force of the constitutional requirement that judges appointed under Ch III of the Constitution should enjoy, and be seen to enjoy, judicial independence. But the existence and extent of the constitutional guarantee of judicial independence is a consequence of the text and structure of the Constitution: it is not a principle which, having been derived from the text and structure of the Constitution, returns to its origins to modify them. The applicants’ argument is an example of the “top-down” reasoning deprecated by McHugh J in McGinty v Western Australia (1996) 186 CLR 140 at 231-232:
Underlying or overarching doctrines may explain or illuminate the meaning of the text or structure of the Constitution but such doctrines are not independent sources of the powers, authorities, immunities and obligations conferred by the Constitution. Top-down reasoning is not a legitimate method of interpreting the Constitution. As I pointed out in Theophanous v Herald & Weekly Times Ltd, after the decision of this Court in the Engineers’ Case, the Court had consistently held, prior to Nationwide News and Australian Capital Television Pty Ltd v The Commonwealth, that it is not legitimate to construe the Constitution by reference to political principles or theories that are not anchored in the text of the Constitution or are not necessary implications from its structure. I pointed out that the Engineers’ Case had made it plain that the Constitution was not to be interpreted by using such theories to control or modify the meaning of the Constitution unless those theories could be deduced from the terms or structure of the Constitution itself. It is the text and the implications to be drawn from the text and structure that contain the meaning of the Constitution.
We turn now to explain further grounds on which the applicants’ case fails.
APPREHENDED PARTIALITY OR DEPENDENCE
The applicants emphasise that they are the least well remunerated federal judges and the only such judges who are not entitled to a life-long non-contributory pension. Both of these points may be true, but they are not decisive in their favour unless the Constitution denies the Parliament the power to legislate to establish different levels of remuneration among different courts. It is not submitted by the applicants that the Constitution denies that possibility. Of course, if the Constitution did deny that possibility, then the consequence would not be that all federal judges of whatever federal court enjoy the same terms and conditions; rather, it would be that legislation establishing any court after the High Court, which did not provide for equivalent remuneration, would be entirely invalid. And no one advances that contention.
The applicants seek to rely upon a different touchstone of constitutional invalidity. Both of the applicants’ claims to relief proceed on the footing that a reasonable, well-informed lay observer would apprehend that Federal Magistrates might not be independent or impartial because of the arrangements in relation to their remuneration.
In our respectful opinion, the applicants have not shown that a reasonable well-informed lay observer would apprehend that their impartiality and independence is put at risk by the want of a judicial pension, at least when regard is had to their salaries and the other safeguards of their independence and partiality. A number of points may be made here. First, it is artificial to seek to test the sufficiency of remuneration necessary to dispel any perception of a risk to independence and impartiality by focusing upon post-retirement remuneration to the exclusion of judicial salary while in office. While it may well be the case, as the applicants say, that their post-retirement remuneration is less, and less secure, than would be the case under the judicial pension, to say that is distinctly not to demonstrate that the hypothetical well-informed non-judicial observer would apprehend that Federal Magistrates are not so financially secure as to be free of the appearance of significant temptation in terms of impartiality and independence.
The reasonable well-informed observer would be taken to know the fact agreed between the parties in the special case to the effect that notwithstanding the issues raised in this case, each of the applicants has used his or her best endeavours to properly discharge his or her judicial functions consistent with the oath of office and has never acted in a partial manner by reason of any actual or perceived financial uncertainty. Knowing that fact, the reasonable observer would, we think, be most likely to infer that this state of affairs will continue and conclude that there is no real risk of partiality or want of independence on the part of Federal Magistrates.
The reasonable and well-informed lay observer might also be taken to know that there are many mechanisms, apart from remuneration, which ensure judicial independence. In Forge v ASIC (2006) 228 CLR 45 at [84]-[85], Gummow, Hayne and Crennan JJ said:
84 History reveals that judicial independence and impartiality may be ensured by a number of different mechanisms, not all of which are seen, or need to be seen, to be applied to every kind of court. The development of different rules for courts of record from those applying to inferior courts in respect of judicial immunity and in respect of collateral attack upon judicial decisions shows this to be so. The independence and impartiality of inferior courts, particularly the courts of summary jurisdiction, was for many years sought to be achieved and enforced chiefly by the availability and application of the Supreme Court's supervisory and appellate jurisdictions and the application of the apprehension of bias principle in particular cases. But by contrast, the independence and impartiality of a State Supreme Court cannot be, or at least cannot so readily be, achieved or enforced in that way. Rather, the chief institutional mechanism for achieving those ends, in the case of the Supreme Courts, has been the application of Act of Settlement terms of appointment to the Court's judges coupled with rules like the rules about judicial immunity mentioned earlier in these reasons.
