Garsec Pty Ltd v His Majesty Sultan Haji Hassanal Bolkiah Mu'Izzaddin Waddaulah the Sultan & Yang Di-Pertuan of Brunei

[2009] HCATrans 21

[2009] HCATrans 021

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S457 of 2008

B e t w e e n -

GARSEC PTY LTD

Applicant

and

HIS MAJESTY SULTAN HAJI HASSANAL BOLKIAH MU’IZZADDIN WADDAULAH THE SULTAN AND YANG DI-PERTUAN OF BRUNEI DARUSSALAM

First Respondent

PEHIN ORANG KAYA SHAH BANDARHJ AWANG MOHD NAWAWI BIN PEHIN ORANG KAYA SHAH BANDAR HJ AWANG MOHD TAHA

Second Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 FEBRUARY 2009, AT 9.34 AM 

Copyright in the High Court of Australia

__________________

MR N.C. HUTLEY, SC:   If the Court please, I appear with my learned friend, MR S.J. FREE, for the applicant  (instructed by Swaab Attorneys)

MR J.T. GLEESON, SC:   May it please the Court, I appear with MR S.A. KERR and MR P. KULEVSKI.  (instructed by Clayton Utz)

GUMMOW J:   Yes, Mr Hutley.

MR HUTLEY:   Your Honour, the case, as your Honours are aware, concerns the characterisation of Article 84B of the Brunein Constitution that your Honours will find at application book page 84.

GUMMOW J:   How does this arise?  Can I just put this to you, Mr Hutley.  We may be wrong about this, but I am right in thinking that the primary judge dismissed an application by Mr Gleeson’s clients to withdraw the notice of appearance?  That is right, is it not?

MR HUTLEY:   Yes.

GUMMOW J:   It also seems to appear from the proceedings so far that Brunei is the proper law of any contract?

MR HUTLEY:   Yes.

GUMMOW J:   One then says to oneself, the essential validity of a contract seems to be governed by the proper law.

MR HUTLEY:   Yes.

GUMMOW J:   One then asks oneself, this special position you have just been adverting to under the law of Brunei would be classified by an Australian court as an issue of essential validity.

MR HUTLEY:   We, with respect, disagree with that.

GUMMOW J:   That may or may not be right, but just assume for a minute it is.  If that is so, the applicants have no juridical advantage that would lead to success in an Australian court as against failure in the courts of Brunei.

MR HUTLEY:   On those assumptions, I accept that.

GUMMOW J:   If that is the proper framework on which the stay application would have been considered, what is the point in granting special leave?

MR HUTLEY:   Your Honour, if one accepts the premise that Article 84B(1), the relevant terms which I will take your Honours to in a moment, is a matter which says that the contract is invalid, that is, the validity of the contract is struck down, which was never a proposition advanced in the sense that it was accepted, as I understand it, that the Sultan could enter into a contract with an individual.  The question was whether the individual could enforce the contract against the Sultan in the Brunein courts.  So it was not suggested that there was no contract in the sense of ‑ ‑ ‑

GUMMOW J:   That is giving the term “enforcement” some classification under our legal systems.

MR HUTLEY:   I accept that, your Honour.  Can I take your Honours to Article 84B(1) ‑ ‑ ‑

GUMMOW J:   I have not finished yet.

MR HUTLEY:   It gets worse, does it?

GUMMOW J:   No, it does not get worse, but the question that then arises is whether further consideration of this application for special leave should not be adjourned for reconsideration by the parties and further consideration by an enlarged bench of this Court.

MR HUTLEY:   Would your Honour propose then to stand the special leave application ‑ ‑ ‑

GUMMOW J:   I am not proposing anything.  That is the question that is ‑ ‑ ‑

MR HUTLEY:   The question then being is whether special leave application be stood over before a Full Court and the parties to prepare as if on a final basis.

GUMMOW J:   With fuller consideration of these questions.  Can I put this to you.  Notions of procedure and substance seem to have bedevilled this litigation below.  At the moment it is not easy to see what they have to do with it.

MR HUTLEY:   Your Honour, can I explain it as we see what it has to do with it?

GUMMOW J:   If I can just explain to you, in other words, it is a question of finding the connecting factor and then you find the governing law and then you look at governing law.

MR HUTLEY:   Yes, but once having found the governing law, there is then, as we understand the authorities, the question ‑ ‑ ‑

GUMMOW J:   Whether we consider something in Brunei as a matter of procedural substance does not really bear on the question.

