K-Generation Pty Ltd v Liquor Licensing Court

[2007] SASC 319

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

K-GENERATION PTY LTD & ANOR v LIQUOR LICENSING COURT & ANOR

[2007] SASC 319

Judgment of The Full Court

(The Honourable Justice Duggan, The Honourable Justice Gray and The Honourable Justice Vanstone)

30 August 2007

ADMINISTRATIVE LAW - JUDICIAL REVIEW - GROUNDS OF REVIEW - PROCEDURAL FAIRNESS - EXCLUSION OF PROCEDURAL FAIRNESS

CONSTITUTIONAL LAW - THE NON-JUDICIAL ORGANS OF GOVERNMENT - THE LEGISLATURE - LEGISLATION AND LEGISLATIVE POWERS - EXAMINATION OF VALIDITY OF LEGISLATION BY COURTS

HIGH COURT AND FEDERAL COURT - THE FEDERAL JUDICATURE - NATURE AND EXTENT OF JUDICIAL POWER

Application for judicial review of a decision of the Licensing Court, which affirmed a decision of the Liquor and Gambling Commissioner - section 28A of the Liquor Licensing Act 1997 (SA) provides that material that is classified by the Commissioner of Police as "criminal intelligence" and provided to the Liquor and Gambling Commissioner and Licensing Court must be taken into account by the Commissioner and Court, cannot be disclosed to applicants for, or holders of, licences, and that the Commissioner and Court need not give reasons for its decision - plaintiffs sought a liquor licence from the Commissioner - application refused on the basis of "criminal intelligence" - decision affirmed by Licensing Court, having considered the "criminal intelligence" without disclosing it to the plaintiffs - whether the plaintiffs were denied natural justice - whether the Liquor Licensing Act excludes an aspect of the common law natural justice hearing rule and so authorises the denial of natural justice - if it does not, whether the plaintiffs waived their right to natural justice by not requesting the "criminal intelligence" at the hearing before the Licensing Court - whether a breach of procedural fairness by an inferior court is reviewable by a superior court - whether section 28A of the Liquor Licensing Act is constitutionally valid.

Held: (per Gray J, Duggan and Vanstone JJ concurring) - section 28A of the Liquor Licensing Act excludes an aspect of the common law natural justice hearing rule and so an aspect of the plaintiffs' right to natural justice was extinguished - there was no denial of natural justice as the Act did not afford the plaintiffs the right to receive adverse evidence and reasons for the decision - although not necessary to decide, the plaintiffs did not waive any right to natural justice, and a breach of procedural fairness by an inferior court is reviewable by a superior court.

Held: (per Duggan and Vanstone JJ, Gray J in dissent) - section 28A of the Liquor Licensing Act is constitutionally valid.

(per Gray J in dissent) - section 28A of Liquor Licensing Act breaches Chapter III of the Australian Constitution - procedural fairness is an essential element of the judicial power - a District Court Judge cannot be required to act in a way that is antithetical to Federal judicial power.