85 That different mechanisms for ensuring independence and impartiality are engaged in respect of inferior courts from those that are engaged in respect of State Supreme Courts is, no doubt, a product of history: not least the historical fact that the inferior courts of England were often constituted by persons who were not lawyers or, if legally trained, held no permanent full-time appointment to office. But the differences that may be observed as a matter of history between, on the one hand, the inferior courts in Australia and their English forbears and, on the other, the colonial, and later State, Supreme Courts, do not deny the central importance of the characteristics of real and perceived independence and impartiality in defining what is a "court" within the meaning of the relevant provisions of Ch III. The observed differences do no more than deny that Act of Settlement terms of appointment are defining characteristics of every "court" encompassed by the expression, in s 77(iii), "any court of a State". But the existence of these observed differences does not necessarily mean that particular mechanisms for ensuring the independence and impartiality of State Supreme Courts may not be defining characteristics of those, constitutionally recognised and required, bodies. In examining what are those defining characteristics, it is necessary to consider whether Act of Settlement terms of appointment for all judges constituting a State Supreme Court are essential to the institutional integrity of those courts.
We should make it clear that we have sought to give effect to our appreciation of the likely view of the reasonable and well-informed lay person in accordance with the submissions of both sides despite some misgivings on our part. It may be accepted that, where a question arises in any given case as to whether a judge should recuse himself or herself for apprehended bias, that question should be resolved by the application of the approach explained by Gaudron J in Ebner v Official Trustee (2000) 205 CLR 337 at [83]-[84] where her Honour said:
It is not in doubt that the requirement that courts be and appear to be impartial dictates the result that a judge is disqualified by actual bias and, also, by the appearance of bias. The test in this country with respect to the appearance of bias is "whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question [he or she] is required to decide".
The test for the appearance of bias was formulated in a series of cases decided by reference to common law principles and without regard to the role of Ch III of the Constitution. However, in my view, that test properly reflects the requirement of Ch III. What is in issue is not bias, but the appearance of bias. And as a practical matter, that can only be determined by reference to considerations of reasonableness and fairmindedness. And because the ultimate rationale for the requirement that courts appear to be impartial is the maintenance of public confidence in the administration of justice, it is appropriate that the test be formulated by reference to the reasonable apprehension of the hypothetical fair-minded lay observer.
It is urged by both parties that this Court should accept that the touchstone of validity is the perception of the hypothetical lay observer. There is authority supporting that view: Kable v Director of Public Prosecutions (NSW) (1995-1996) 189 CLR 51 at 118-119. In Forge v ASIC (2006) 228 CLR 45 at [68], Gummow, Hayne and Crennan JJ said:
The apprehension of bias principle has its application in particular cases. No unthinking translation can be made from the detailed operation of the apprehension of bias principle in particular cases to the separate and distinct question about the institutional integrity of a court. But the apprehension of bias principle is one which reveals the centrality of considerations of both the fact and the appearance of independence and impartiality in identifying whether particular legislative steps distort the character of the court concerned.
It might be thought that reference to the hypothetical reasonable and informed observer as a touchstone of constitutional validity of a statute involves an unnecessary anthropomorphic distraction. One can readily understand that the touchstone of apprehended bias on the part of an individual judge in a particular case should be a standard free of the influence of judicial sensibilities and experience; but there may be a question as to its suitability as a test of the institutional integrity of a court. The judiciary do not conduct opinion polls and they are not dependent on the support of the electorate to continue in office. If the constitutional validity of laws were to be determined by reference to the standards of reasonable and well-informed citizens, then the elected Parliament might be thought to offer a more reliable gauge of that assessment.
Nevertheless, we accept that, as the parties urge, the test of the perception of the hypothetical reasonable well-informed bystander is to be applied to this question of constitutional law. Applying that test, we are not satisfied that this paragon would entertain an apprehension that, notwithstanding the remuneration paid to the applicants and the other institutional safeguards of their independence and impartiality, they may not be independent and impartial because of their want of a judicial pension.
SUCH REMUNERATION AS THE PARLIAMENT MAY FIX
Section 72(iii) of the Constitution provides that justices shall receive such “remuneration as the Parliament may fix.” The fixing of judicial remuneration is expressly a matter for determination by the Parliament. Quite apart from the actual text of the Constitution, it is hardly to be supposed that the framers of the Constitution intended to leave it to the justices to determine their own remuneration, or that succeeding generations of Australians would ever regard such a state of affairs as acceptable, much less essential to the sound administration of justice.
