Hoxton Park Residents Action Group Inc v Liverpool City Council

[2016] NSWCA 157

Court of Appeal

Supreme Court

New South Wales

• Summary available
• Amendment notes

Medium Neutral Citation:

Hoxton Park Residents Action Group Inc v Liverpool City Council [2016] NSWCA 157

Hearing dates:

2 February 2016

Decision date:

05 July 2016

Before:

Beazley P at [1];
Basten JA at [235];
Macfarlan JA at [295]

Decision:

Appeal dismissed with costs.

Catchwords:

CONSTITUTIONAL LAW – Commonwealth grants of financial assistance to the States – Commonwealth of Australia Constitution, s 96 – whether impermissible for Commonwealth to provide funding in respect of objects outside areas of legislative competence – Commonwealth may provide funding outside areas of federal legislative competence subject to any relevant constitutional provision to the contrary

 

CONSTITUTIONAL LAW – Commonwealth funding of non-government schools, including religious schools – Commonwealth of Australia Constitution, s 116 – whether legislation establishing funding regime, or funding itself, impermissible as contrary to s 116 – whether funding Acts laws for establishing religion, imposing religious observance or prohibiting the free exercise of religion – importance of legislative purpose

STANDING – challenge to Commonwealth grants of financial assistance pursuant to Commonwealth of Australia Constitution, s 96 – whether plaintiffs have standing to challenge validity of Commonwealth laws and executive acts relating to funding of non-government school – whether standing limited to existing funding arrangements

Legislation Cited:

Australian Education Act 2013 (Cth), ss 3, 4, 6, 15, 21, 22, 23, 25, 26, 31, 71, 75, 77, 78; Pt 6
Australian Education Regulation 2013, ss 10, 41, 42, 43, 61
Constitution, ss 51, 80, 87, 92, 96, 116, 117, 122
Schools Assistance Act 2008 (Cth), ss 118, 119, 120; Pt 9, Div 3
Supreme Court Act 1970 (NSW), s 75A
Uniform Civil Procedure Rules 2005 (NSW), r 13.4, 50.16, 51.36

Cases Cited:

Adelaide Company of Jehovah’s Witnesses Incorporated v Commonwealth [1943] HCA 12; 67 CLR 116
Agostini v Felton 521 US 203 (1997)
Alphapharm Pty Ltd v SmithKline Beecham (Aust) Pty Ltd (1994) 49 FCR 250
AMS v AIF [1999] HCA 26; 199 CLR 160
Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559
Attorney-General for New South Wales v Brewery Employees Union of New South Wales [1908] HCA 94; 6 CLR 469
Bank of NSW v Commonwealth [1948] HCA 7; 76 CLR 1
Cheedy on behalf of the Yindjibarndi People v State of Western Australia [2010] FCA 690
Cheng v R [2000] HCA 53; 203 CLR 248
Church of the New Faith v Commissioner of Pay-Roll Tax (Vic) [1983] HCA 40; 154 CLR 120
Clunies-Ross v Commonwealth [1984] HCA 65; 155 CLR 193
Cole v Whitfield [1988] HCA 18; 165 CLR 360
Davis v The Commonwealth (1988) 166 CLR 79
Doherty v Liverpool District Hospital (1991) 22 NSWLR 284 at 294
Everson v Board of Education of Ewing Tp 330 US 1 (1947)
Fox v Percy [2003] HCA 22; 214 CLR 118
Georgiadis v Australian & Overseas Telecommunications Corporation [1994] HCA 6; 179 CLR 297
Great Wall Resources Pty Ltd v O’Sullivan [2009] NSWCA 119
Hoxton Park Residents Action Group Inc v Liverpool City Council (No 2) [2011] NSWCA 363; 256 FLR 156
Hoxton Park Residents Action Group Inc v Liverpool City Council [2015] NSWSC 136
ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51; 240 CLR 140
Insurance Australia Ltd v Checchia [2010] NSWCA 193
JT International SA v Commonwealth [2012] HCA 43; 250 CLR 1
Kruger v Commonwealth [1997] HCA 27; 190 CLR 1
Krygger v Williams [1912] HCA 65; 15 CLR 366
Lange v Australian Broadcasting Corporation [1997] HCA 25; 189 CLR 520
Leeth v Commonwealth [1992] HCA 29; 174 CLR 455
Lemon v Kurtzman 403 US 602 (1971)
Mitchell v Helms 530 US 793 (2000)
Mutual Pools & Staff Pty Ltd v Commonwealth [1994] HCA 9; 179 CLR 155
New South Wales v The Commonwealth [2006] HCA 52; 229 CLR 1
P J Magennis Pty Ltd v Commonwealth [1949] HCA 66; 80 CLR 382
Plaintiff M68-2015 v Minister for Immigration and Border Protection [2016] HCA 1
Pape v Federal Commissioner of Taxation (2009) 238 CLR 1; [2009] HCA 23
R v Winneke; Ex parte Gallagher [1982] HCA 77; 152 CLR 211
Radnedge v Government Insurance Office of New South Wales (1987) 9 NSWLR 235
Re McBain; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372; [2002] HCA 16
Reynolds v United States 98 US 145 (1878
Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 56 FCR 50
Smith v ANL Ltd [2000] HCA 58; 204 CLR 493
Street v Queensland Bar Association [1989] HCA 53; 168 CLR 461
Teori Tau v The Commonwealth (1969) 119 CLR 564
Victoria v Commonwealth [1957] HCA 54; 99 CLR 575
Wurridjal v The Commonwealth (2009) 237 CLR 309; [2009] HCA 2
Williams v Commonwealth of Australia [2012] HCA 23; 248 CLR 156
Zelman v Simmons-Harris 536 U.S. 639 (2002)

Texts Cited:

J Quick and RR Garran, The Annotated Constitution of the Australian Commonwealth (1901 ed, Legal Books, Sydney, 1976)

  Nadine Strossen, “Religion and the Constitution: A Libertarian Perspective” 2006 Cato Sup Ct Rev 7 at 18-19

Category:

Principal judgment

Parties:

Hoxton Park Residents Action Group Inc (First Appellant)
Marella Harris (Second Appellant)
Liverpool City Council (First Respondent)
Malek Fahd Islamic School Ltd (Second Respondent)
Australian Federation of Islamic Councils Inc (Third Respondent)
State of New South Wales (Fourth Respondent)
Commonwealth of Australia (Fifth Respondent)

Representation:

Counsel:
P E King (First and Second Appellants)
Submitting Appearance (First Respondent)
B Katekar and J Muir (Second and Third Respondents)
Submitting Appearance (Fourth Respondent)
S Free (Fifth Respondent)

  Solicitors:
Robert Balzola And Associates (Appellants)
Marsdens Law Group (First Respondent)
Mitry Lawyers (Second and Third Respondents)
Crown Solicitor’s Office (Fourth Respondent)
Australian Government Solicitor (Fifth Respondent)

File Number(s):

2015/87043

 Decision under appeal 

Court or tribunal:

Supreme Court

Jurisdiction:

Equity

Citation:

Hoxton Park Residents Action Group Inc v Liverpool City Council [2015] NSWSC 136

Date of Decision:

03 March 2015

Before:

Pembroke J

File Number(s):

2009/289796

Headnote

[This headnote is not to be read as part of the judgment]

The appellants commenced proceedings in the Supreme Court of New South Wales seeking declaratory relief in respect of certain funding paid to the second respondent, Malek Fahd Islamic School Ltd (Malek Fahd), in respect of its Hoxton Park campus.

Malek Fahd operates the Malek Fahd Islamic School (the School), a non-government school with campuses at Greenacre, Beaumont Hills and Hoxton Park. The Hoxton Park campus is operated on lands leased by Malek Fahd from the third respondent, the Australian Federation of Islamic Councils Ltd. Funding for the Hoxton Park campus was provided to the School by the Commonwealth, in the context of Commonwealth educational funding grants to the States pursuant to the Schools Assistance Act 2008 (Cth) and the Australian Education Act 2013 (Cth).

The appellants sought to challenge the constitutional validity of the relevant funding arrangements, alleging invalidity in respect of both the Acts themselves and the administrative actions taken under them. On 3 March 2015, Pembroke J dismissed the appellants’ claims with costs. His Honour rejected the appellants’ constitutional arguments, and held that the appellants’ standing was confined to the challenge of existing funding arrangements.

The principal issues for determination on the appeal were as follows:

(i) whether the impugned Acts were invalid in providing for Commonwealth grants of financial assistance pursuant to s 96 of the Constitution in respect of matters beyond federal legislative competence;

(ii) whether the impugned Acts, or the funding provided to the School thereunder, were invalid on the basis of s 116 of the Constitution;

(iii)   whether the appellants had standing and, if so, whether that standing was confined to the challenge of existing funding arrangements

The appellants also made challenges in relation to the primary judge’s factual findings and treatment of certain evidence.

The Court held, dismissing the appeal with costs:

In relation to (i):

(1) The Commonwealth cannot provide financial assistance to the States pursuant to s 96 of the Constitution if to do so would be contrary to another provision of the Constitution. [52]-[61] (Beazley P); [239] and [246] (Basten JA); [295] (Macfarlan JA)

Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559; ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51; 240 CLR 140; P J Magennis Pty Ltd v Commonwealth [1949] HCA 66; 80 CLR 382; Victoria v The Commonwealth [1926] HCA 48; 38 CLR 399

(2) However, subject to the operation of other provisions of the constitution, the Commonwealth may provide financial assistance to the States under s 96 on such terms as it sees fit and notwithstanding that the object of the funding falls outside Commonwealth legislative power. [52]-[61] (Beazley P); [245]-[246] (Basten JA); [295] (Macfarlan JA)

Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559; ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51; 240 CLR 140; P J Magennis Pty Ltd v Commonwealth [1949] HCA 66; 80 CLR 382; Victoria v. The Commonwealth [1926] HCA 48; 38 CLR 399

per Basten JA:

(3) It is unnecessary to rely on s 51(xxxvi) in order to provide a legislative basis for an exercise of power under s 96 of the Constitution. [240]-[246]

Victoria v Commonwealth (1957) 99 CLR 575; Wurridjal v Commonwealth [2009] HCA 2; 237 CLR 309.

