Elston v Commonwealth of Australia
[2013] FCA 506
FEDERAL COURT OF AUSTRALIA
Elston v Commonwealth of Australia [2013] FCA 506
Citation: Elston v Commonwealth of Australia [2013] FCA 506 Parties: DR GUY N ELSTON v COMMONWEALTH OF AUSTRALIA and NATIONAL HEALTH AND MEDICAL RESEARCH COUNCIL File number: QUD 169 of 2013 Judge: GREENWOOD J Date of judgment: 24 May 2013 Catchwords: PRACTICE AND PROCEDURE – application for leave to appeal from an interlocutory judgment of the Court Legislation: National Health and Medical Research Council Act 1992 (Cth), ss 5B, 6, 7, 20, 45(2), 125,126 129 (and s 6 as that section stood prior to the commencement on 1 July 2006 of the National Health and Medical Research Council Amendment Act 2006 (Cth)) Date of hearing: 23 May 2013 Date of last submissions: 23 May 2013 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 38 Counsel for the Applicant: Applicant appeared in person Counsel for the Respondents: Mr P Bickford Solicitor for the Respondents: Clayton Utz
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 169 of 2013
BETWEEN: DR GUY N ELSTON
ApplicantAND: COMMONWEALTH OF AUSTRALIA
First RespondentNATIONAL HEALTH AND MEDICAL RESEARCH COUNCIL
Second Respondent
JUDGE:
GREENWOOD J
DATE OF ORDER:
24 MAY 2013
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The application is dismissed.
2.The applicant pay the costs of the Commonwealth of Australia of and incidental to the application.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 169 of 2013
BETWEEN: DR GUY N ELSTON
ApplicantAND: COMMONWEALTH OF AUSTRALIA
First RespondentNATIONAL HEALTH AND MEDICAL RESEARCH COUNCIL
Second Respondent
JUDGE:
GREENWOOD J
DATE:
24 MAY 2013
PLACE:
BRISBANE
REASONS FOR JUDGMENT
These proceedings are concerned with an application by the applicant in the principal proceeding, Dr Guy Elston, for leave to appeal from an interlocutory judgment of Justice Logan in which his Honour made orders dismissing the second respondent, the National Health and Medical Research Council (the “NH&MRC”), as a party to the proceeding; striking out the statement of claim but giving leave to Dr Elston to file and serve an amended statement of claim by 15 March 2013; and ordering Dr Elston to pay the costs of the Commonwealth of and incidental to the 7 February 2013 application giving rise to the orders.
Although, by his Honour’s order, the NH&MRC was dismissed from the proceeding, the NH&MRC is a respondent to Dr Elston’s application for leave to appeal. Leave to appeal is required under ss 24(1)(a) and 24(1A) of the Federal Court of Australia Act 1976 (the “Court Act”) and the application for leave is made under s 25(2)(a) of the Court Act.
In determining the application, the Court is required to address the familiar questions of whether in all the circumstances, the decision of his Honour is attended with sufficient doubt to warrant the decision being reconsidered by the Full Court and, secondly, whether substantial injustice would result to Dr Elston should leave be refused, supposing the decision to be wrong.
The character of the decision in question is an interlocutory decision dealing with matters of practice concerning the formulation by Dr Elston of the statement of claim upon which he relies in framing the causes of action and identifying the remedial relief he seeks. The second part of the principal decision concerns a question of whether the NH&MRC is a body recognised according to law capable of suing and being sued.
In the application for leave to appeal, Dr Elston contends that his Honour’s judgment contains errors of fact (Ground 1); parts of the judgment are based upon material not in evidence before his Honour (Ground 2); and the judgment failed to have regard to the legislative and parliamentary intention reflected in the relevant provisions of the National Health and Medical Research Council Amendment Act 2006 (Cth), (the “2006 Amendment Act”) concerning the question of the juristic standing of the NH&MRC under that Act.
In support of the application for leave, Dr Elston who is self-represented, has filed extensive written submissions going to each of the grounds and in particular submissions directed to the legal identity of the NH&MRC. Aspects of the submissions are directed to underlying questions going to the merits of the various contentions Dr Elston seeks to agitate in the principal proceeding. Dr Elston has taken up the opportunity to reformulate or amend the statement of claim struck out by Logan J. An amended statement of claim was filed and served on 15 March 2013. Further amendments were made on 18 April 2013 and further amendments were made on 23 April 2013. Accordingly matters relating to the dismissal of a statement of claim and the opportunity to re-plead the causes of action and the remedies said to arise out of those causes of action, have progressed to the point of re-pleading.