The applicants’ argument, if accepted, would mean that federal judges, and not the Parliament, would be fixing the remuneration of federal judges. That is because, if the primary relief sought by the applicants were to be granted by this Court, they would immediately and retrospectively become entitled to entitlements under the Pensions Act, and s 72(iii) would then be engaged to prevent Parliament legislating to diminish their entitlements, a fortiori, if the alternative relief sought by the applicants were to be granted.
In arguing for remuneration which is “broadly equivalent” to that fixed by the Parliament in respect of other Ch III justices, the applicants, through their Counsel, disclaim any suggestion that s 72(iii) is to be read as if the power of the Parliament to fix the remuneration of justices were limited to fixing the same remuneration for all federal justices. In light of this disclaimer, it is difficult to see how it can be maintained that s 72(iii) can be read as requiring the Parliament to enact “broadly” equivalent arrangements for the remuneration of the various federal courts which the Parliament may create. And even if it can be read that way, it is difficult to see how, on a “broad” view of equivalence, the remuneration package afforded Federal Magistrates fails to satisfy this indeterminate standard.
There is nothing in the authoritative exegesis of Ch III of the Constitution which suggests that the provisions of Ch III impliedly state what the Parliament must prescribe under s 72(iii). In Forge v ASIC & Ors (2006) 228 CLR 45 at [36]-[37] Gleeson CJ said:
36 Australia has an integrated, but not a unitary, court system. As was pointed out in North Australian Aboriginal Legal Aid Service Inc v Bradley, there is no single ideal model of judicial independence, personal or institutional. Within the Australian judiciary, there are substantial differences in arrangements that bear upon judicial independence. Until a constitutional amendment in 1977, Justices of this Court, and other federal courts created by Parliament, were required to be appointed for life. No one ever suggested that, in that respect, Ch III of the Constitution provided a template that had to be followed to ensure the independence of State Supreme Courts, much less of all courts on which federal jurisdiction might be conferred. Indeed, for most of the twentieth century, many of the judicial officers who exercised federal judicial power, that is to say, State magistrates, were part of the State public service. If Ch III of the Constitution were said to establish the Australian standard for judicial independence then two embarrassing considerations would arise: first, the standard altered in 1977; secondly, the State Supreme Courts and other State courts upon which federal jurisdiction has been conferred did not comply with the standard at the time of Federation, and have never done so since.
37 Nothing better illustrates the room for legitimate choice that exists in connection with arrangements affecting judicial independence than the removal in 1977 of the requirement of life tenure for federal judges. That requirement probably explained why, before 1977, the federal judiciary was so small, and why so much federal jurisdiction was exercised by State judges, who did not have life tenure. At the time of Federation, life tenure was seen as necessary to secure the independence of the federal judiciary and, in particular, of the members of this Court. In 1977, it was seen as inconvenient. This Court did not become less independent in 1977. Tenure is an important aspect of the arrangements that support the individual and personal aspects of judicial independence; but it is only one of a number of aspects all of which have to be considered in combination. Furthermore, the essence of tenure is that explained in the quotation from Valente v The Queen set out earlier in these reasons.
(Footnotes omitted).In Forge, Gummow, Hayne and Crennan JJ said at [76]-[78]:
76 [I]f attempting to state comprehensively the measures that have been taken to support judicial independence, it would be necessary to take account of not only the arrangements for remuneration of judges while in office but also the provision made for payment of pensions on retirement. The "remuneration", which s 72(iii) of the Constitution states shall not be diminished during continuance in office, includes non-contributory pension plan entitlements which accrue under the federal judicial pensions statute.
77 Provision is made for judicial pensions for a number of reasons. One not insignificant reason is to reduce, if not eliminate, the financial incentive for a judge to seek to establish some new career after retirement from office. As was pointed out in argument, it may otherwise be possible to construe what a judge does while in office as being affected by later employment prospects.