In relation to (ii):

(4) The terms of s 116 differ from those of the First Amendment to the Constitution of the United States, and United States authorities are accordingly of little assistance in the construction of s 116. [89]-[98] (Beazley P); [265]-[272] (Basten JA); [295] (Macfarlan JA)

Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559

(5) In determining whether a law infringes one of the limbs of s 116, the relevant inquiry is the purpose of the law in question. A law will only infringe s 116 if it is a law for a proscribed purpose. [101]-[106] (Beazley P); [265] (Basten JA); [295] (Macfarlan JA)

Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559; Kruger v Commonwealth [1997] HCA 27; 190 CLR 1; Yindjibarndi People v State of Western Australia [2010] FCA 690

(6)   For a law to be invalid as a law for establishing any religion, the law in question must have, as its purpose, the establishment or recognition of a state religion or state church. [115]-[123] (Beazley P); [274]-[275] (Basten JA); [295] (Macfarlan JA)

Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559

(7) Commonwealth funding of religious schools, in the context of a neutral and non-discriminatory regime for the funding of non-government schools, will not contravene the establishment clause of s 116. [124]-[128] (Beazley P); [276]-[279] (Basten JA); [295] (Macfarlan JA)

Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559

(8)   That a religious school in receipt of Commonwealth funding requires religious observances of its pupils will not invalidate a funding statute, or the funding thereunder, as a law for imposing religious observance. The imposition must be the purpose of the law, and not merely an incident of individual or parental choice. [132]-[135] (Beazley P); [280]-[281] (Basten JA); [295] (Macfarlan JA)

(9)   That a religious school in receipt of Commonwealth funding imposes religious restrictions on its pupils will not invalidate a funding statute, or the funding thereunder, as a law for prohibiting the free exercise of religion. [145]-[150] (Beazley P); [282]-[283] (Basten JA); [295] (Macfarlan JA)

In relation to (iii) – per Beazley P, with whom Macfarlan JA agreed:

(10)   It does not follow from Williams v Commonwealth [2012] HCA 23; 248 CLR 156 that the mere participation of a State in proceedings raising questions of constitutional validity is sufficient to ground standing. [215]-[218] (Beazley P); [295] (Macfarlan JA)

In relation to (iii) – per Basten JA:

(11)   The mere fact that a decision or law may have a physical or economic effect on a particular person does not mean that that person will have standing to challenge the decision or law. [290] (Basten JA)

Re McBain; Ex parte Australian Catholic Bishops Conference [2002] HCA 16; 209 CLR 372; Alphapharm Pty Ltd v SmithKline Beecham (Aust) Pty Ltd (1994) 49 FCR 250; Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 56 FCR 50

Judgment

1. BEAZLEY P: The appellants sought leave to appeal from the orders of Pembroke J made on 3 March 2015, dismissing proceedings brought by the Hoxton Park Residents Action Group Inc and an individual, Ms Marella Harris: Hoxton Park Residents Action Group Inc v Liverpool City Council [2015] NSWSC 136. This matter raises a matter of public importance and accordingly, leave, which was not opposed, should be granted.

2. The second respondent, Malek Fahd Islamic School Ltd (Malek Fahd), and the third respondent, the Australian Federation of Islamic Councils Inc (the AFIC) were jointly represented on the appeal. Liverpool City Council and the State of New South Wales (the State), the first and fourth respondents respectively, filed submitting appearances, although the fourth respondent was an active party in the court below. The fifth respondent, the Commonwealth, appeared both at first instance and on appeal. A reference to “the respondents” in these reasons is a reference to the active respondents only.

Factual background

3. In the proceedings, the appellants claimed declaratory relief in respect of funding paid to Malek Fahd by the State, the source of the funds being moneys paid to the State by the Commonwealth. The relief sought by the appellants was in the following terms:

“5.   Declaration that the law of the Commonwealth and any declaration by and decision of the Minister thereof conferring power to approve funding of the project by payment of funds to or for the Second and/or Third Defendant for their purposes pursuant to any agreement or otherwise is void and of no effect.

6.   Declaration that the Commonwealth law insofar as it provides for grants to the State of New South Wales on condition that the money so granted is paid by the State to Third Defendant to finance the project, including the erection of buildings therefore whether or not pursuant to agreement or otherwise between the Fifth and Fourth Defendants and between the said Defendants or either of them and the Second and Third Defendants is void and of no effect.

Particulars of Statutes

Schools Assistance Act 2008, Schools Assistance (Learning Together-Achievement Through Choice and Opportunity) Act 2004 as amended; Australian Education Act 2013 [Cth]; Appropriation Act 2008 to date.

7A. Declaration that Appendix F to the intergovernmental agreement on Federal Financial Relations and/or such informal agreement or arrangement between the Defendants and each of them with respect to the project is an unconstitutional agreement and is invalid and of no effect, or invalid and inoperative to the extent that it provides funds having the purpose or effect of a law prohibited in contravention of the Constitution section 116, and any part thereof.”

4. The ‘project’ referred to in the claimed relief was the term used by the appellants in para (25) of their pleadings to encompass the purchase of land by the AFIC, the lease of that land to Malek Fahd, the construction on the land of substantial infrastructure “and the conduct of an establishment as and for the purpose of a place of worship … and for the purpose of a faith based educational facility”. The project was pleaded to be part of a national network “of that and similar projects”. Particulars of the “national network” referred to in para (25) were pleaded to include:

“… 2 other campuses of [Malek Fahd and the AFIC] in NSW owned and administered by them since 1 January 2005 and campuses in other States and Territories.”

5. Malek Fahd is a company limited by guarantee, which operates a school with multiple campuses, the Malek Fahd Islamic School (the School). The first campus opened in October 1989 at Greenacre. The Hoxton Park campus opened on 27 April 2011 and is located within the local government area of Liverpool City Council.

6. The Hoxton Park campus operates on land leased to Malek Fahd by the AFIC. There is a close relationship between those two entities. The Constitution of Malek Fahd prescribes for certain School board appointments and decisions to be made or approved by the AFIC, and for Malek Fahd’s assets to vest in the AFIC in the event Malek Fahd is wound up.

7. The School has received Commonwealth funding throughout its operation, in particular, under the Schools Assistance Act 2008 (Cth) and the Australian Education Act 2013 (Cth).

8. The Schools Assistance Act was in operation between 2009 and 2013 and authorised the Commonwealth to provide financial assistance to the States for, or in connection with, non-government schools for recurrent expenditure, capital expenditure and targeted expenditure. The operation of the Schools Assistance Act with respect to recurrent expenditure was summarised by Pembroke J, at [28], as follows:

“The operative scheme under the Schools Assistance Act was as follows:

(a)   funding by the Commonwealth for recurrent expenditure was paid to the State for provision to ‘Approved Authorities’ of non-government schools. The Approved Authority was required to administer the grant of recurrent expenditure;

(b) a funding agreement with the Commonwealth governed the way in which the recurrent funding was to be administered by the Approved Authority. A payment could not be authorised for a school unless the Approved Authority for the school had made a funding agreement with the Commonwealth that complied with Part 3 Division 3 of the Act: Section 12(1);

(c)   the funding agreement required the Approved Authority to ensure that amounts received were spent for the purposes that were determined by the Minister and set out in the agreement: Section 16(1). The amount of funding that could be provided for recurrent expenditure was capped in accordance with the limits set in Part 4 of the Act.”

9. Under the Schools Assistance Act, Malek Fahd was the Approved Authority for the School. A funding agreement was entered into between Malek Fahd as Approved Authority and the Commonwealth for the period 2009-2013 for the purposes of funding recurrent expenditure. Under the funding agreement, funding for recurrent expenditure could be applied for the purposes of paying teaching and ancillary staff salaries, for professional development of teachers and for maintenance and general operations.

10. Funding for the Hoxton Park campus was requested with effect from 27 April 2011. Although the Schools Assistance Act made provision for the funding of capital expenditure, his Honour held that the there was no such funding available to the Hoxton Park campus under those provisions.

11. From 1 January 2014, the Australian Education Act governed Commonwealth funding of the School. Under that Act, funding conditions are set out in the legislation itself rather than in individual funding agreements with Approved Authorities. Pembroke J described the operation of the legislative scheme as follows:

“[34] As with the Schools Assistance Act, financial assistance is provided for ‘approved authorities’ for one or more schools. In the case of non-government schools, the approved authority is the body corporate which is approved by the Minister in respect of that school. A school is a ‘participating school’ if there is an approved authority in relation to one or more locations and the requisite level of education and the school is a non-government school. In the case of participating schools that are government schools, the approved authority is the relevant State or Territory.

…

[37]   The Australian Education Act contains a transitional process. A body that was an approved authority for a non-government school under the Schools Assistance Act on 31 December 2013 is taken to be the approved authority for that school under the 2013 Act: Item 2(3) of Schedule 2 of the Australian Education (Consequential and Transitional Provisions) Act 2013. As at 31 December 2013 there were 828 approved authorities representing 2,727 non-government schools in Australia, of which 88.7% were considered to be affiliated with a religion.

[38]   Recurrent funding is provided under the Australian Education Act via the States and Territories: ss. 21, 23(2) and subject to a condition that the State or Territory must implement national policy initiatives for school education in accordance with the regulations: s. 22(1). All participating schools (ie including non-government schools with an approved authority) are entitled to receive recurrent funding as calculated in accordance with the Act. Part 3 of the 2013 Act contains provisions for calculating the amount of recurrent funding.”

12. Pursuant to the relevant transitional provisions, Malek Fahd became an Approved Authority under the Australian Education Act from 1 January 2014. Pembroke J, at [42], recorded that Commonwealth funding for the School, including the Hoxton Park campus, had been made available under the Australian Education Act as follows:

“(a)   In late 2013 the system generated an estimate for the annual entitlement to recurrent funding for the second defendant of $17,663,122 (excl of GST). That is taken to be a decision of the Minister by virtue of s. 124(2).

(b)   On 7 January 2014 an amount was paid to the State for the second defendant comprising 50% of the estimated annual entitlement (ie $8,831,561 ex GST).

(c) In June 2014 revisions were made to the estimate based on updated socio economic advantage data and language background data. A determination was made by the delegate of the Minister to vary the amount of the next two instalments. The Determination was made on 16 June 2014 under s. 25(1) of the AE Act.

(d)   On 7 July 2014 a further amount of $4,380,345 (ex GST) was paid to the State for the second defendant, bringing the amount paid to 75%.

(e)   In August 2014 the second defendant provided details of the number of students at each location on ‘census day’. The information showed 11 teachers and 186 students at the Hoxton Park campus.

(f)   On 16 September 2014 there was a further revision of the annual estimate and change to planned payments using the new census data. The new annual estimate was $17,343,521 (ex GST).

(g)   On 7 October 2014 a third instalment of $4,109,341 was paid to the State.

(h)   On 16 October 2014 there was a final annual entitlement calculation, showing the final entitlement to be $17,589,958. That identified a shortfall in payment of $246,437.

(i)   On 7 November 2014 a final payment of $246,437 was made for 2014.”

13. His Honour’s summary of the provisions of the Act and its administration were not subject of challenge.

14. Malek Fahd’s Constitution identifies as one of its objects the provision of “a balanced general education in an Islamic environment to Muslim and other children”. Its Enrolment Policy includes as a criterion “[a] commitment from the family to support the School’s Islamic ethos and values”. However, there is no requirement for admission that its pupils be Muslim, although the School accepted that all of its pupils are Muslim.

15. The primary judge, at [5], observed that in New South Wales each school, whether religious or not, is required to implement a curriculum and adhere to a syllabus prescribed by the New South Wales Board of Studies, Teaching & Educational Standards (BOSTES). His Honour further noted, at [6], that the religious education at the school was consistent with the BOSTES requirements and that there was no additional religious education. A significant percentage of the teachers at the school were non-Muslim and it had a Catholic Executive Principal in 2013 and 2014.

16. Various practices of the Muslim faith are observed at the Hoxton Park campus. At first instance, the following facts were agreed and reduced to writing, which became Exhibit R, as to the religious practices conducted at the school:

“1.   Salaat [a form of prayer] is compulsory once each school day for pupils.