The principal question agitated in the application for leave is the proposition that his Honour fell into error by dismissing the NH&MRC from the proceeding on the footing that the NH&MRC lacks legal personality and is not capable of suing or being sued. Dr Elston contends that a proper construction of the 2006 Amendment Act leads to the conclusion that the Parliament intended the NH&MRC to be a body capable of suing and being sued having regard to its statutory independence from the Department of State (being the Department of Health and Ageing at the date of commencement of the 2006 Amendment Act).
The essential background facts are not contentious (at least for the purposes of this application) and can be simply stated. On 11 December 2001, Dr Elston was awarded a Research Fellowship known as the “RD Wright Fellowship”. That Fellowship is described as being “tenable” at the University of Queensland. The Fellowship awarded to Dr Elston was funded by a statutory corporation constituted under the provisions of the National Health and Medical Research Council Act 1992 (Cth) (the “1992 NH&MRC Act”). The incorporated body was called the National Health and Medical Research Council (the “1992 entity”). A governing deed was entered into between the University of Queensland (the “University”) and the 1992 entity, reciting the terms and conditions of the funding arrangement. The principal beneficiary, in terms of research accreditation, of the Fellowship funding under the deed was Dr Elston.
On 15 August 2006, the University suspended Dr Elston’s employment without pay. On 7 September 2006, the NH&MRC, constituted under the 2006 Amendment Act, advised the University that it had decided, under the terms of the deed, to suspend payment to the University of amounts otherwise payable in respect of the Fellowship. The NH&MRC requested the University to advise Dr Elston of the suspension of payments under the deed.
On 11 September 2001, Dr Elston commenced proceedings in the High Court of Australia against the Commonwealth and also the NH&MRC arising out of the sequence of events relating to the various steps just described. The Commonwealth entered an appearance in the proceedings. The NH&MRC did not enter an appearance. On 22 March 2012, the High Court remitted the proceeding to this Court. The Commonwealth then brought on an application seeking orders that the statement of claim annexed to the writ filed in the High Court be struck out and in the alternative an order that judgment be entered for the Commonwealth against Dr Elston. Apart from those orders the Commonwealth sought an order that the NH&MRC be dismissed as a respondent to the proceeding on the footing that it is not a juristic person against which a remedy can be granted. On 21 February 2013, Logan J delivered judgment and made the orders earlier described.
Under the 1992 NH&MRC Act, the 1992 entity is established by s 6 of that Act in these terms:
Establishment
(1)There is established by this section a council to be known as the National Health and Medical Research Council.
(2) The Council:
(a) is a body corporate with perpetual succession; and
(b) has a seal; and
(c) may sue and be sued under its corporate name.(3)All courts, judges and persons acting judicially must take judicial notice of the imprint of the seal of the Council appearing on a document and must presume that the document was duly sealed.
On 24 May 2006, the National Health and Medical Research Council Amendment Bill 2006 (the “2006 Bill”) was read a second and third time. The Explanatory Memorandum (the “EM”) for the Bill is relied upon by Dr Elston as an aid to construction of the 2006 Amendment Act on the footing that the EM recites that the proposed amendments to the 1992 NH&MRC Act are designed to “strengthen the independence of the NHMRC”. The EM also says this:
Under the existing arrangements, the Council is established as a statutory body corporate. Staff of the NHMRC are officers of the Department of Health and Ageing made available to the Council via an arrangement under subsection 45(2) of the Act. The new arrangements establish the NHMRC as a statutory agency. The CEO will be responsible for the primary functions of the agency, with the Council advising and providing guidelines and recommendations to the CEO. The CEO will directly engage the staff of the agency, with the CEO and staff constituting a Statutory Agency for the purposes of the Public Service Act1999. It is proposed that the NHMRC will also become a prescribed agency for the purposes of the Financial Management and Accountability Act 1997.
(emphasis in bold added)
Under the 2006 Amendment Act, Part 2 of the 1992 NH&MRC Act (within which section 6 falls), was repealed and replaced with a new Part 2 (Item 31, Part 1, Schedule 1) containing, among other provisions, s 5B in these terms:
Establishment of the NHMRC
(1)The National Health and Medical Research Council is established by this section.
(2) The NHMRC comprises the following:
(a) the CEO;
(b) the Council and committees;
(c) the staff of the NHMRC.The Council of the NHMRC is then established by a new s 20(1) of the 2006 Amendment Act (Item 52, Part 1, Schedule 1). The Council consists of the Chief Medical Officer for the Commonwealth, the Chief Medical Officer for each State and Territory and other individuals with the experience contemplated by s 20(2).