78 No doubt the provisions that have been made to govern the security of both the tenure and the remuneration of judges are important in securing judicial independence and impartiality. But those provisions take their place in a much wider setting of principles that have been established or enacted and which also contribute to the maintenance of both the fact and the appearance of judicial independence and impartiality…
(Footnoted omitted).In North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146 at [3] Gleeson CJ said:
… In Porter v Magill, the House of Lords cited the statement of the European Court to the effect that, in considering whether a tribunal is independent, regard must be had inter alia to the manner of appointment of its members and their term of office, and the existence of guarantees against outside pressures. The Supreme Court of Canada has said that "[t]he manner in which the essential conditions of independence may be satisfied varies in accordance with the nature of the court or tribunal". It has also pointed out that "[c]onceptions have changed over the years as to what ideally may be required in the way of substance and procedure for securing judicial independence in as ample a measure as possible". Within the Australian judiciary, there are substantial differences in arrangements concerning the appointment and tenure of judges and magistrates, terms and conditions of service, procedures for dealing with complaints against judicial officers, and court administration. All those arrangements are relevant to independence. The differences exist because there is no single ideal model of judicial independence, personal or institutional. There is room for legislative choice in this area; and there are differences in constitutional requirements. For example, s 72 of the Constitution does not permit the appointment of federal acting judges. On the other hand, acting judges are commonly appointed for fixed, renewable, terms in some State and Territory courts. This Court decided in Re Governor, Goulburn Correctional Centre; Ex parte Eastman that acting judges may be appointed in the Supreme Court of the Australian Capital Territory. In the Northern Territory, the legislation with which this case is concerned provides for the appointment of acting magistrates (s 9). (The legislation also provides for the appointment of justices of the peace as Special Magistrates (s 14).)
(Footnotes omitted).It is to be noted that in none of the authorities is it said that provision of a non-contributory, remuneration based, life-long, post-retirement judicial pension is essential to secure an irreducible minimum level of judicial independence and impartiality.
In the decisions of the High Court expounding Ch III of the Constitution, judicial independence and impartiality have been identified as values of high constitutional significance so that legislation inconsistent with the provisions of Ch III, whereby those values are protected, has been held to be invalid. See TheQueen v Kirby and Others; Ex parte Boilermakers’ Society of Australia (1955-1956) 94 CLR 254; Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51; Re Wakim; Ex parte McNally (1999) 198 CLR 511; Austin v The Commonwealth (2003) 215 CLR 185. See also the discussion in North Australian Aboriginal Legal Aid Service Inc v Bradley (2004) 218 CLR 146; Forge v Australian Securities Investments Commission (2006) 228 CLR 45.
Two points may be made here. First, these decisions give effect to Ch III of the Constitution, not to abstract conceptions which have not found expression in the text and structure of the Constitution. Secondly, and more importantly for present purposes, they illustrate the point that Ch III operates by nullifying inconsistent legislation. There has been no suggestion in the Australian authorities that the judiciary have a legitimate role to play in substituting a valid prescription for that which has been struck down.
On behalf of the applicants it was suggested that examples of judicial prescription of proper levels of remuneration are to be found in the Canadian cases concerned with the unconstitutionality of certain actions of provincial governments that interfered with the judicial independence of provincial courts: See the Provincial Court Judges’ Case (1997) 3 SCR 3; Re Remuneration of Judges of the Provincial Court of Prince Edward Island (1998) 1 SCR 3; Provincial Court Judges’ Association of New Brunswick v The Queen (2005) 2 SCR 286.
These cases had their genesis in provincial legislation which undermined the financial security of provincial court judges by legislatively reducing the salaries of serving judges. This was held to render them “dependent”: see Re Remuneration of Judges of the Provincial Court of Prince Edward Island (1998) 1 SCR 3 at [2]. The Supreme Court decided that the provincial courts were not independent tribunals, and by virtue of s 11(d) of the Canadian Charter of Rights and Freedoms, which guarantees the right “to be presumed innocent until proven guilty according to law in a fair and public hearing by an independent and impartial tribunal”, each person who had been found guilty by one of the affected provincial courts was seen to have suffered a breach of his or her rights. In order to avoid the consequences of these conclusions, namely that all these convictions were void, the Supreme Court of Canada had resort to an expedient not known to Australian law, namely to “suspend all aspects of the requirement for an independent, objective and effective process for setting judicial remuneration…for one year from the date of [its] original judgment”: see Re Remuneration of Judges of the Provincial Court of Prince Edward Island (1998) 1 SCR 3 at [18].
The provinces set up remuneration commissions to fix judicial salaries; but that did not resolve the conflict between the judiciary and the other arms of government.
In the last case of this series, Provincial Court Judges’ Association of New Brunswick v The Queen (2005) 2 SCR 286, the Supreme Court was concerned to review the decisions made by remuneration commissions put in place to determine provincial judges remuneration by judicial commissions, and the judicial review of those decisions.