2.   Wudu [cleansing religious ritual] is expected each school day.

3.   Halal food [certified by [AFIC] or other Halal certification authorities for religious purposes] is available and/or sold at [the School’s] tuckshops.

4.   A head-cloth covering the hair as a mark of female distinction and modesty is compulsory for female students.

5.   Religious studies in the Islamic faith are compulsory in primary schools.

6.   At the mosque at Greenacre and in the primary school prayers halls, females are segregated from males.

17. It was also an agreed fact set out in Exhibit R that admission as a pupil to attend the school is governed by the terms of its Enrolment Policy.

Issues on the appeal

18. The arguments advanced by the appellants were wide ranging, and adopted a sixfold classification of “errors”, namely, the sectarian error; the motive error; the paternalism error; the characterisation error; the proof of purpose error; and the Constitutional writ error. The appellants’ written submissions identified the grounds of appeal to which each “error” was said to relate. The “errors” overlapped: for example, ground 1 was identified with each of the alleged errors; grounds 2 and 3 were said to relate to the paternalism error, the proof of purpose error and the Constitutional writ error, and so forth.

19. Rather than adopt the appellants’ classification of errors, I have considered that the preferable way to proceed is to identify the principal issues on the appeal by reference to the appeal grounds. The principal issues are as follows:

1. whether the Schools Assistance Act and the Australian Education Act are invalid because the States have exclusive power over matters of religion and education. This question raised the proper construction of s 96 of the Constitution (grounds 2, 6 and 7);

2. whether the Schools Assistance Act and the Australian Education Act are invalid because they contravene s 116 of the Constitution (grounds 1, 3, 4, 6; 8);

3. whether the appellants had standing to sue in respect of past allocations of funding (ground 9);

4. whether the primary judge erred in various findings of fact (ground 10);

5. whether the primary judge erred in failing to make findings in respect of certain matters (grounds 12 and 13);

6. whether the primary judge erred in refusing to admit certain evidence (ground 17).

20. The issues raised in grounds 5, 14, 15, 18 and 19 are also dealt with below. Grounds 11 and 16 were abandoned.

21. The appellants also sought, after the conclusion of the hearing of the appeal, to adduce fresh evidence said to relate to the provision of funding to the School and which had been the subject of newspaper reporting. For reasons given below, leave to adduce that evidence must be refused.

Relevant Constitutional provisions

22. It is appropriate at the outset to set out the text of the relevant constitutional provisions. Sections 96 and 116 of the Constitution provide as follows:

“96   Financial assistance to States

… the Parliament may grant financial assistance to any State on such terms and conditions as the Parliament thinks fit.

…

116   Commonwealth not to legislate in respect of religion

The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion, and no religious test shall be required as a qualification for any office or public trust under the Commonwealth.”

23. The following provisions are also relevant:

“51   Legislative powers of the Parliament

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:

…

(xxxvi) matters in respect of which this Constitution makes provision until the Parliament otherwise provides;

…

(xxxix) matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth.”

24. Although not directly relevant to the issues, it is also convenient to set out the terms of s 51(xxxi), as that provision is discussed in certain of the authorities that are relevant and upon which the parties relied. That provision is in the following terms:

“(xxxi)   the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws …”

The impugned legislation

25. Although the primary judge described the operation of the legislation, as set out above at [8] and [11], it is necessary to consider the provisions of the impugned legislation in some detail, so as to properly take account of the submissions advanced by the parties on the appeal. It is convenient to do so primarily by reference to the Australian Education Act and the Australian Education Regulation (the Regulation), being the Act and Regulation presently in force.

26. Under the Schools Assistance Act, funds were distributed in accordance with an agreement entered into between an Approved Authority and the relevant state. Malek Fahd was the Approved Authority for the School. Under the Australian Education Act, conditions for the grant of funds are contained in the legislation itself as is described more fully below. Pursuant to the transitional provisions, Malek Fahd became the Approved Authority for the receipt of funds under the Australian Education Act. It was not suggested that there was any provision of the earlier Schools Assistance Act which was different in a substantive way from the Australian Education Act and the Regulation, although, as the primary judge explained, the method of administration of the funding changed.

27. The Australian Education Act is “an Act in relation to school education and reforms relating to school education, and for related purposes”. The Act commenced on 1 January 2014. Its objects, provided for by s 3, are as follows:

“3   Objects of this Act

(1)   The objects of this Act are the following:

(a)   to ensure that the Australian schooling system provides a high quality and highly equitable education for all students by having regard to the following national targets:

(i)   for Australia to be placed, by 2025, in the top 5 highest performing countries based on the performance of school students in reading, mathematics and science;

(ii)   for the Australian schooling system to be considered a high quality and highly equitable schooling system by international standards by 2025;

(iii)   lift the Year 12 (or equivalent) or Certificate II attainment rate to 90% by 2015;

(iv)   lift the Year 12 (or equivalent) or Certificate III attainment rate to 90% by 2020;

(v)   at least halve the gap between Aboriginal and Torres Strait Islander students, and other students, in Year 12 or equivalent attainment rates by 2020 from the baseline in 2006;

(vi)   halve the gap between Aboriginal and Torres Strait Islander students, and other students, in reading, writing and numeracy by 2018 from the baseline in 2008;

(b)   to acknowledge the matters referred to in the Preamble;

(c)   to provide a needs‑based funding model for schools applied consistently across all schools which includes:

(i)   a base amount of funding for every student; and

(ii)   additional loadings for students and schools who need extra support;

(d)   to implement the National Plan for School Improvement.

(2)   The Commonwealth will work with the governments of the States and Territories, and non‑government education authorities, to implement the National Plan for School Improvement set out in the National Education Reform Agreement to meet the objects of this Act by addressing the reform directions set out in subsections (3) to (8).”

28. The Act also has the following objects: quality teaching: s 3(3); quality learning: s 3(4); empowered school leadership: s 3(5); transparency and accountability: s 3(6); data collection: s 3(7); meeting student needs: s 3(8).

29. As is immediately apparent from the stated objects of the Act, there is no reference to religion, nor could it be inferred from the text of the object provisions that there was any object or purpose of the Act concerning religion. The objects are all directed to the education of Australian children in what I will describe for convenience as the core secular disciplines of reading, mathematics, science, writing and numeracy.

30. Section 4, entitled “Guide to this Act”, explains what the Act does, namely, make provision for Commonwealth financial assistance to schools under s 96 of the Constitution in the case of States, and s 122 in the case of Territories. The section further states that each school has an “approved authority”. In the case of government schools, the approved authority is the State or Territory. For non-government schools, the approved authority is a body corporate approved by the Minister.

31. As s 4 further explains, financial assistance is provided directly to a State or Territory for its government schools and in the case of non-government schools, to the State or Territory which “must give it to the approved authority for the school”. Section 4 also provides a “guide” in respect of recurrent funding and a statement that the Minister can determine other kinds of funding for any school under Pt 5.

32. The section also highlights the distinction between a “participating school” and a “non-participating school”. Relevantly, a school is a “participating school” if there is an approved authority for the school and the approved authority is approved in relation to one or more locations of the school and a level of education provided by the school at any of those locations: s 6.

33. Section 15 makes provision for “levels of education” and specifies that the regulations may prescribe the level of education that constitutes primary or secondary education.

34. Part 2 of the Act makes provision for “Grants of financial assistance to states and territories”. Section 21(a) provides that recurrent funding for a participating school is payable under Div 2 of Pt 3. Section 22 provides that payment of financial assistance under the Act is subject to the condition that the relevant State or Territory implement national policy initiatives for school education in accordance with the regulations. In a note to the section, the national policy initiatives are described as those agreed policy initiatives that States and Territories have responsibility for implementing for the school education system generally.

35. Section 23 makes provision for “conditions of financial assistance” and provides relevantly in s 23(1)(a) that recurrent funding for participating schools is subject to the conditions set out in s 23. Those conditions are described in the headings to subs (2) and (3) respectively as requiring the State or Territory to pay the funding to the approved authority for a school and to make the payment as soon as practicable after the amount is paid to the State or Territory.

36. Section 25 provides that the Minister is to determine the timing and amounts of recurrent funding. Section 26 provides for the Minister’s determination of a State or Territory’s total entitlement to funding.

37. Part 3 provides for recurrent funding for participating schools. Section 31 contains the Guide to the Part. The Guide states that:

“Financial assistance for participating schools is payable by the Commonwealth each year, based on a formula in Division 2 of this Part.”

38. It further states that all participating schools are entitled to a base amount and that there may be an entitlement to loadings.

39. The base amount for a school reflects the number of students at the school for the year, the schooling resource standard funding amount of the year for a student at the school and the capacity of the school’s community to contribute financially to the school.

40. The loadings to which a school may be entitled relate to students with a disability, Aboriginal and Torres Strait Islander students, students with a low socio-economic status, students who have low English proficiency, schools that are not in major cities and schools that are not large schools. The dollar figure for these loadings is worked out in accordance with the formulae contained in Pt 3, Div 3.

41. Part 9, Div 4, s 126 states that the consolidated revenue fund is appropriated for the purposes of making payments of financial assistance under the Act in accordance with the determination made under the relevant provisions, in this case, s 25, in respect of recurrent funding.

42. Part 2 of the Regulation governs grants of financial assistance to States and Territories. Section 10 provides:

“10   Conditions of financial assistance—implementing national policy initiatives relating to school education

(1) This section sets out the national policy initiatives for school education that a State or Territory must implement for section 22 of the Act (whether or not the State or Territory is a participating State or Territory).

(2)   A State or Territory must do the following in relation to all students in all schools located in the State or Territory:

(a)   improve the provision of school education to meet nationally agreed outcomes, objectives and targets, including for students with particular needs;

(b)   implement policies and programs to ensure that all children are engaged in and benefit from schooling (including by supporting the most disadvantaged students agreed by the Ministerial Council);

(c)   implement policies and programs to support students to complete education to year 12 (or an equivalent level) and to achieve nationally agreed outcomes, objectives and targets;

(d)   take action to collect and provide data in relation to paragraphs (a) to (c) under nationally agreed performance reporting frameworks to allow governments to identify areas of need and direct resources accordingly.

Note: The nationally agreed outcomes, objectives and targets are set out in the National Education Agreement which is set out in Schedule F to the Intergovernmental Agreement (within the meaning of section 4 of the Federal Financial Relations Act 2009).

(3)   A State or Territory must:

(a)   participate in the governance of, and provide financial and other support for, the national education institutions to progress the policy directions, and implement the national reforms, agreed by the Ministerial Council; and

(b)   provide effective regulatory oversight of all schools located in the State or Territory to ensure the quality and effectiveness of the provision of school education.

Note: The national education institutions include ACARA, the Australian Institute for Teaching and School Leadership Ltd and Education Services Australia Ltd.

(4)   A State or Territory must continue efforts to improve the quality of teachers at schools located in the State or Territory:

(a)   having regard to nationally agreed professional standards for teachers; and

(b)   through initiatives agreed by the Ministerial Council for nationally consistent teacher registration and accrediting initial teacher education courses.