By the new Part 3 introduced by the 2006 Amendment Act, (Item 32, Part 1, Schedule 1) there is a Chief Executive Officer of the NHMRC (s 6) as established under s 5B. By s 7, the functions of the CEO include enquiring into and issuing guidelines on the range of matters set out at s 7(1)(a); advising and making recommendations to the Commonwealth, States and Territories on those matters; making recommendations to the Minister on expenditure, on public health research and training, and also on medical research and training; any other functions conferred on the CEO in writing by the Minister (s 7(1)(d)); any other functions conferred on the CEO by the 1992 NH&MRC Act as amended by the 2006 Amendment Act, the regulations and any other law (s 7(1)(e)); and any functions incidental to any of the foregoing (s 7(1)(f)).
I mention these matters of the functions of the CEO in [15] because Dr Elston relies upon the functions at s 7(1)(d), (e) and (f) as consistent with a statutory extension by the 2006 Amendment Act of a truly independent NH&MRC as established under the 2006 Amendment Act taken in conjunction with the steps put in place by the Commonwealth to establish the NH&MRC as both a Statutory Agency for the purposes of the Public Service Act 1999 (Cth) (the “Public Service Act”) and a Prescribed Agency for the purposes of the Financial Management and Accountability Act 1997 (Cth) (the “FMA Act”). In short, Dr Elston says, in effect, why would the Commonwealth clothe the NH&MRC by operation of the 2006 Amendment Act with the independence and responsibility of being both a Statutory Agency and a Prescribed Agency, if the 2006 Amendment Act is not intended to make the NH&MRC independent and accountable, and more so than it previously was.
By s 45(2) of the 2006 Amendment Act, the CEO and the staff of the NH&MRC together constitute a Statutory Agency and the CEO is the “Head” of the agency for the purposes of the Public Service Act. Under the Public Service Act an Agency is defined to mean a Department; or an Executive Agency; or a Statutory Agency. Because the NH&MRC is a Statutory Agency, the obligations cast upon an Agency by the Public Service Act fall to be discharged by the NH&MRC. Those obligations include compliance with Codes of Conduct and compliance with a range of prohibitions upon prescribed conduct. The objects include providing a legal framework for the effective and fair employment, management and leadership of Australian Public Service (“APS”) employees, defining the powers, functions and responsibilities of Agency heads; and establishing the rights and obligations of APS employees.
Under the Public Service Act, a Department means “a Department of State excluding any part that is itself an Executive Agency or Statutory Agency”.
By s 5 of the FMA Act, a prescribed Agency means “a body, organisation or group of persons prescribed by the Regulations for the purposes of this definition”. By Regulation 5 of the Financial Management and Accountability Regulations 1997 (Statutory Rules No 328, 1997), the NH&MRC was prescribed as a Prescribed Agency for the purposes of the definition in s 5 of the principal Act. Item 159, in Schedule 1, identifies nine collections of persons comprising the NH&MRC for the purposes of prescription as a Prescribed Agency. The Head of that Agency is the Chief Executive Officer for the purposes of s 5 of the principal Act.
Dr Elston also puts emphasis upon two other documents. The first is the official Hansard Report of the reading speeches for the 2006 Bill from 24 May 2006. Although the relevant instrument to be used in aid of statutory construction is the Explanatory Memorandum, Dr Elston notes that the Minister for Local Government, Territories and Roads who moved the second reading of the Bill, observed that from 1 July 2006 the NH&MRC would be established as a statutory agency for the purposes of the Public Service Act and a prescribed agency under the FMA Act. The second reading speech at pp 18 and 19 says this:
The new agency will remain within the Health and Ageing portfolio, with reporting and accountability frameworks that clearly separate the NHMRC roles and functions from those of the Department of Health and Ageing. The bill’s provisions strengthen the NHMRC’s independence, promote clear lines of responsibility for governance and financial accountability and allow the council to focus on issues relating to medical and biological research and advice.