It can be seen that these Canadian decisions began as a response to the legislative reduction of salaries of serving judges and the violation of the constitutional rights of subjects to the kind of trial guaranteed by the express provisions of the Canadian Charter of Rights and Freedoms (the Charter). That response involved the conclusion that the judges of the affected courts were not independent and the invocation of prospective and limited invalidation of statutes. It led to the ongoing involvement of the Supreme Court of Canada in reviewing the work of judicial commissions set up to fix judicial remuneration in the provinces. This state of affairs is a far cry from the circumstances of this case. This is not a case of the reduction of the remuneration of sitting judges. Further, neither party suggests that this Court should conclude that Federal Magistrates are “dependent” on the other branches of government. And most importantly, the constitutional foundation of the Canadian cases is different from s 72(iii) of the Constitution.
Further, in relation to the Canadian jurisprudence, it should be noted that in Valente v The Queen (1985) 2 SCR 673 at 704, the Supreme Court of Canada said that s 11 (d) of the Charter means “security of salary or other remuneration, and, where appropriate, security of pension”. The Supreme Court went on to explain that:
“[t]he essence of such security is that the right to salary and pension should be established by law and not be subject to arbitrary interference by the Executive in a manner that could affect judicial independence. In the case of pension, the essential distinction is between a right to a pension and a pension that depends on the grace and favour of the executive”.
The rights of Federal Magistrates to remuneration are established by law and are not subject to arbitrary interference by the Executive or, for that matter, the legislature. In our respectful opinion, the Canadian cases afford no support for the applicants’ argument.
THE APPLICANTS’ ALTERNATIVE ARGUMENT
The applicants’ alternative argument depends upon a strained reading of
s 72(iii) of the Constitution. The first step in the argument is that s 72(iii), by expressly providing that judicial “remuneration shall not be diminished during…continuance in office”, impliedly permits remuneration to be diminished after retirement from office. The second step is that implied permission to diminish remuneration does not encompass the extinguishment of remuneration. The consequence, so it is said, is that s 72(iii) obliges the Parliament to continue some form of remuneration of Ch III justices after they have retired from office.
The first step in this argument gives an operation to the maxims of interpretation “expressum facit cessare tacitum” and “expressio unius est exclusio alterius” beyond anything contemplated in the authorities in which a negative implication has been drawn from the express provisions of Ch III of the Constitution: See In re Judiciary and Navigation Acts (1921) 29 CLR 257; R v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254; Re Wakim; Ex parte McNally (1999) 198 CLR 511 at [5]-[18]; [51]-[52]; [110]-[111]; [256]-[265].
The approach to interpretation embodied in the Latin tags mentioned above has been said to be “a valuable servant, but a dangerous master”. See Colquhoun v Brooks (1888) 21 QBD 52 at 65; Houssein v Under-Secretary of Industrial Relations and Technology (NSW) (1982) 148 CLR 88 at 95.
We are not persuaded that necessity compels the implication involved in the first step of the applicants’ argument. An attempt to reduce or withdraw the benefit of an accrued entitlement with just compensation would be likely to fall foul of s 51(xxxi) of the Constitution. In conformity with the observations of Gleeson CJ in Theophanous v The Commonwealth (2006) 225 CLR 101 at [7], we “would not accept that statutory superannuation or pension benefits are inherently defeasible and that, on that account alone, their modification or withdrawal could never constitute an acquisition of property” within the meaning of s 51(xxxi) of the Constitution. While it is true to say that “remuneration” includes pension entitlements and superannuation benefits, the reduction or withdrawal of these benefits after retirement would be an acquisition of property the validity of which would be conditional on the provision of just terms in accordance with s 51(xxxi) of the Constitution.
And the second step in the applicants’ argument presses for an implication upon an implication: that kind of reasoning does not find any foundation in the authoritative exposition of Ch III.
CONCLUSION AND ORDER
In our respectful opinion, the applicants’ contentions should not be accepted.
We would answer the questions posed by the special case as follows:
Question One: Are the applicants entitled to the relief sought in the amended application and the second further amended statement of claim?
Answer:No.
Question Two: What order as to costs should be made with respect to the Special Case?
Answer:The applicants should pay the Commonwealth’s costs as taxed or agreed.
Question Three: What order as to costs should be made with respect to the proceedings before referral of the Special Case to a Full Court?
Answer:The applicants should pay the Commonwealth’s costs as taxed or agreed.