MR HUTLEY:   Your Honour, except that, as we understand it, that it follows from John Pfeiffer that there is a question of characterisation with respect to a matter raised, with respect to this provision, as to whether it would be characterised here as a matter of substance or procedure and that, as we understand the authorities, is a matter of us ‑ ‑ ‑

GUMMOW J:   Wait a minute.  You say it would be characterised here?

MR HUTLEY:   Yes, for private international law purposes as a matter of substance or procedure, and if characterised here, this Article 84B as a matter of procedure would not be a matter which this Court would have regard to in determining the substantive rights between the parties, namely, as to whether there existed a contract and, if so, was it breached?  As we understand John Pfeiffer, it is a matter of Australian law, that question of characterisation, and that was the battle lines upon which the parties fought, namely, was this provision, 84B(1), to be so characterised?  Our position being is 84B(1) was speaking as to the capacity of Brunein courts to determine an issue akin to a jurisdictional question and our position was that such a question is a matter of procedure yet not going to the substance of the contract, but really in a sense as to where the litigation would be conducted.

GUMMOW J:   There is another question, too.  The Australian statute seems to have disappeared very early from this proceeding and particularly the Australian statute Foreign States Immunities Act 1985 contains particular provisions about commercial contracts, does it not?

MR HUTLEY:   Yes, your Honour.  It was accepted – and your Honours will see this at application book page 7, paragraph 5(1) where the first instance judge set out the issues which my learned friend had identified for the purposes of the proceedings, and the first issue was whether the Sultan as the head of a foreign state has immunity from this Court’s jurisdiction under Australian law.  That question was not pressed.  As we imagine, that was either on the basis that it was accepted that there had either been a waiver within section 10(6)(b), or, the point that your Honour observed, the Sultan’s representatives accepted that if there were a contract, it was a commercial contract, therefore the Court had jurisdiction, but the point simply was not pressed.  So it was accepted, for whatever reason, that the Court had jurisdiction over the issue and that is how the matter proceeded.  Our position essentially was that Article 84B(1), the relevant ‑ ‑ ‑

GUMMOW J:   Take us to it.

MR HUTLEY:   Your Honours will find it at application book page 84.  Article 84B(1), which was the point upon which the case turned relevantly, it said:

His Majesty the Sultan and Yang Di‑Pertuan can do no wrong in either his personal or any official capacity.

That limb was irrelevant because it was accepted that that related to questions of tort, not contract.  The relevant portion of the provision is the following:

His Majesty the Sultan and Yang Di‑Pertuan shall not be liable to any proceedings whatsoever in any court in respect of anything done or omitted to have been done by him during or after his reign in either his personal or any official capacity.

The question was, as we maintained, and there was investigation of the history of it ‑ ‑ ‑

GUMMOW J:   I assume there is evidence about this, but “shall not be liable” may mean for anything done ‑ ‑ ‑

MR HUTLEY:   To any proceedings.

GUMMOW J:   Yes.  For anything done would include entering into the contract.

MR HUTLEY:   Quite, “shall not be liable”, but it seems to take us to a point of departure that the contract is a valid contract.

GUMMOW J:   It depends what one means by “valid”.  Is there evidence about these matters?

MR HUTLEY:   There was evidence from an expert concerning this matter, but the court in the Court of Appeal took the view that the question of characterisation of this provision was a matter of Australian law as to whether it was to be characterised as a matter of substance or procedure.  We put the position that, in essence, due to the history of this provision which found its historical antecedents in the English law concerning the inability of the Crown to be impleaded in the King or Queen’s own courts, it was an essentially procedural matter, not a matter of substance which ‑ ‑ ‑

GUMMOW J:   Did they ever had petitions of right in Brunei?

MR HUTLEY:   They did at one stage and then removed them.  I am sorry, to be absolutely accurate, it was an open question, I think it is fair to say, whether there was a petition of right in Brunei, but after a certain point it has been found that that question is no longer open, I think is the precise matter.  The point simply is, does John Pfeiffer dictate an answer to this question that this is a matter of substance?  We say essentially it is a matter talking about the capacity to bring proceedings in a court and is really of a character like a jurisdictional character which does not determine the existence or extent of rights such that a determination of this variety, for example, if a similar provision was in an Australian court, would purely be a jurisdictional matter and would not, as it were, give rise to estoppels concerning the existence or non‑existence of rights.

We say that is properly to be characterised as a procedural matter and not a matter, to use the terminology in the relevant paragraph of John Pfeiffer which goes to “the existence, extent or enforceability of the rights”, as properly understood is concerned with the court in which such rights can be adjudicated. That question of jurisdiction has, in effect, an analogue in the legislation which your Honour referred to concerning jurisdiction of our courts in the sense that the provision in the Constitution is akin to the provision in our Act, section 9, which says this court does not have jurisdiction over a foreign sovereign. That, we would say, would inform the process of characterisation and indicates that proper characterisation is one of procedure rather than substance.