Dr Elston makes reference to Mr Abbott’s speech (as the Minister for Health and Ageing, moving the reading of the Bill for a third time) which is recorded at pp 28, 29 and 30 of Hansard. The part Dr Elston relies upon is this:
This is actually quite a simple bill. It implements the administrative recommendations of the Grant and Wills review of health research funding programs. The essence of that review was that the [NHMRC] needed to be made more clearly independent of government and, while the CEO of the NHMRC will certainly be reporting to the minister, and while the government will certainly be funding this organisation, some of the lack of clarity in who was reporting to whom will be dealt with by this bill. …
I mention these references to the reading speeches because Dr Elston has placed reliance upon them as suggesting that the NH&MRC was intended by the 2006 Amendment Act to extend rather than diminish the independence of the NH&MRC.
The second document relied upon by Dr Elston is Appendix D to a document published by the Department of Finance and Administration of the Commonwealth under the title “Governance Arrangements for Australian Government Bodies, August 2005”. The document is sub‑referenced as “Financial Management Reference Material No. 2”. The document discusses such topics as when it is necessary for the purposes of Australian Government activity to “form a body”; how the financial framework of the Commonwealth operates; financial and staffing autonomy; factors influencing Government arrangements; bodies other than companies; bodies corporate and the FMA Act and other topics. Annexure D is entitled “Departments and Public Service Act Agencies”. The document points out that one of the benefits of being established as a separate agency (a “prescribed agency”) under the FMA Act is to enable a body to receive its own appropriation under the Annual Appropriate Acts. At [80], the document says this:
An FMA Act agency will typically be legally part of the Commonwealth. However, there may be instances where a body requires a separate legal identity to the Commonwealth. This will generally arise where, for example, there is a need for the body to have the power to sue and be sued in its own corporate name (as opposed to a single office holder requiring that capacity, such as the Federal Commissioner of Taxation). Corporate identity may also arise where a group of people need to exercise collective decision‑making in the performance of their statutory functions, including a regulatory or enforcement role. In these cases, it may be appropriate for a body corporate to be created by the Parliament.
Annexure D deals with Executive Agencies and Statutory Agencies. Dr Elston relies upon this part of Annexure D at p 55:
Statutory Agencies are entities separate from the Department of State (under the Constitution) for the purposes of the Public Service Act. This derives from the definition of a Department which states “Department means a Department of State, excluding any part that is itself an Executive Agency or Statutory Agency.
The point of designating the NH&MRC as a Statutory Agency and a Prescribed Agency is indeed to reinforce in public policy terms the independence of the NH&MRC in two respects. The first is to provide the NH&MRC with direct funding under the Appropriation Acts rather than providing bulk funding to the Department. Autonomous direct funding is perceived in public policy terms as enabling the NH&MRC to be better and more directly accountable for the expenditure of research funding and the administration costs associated with its operations. The second is to make the NH&MRC directly accountable through the CEO for compliance with the protocols and conduct code requirements of the Public Service Act. As the second reading speech at pp 18 and 19 observes, the amendments are designed to establish “reporting and accountability frameworks” that clearly separate the NH&MRC roles and functions from the roles and functions of the Department of Health and Ageing.
However, the 2006 Amendment Act does not establish the NH&MRC as a separate incorporated entity or body with independent legal personality. In fact, the 2006 Amendment Act expressly deconstructed the incorporation model adopted by the 1992 NH&MRC Act. The designations Statutory Agency and Prescribed Agency, rather than statutory authority or statutory body suggest that although as a matter of public policy the NH&MRC is to operate on an independent footing, it remains an agency of the Commonwealth. The Parliament has chosen not to incorporate or render the NH&MRC a statutory corporation. It is an agent in the sense that it stands in the shoes of the Commonwealth but in the conduct of its undertaking it acts with autonomous independent funding for the purposes of the Annual Appropriation Acts and it is merely an Agency of the Commonwealth for the purposes of the Public Service Act, rather than, structurally, a part of the Department of State then known as the Department of Health and Ageing. Nothing in s 7(1)(d), (e) and (f) alters that position.
This construction of the 1992 NH&MRC Act and the 2006 Amendment Act is consistent with the provisions of Part 4 of Schedule 1 of the 2006 Amendment Act dealing with the issue of the vesting of assets of the 1992 entity, described under the 2006 Amendment Act as the “old NHMRC” and the vesting of the liabilities of the old NHMRC.
In a transitional sense, the Parliament had to deal with the question of where the assets of the 1992 entity would be vested and where its liabilities would lie, upon the commencement of the 2006 Amendment Act which brought about the establishment of the NH&MRC and the cessation and deconstruction of the 1992 entity. The relevant provisions are in these terms:
125 Vesting of assets of old NHMRC
(1)This item applies to the assets of the old NHMRC immediately before the commencement time.