I certify that the preceding seventy-eight (78) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Keane and Justice Lander. Associate:
Dated: 31 August 2012
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1658 of 2011
BETWEEN: BARBARA AVALON BAKER, EVELYN RUTH BENDER, JAMES HAROLD BREWSTER, PHILLIP DONALD BURCHARDT, MICHAEL JOHN FRANCIS BURNETT, GILES ANTHONY COAKES, MICHAEL KEVIN CONNOLLY, ANNE ELIZABETH DEMACK, NORAH HELENE HARTNETT, LOUISE HELEN HENDERSON, KATE HELENA HUGHES, CHARLOTTE MARIE SIMEON KELLY, STUART HAMILTON LINDSAY, TERRENCE JOHN MCGUIRE, DANIEL PATRICK O'DWYER, MAURICE BEAUMONT PHIPPS, GRANT THEO RIETHMULLER, HEATHER MARGARET RILEY, STUART ALDEN ROBERTS, JEFFREY FRANK EDWARD TURNER, JOHN MYER WALTERS, DOMINICA MARY WHELAN, RONALD DAVID CURTAIN and MATTHEW DAVID MYERS
ApplicantsAND: COMMONWEALTH OF AUSTRALIA
Respondent
JUDGES:
KEANE CJ, LANDER AND PERRAM JJ
DATE:
31 AUGUST 2012
PLACE:
SYDNEY
PERRAM J
This matter comes before the Full Court for its opinion by means of a special case filed on 13 June 2012 pursuant to orders made by Buchanan J on 1 June 2012. It concerns the retirement entitlements of Federal Magistrates. The Federal Magistracy is an element of the Federal judiciary and its members are ‘Justices’ within the meaning of s 72 of the Constitution.
The applicants are a group of 24 of the current 63 Federal Magistrates. As part of their terms and conditions of appointment Federal Magistrates are presently entitled to a contribution by the Commonwealth of 15.4% of their annual salary towards their superannuation. A potential feature of contributory superannuation is that the benefits payable upon retirement are not fixed but are instead subject to the length of the Magistrate’s career and the vagaries of the superannuation funds in which the contributions are invested. The applicants contend that there is a positive implication in Chapter III of the Constitution which requires that federal judicial officers should know in advance their financial position upon retirement and that the provision to them of a contribution to a superannuation fund does not, by reason of those vagaries, satisfy the requirements of the positive implication. The positive implication is submitted to be a corollary of judicial independence. It is said to be necessary because without it Federal Magistrates may be exposed to a temptation, contrary to their oath of office, to curry favour with those appearing before them with a view to securing employment upon retirement. Seen that way, the applicants submit, the failure to provide certainty in retirement poses a risk to judicial independence.
The consequence of the positive implication’s infringement is, as the argument was put, that cl 1 of Schedule 18 to the Federal Magistrates (Consequential Amendments) Act 1999 (Cth) is constitutionally invalid. It was that provision which, upon the inception of the Federal Magistrates Court, changed the definition of a ‘Judge’ in s 4 of the Judges’ Pensions Act 1968 (Cth) from ‘a Justice or Judge of a federal court’ to ‘a Justice or Judge of a federal court (other than the Federal Magistrates Court)’. If cl 1 of Schedule 18 is invalid and the definition of a ‘Judge’ reverts to ‘a Justice or Judge of a federal court’ then the applicants argue that they will be entitled to a pension under the Judges’ Pensions Act (subject, of course, to meeting its qualification requirements). The pension under that Act is part of a non-contributory defined benefits scheme and this, the applicants accepted, would not infringe the implication identified by them.
It is not an element of the applicants’ case that either their ordinary remuneration is insufficient or that the 15.4% superannuation contribution is quantitatively inadequate. Their argument is limited instead to the adequacy of the quality of the remuneration and, in particular, to the uncertainty attending their final retirement position; in other words, the case is concerned, as Mr Walker SC was at pains to point out on the applicants’ behalf, with the question of what kind of retirement remuneration was involved rather than how much. By that means, the applicants’ argument avoided asking this Court directly to fix their remuneration, a course foreclosed by the allocation of that function to the Parliament by s 72(iii) of the Constitution (‘shall receive such remuneration as the Parliament may fix’).
In my opinion, the applicants’ contentions should be rejected. The Federal Magistrates Court came into existence on 23 December 1999 when the Federal Magistrates Act 1999 (Cth) received the Royal Assent (s 2). The only provision in the Act dealing with remuneration was cl 5(1) of Schedule 1 which provided that ‘A Federal Magistrate is to be paid such remuneration as is determined by the Remuneration Tribunal’. No provision of the Act dealt with the retirement position of Federal Magistrates. On the same day that Act commenced, however, there also came into effect the Federal Magistrates (Consequential Amendments) Act and, as already noted, cl 1 of Schedule 18 to that Act amended the Judges’ Pensions Act so that Federal Magistrates would not qualify under it. The consequence was, at least on 23 December 1999, that there was no explicit provision made for the retirement position of Federal Magistrates beyond their excision from the defined benefits scheme provided for in the case of all other federal judicial officers.