(5)   A State or Territory must:

(a)   implement the Aboriginal and Torres Strait Islander Education Action Plan 2010‑2014; and

(b)   develop and implement a new Aboriginal and Torres Strait Islander Education Action Plan to be in place after the Aboriginal and Torres Strait Islander Education Action Plan 2010‑2014 expires.

Note: In 2013, the Aboriginal and Torres Strait Islander Education Action Plan 2010‑2014 was accessible at start="43">

Part 5, Div 1 specifies the basic requirements for approved authorities. Division 2 deals with ongoing policy and funding requirements for authorities and bodies and includes provisions as to recurrent funding for approved authorities.

Proper construction and application of s 96

44. The appellants challenged the funding provided to Malek Fahd and to its Hoxton Park campus through the statutory and agreement based grants as constitutionally invalid on the basis that the States have exclusive power over matters of religion and education.

Reasons of the primary judge

45. The primary judge, at [45], held that the impugned legislation was within the scope of the Commonwealth’s power to provide grants to the State under s 96 of the Constitution and that there was no support in the Constitution or in the case law for the appellants’ contentions of invalidity. His Honour rejected the appellants’ argument as contrary to accepted authority as to the scope of Commonwealth power under s 96: see Attorney-General (Vic); Ex rel Black v Commonwealth [1981] HCA 2; 146 CLR 559 at 659, 660.

46. His Honour stated, at [46], that the absence of a head of power in s 51 relating to religion or education was beside the point. In his Honour’s view, the validity of the legislation was supported by s 96 in combination with ss 51(xxxvi) and 51(xxxix) of the Constitution. His Honour observed that under those provisions, the Commonwealth may enact laws that provide for the payment of grants to States on specified conditions and, provided that the conditions do not contravene an express or implied limitation on Commonwealth power, there is no limit on the subject matter or type of conditions that may be imposed.

47. In this regard, his Honour observed that in ICM Agriculture Pty Ltd v The Commonwealth [2009] HCA 51; 240 CLR 140, French CJ, Gummow and Crennan JJ at [35] and [46], and Heydon J (dissenting) at [174] and [222], held that s 51(xxxvi) is a relevant source of legislative power in association with s 96 grants. This was so, in his Honour’s view, at [47], even if the grant concerned a matter in respect of which the Commonwealth had no specific legislative power under s 51: see ICM Agriculture per French CJ, Gummow and Crennan JJ at [34]; Ex rel Black at 592 per Gibbs J, 619 per Mason J and 649-650, 660 per Wilson J.

48. His Honour further observed, at [48], that there was no constitutional defect in the Commonwealth making a grant of funds to a state on condition that the funds be distributed to a third party: Victoria v Commonwealth (“Second Uniform Tax case”) [1957] HCA 54; 99 CLR 575 at 605, 607.

Appellants’ submissions

49. The appellants complained that his Honour erroneously referred to their argument as being limited to the construction of s 51, and failed to deal with their argument that the funding power in s 96 could not be used to replace the exercise of State power within the States’ exclusive sphere of legislative power and administrative functions. The appellants submitted that a constitutional power could not be used indirectly to achieve an object that would be impermissible directly: P J Magennis Pty Ltd v Commonwealth [1949] HCA 66; 80 CLR 382; Bank of NSW v Commonwealth (“Bank Nationalisation case”) [1948] HCA 7; 76 CLR 1.

50. The appellants sought to demonstrate this proposition by positing the circumstance of the Commonwealth itself building schools and imposing conditions on their operation, as they contended the AFIC had done in respect of the Hoxton Park campus, or alternatively, by building a network of schools such as the AFIC had done. The appellants also submitted that the Commonwealth was “fully aware” that funds were being used for unconstitutional purposes.

Respondents’ submissions

51. The respondents submitted that his Honour’s reasoning on this issue was correct and reflected long standing authority, to which he had correctly referred.

Consideration

52. There was no error in his Honour’s determination that the funding to the State under the legislation was constitutionally valid. The question of funding of schools, including those conducted by non-government entities with a religious affiliation, by the provision of financial assistance pursuant to s 96 was the subject of determination by the High Court in Ex rel Black. That case concerned funding to non-government schools conducted by religious bodies, in large part by the Catholic Church or its agencies: see Barwick CJ at 575-576.

53. Gibbs J, at 593, commented upon the operation of s 96 as follows:

“… ss 96 and 116 should be read together, the result being that the Commonwealth has power to grant financial assistance to any State on such terms and conditions as the Parliament thinks fit, provided that a law passed for that purpose does not contravene s 116.”

54. Mason J, at 618-619, dealt with the construction and operation of s 96 in the following terms:

“The plaintiffs submit that the statutory provisions travel beyond the authority which s. 96 confers by depriving the States of any choice or freedom of action in relation to the moneys provided, other than the freedom to accept or reject the grant. When States accept the grant on the terms set out in the legislation they are obliged by those terms to pay money to schools and school authorities nominated by the Commonwealth and to enter into agreements the terms of which are fixed by the Commonwealth. As Wilson J. observes, the conditions attached to the grant require the school or school authority to account to the Commonwealth for moneys spent and to provide statistical information to the Commonwealth.

But the course of judicial decision in this Court establishes that the Commonwealth may condition its grant under s. 96 so as to make the State a conduit pipe in channelling the fund to the intended recipient. As early as 1926, in Victoria v. The Commonwealth [1926] HCA 48; (1926) 38 CLR 399, the Federal Aid Roads Act 1926 was upheld, notwithstanding that it bound the State to apply money to an object selected by the Commonwealth, that the object was outside Commonwealth legislative power and that the amount of the payments was to be fixed by a Commonwealth Minister. Subsequently, in South Australia v. The Commonwealth (the first Uniform Tax Case) [1942] HCA 14; (1942) 65 CLR 373, the Commonwealth legislation introducing uniform taxation was upheld. A central element in that legislation was a provision in the States Grants (Income Tax Reimbursement) Act 1942 (s. 4) which provided for the giving of financial assistance to a State on condition that the State did not impose a tax on incomes in the relevant financial year. Latham C.J., Rich, McTiernan and Williams JJ. (Starke J. dissenting) held that the Act was not directed towards destroying or weakening the constitutional functions or capacities of the States and was therefore not invalid on that ground. The Court drew a distinction between a law which offers an inducement to a State not to exercise its powers and a law which creates or attempts to create a legal compulsion to do so (1942) 65 CLR, at pp 417, 464.

Later, in Victoria v. The Commonwealth (the second Uniform Tax Case) [1957] HCA 54; (1957) 99 CLR 575, Dixon C.J., who had not participated in the first Uniform Tax Case, though suggesting that there was support for a more limited construction of s. 96, went on to say, ‘the course of judicial decision has put any such limited interpretation of s. 96 out of consideration’ (1957) 99 CLR, at p 609.” (emphasis added)

55. Wilson J was of the same view. As his Honour stated, at 650:

“The salient feature, for present purposes, of a s. 96 law is that through the exercise of the power to impose conditions to a grant of financial assistance the Commonwealth Parliament may pursue a particular purpose.”

56. His Honour further explained, at 659-660:

“It is a non-coercive law which in terms grants money to each of the States ‘by way of financial assistance to the State’. The freedom of each State to decide whether to accept or reject the grant, however restricted it may be in a political sense, is legally fundamental to the validity of the scheme, and its existence as a matter of law cannot be denied. The conditions attaching to the grant are those to be determined by the Commonwealth, but this has always been so. It is not necessary that the grant should benefit the State Treasury directly, or that the purpose of the grant should be within the express legislative power of the Commonwealth, or that the State should be the instigator or even a party to the initiation of the scheme.”

57. This construction of s 96, its scope and operation was reaffirmed in ICM Agriculture v The Commonwealth. That case concerned State legislation under which certain water entitlements under pre-existing legislation were reduced. The State offered compensation, which, it was alleged, had it concerned an acquisition under Commonwealth legislation, would not have constituted compensation on “just terms” within the meaning of s 51(xxxi). Notwithstanding that the water entitlements were granted under State legislation, the appellants relied upon funding arrangements between the Commonwealth and the State pursuant to s 96 of the Constitution in order to argue that any compensation paid by the State was required to be on just terms.

58. Insofar as is relevant to this case, French CJ, Gummow and Crennan JJ accepted, at [43], that s 51(xxxi) was a constitutional safeguard and had assumed the status of a constitutional guarantee. Their Honours noted at [45]:

“… passages in the reasons of several members of the Court in Attorney-General (Vic); Ex rel Black v The Commonwealth, respecting the relationship between s 96 and the guarantee or prohibition provided by s 116 with respect to matters of religion, suggest that s 96 and s 51(xxxi) also should be read together.”

59. Their Honours observed that Wilson J, at 650 in Ex rel Black, considered that P J Magennis v Commonwealth remained a persuasive analogy in respect of ss 96 and 116. Their Honours in ICM then referred with approval to the passage of Gibbs J set out above at [53]. Their Honours, at [46], held that the legislative power of the Commonwealth conferred by ss 96 and 51(xxxvi) did not extend to the grant of financial assistance to a State on terms and conditions requiring the State to acquire property on other than just terms. However, their Honours rejected the plaintiffs’ case that the reduction in their water licences constituted an acquisition of property.

60. The reference by their Honours to P J Magennis v Commonwealth should be explained. In that case a law that approved an agreement between the Commonwealth and the State relating to war service land settlement was held to be invalid on the basis that the acquisition of land at a value determined at a date some years earlier involved an acquisition of property on other than just terms contrary to s 51(xxxi). Latham CJ, at 403, dismissed an argument that the law was valid based on s 96 as “giving financial assistance to States [and] therefore not a law with respect to the acquisition of property”. It was this statement that Wilson J considered persuasive in Ex rel Black.

61. The effect, then, of the authorities in respect of s 96, so far as is relevant here, is that the Commonwealth cannot provide financial assistance to the States if to do so would be contrary to another provision of the Constitution. It is in this sense that it can be said that s 96 is to be read with other provisions of the Constitution under consideration in a particular case, relevantly here, s 116. However, subject to that qualification and the consideration of the appellants’ s 116 arguments below, the Commonwealth may provide financial assistance to the States under s 96, notwithstanding that the object of the funding falls outside Commonwealth legislative power. The appellants’ argument to the contrary must be rejected.

Section 116 of the Constitution: preliminary matters

62. The question raised by the appellants was whether the fact that under the legislation funds are provided to a school which identifies itself as an Islamic school offends the first, second or third limb of s 116. Before turning to the operation and application of each of those limbs of s 116, it is necessary to consider a number of preliminary issues as to the proper construction and operation of s 116, and “constitutional guarantees” more generally.

Submissions of the appellants

63. An initial point advanced by the appellants in support of their challenge to his Honour’s reasoning in respect of s 116 was that, in accordance with modern Australian constitutional jurisprudence, s 116 is a “constitutional guarantee”, as opposed to a mere fetter on power, and is thus to be construed liberally. They contended that the test for establishing a religion and its application required review. On this argument, on a liberal construction of s 116, the legislation offended one or more of the first three limbs of s 116.