(2)At the commencement time, the assets to which this item applies cease to be assets of the old NHMRC and become assets of the Commonwealth without any conveyance, transfer or assignment. The Commonwealth becomes the successor in law in relation to these assets.
126 Vesting of liabilities of old NHMRC
(1)This item applies to the liabilities of the old NHMRC immediately before the commencement time.
(2)At the commencement time, the liabilities to which this item applies cease to be liabilities of the old NHMRC and become liabilities of the Commonwealth without any conveyance, transfer or assignment. The Commonwealth becomes the successor in law in relation to these liabilities.
These provisions make it clear that the NH&MRC is truly an agency of the Commonwealth without independent legal personality. The relevant legal personality is that of the principal, the Commonwealth of Australia. Counsel for the Commonwealth also relies upon s 129 of Part 4 of Schedule 1 which provides that if any proceeding to which the old NHMRC was a party were pending in any Court or Tribunal immediately before the commencement date for the 2006 Amendment Act, the Commonwealth by operation of s 127(1) is substituted for the old NHMRC, from the commencement date, as a party to the proceedings. The old NHMRC was not a party to a pending proceeding at the commencement date but it would be extremely unlikely that the Parliament intended proceedings which were pending to result in the substitution of the Commonwealth for the old NHMRC but in proceedings commenced after the commencement date, proceedings could properly commence and continue against the NH&MRC rather than the Commonwealth.
Having regard to all of these considerations and taking into account everything Dr Elston relies upon, I am satisfied that there is no error on the part of Logan J in concluding that the NH&MRC is not a juristic person capable of suing or being sued. The relevant legal person in relation to the conduct of the NH&MRC and its officers is the Commonwealth of Australia. In respect of conduct of the 1992 entity otherwise called the old NHMRC prior to the establishment of the NH&MRC under s 5B of the new Part 2, the Commonwealth has assumed all of the liabilities of that body.
Dr Elston has raised other matters relating to notions of the shield of the Crown and whether entities or bodies established under legislation enjoy the rights, privileges and immunities of the Crown as part of his discussion of whether the NH&MRC stands as an independent authority (an independent legal person) outside the shield of the Crown. The real question to be resolved in this matter is whether Dr Elston has demonstrated that the decision of Logan J is attended with sufficient doubt to warrant the decision being reconsidered by a Full Court and whether substantial injustice would result to Dr Elston should leave be refused, supposing the decision to be wrong. I am not satisfied that sufficient doubt or any doubt has been shown about the conclusion of Logan J. Moreover, Dr Elston remains unconstrained in his capacity to pursue the causes of action he agitates in respect of conduct either by the 1992 entity, or more relevantly, the conduct in the period from 2006 by the NH&MRC acting in its capacity as agent for the Commonwealth. All of Dr Elston’s claims (meritorious or otherwise) are able to be advanced against the Commonwealth with whatever remedies might lie in respect of a cause of action he might establish arising out of the relevant conduct. There is simply no prejudice to Dr Elston.
Dr Elston also says that the NH&MRC ought to be regarded as a legal person independent of Government because there is a public purpose or public interest in enabling researchers to see the NH&MRC accountable in a proceeding for conduct undertaken in its name and not simply as conduct of the Commonwealth. This is said to be so because researchers never turn their mind to the precise legal structures surrounding the NH&MRC. I mention this matter only because Dr Elston places importance upon it and he is self‑represented in the application for leave to appeal. The consideration he identifies is not one which is relevant to the question of the precise legal standing of the NH&MRC.
As to the orders in relation to the Statement of Claim, events have overtaken things in the sense that Dr Elston has filed Amended Statements of Claim, as earlier mentioned.
Dr Elston also contends that the primary judge made errors of fact in formulating the exposed reasons in support of the orders. I am not satisfied that the contended errors brought about any error in the adjudication of the matters in issue on the application for the primary orders.
Logan J also made orders in relation to costs. I am not satisfied there is any basis for disturbing those orders in the exercise of the discretion. The discretion has not miscarried.
Accordingly, the application for leave to appeal must be dismissed.
The parties agreed at the hearing of the application for leave to appeal that the orders and reasons for judgment arising out of the leave application could properly be published without the need to convene the parties for the pronouncement of the orders. Accordingly, the orders have been pronounced from the Court without convening the parties to receive, in Court, the orders and reasons for judgment in support of the orders.
The applicant is ordered to pay the costs of and incidental to the application for leave to appeal.
I certify that the preceding thirty‑eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 24 May 2013
0
0
0