The Federal Magistrates Act did, however, contain a general power to deal with the terms and conditions on which Federal Magistrates were to hold office. It was contained in cl 8(1) of Schedule 1 and it provided that ‘A Federal Magistrate holds office on such terms and conditions (if any) in relation to matters not covered by this Act as are specified in a written determination made by the Governor-General for the purposes of this subclause’. Before the Federal Magistrates Court was first convened on 3 July 2000 the Governor-General exercised this power. This occurred on 2 February 2000 when His Excellency determined the terms and conditions of Federal Magistrates by means of the Federal Magistrates (Terms and Conditions of Appointment) Determination 2000. Clause 2(1) of the determination provided that each Federal Magistrate holding office on a full-time basis would be ‘entitled to a Commonwealth contribution, of an amount equal to 13.1% of his or her annual salary, to his her choice of: (a) a complying superannuation fund…; or (b) a retirement savings account…’.
This was an important matter for, as Mr Williams SC submitted on the Commonwealth’s behalf, it showed that contributory superannuation was not a feature of the Federal Magistrates Act when in it came into force. It would have been equally possible, in principle, for the Governor-General to have exercised the power conferred on him by cl 8(1) of Schedule 1 by determining that Federal Magistrates should have access to a non-contributory defined benefits scheme. The subject matter of the applicants’ complaint – their unconstitutional exposure to a contributory non-defined benefits scheme – was not what the Federal Magistrates Act or the Federal Magistrates (Consequential Amendments) Act did. What created the scheme at which the applicants’ argument is directed was the exercise of a statutory power by the Governor-General well after both Acts had already come into force.
Were it to exist, it is likely that the positive constitutional requirement for which the applicants contend would delimit the power conferred on the Governor-General by cl 8(1) of Schedule 1. If so, cl 8(1) would be construed so as not to authorise the determination of terms and conditions which were, perhaps to put the matter a little loosely, inconsistent with judicial independence: Acts Interpretation Act 1901 (Cth), s 15A. On that hypothesis, both the original determination of 2 February 2000 and a more recent determination of 30 June 2011 (which increased the contribution rate from 13.1% to 15.4%) would be invalid.
The applicants did not, however, seek to invalidate the determinations by which their post-retirement benefits were formulated. Nor did they seek to suggest that the Federal Magistrates Act was invalid because it was not consistent with judicial independence to leave to the Governor-General the decision of whether they would receive any post-retirement benefits and, if they did, of what kind those benefits would be.
Instead, the argument was that the excision of Federal Magistrates from the definition of a ‘Judge’ under the Judges’ Pensions Act was invalid because of the inadequate quality of the contributory superannuation for which provision had been made. Where those arrangements did not come into effect until sometime after the passage of the legislation this argument is untenable. I do not accept that it could be possible that the excision of Federal Magistrates from the definition of a ‘Judge’ was valid on 23 December 1999 when the legislation came into effect but became invalid in the following year when the Governor-General made his determination to grant to them a contribution towards superannuation. Correspondingly, I cannot agree that the making of the determination on 2 February 2000 could retroactively invalidate legislation passed the preceding year. This is not to embrace in its absolute form the proposition that the validity of legislation is in every case to be judged at its inception (a larger proposition the possible exceptions to which it is not presently necessary to explore) but only to say that in this case I do not see how it can be made to work.
In fact, the implication which the applicants advance could have arisen in this litigation in only one of two ways.
First, it might have been said that the Federal Magistrates Act and the Federal Magistrates (Consequential Amendments) Act failed to provide for the retirement position of Federal Magistrates at all and that this was inconsistent with judicial independence. That argument would have needed to confront at the outset the general power of the Governor-General to make a determination about the terms and conditions upon which Federal Magistrates hold office under cl 8(1) of Schedule 1 to the Federal Magistrates Act. If it were found that a mere non-mandatory general power to fix terms and conditions was not consistent with judicial independence then it would then have followed that cl 8(1) of Schedule 1 was invalid. Upon that that conclusion a further issue would have arisen as to whether, shorn of that provision, the Federal Magistrates Act was wholly invalid or whether it could be saved by severing that part of the Federal Magistrates (Consequential Amendments) Act which excised Federal Magistrates from the definition of a ‘Judge’ in the Judges’ Pensions Act.