64. The appellants contended that in approaching the construction of a constitutional provision it was permissible to refer to the constitutional debates, an approach that had been rejected in Ex rel Black but which is now permissible: see Cole v Whitfield [1988] HCA 18; 165 CLR 360. The appellants also submitted that the primary judge ought to have had regard to the jurisprudence of the United States Supreme Court on the establishment clause contained in the First Amendment to the Constitution of the United States.

65. The appellants contended that US authorities on the First Amendment, upon which they had relied at first instance but to which the primary judge failed to refer, supported a less restrictive interpretation of s 116. In particular, they submitted that there was a preparedness in the US cases to have regard to the effect and operation of a legislative or executive measure when considering the validity of that measure.

66. The appellants contended that the same approach should be taken to s 116 and that any Commonwealth involvement in faith-based establishment transgresses the principles stated in Lemon v Kurtzman 403 US 602 (1971). The appellants also submitted that the difference in language between the US and Australian provisions was not sufficient to make this approach impermissible.

67. The consequence for which the appellants contended was that, on the proper construction of s 116, regard was to be had to the end, object, result or effect of the legislation and that the legislation here under challenge was unconstitutional as offending one or more of the first three limbs of s 116. The appellants also sought to distinguish Ex rel Black on the basis that there had been no submission in that case that the effect of the funding was to establish a particular religion as distinct from a particular denomination in Australia.

Submissions of the respondents

68. In addressing the appellants’ arguments in respect of each limb of s 116, the Commonwealth advanced a number of submissions as to the proper construction of that section. In doing so, it contended that the appellants’ submissions “openly invite the Court to abandon High Court authority”. It was further submitted by the Commonwealth that the approach contended for by the appellants, including the reliance on US jurisprudence, was contrary to the text of s 116 and the reasoning of the High Court in Ex rel Black.

69. The Commonwealth also emphasised that, having regard both to the text of s 116 and High Court authority, invalidity requires that a “constitutionally impermissible end” be the object of the law. That is, the Commonwealth submitted that the purpose of the law in question was the sole criterion selected by s 116 for invalidity. The Commonwealth submitted that s 116 was directed to the making of laws and not their administration, and that it is “doubtful” whether s 116 operates as a constraint on the executive in administering Commonwealth laws. In any event, the Commonwealth contended there was no impermissible purpose even in the administration of the relevant funding regime.

Section 116 as a “constitutional guarantee”

70. The appellants sought to support their submission that s 116 was a “constitutional guarantee” by reference to various observations of the High Court concerning constitutional guarantees, including those of French CJ, Gummow and Crennan JJ in ICM Agriculture v Commonwealth at [43]; French CJ in JT International SA v Commonwealth [2012] HCA 43; 250 CLR 1 at [41]; and Kirby J in Smith v ANL Ltd [2000] HCA 58; 204 CLR 493 at [74].

71. A review of the authorities reveals that the High Court has referred to provisions of the Constitution as “guarantees” in at least two senses: one where the guarantee constitutes a fetter on power, and the other where the guarantee gives rise to a personal right. Section 51(xxxi) has been held to fall into the first category: see JT International SA v Commonwealth at [41]; Smith v ANL Ltd at [74]. Sections 80, 92 and 117 have been said to fall into the second: see, for example, Cole v Whitfield at 393; Street v Queensland Bar Association [1989] HCA 53; 168 CLR 461 at 485; AMS v AIF [1999] HCA 26; 199 CLR 160 at 177; Cheng v R [2000] HCA 53; 203 CLR 248 at 278-279.

72. It is convenient first to deal with the authorities upon which the appellant relied. ICM Agriculture v Commonwealth has been discussed above at [57] ff. The observation upon which the appellants placed particular reliance in support of the submission presently under consideration was the reference in that case at [45] to “the guarantee or prohibition provided by s 116 with respect to matters of religion” (emphasis added). That comment was made in the context of adopting the view that s 51(xxxi), like s 116, should be read together with s 96. Their Honours did not engage in any elaboration or exposition of their reason for stating that s 116 was, inter alia, a “constitutional guarantee”, but the use of the phrase in combination with s 116 being referred to alternatively as a prohibition suggests that their Honours were characterising s 116 in the first of the senses referred to above.

73. JT International SA v Commonwealth was also concerned with the acquisition of property on just terms. In that context, French CJ, at [41], referred to s 51(xxxi) as embodying a “constitutional guarantee” of just terms and observed that it “is to be given the liberal construction appropriate to such a constitutional provision”. There was no reference to s 116 in that case.

74. In Smith v ANL Ltd, Kirby J referred to s 51(xxxi) as a “constitutional guarantee”, but one which operated as a limitation on power. As his Honour explained, at [74]:

“That guarantee exists in the form of a limitation on what would otherwise be the extensive power which the Parliament would enjoy to enact a law postulated to be ‘for any purpose in respect of which the Parliament has power to make laws’. Because of its object and function, the constitutional provision must not be given a pedantic, rigid, or narrow construction but one broad and ample such as befits the achievement of its objective.”

75. Aside from the cases on which the appellants placed particular reliance, there are references to “constitutional guarantees” in other High Court authorities. In Adelaide Company of Jehovah's Witnesses Incorporated v Commonwealth [1943] HCA 12; 67 CLR 116, Latham CJ described s 116 as containing a “guarantee”, although it is apparent that the Chief Justice did so on the basis that the provision operated as a limitation on government action. As his Honour observed, at 132, “[t]hat guarantee is intended to limit the sphere of action of the legislature”. In the same case, Starke J, at 154, spoke of “the provision for religious liberty or freedom protected and guaranteed by the Constitution”.

76. Stephen J in Ex rel Black distinguished s 116 from a constitutional guarantee of personal rights in terms that made it clear that his Honour considered s 116 to operate as a fetter on Commonwealth power. His Honour stated, at 605:

“Some things about the section are self-evident. It is not, in form, a constitutional guarantee of the rights of individuals … Section 116 … takes the form of express restriction upon the exercise of Commonwealth legislative power.” (emphasis added)

77. In Church of the New Faith v Commissioner of Pay-Roll Tax (Vic) [1983] HCA 40; 154 CLR 120, Mason ACJ and Brennan J, at 130, described s 116, in obiter, as containing a “guarantee of religious freedom”. In the same case, Wilson and Deane JJ, at 173, referred to s 116 in the sense of “a constitutional guarantee against the establishment of a religion” (emphasis added).

78. In R v Winneke; Ex parte Gallagher [1982] HCA 77; 152 CLR 211 Murphy J, in his dissenting judgment, at 228, stated that “[s 116] is a broad guarantee that the Commonwealth shall not make any law impairing freedom of religion or freedom from religion”. Importantly to the challenge made by the appellants, his Honour observed, in considering the taking of oaths under the Royal Commissions Act, that no Commonwealth law could impair that freedom. In Leeth v Commonwealth [1992] HCA 29; 174 CLR 455, Deane and Toohey JJ, at 487, referred to the “no religious test” limb in terms of a “guarantee that no religious test shall be required as a qualification for any office or public trust under the Commonwealth”.

79. In Kruger v Commonwealth [1997] HCA 27; 190 CLR 1, which primarily concerned the free exercise limb of s 116, Gaudron J described s 116 as a “limited guarantee” in the sense of a fetter on power. As her Honour observed at 124-125:

“By its terms, s 116 does no more than effect a restriction or limitation on the legislative power of the Commonwealth. It is not, ‘in form, a constitutional guarantee of the rights of individuals’. It does not bind the States: they are completely free to enact laws imposing religious observances, prohibiting the free exercise of religion or otherwise intruding into the area which s 116 denies to the Commonwealth. It makes no sense to speak of a constitutional right to religious freedom in a context in which the Constitution clearly postulates that the States may enact laws in derogation of that right.” (emphasis added)

80. Accordingly, when a provision such as s 116 is described as a constitutional guarantee, as the appellants sought to characterise it, it is necessary to understand the sense in which it may be so characterised. The appellants’ characterisation has been stated in the broad, without any analysis of the nature of the guarantee or what it is that is said to be guaranteed. To the extent that s 116 has been described as a constitutional guarantee in the authorities upon which the appellants relied, it has been so described either in discussion at a high level of abstraction or on an expressed understanding that it operates as a fetter on legislative power. As this review of the case law demonstrates, the three limbs of s 116 upon which the appellants relied, are properly understood as guarantees in the sense of being restrictions on legislative power.

The construction of “constitutional guarantees”

81. As with any question of construction, it is necessary to commence with the relevant basal principles. In Bank of NSW v Commonwealth [1948] HCA 7; 76 CLR 1, which concerned the acquisition of property on just terms, Dixon J, at 332, referred to the general principles of constitutional interpretation, the foundation of which were stated by Higgins J in Attorney-General for New South Wales v Brewery Employees Union of New South Wales [1908] HCA 94; 6 CLR 469, at 611-612, which his Honour quoted as follows:

“… ‘although we are to interpret the words of the Constitution on the same principles of interpretation as we apply to any ordinary law, these very principles of interpretation compel us to take into account the nature and scope of the Act that we are interpreting - to remember that it is a Constitution, a mechanism under which laws are to be made, and not a mere Act which declares what the law is to be.’ His Honour proceeds to quote from Story, Commentaries, 2nd ed., s. 455: ‘While, then, we may well resort to the meaning of single words to assist our inquiries, we should never forget, that it is an instrument of government that we are to construe’ (1908) 6 CLR, at p 612.”

82. His Honour also observed, at 349:

“… when a constitution undertakes to forbid or restrain some legislative course, there can be no prohibition to which it is more proper to apply the principle embodied in the maxim quando aliquid prohibetur, prohibetur et omne per quod devenitur ad illud. [‘when anything is prohibited, every means by which the thing may be accomplished is also prohibited’]. In requiring just terms s. 51 (xxxi.) fetters the legislative power by forbidding laws with respect to acquisition on any terms that are not just.”

83. It may be accepted that where a provision, such as s 51(xxxi) of the Constitution, has the status of a “constitutional guarantee” it will be given a liberal construction: Clunies-Ross v Commonwealth [1984] HCA 65; 155 CLR 193 at 201-202; New South Wales v The Commonwealth (“Work Choices Case”) [2006] HCA 52; 229 CLR 1 at [501]. Thus, it has been said that a constitutional guarantee is not to be construed so as to prefer form over substance, nor “‘pedantically’ so that they may be circumvented by legislative provisions which purport to do indirectly what cannot be done directly”: Kruger per Gaudron J at 131.

84. In a similar vein, Mason CJ, Deane and Gaudron JJ commented in Georgiadis v Australian & Overseas Telecommunications Corporation [1994] HCA 6; 179 CLR 297 at 305, importantly not only in respect of guarantees but also for constitutional prohibitions:

“It is often said in relation to constitutional guarantees and prohibitions that ‘you cannot do indirectly what you are forbidden to do directly’. That maxim is, in fact, an important guide to construction, indicating that guarantees and prohibitions are concerned with substance not form.” (footnote omitted)

85. Their Honours’ observation reflects the basic principles of constitutional interpretation referred to by Dixon J referred to above. See also Mutual Pools & Staff Pty Ltd v Commonwealth [1994] HCA 9; 179 CLR 155 at 169; Street v Queensland Bar Association at 485-486; JT International at [169]; ICM Agriculture v Commonwealth at [185]-[186].