That is the issue of debate and we say that John Pfeiffer has expressly left open the difficulties of a uniform principle for the purposes of characterisation and the court in terms, in paragraph 100 of the plurality judgment, said that further development is likely to be necessary.  The Court of Appeal considered it was constrained by the statement of principle in paragraph 99 of John Pfeiffer and we say whether they are or not is an important question.  The only place where that can properly be agitated, of course, is this Court.  This raises an important question about the characterisation of total immunities of suit of a foreign sovereign who has elected to accept the jurisdiction of this Court yet say as a matter of substance, although one cannot bring any proceedings in their court, that is a substantive matter which they can rely on having accepted the jurisdiction of Australian courts, and we say that is a matter of generally importance.  That is how we put it, your Honours.

GUMMOW J:   Yes, Mr Gleeson?

MR GLEESON:   Your Honours, there are three reasons why your Honours can comfortably today conclude the special leave application should be refused.  The first is that the Act was and remains irrelevant to these proceedings for this reason.  If your Honours have the Foreign States Immunities Act under section 3(3)(b), a head of state is only equated to a foreign state if he or she is acting in a public capacity.  There was no allegation in these proceedings that this so‑called contract for the sale of an item of commerce involved a transaction in a public capacity.  For that reason section 9 could not provide even a prima facie immunity.  The exceptions in sections 10 and 11 did not arise.  Had they arisen, we accept that section 11 would probably have been a fairly strong problem and given the findings that are now made, section 10 is a further problem. 

So for the combination of those three reasons, the Act is silent in terms of giving the Sultan an immunity from the jurisdiction of the Australian court and we accept he is subject to the jurisdiction of the Court.  That is the first matter.  The second matter, your Honour asked, what was the evidence in terms of the operation and effect of this provision of Brunein law?  Could I ask your Honours to go to page 87.  The expert, Mr Chiew, who was uncontradicted and unchallenged, opined, between lines 10 to 30, that prior to 2004 there was at least an argument that there may have been means to vindicate a contract claim against the head of state.

Critically he then said, between paragraphs 71 and 72, that the 2004 amendments, as is clear on their face, removed absolutely the possibility of any proceedings by petition of right and he said critically in paragraph 72; the consequence of those amendments is the Sultan is not liable, theoretically or otherwise, for breach of contract.  That, we submit ‑ ‑ ‑

GUMMOW J:   The question is, what is meant by “theoretically” and the question is whether this goes to the essential validity of any alleged contract?  We are talking about contract.  For contract you need competent actors.

MR GLEESON:   Yes, and, your Honours, the way we would answer that question, if I could ask your Honours to go page 145 in paragraph 16 of our submission.  At about line 40 we took up the matters discussed by this Court in The Commonwealth v Mewett which is, of course, relevant.

GUMMOW J:   I really do not think the long constitutional history of the British Crown can readily and immediately be translated to the position of the Sultan.

MR GLEESON:   That is our essential point.  Our essential point is the excursus into history which ‑ ‑ ‑

GUMMOW J:   In the British constitutional history.

MR GLEESON:   Is irrelevant and it was the applicant who kept propounding the need for that excursus in order to try and contradict the plain words of Article 84B, page 33, that the head of state, the Sultan, would not be liable to any proceedings whatsoever in any court, the court of Brunei, in respect to any matters in a personal or official capacity.  Now, what has happened is, in Brunei, for reasons considered proper in Brunei ‑ ‑ ‑

GUMMOW J:   Is there evidence that the Sultan himself could sue on a contract?

MR GLEESON:   Mr Hutley asked some questions in cross‑examination on that topic.  I do not believe there are any findings on that in the judgment.  I believe Mr Chiew did give some evidence along those lines.  Your Honours, in the light of that position though, what we say is British constitutional history is irrelevant.  What one has is Brunei as being the governing law, which is accepted, and once that is so, your Honours have fully disclosed of this.....in Neilson 223 CLR 331, which is in tab 2 of our authorities. The relevant paragraphs are 89, 90 and particularly 94. The applicant is asking this Court to do the very thing Neilson said should not be done which is to divide a foreign legal system and impose upon it a division which it cannot be assumed to bear.  In the present case, their argument amounts to; Brunei respects the law of contract which derives from a constitution, but they want to give effect to contract denying constitution.

GUMMOW J:   Just stopping there.  What evidence is there as to the existence of a law of contract?  Did they have the.....code, for example?