This argument would not have involved any consideration of whether contributory superannuation satisfied the requirements of judicial independence because contributory superannuation was not then, and is not now, a feature of the Federal Magistrates Act or the Federal Magistrates (Consequential Amendments) Act. This was not, however, the applicants’ argument. Had it been, several related issues would have arisen. If the provision authorising the Governor-General to fix the terms and conditions upon which Federal Magistrates held office were invalid then the determinations under which the applicants had received their superannuation contributions would also have been invalid. Questions of restitution and their complex interplay with the terms of s 72(iii) would then have come into view: cf. Austin v Commonwealth (2003) 215 CLR 185 at 234-235 [72] per Gaudron, Gummow and Hayne JJ; United States v Hatter (2001) 532 US 557 at 574 per Breyer J, Rehnquist CJ, Kennedy, Souter and Ginsburg JJ agreeing, 583 per Scalia J.
On the issue of severance, it would have been necessary to inquire whether the provision by which Federal Magistrates were excised from the definition of a ‘Judge’ in the Judges’ Pensions Act could be removed without altering the policy the Parliament had clearly expressed in cl 1 of Schedule 18 viz that Federal Magistrates were not to be covered by the Judges’ Pensions Act: cf. Pidoto v Victoria (1943) 68 CLR 87 at 109 per Latham CJ. To me it is far from obvious that that question would have been answered in the affirmative.
The second way the question could have arisen is if the applicants had sought a declaration that the Governor-General’s determination to put in place a contributory superannuation scheme was itself invalid. Here the constitutional implication for which they contend, if accepted, either would have rendered the conferral of power on the Governor-General to make a determination about terms and conditions invalid (if it could not be read down under s 15A) or not sufficient to support the determination (if it could). Again this was not the applicants’ case in this Court.
Instead, the applicants confined themselves to the contention above at [88] and, as has been noted, it suffers from a want of temporal logic. This is underscored by the observation that the omission of the applicants to challenge the validity of the determination means that if the present argument were to be embraced they would each become entitled both to a pension under the Judges’ Pensions Act and to a continuing superannuation contribution of 15.4% under the most recent determination. Given the terms of s 72(iii) which require that the remuneration of judicial officers ‘shall not be diminished during their continuance in office’ it would thereafter be impossible for Parliament to abolish the 15.4% superannuation contribution which, by then, would have formed part of the remuneration paid to Federal Magistrates.
It follows that these proceedings may be determined without deciding whether the positive implication for which applicants contend exists. Even assuming it did, the applicants would not be entitled to the relief they claim: the inadequacy they allege is not a result of the Act which they challenge; the argument which might be directed at that Act is not the one which they have advanced; and the delegated instrument which created the scheme about whose deficiencies they now complain is not the one which they seek to invalidate. The footings for the constitutional argument they wish to advance have not, therefore, been laid. The relief sought is not connected to the constitutional wrong identified and the claim, in those circumstances, cannot succeed.
Established authority requires this Court not to decide constitutional questions unless it is necessary to do so: see, e.g., Re Patterson; ex parte Taylor (2001) 207 CLR 391 at 473-474 [248]-[252] per Gummow and Hayne JJ. Speaking, it is true, of the position of the High Court, Higgins J explained in Attorney-General (NSW) v Brewery Employees Union (NSW) (1908) 6 CLR 469 at 590 that ‘Nothing would tend to detract from the influence and the usefulness of this Court more than the appearance of an eagerness to sit in judgment on Acts of Parliament, and to stamp the Constitution with the impress which we wish it to bear. It is only when we cannot do justice, in an action properly brought, without deciding as to the validity of the Act, that we are entitled to take out this last weapon from our armoury’ (emphasis added). No different position obtains in this Court.
In light of the foregoing it is not only unnecessary but inappropriate to decide whether Chapter III carries with it, as the applicants contend, a positive implication that requires the Parliament to confer upon judicial officers post-retirement benefits which are known in advance of retirement. Such an implication, even if accepted, would, with respect, provide no basis for the relief claimed. To use the expression of Higgins J, until there is ‘an action properly brought’ the constitutional issue does not arise and should not be determined.
I would answer the questions posed on the special case as follows:
Question One: Are the applicants entitled to the relief sought in the amended application and the second further amended statement of claim?
Answer:No.
Question Two: What order as to costs should be made with respect to the Special Case?
Answer:The applicants should pay the Commonwealth’s costs as taxed or agreed.
Question Three: What order as to costs should be made with respect to the proceedings before referral of the Special Case to a Full Court?
Answer:The applicants should pay the Commonwealth’s costs as taxed or agreed.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perram. Associate:
Dated: 31 August 2012
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