86. There is nothing in these principles of construction, however, that permits the construction of a constitutional provision other than in accordance with its terms. To put the matter simplistically, a “black cat” cannot become a “white cat” by the application of a liberal approach to construction. As Barwick CJ commented in Ex rel Black, at 577, the “simple and direct English” meaning of the words prevails and, as was explained by Gibbs J, at 603, in respect of s 116, a liberal construction “would not justify giving the words of the establishment clause an expanded meaning which they do not naturally bear”. Rather, it remained “necessary to determine the meaning of the words of s 116 themselves”.

87. In further support of their argument, the appellants also referred to the approach to construction of legislation in the context of the implied freedom of communication. In particular, the appellants referred to the first limb of the test of constitutional validity, namely, “does the law effectively burden ‘freedom of communication’ about government or political matters either in its terms, operation or effect?”: See Lange v Australian Broadcasting Corporation (“Political Free Speech case”) [1997] HCA 25; 189 CLR 520 at 567. In my opinion, construction in the context of the implied constitutional freedom does not assist in the construction of s 116, either as a constitutional guarantee or as a restriction on power. The relevant principles of construction are those discussed above.

88. As I have already indicated, the three limbs of s 116 that are in issue, albeit recognised as constitutional guarantees, are cast in the form of a fetter on Commonwealth legislative power. On a proper construction, the Commonwealth cannot enact legislation that indirectly does that which cannot be done directly. However, before determining whether the two Acts in question in this case contravene that principle, it is necessary, by the application of the principles of construction discussed, to construe each of the three limbs of s 116, viz “establishing any religion”, “imposing religious observance” and “prohibiting the free exercise of religion”. Before doing so, it is convenient to consider the reliance placed by the appellants on the American authorities and to refer to the appellants’ reliance on the constitutional debates.

Recourse to jurisprudence on the First Amendment to the United States Constitution

89. The appellants contended that US authorities on the First Amendment to the US Constitution support a less restrictive interpretation of s 116 and evince a willingness to have regard to the effect and operation of a legislative or executive measure when considering the validity of that measure.

90. The First Amendment to the Constitution of the United States of America is in the following terms:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

91. The so-called ‘Lemon test’ for the constitutional validity of a provision, was stated by Burger CJ in Lemon v Kurtzman at 612-613:

“Every analysis in this area must begin with consideration of the cumulative criteria developed by the Court over many years. Three such tests may be gleaned from our cases. First, the statute must have a secular legislative purpose; second, its principal or primary effect must be one that neither advances nor inhibits religion; finally, the statute must not foster ‘an excessive government entanglement with religion’.”

92. In response to the argument in Lemon v Kurtzman that the legislation in question fostered an excessive entanglement of church and state, Burger CJ pointed out, at 616-617, that not all funding of faith-based schools will infringe the establishment clause:

“Our decisions from Everson to Allen have permitted the States to provide church-related schools with secular, neutral, or nonideological services, facilities, or materials. Bus transportation, school lunches, public health services, and secular textbooks supplied in common to all students were not thought to offend the Establishment Clause.”

93. More recently in Zelman v Simmons-Harris 536 U.S. 639 (2002), the Supreme Court of the United States upheld an Ohio school assistance program giving tuition aid to struggling Cleveland families, even though 82 per cent of the participating private schools had a religious affiliation. The Court stressed the importance of individual choice, the aid having been given to families directly, and that the underlying assistance program was neutral with respect to religion.

94. It is important, at the outset of any consideration of comparative jurisprudence, to identify any textual differences in the legislation in the respective jurisdictions. Thus, s 116 relevantly provides that “the Commonwealth shall not make any law for” each of the purposes identified in the first, second and third limb, that is, “for establishing any religion”, “for imposing any religious observance”, or “for prohibiting the free exercise of any religion”.

95. In Ex rel Black, Barwick CJ, in considering the First Amendment and s 116, observed, at 579, that divergence between the two provisions was apparent from the use of the word “respecting” in the American text and the word “for” in s 116. The Chief Justice further observed that “what the former may fairly embrace, quite clearly the latter cannot” and that was so:

“… even without placing critical significance on the purposive nature of the Australian expression and the lack of such an element in the American text.”

96. Consistent with its text, s 116 has been interpreted as being directed to the purpose of the legislation and as only being infringed where religious establishment, or another prohibited purpose, is the object of the law: see Barwick CJ at 579. It followed, in the Chief Justice’s view, that the establishment of religion had to be the sole object of an impugned provision for it to offend the first limb of s 116.

97. On the other hand, the establishment clause of the First Amendment is directed at laws respecting an establishment of religion. Arguably, this difference in language is one source of the breadth of the US jurisprudence on the establishment clause. As Burger CJ noted in Lemon v Kurtzman at 612:

“A law may be one ‘respecting’ the forbidden objective while falling short of its total realization. A law ‘respecting’ the proscribed result, that is, the establishment of religion, is not always easily identifiable as one violative of the Clause. A given law might not establish a state religion, but nevertheless be one ‘respecting’ that end in the sense of being a step that could lead to such establishment, and hence offend the First Amendment.”

98. The appellants contended that for the Commonwealth to be involved in funding “any such faith based establishment”, that being a reference to the School as what the appellants termed a “faith based educational establishment”, transgressed the three principles in Lemon v Kurtzman. I do not accept this submission. As I understand it, the jurisprudence of the United States Supreme Court on the establishment clause of the First Amendment does permit funding of faith-based education in some circumstances, as the passage cited above at [92] makes clear.

Recourse to the Constitutional Debates

99. The appellants contended that notwithstanding the view of Barwick CJ in Ex rel Black, at 578 that it was not appropriate to seek to construe the provisions of the Constitution by reference to the constitutional debates, the High Court has subsequently altered its view on the appropriateness of recourse to the constitutional debates: see, for example, Cole v Whitfield at 385-392.

100. Accepting that to be so, the appellants did not refer the Court to any aspect of the Convention debates that was relevant to the construction of s 116 or to the present case. In my view, it is inappropriate for the Court to embark upon an examination of the debates without being directed to specific aspects of the debates and without any adequate submission explaining the import of the debates to the issue.

The s 116 inquiry: the relevance of administration, operation and effect

101. Underpinning the appellants’ submissions was the stance that the Court should have regard to the effect and operation of legislative and executive measures when considering their validity under s 116. In this regard, the appellants placed particular reliance on the US authorities, and recourse to “terms, operation or effect” in the context of the implied freedom of political communication.

102. As is evident from the analysis above, the approach contended for by the appellants is not permitted on existing High Court authority. However, given the prominence of this view in the appellants’ submissions, it is appropriate to make some further brief observations on the position urged by the appellants on the Court. In Ex rel Black, Barwick CJ observed, at 580-581, that s 116 is “directed to the making of law. It is not dealing with the administration of a law”. The Chief Justice accordingly noted, at 581, that the validity of a law is to be assessed by reference to “the time of its making, of its passage by the Parliament”. In Kruger, Gaudron J observed, at 132, “purpose must be taken into account ... it is the only matter to be taken into account in determining whether a law infringes s 116”.

103. Likewise, as McKerracher J recently observed in Cheedy on behalf of the Yindjibarndi People v State of Western Australia [2010] FCA 690 at [83], and as cited by the primary judge, s 116 is “directed to the making of Commonwealth laws, not with their administration or with executive acts done pursuant to those laws”.

104. It may be acknowledged that Barwick CJ envisaged some limited relevance of the manner of a law’s administration to the question of constitutional validity. Thus, his Honour observed, at 581, that:

“… if that administration is within the ambit of the authority conferred by the statute, and does amount to the establishment of a religion, the statute which supports it will most probably be a statute for establishing a religion and therefore void as offending s.116.”

105. In this regard, the appellants submitted that it is erroneous to treat the effect of a law as irrelevant to proof of its purpose. The acceptance of that limited proposition does not advance the appellants’ case. At all times, the relevant inquiry is as to the purpose of the law in question. Any limited scope for recourse to effect does not shift the relevant inquiry from the purpose of the law to the conduct or purpose of those persons who may happen to receive funding pursuant to the law in question. Effect will only be relevant insofar as it is evident at the time of enactment, and insofar as can be discerned within the four corners of the law in question. So much is clear from the immediate context of the remarks of Barwick CJ extracted above. The Chief Justice observed:

“… if that administration is within the ambit of the authority conferred by the statute, and does amount to the establishment of a religion, the statute which supports it will most probably be a statute for establishing a religion and therefore void as offending s.116. That is so, not because of the manner of the administration but because the statute, properly construed, authorizes it. I say most probably, because the purposive content of the expression "for establishing" must, in any case, be satisfied.

The time at which to determine vis a' vis s. 116 the validity of a law is therefore the time of its making, of its passage by the Parliament. As I have said, it will be tested against the situation of law and fact current at the time of its enactment. It must then be judged for what in that situation it does and what upon its reasonable construction it authorizes. The manner of its administration can have no independent effect. What may lawfully be done in its administration forms part of the consideration of the validity of its enactment: and what can be lawfully done is determined by the construction of the statute, the determination of its meaning and its operation.” (emphasis added)

106. Insofar as the appellants’ submissions call for any broader inquiry as to the administration of funding under the impugned Acts, such recourse is inconsistent with High Court authority and contrary to the text of s 116 which is framed in terms of purpose. As Gaudron J remarked in Kruger at 132, “purpose is the criterion and the sole criterion selected by s 116 for invalidity”.

Whether the impugned legislation contravenes s 116: the establishment clause

107. The primary judge, at [51], observed that the appellants, in seeking to impugn the Schools Assistance Act and the Australian Education Act, and the executive decisions and actions made pursuant to them, relied on the first three limbs of s 116 of the Constitution. It is convenient to commence with consideration of the appellants’ arguments in reliance on the establishment clause of s 116, namely, that the impugned legislation and funding are invalid as “establishing any religion”.

108. As is immediately apparent from the stated objects of the Australian Education Act, there is no reference to religion, nor could it be inferred from the text of the object provisions that there was any object or purpose of the Act to establish any religion. The objects are all directed to the education of Australian children in the core secular disciplines of reading, mathematics, science, writing and numeracy. In this light, it will be necessary to consider in detail the manner in which the appellants sought to propound the Act’s invalidity.