MR GLEESON: They had received English common law as amended by local statutes and all of that matter was put into evidence by Mr Chiew and it was subject to the overriding operation of the Constitution. So a contractual right or remedy in Brunei cannot exist if it contradicts the Constitution. Your Honours, that is the second matter which, we submit, is sufficiently clear to dispose of at this stage.

The third matter, which is an interest of justice point, is if your Honours could go to pages 88 to 89 of the book.  This is a case where, as your Honours see in paragraph 74, the commercial list has directed the claimant to file affidavits setting out the entirety of its case.  It has done so and those affidavits, as your Honours see from paragraphs 79 to 80, involve each of the applicant’s witnesses deposing that the contract involved the corruption of the Sultan’s private secretary with Mr Nawawi, the second respondent, being involved receiving part of the proceeds and allocating the rest between appropriate Muslim charities.

Mr Chiew gave unchallenged evidence, referred to paragraph 81, of the existence of the appropriate illegality defences under the law of Brunei.  Unchallenged either by an opposing witness or by cross‑examination and he said on the basis of that, unsurprisingly, Brunei would give no remedy.  Although that matter has not gone to a final judgment, we have laid down a challenge to the applicant in two courts which is, “Please explain to the court in simple words how in the face of your evidence you could ever obtain a remedy under the law of Brunei in the face of this illegality”.  They have never done it.  For that reason, whatever the inherent attraction of the other points, we submit the interests of justice would require the application to be dismissed this morning.  May it please the Court.

GUMMOW J:   Yes, Mr Hutley.  What do you say about this illegality point?

MR HUTLEY:   Your Honour, neither at first instance nor in the Court of Appeal was that relied upon by either court for its determination.  Secondly, as my learned friend observed, we are at an early stage of the proceedings.  It may well be, if our facts are right, that Mr Nawawi did what he did with the express or implicit authority of the Sultan.  Who knows?  To dispose of this matter peremptorily when neither the first instance judge nor the Court of Appeal have considered it appropriate, is, in our respectful submission, quite unavailable.  That is the first point.  There has neither been discovery or evidence.  It was not really a matter of relevance.  It is set out by his Honour, the first instance judge, it did not form any basis of his decision.

The second point which was raised was that section 9 is irrelevant.  This came as somewhat as a surprise to us, your Honours, because if your Honours go to application book page 7, my learned friend sets out his argument at paragraph 5.  If you go to page 8, paragraph 5(5), your Honours will see at about line 35, one of the issues propounded by our learned friends is:

Whether, if proceedings did go forward in this Court, there were particular immunities or privileges under Australian law relevant to aspects of the case ‑

and then they referred to section 39 of the Foreign States Immunities Act.

GUMMOW J:   That is all about discovery, is it not?

MR HUTLEY:   Yes, but that section only applies if the Act applies and my learned friend’s position, as we understood it at first instance, is the Act applied. He now says that the Act does not apply because section 3(3) is engaged. Section 39 would only be engaged if section 3(3) is engaged, yet that also, if that was the position they now take, would raise the question about section 36 of the Act which gives to foreign heads of state when acting in their private capacity the immunities of diplomats, heads of missions in Australia and there is a.....issue as to that – that extends to their acts both in or out of Australia and that is an issue of law. For my learned friend to say that this was determinative is contrary to the position they took in the trial. That is the first point.

Secondly, my learned friend’s submission that we engaged on the discursus about the historical antecedents involving the British Crown, in fact, that is exactly what Mr Chiew did, who was their expert, who’s evidence, your Honours, in that regards, we will see at application book 36, paragraph 85 and application book 86, paragraph 68.  In other words, Mr Chiew justified his understanding of the relevant provision by reference to its historical antecedents in the English Crown.  The position was quite contrary to that which my learned friend advances.  Mr Chiew relied upon that history to justify the position as to the proper interpretation of the provision and we say, so that history is of assistance in understanding the provision and because their expert – and informs the question of characterisation which we said was before the Court.  Those are our submissions, if the Court pleases.

GUMMOW J:   Thank you.  We will take a short adjournment.

AT 9.59 AM SHORT ADJOURNMENT

UPON RESUMING AT 10.02 AM:

GUMMOW J:   Application No 2 will be referred for further consideration to an enlarged bench of the Court.  In preparing for that hearing the parties should prepare further written submissions as if on an appeal.  The costs of today obviously will be caught up in the ultimate disposition of the special leave application.

MR HUTLEY:   May it please the Court.

AT 10.03 AM THE MATTER WAS CONCLUDED