Reasons of the primary judge

109. His Honour, at [54], considered that the approach of the majority in Ex rel Black was fatal to the appellants’ challenge to the Schools Assistance Act and the Australian Education Act based upon the ‘establishment clause’ of s 116. In his Honour’s opinion, there was:

258. The protection of religious freedom was among the first freedoms to be enacted and, indeed, the prohibition on religious tests for officers or public trusts under the United States was included in the unamended Constitution. As one commentator has noted, [24] “the Constitution did not make race similarly irrelevant until almost a century later, after the civil war, [25] and it did not make gender similarly irrelevant until well into the twentieth century. [26] ” Giving priority to removing religious considerations from the criteria for participation in public office, one would expect that government intrusion on freedom of religion would be subject to strict scrutiny and justifiable only by a compelling interest. However, more recent decisions have limited consideration of the effect of a particular measure in advancing or inhibiting religion and focused on the statutory purpose. The current approach to school funding is reflected in a decision delivered in 2000, Mitchell v Helms. [27]

     24.    Nadine Strossen, “Religion and the Constitution: A Libertarian Perspective” 2006 Cato Sup Ct Rev 7 at 18-19.

     25.    Referring to Amendment XV ratified in 1870.

     26.    US Constitution Amendment XIX, ratified in 1920.

     27. 530 US 793 (2000).

259. Mitchell v Helms involved what Thomas J, delivering the judgment of four members of the Court, described as “part of a longstanding school-aid program known as Chapter 2,” pursuant to which “the Federal Government distributes funds to state and local and governmental agencies, which in turn lend educational materials and equipment to public and private schools, with the enrolment of each participating school determining the amount of aid that it receives.” [28] A question as to whether the law was one “respecting an establishment of religion” arose because many private schools were religiously affiliated.

     28. 530 US at 801.

260. The judgment continued: [29]

“The Establishment Clause of the First Amendment dictates that ‘Congress shall make no law respecting an establishment of religion.’ In the over 50 years since Everson v Board of Education of Ewing, 330 US 1 (1947), we have consistently struggled to apply these simple words in the context of governmental aid to religious schools.”

29. 530 US at 807.

262. The judgment then referred to the fact that, in Agostini v Felton [30] the Court had modified the entanglement criterion, reducing it to a factor considered in relation to the primary effects of advancing or inhibiting religion. In Agostini, the Court had in fact identified three primary criteria in evaluating whether government aid does not have the effect of advancing religion, namely that “[i]t does not result in government indoctrination; define its recipients by reference to religion; or create an excessive entanglement.” [31] The opinion then noted that “the question whether governmental aid to religious schools results in governmental indoctrination is ultimately a question whether any religious indoctrination that occurs in those schools could reasonably be attributed to governmental action.” [32] In the course of argument in this Court, the concept of “religious indoctrination” was recast as “religious instruction”, meaning instruction in the tenets of the particular religion of those running the school.

     30. 521 US 203 (1997).

     31. 530 US at 808, quoting Agostini at 234.

     32. 530 US at 809.

263. As Mitchell explained, the Supreme Court has upheld numerous schemes whereby government funds are distributed to schools for secular non-religious purposes, according to criteria which are neutral as to the nature of the school and in circumstances where the child attends the school as the result of a private choice by individual parents.

264. O’Connor J agreed with the joint reasons in upholding the validity of the law under review. Her concurring reasons (in which Breyer J joined), however, rejected the weight accorded in the plurality reasons to the principle of neutrality, and the effective diminution of emphasis given to the identification of impermissible effects. [33] A third judgment (in dissent) was delivered by Souter J (with whom Stevens and Ginsburg JJ joined). Souter J stated: [34]

“There may be no aid supporting a sectarian school's religious exercise or the discharge of its religious mission, while aid of a secular character with no discernible benefit to such a sectarian objective is allowable. Because the religious and secular spheres largely overlap in the life of many such schools, the Court has tried to identify some facts likely to reveal the relative religious or secular intent or effect of the government benefits in particular circumstances. We have asked whether the government is acting neutrally in distributing its money, and about the form of the aid itself, its path from government to religious institution, its divertibility to religious nurture, its potential for reducing traditional expenditures of religious institutions, and its relative importance to the recipient, among other things.”

33. 530 US at 839-840.

34. 530 US at 868-869.

265. The appellants did not seek to undertake a detailed review of the jurisprudence of the United States Supreme Court, nor to identify the extent to which that jurisprudence can properly inform the application of s 116 in this Court. Two factors suggest that further consideration of the American case law may not be productive. First, as was emphasised in Black, the language of s 116 departs from that used in the establishment clause of the US First Amendment. That provision demands that there be “no law respecting an establishment of religion.” By contrast, s 116 prohibits the Commonwealth making “any law for establishing any religion”. As explained by Barwick CJ in Black [35] the language in the American text is clearly wider than that in s 116, which has a more constrained “purposive content”.

     35.    Black at 579.

266. Given that s 116 is expressed as a constraint on legislative power, Barwick CJ considered that evidence relating to the administration of the law could have only a limited purpose: [36]

“The next observation I wish to make as to s 116 is that it is directed to the making of law. It is not dealing with the administration of a law. But, if that administration is within the ambit of the authority conferred by the statute, and does amount to the establishment of a religion, the statute which supports it will most probably be a statute for establishing a religion and therefore void as offending s 116. That is so, not because of the manner of the administration but because the statute, properly construed, authorizes it. I say most probably, because the purposive content of the expression ‘for establishing’ must, in any case, be satisfied.”

36.    Black at 580-581.

267. The linguistic difference was also relied upon by other members of the Court. Gibbs J, having noted the distinction, [37] concluding: [38]

“The primary purpose of the challenged legislation is the advancement of education within Australia. That would, no doubt, not be decisive if the legislation had the further purpose of establishing any religion. However, it is impossible to say, on any view of the statutory provisions in question or of the evidence in the case, that the challenged legislation has the purpose or effect of setting up any religion or religious body as a state religion or a state church, even for limited purposes only.”

37.    Black at 598 and 603.

38.    Black at 604.

268. Stephen J identified the linguistic variation as one of two problems confronting reliance by the plaintiffs in Black on US constitutional case law. He said: [39]

“The argument is that words of the First Amendment are similar to those of the first restriction in s 116; that the First Amendment was, by the time of Federation, understood in a sense which would forbid the grant by the federal government of aid to church schools; and that, by using similar language, the framers of our Constitution must have intended that the first restriction in s 116 should have a similar operation.

The argument fails on two counts. The more obvious is that the wording of the two measures differs in an important respect; the more telling is that the First Amendment had not, by the 1890s, come to bear the meaning which the plaintiffs would seek to assign to the first restriction in s 116.”

39.    Black at 609.

269. To similar effect, Mason J stated: [40]

“We speak of any ‘law for establishing’ any religion. The Americans speak of a law ‘respecting an establishment’ of religion. … Here, however, we are dealing, not with a grant of legislative power, but with a prohibition against the exercise of legislative power. In such a context ‘for’ is more limiting than ‘respecting’; ‘for’ connotes a connexion by way of purpose or result with the subject matter which is not satisfied by the mere circumstance that the law is one which touches or relates to the subject matter. In this respect the first prohibition in s 116 is narrower than its American counterpart.”

40.    Black at 615-616.

270. Again, Wilson J in Black stated: [41]

“Furthermore, it seems to me that the words ‘for establishing’ are not comparable with the words ‘respecting an establishment’. The former words convey the sense of ‘in order to establish’, and speak quite specifically of the purpose of the law in terms of the end to be achieved. ‘Respecting’ conveys the notion of ‘in respect of’ a particular subject-matter, namely, an establishment or religion, thereby providing a broad frame of reference.”

41.    Black at 653.

271. The second difficulty flowing from the reliance on American case law, not adequately acknowledged by the appellants’ submissions, involves the historical development of relevant social context and concepts. The first of the US cases referred to above was Everson,[42] decided in 1947. Nor, as explained by Gibbs J and Stephen J in Black, were the principles which developed in the mid-20th century recognised in form or substance in 1900. Accordingly, to the extent that reliance is placed upon the American case law as informing the views of those responsible for s 116 in the Australian Constitution, little support is to be gained from the relevant historical analysis.

     42.    See fn (17) above.

272. In part that is a function of social conditions in the nineteenth century: government expenditure on health, education and welfare was far more limited than it became in the middle of the twentieth century and certainly bore no relation to the levels of funding identified by Wilson J from the evidence in Black. [43] Accepting that originalism cannot dictate a single understanding of the scope of constitutional provisions in different social circumstances, and further that later developments in constitutional law may well inform the construction of s 116, there is nevertheless a difficulty for the appellants in identifying which precise aspects of American jurisprudence are to be adopted.

     43.    Black at 645-647.

Establishment

273. A significant part of the appellants’ case turned upon the submission that, even adopting the understanding explained in Black as to the meaning of “establishing” in s 116, the current legislation varied in significant respects from that considered in Black, thus requiring a different conclusion as to the validity of the legislation.

274. The concept of establishing a religion was described in various terms in the separate judgments in Black. Thus, Barwick CJ stated, in a passage relied on by the appellants: [44]

“A law which in operation may indirectly enable a church to further the practice of religion is a long way away from a law to establish religion as that language properly understood would require it to be if the law were to be in breach of s 116. It would not be enough that the law allowed such activity on the part of the owners of the schools. The law must be a law for it, ie intended and designed to set up the religion as an institution of the Commonwealth.”

44.    Black at 583.

275. Gibbs J stated that “[t]he natural meaning of the phrase ‘establish any religion’ is, as it was in 1900, to constitute a particular religion or religious body as a state religion or state church.” [45] Stephen J also accepted that the verb “establish”, in relation to religion meant, “to place (a church or a religious body) in the position of a state church". [46] However, he recognised that, as with the Church of England in England, the status was achieved not through demonstrating any single characteristic, but rather was constituted by “the sum total of all the mutual relations for the time being existing according to law between Church and State.” [47] Such an approach was consistent with other limbs of s 116, “prohibiting three avenues of possible legislative encroachment upon that freedom – the elevation of one church above all others, the imposing of particular religious observances and the proscribing of any religious worship.” [48] In similar terms, Mason J considered that establishment involved the creational recognition of a church “as a national institution”, citing with approval the language of Quick and Garran [49] explaining establishment as involving “the erection and recognition of a State Church, or the concession of special favours, titles, and advantages to one church which are denied to others”, although with the qualification that the conferral of concessions must result in an official religion of the State and the establishment of the religion as a national institution. [50]

     45.    Black at 597.

     46.    Black at 606.

     47.    Black at 607.

     48.    Black at 610.

     49.    Annotated Constitution, p 951.

     50.    Black at 612.

276. The appellants’ case in this respect focused on the manner in which financial assistance was made available to non-government schools. It was said that at least from the commencement of the Schools Assistance Act 2008 (Cth) funds were provided to “approved authorities”, referred to in Pt 9 of that Act. The scheme was maintained under the Australian Education Act 2013 (Cth), Pt 6 of which continued a system whereby funds provided for government schools were provided to the relevant State or Territory as the approved authority for those schools and, for non-government schools, to a body corporate approved by the Minister as the approved authority for the school. [51] In substance, approved authorities are bodies which administer education through the particular school on a not-for-profit basis. [52] Each approved authority is subject to ongoing policy requirements [53] and is subject to detailed controls in respect of financial accountability. [54] By creating the religious institution, Malek Fahd Islamic School Ltd, as an approved authority, receiving recurrent funding for the Hoxton Park campus, the appellants contended that the legislation established that body as an institution or instrumentality of the Commonwealth.

     51. Australian Education Act, s 71.

     52. Australian Education Act, s 75(3).

     53. Australian Education Act, s 77 and Australian Education Regulation 2013, ss 41-43.

     54. Australian Education Act, s 78 and Australian Education Regulation, s 61.

277. For this purpose, reliance was also placed upon Pt 9, Div 3 of the Australian Education Act, which provided for review of various reviewable decisions relating to the provision of education at a school. Somewhat ambiguously, the table of such decisions in s 118 referred, in col 3, to the “relevant person for the reviewable decision” which, in most cases was the approved authority for the school. The ambiguity arose from the fact that it did not appear from s 118 whether the relevant person was the decision-maker or played some other role. However, reference to ss 119 and 120 demonstrates that the relevant person is the person affected by a decision and who may apply for review. It is therefore not correct to suggest that the provisions for review incorporate the approved authorities as parts of the Commonwealth system of review: rather the contrary, approved authorities are given standing to challenge certain decisions made by the Minister or other decision-maker under the Act.

278. Even putting this latter point to one side, it may be accepted that approved authorities whether they be the State, secular institutions or religious institutions, play an integral role in the funding scheme created by the Commonwealth legislation. Nevertheless, that feature does not assist the appellants in the present argument.

279. In the course of their submissions, the appellants complained that the trial judge had been in error in seeking to undertake a comparative exercise as to the particular effects or consequences of the legislative regime for Malek Fahd School, as compared with other secular or religious educational systems obtaining Commonwealth funding. The submission was based on the proposition that the establishment clause in s 116 precludes the provision of any financial assistance to any religious institution. That submission runs counter to the understanding in Black as to what is meant by establishing a religion. On that approach, it is not sufficient that the challenged law provides funding to religious institutions unless it discriminates in some way between them. Thus the concept of establishment accepted in Black involves the preferential treatment, arguably to the extent of creating a “state religion” directed to one particular religion or denomination or division, to the exclusion of others. By contrast, the regime established under the Australian Education Act (and its predecessors) is neutral and non-discriminatory as between secular and other religious institutions and as between different faiths. The appellants’ submission cannot succeed without departing from this aspect of Black, a course which is not open to this Court.

Free expression

280. Perhaps curiously, the appellants placed their primary arguments in this Court, not on the establishment clause, but on the prohibition against laws imposing any religious observance and prohibiting the free expression of any religion. The two clauses may be treated together because the arguments presented were closely related. The manner in which the Australian Education Act was said to impose religious observance relied upon the suggestion that a law of the Commonwealth which provided funds to a religious school, which included in its syllabus the undertaking of religious activities, involved the imposition of religious observance. That was said to flow from the finding of the primary judge that “[t]he school obviously requires religious observance by pupils during their hours of attendance, which is presumably one of the reasons why parents enrol their children there.” [55]

     55. Hoxton Park at [25].

281. This argument fails for two fundamental reasons. First, central to the concept of “imposition” is the element of religious observance which is non-consensual. With respect to children, the source of any consent must be found in the beliefs and intentions of the parents. There is no suggestion that any parent is under any threat or improper pressure to send their children to a particular non-secular (or secular) school. No doubt such a choice is strongly influenced by the parents’ religious beliefs: in that (relevant) sense the choice is entirely consensual. Further, whatever may have motivated a parent to send a child to a school which provides religious instruction of a particular kind, the Commonwealth is neutral as to that aspect of the child’s education. It was not right to say that the Commonwealth required that the school provide religious instruction and hence imposed religious observance on the children. The fact that the school imposed such a requirement, and obtained funding from the Commonwealth, does not mean the Commonwealth imposed any such requirement. The funding criteria were silent as to this aspect of the school’s curriculum.

280. Reliance upon the third clause invoked a similar, and possibly more remote, concept. Because, it was said, children at the school were required to undertake religious activities, even had they otherwise been willing participants, they were no longer willing participants because they were required by the school curriculum to undertake such activities. Accordingly they were no longer engaged in the “free exercise” of their religious beliefs. The argument is untenable. By analogy, an employee may be required, pursuant to his or her contract of employment, to undertake work in employment voluntarily entered upon, without the element of voluntariness being overridden or destroyed. Far less is it possible to say that the government, which enacts laws for the enforcement of contractual obligations, removes the employee’s element of consensual participation.

281. It is notable that the appellants found no support for these far-fetched submissions in any judgment in the United States. Whether or not any support could be found, the submissions must be rejected.

Standing

284. There was a dispute as to the standing of the appellants to seek relief in relation to the provision of funding for periods covered by the 2008-2012 funding arrangements under the Schools Assistance Act, which no longer had any relevant operation for Malek Fahd School. The distinction sought to be drawn between past and current funding arrangements is not determinative of the standing of the appellants. There will be cases in which unconstitutional conduct taken in the past, the effects of which are exhausted, may yet be the subject of complaint by an appropriate plaintiff, as for example in cases where there is a realistic chance that the conduct will be repeated in the future. [56]

     56. Plaintiff M68-2015 v Minister for Immigration and Border Protection [2016] HCA 1 at [23] (French CJ, Kiefel and Nettle JJ), [64] (Bell J), [112] (Gageler J), [235] (Keane J) and [349]-[350] (Gordon J).

285. The appellants’ standing was, however, subject to challenge on a different basis. Like many challenges to standing, the success or failure of the challenge turns upon the nature of the case sought to be relied upon and hence cannot readily be evaluated until the court has heard full argument.

286. Although the appellants asserted that their claims were restricted to the invalidity of funding of the Malek Fahd school, there was no rational basis upon which that constraint could be upheld. The legislation did not purport to distinguish between religious institutions as recipients for funding, nor did the appellants suggest a basis on which such discrimination could take place. Absent such discrimination, the consequence of their success must be to invalidate the funding of all schools run by religious institutions. What purported to be a system of grants based on entirely secular educational principles, would then become a system of grants which were only available to secular schools. In that event there would be a real question as to whether the Commonwealth law, by depriving students at sectarian schools of a significant part of their funding would infringe on the injunction against laws prohibiting the free exercise of any religion. (Other questions might also arise.)

287. The individual appellant lived in the vicinity of the Malek Fahd school and relied on evidence that she had been adversely affected as to the amenity of her home in the course of construction of the school and by continuing noise and pollution caused by increased traffic. It appears that the incorporated appellant involved an organisation of individuals affected in similar ways, and which had objected to the development application for the school.

288. It is by no means clear on the evidence that the appellants had any interest, financial, physical or emotional, of a kind which engaged the bases of challenge set out above. They did not have children at secular schools (or if they did that fact does not appear to have been relied upon); they did not suggest that as taxpayers they were opposed to money being made available, indirectly, to faith-based non-government schools; nor did they have any sufficient interest in the control of educational outcomes sought to be achieved as the primary purpose of the legislation. In these circumstances, there is no authority which gives unqualified support for the proposition that they had standing to challenge the validity of the Schools Assistance Act or the Australian Education Act.

289. By contrast, in Davis v The Commonwealth [57] the Aboriginal plaintiffs had standing to challenge the Bicentennial Authority’s legislation controlling the use of certain words and symbols in a way which restricted their commercial freedom to use those words and symbols. In Re McBain; Ex parte Australian Catholic Bishops Conference [58] an issue arose, somewhat indirectly, as to whether the interveners would have had a sufficient interest to challenge the operation of a federal anti-discrimination law which overrode a state legislative ban on providing IVF services to unmarried women. The interveners were responsible for hospitals which provided medical services, but there was no evidence that they would have been required to provide such services to unmarried women, assuming the invalidity of the state legislation. They sought to be joined at the trial, but did not pursue the application; their standing would have been doubtful. [59]

     57. (1988) 166 CLR 79.

     58. (2002) 209 CLR 372; [2002] HCA 16.

     59.    Re McBain at [14], [21] and [26] (Gleeson CJ).

290. The authorities are by no means determinative of the present issue and need not be explored in detail. Two points should, however, be noted. First, the mere fact that a decision (or law) may have a physical or economic effect on a particular person does not mean that that person will have standing to challenge the decision or law. That will be so where the interference is in a functional sense unrelated to the matters to be considered by the decision-maker or unrelated to the purpose of the law. Thus, the decision of a government authority, the purpose of which is to maintain the quality and safety of pharmaceutical drugs, cannot be challenged by a competitor, albeit the decision to release a drug may have a significant commercial effect on the competitor. [60] Similarly, an association created to promote the respect and protection of human life from the moment of conception to natural death (and was opposed to abortion) did not have standing to challenge a decision under the Therapeutic Goods Act 1989 (Cth) because its interests did not involve the objects of the Therapeutic Goods Act. [61] The association was therefore not entitled to challenge a decision of the authority to allow a “morning after pill” to be trialled on the grounds that use of the drug might involve a breach of the criminal law. [62]

     60. Alphapharm Pty Ltd v SmithKline Beecham (Aust) Pty Ltd (1994) 49 FCR 250.

     61. Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 56 FCR 50.

     62.    Right to Life at 68-69 (Lockhart J), 84-86 and 90 (Gummow J).

291. While the issues in this case having significant similarities with those raised in Black, it may be noted that no issue of standing arose in that case. The proceedings being brought by the Attorney-General on relation, the Court was not required to address the standing of the persons represented. Nevertheless Gibbs J, having concluded that the Victorian Attorney-General had standing to compel the Commonwealth to observe the Constitution, in the interests of its citizens, expressed doubt as to whether the individual plaintiffs would have had standing to sue: [63]

“I hardly think that the fact that they are taxpayers, and in some cases parents of children at government schools, gives them a special interest in the subject matter of the action ….”

Nevertheless, he expressed no concluded opinion on the question. [64]

63.    Black at 589.

64.    Black at 590.

292. In a more recent case involving a challenge to the expenditure of Commonwealth moneys, Pape v Federal Commissioner of Taxation [65] the question of Mr Pape’s standing was raised, but dismissed summarily. The parties conceded that he had a sufficient interest to seek a declaration that the tax bonus payable to him was unlawful. As the basis of such a declaration must have resulted in a similar conclusion with respect to the scheme generally, all members of the Court dismissed the proposition that he had no standing to argue the broader question of law. [66]

     65.    See fn (9) above.

     66.    Pape at [52] (French CJ), [158] (Gummow, Crennan and Bell JJ), [272]-[273] (Hayne and Kiefel JJ), and [400]-[401] Heydon J.

293. The appellants have no similar interest. It may be doubted that they have standing in the present proceedings. However, given the limited basis on which the challenge to their standing was raised, and the fact that the appeal must in any event be dismissed, it is not necessary to rule on this issue.

Conclusion

294. In respect of other issues, I agree with Beazley P. I also agree that the appeal must be dismissed with costs.

295. MACFARLAN JA: I agree with the orders proposed by Beazley P and with her Honour’s reasons for judgment.

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Endnotes

Amendments

05 July 2016 - Coversheet - changing citation of "regs" to "ss" of Australian Education Regulations 2013.

[42] - amending "Clause 10" to "Section 10".

[77] - inserted "in the sense of" between "s 116" and "of ".

[137] - deleted "is" between "was" and "no provision".

[145] and [147] - changed "Mason CJ to "Brennan CJ".

Decision last updated: 05 July 2016