Liquor Licensing Act 1997 (SA) ss 3, 4, 12, 13, 14, 15, 16, 17, 18, 21, 22, 23, 24, 25, 27, 28, 28A, 29, 31, 43, 51A, 55, 56, 71C, 75A, 77, 120; Australian Constitution s 71, s 75, s 77; Supreme Court Rules 2006 (SA) ss 199-201; Supreme Court Act 1935 (SA) s 31; Migration Act 1958 (Cth) s 200, s 201, s 204; Administration Appeals Act 1975 (Cth) s 35; Corruption and Crime Commission Act 2003 (WA) s 76; Community Protection Act 1993 (NSW); Disorderly Houses Act 1943 (NSW) ; Criminal Proceeds Confiscation Act 2002 (Qld) s 30; Immigration and Refugee Protection Act 2001 (Canada) ; Canadian Charter of Human Rights s 7, referred to.
Kable v Director of Public Prosecutions (NSW) (1996) 190 CLR 51; Thomas v Mowbray [2007] HCA 33; Craig v State of South Australia (1995) 184 CLR 163; Manna Hill Resources Pty Ltd v South Australia (2001) 82 SASR 18; Kioa v West (1985) 159 CLR 550; Australian Crime Commission v AA Pty Ltd [2006] FCAFC 30; Sargood Brothers v Commonwealth (1910) 11 CLR 258; Pyneboard Pty Ltd v Trade Practices Commission (1983) 45 ALR 609; Coco v R (1994) 179 CLR 427; Annetts v McCann (1990) 170 CLR 596; NAVK v Minister for Immigration, Multicultural and Indigenous Affairs (2004) 135 FCR 567; VEAL v Minister for Immigration, Multicultural and Indigenous Affairs (2005) 222 ALR 411; Percerep v Minister for Immigration and Multicultural Affairs (1998) 86 FCR 483; Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374; Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82; Craig v Workers Compensation Tribunal (2004) 90 SASR 490; Police & The State of South Australia v Lymberopoulos & Ors [2007] SASC 247; Attorney-General of the Commonwealth of Australia v The Queen [1957] AC 288; Mistretta v United States (1989) 488 US 361; Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1; Re Tracey; Ex parte Ryan (1989) 166 CLR 518; Polyukhovich v Commonwealth (1991) 172 CLR 501; R v Davison (1954) 90 CLR 353; R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361; Leeth v Commonwealth (1992) 174 CLR 455; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; R v Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556; R v Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254; Harris v Caladine (1991) 172 CLR 84; Grollo v Palmer (1995) 184 CLR 348; Nicholas v The Queen (1998) 193 CLR 173; Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1; Fardon v Attorney-General (Qld) (2004) 223 CLR 575; Re Criminal Proceeds Confiscation Act 2002 [2003] QCA 249; Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2007] WASCA 49; Forge & Ors v Australian Securities and Investments Commission & Ors [2006] HCA 44; Hilton v Wells & Ors (1985) 157 CLR 57; R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177; Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54; Commissioner of Police v Tanos (1958) 98 CLR 383; Re Minister for Immigration and Multicultural Affairs and Anor; Ex parte Miah (2001) 206 CLR 57; Charkaoui v Minister of Citizenship and Immigration [2007] SCC 9, considered.

WORDS AND PHRASES CONSIDERED/DEFINED

"Judicial power"

K-GENERATION PTY LTD & ANOR v LIQUOR LICENSING COURT & ANOR
[2007] SASC 319

Full Court: Duggan, Gray and Vanstone JJ

1. DUGGAN J. I have had the advantage of reading the draft reasons of Gray J. I respectfully agree with his Honour’s reasoning on all issues with the exception of that relating to the validity of s 28A of the Liquor Licensing Act 1997 (“the Licensing Act”).

2. The validity issue is raised in paragraph 1A of the orders sought in the amended summons.  Paragraph 1A seeks:

   A declaration that the provisions of s 28A of the Liquor Licensing Act 1997(SA) are invalid in so far as they impermissibly interfere with the exercise by the First Defendant [the Licensing Court] of the judicial power of the Commonwealth.

3. Before discussing the basis upon which this order is sought, it is appropriate to summarise some of the provisions in the Licensing Act which deal with the constitution and procedures of the Licensing Court.

   The Licensing Court

4. The Licensing Court, which was created under previous legislation, continues in operation under s 12 of the Licensing Act.  It is a court of record[1] and is constituted of a Licensing Court Judge or some other District Court Judge or former District Court Judge with authority to exercise the jurisdiction of the Court.[2]  Section 15 provides that the Governor may designate a District Court Judge as the Licensing Court Judge or confer on other District Court Judges, or former District Court Judges, authority to exercise the jurisdiction of the court.  The court is not a division of the District Court; nor is it invested with Federal jurisdiction in the performance of any of its functions.

   [1]    s 13.

   [2]    s 14.

5. The principal purpose of the Act as stated in the legislation is “to regulate the sale, supply and consumption of liquor”.  The administration of the Act is the responsibility of the Liquor and Gambling Commissioner (“the Licensing Commissioner”).

6. The Licensing Act provides for a division of responsibilities between the Licensing Commissioner and the Court.  Section 17(1) provides that:

   (1)The powers and responsibilities of a licensing authority under this Act are divided between the Commissioner and the Court as follows:

   (a)     the Commissioner is to determine—

   (i)all non-contested matters except those that are, under some other provision of this Act, to be determined by the Court; and

   (ii)all contested applications for a limited licence;

   (b)if an application is contested (and the application does not relate to a matter that is, under some other provision of this Act, within the exclusive jurisdiction of the Court), the Commissioner must, subject to subsection (2), make reasonable attempts to achieve agreement between the parties by conciliation and—

   (i)if the differences between the parties are resolved by conciliation, the Commissioner must determine the matter so as to reflect the agreement reached by conciliation; and

   (ii)if the differences between the parties are not resolved by conciliation—

   •if the dispute arises on an application for a limited licence—the Commissioner must determine the application; and

   •if the dispute arises on an application (but not an application for a limited licence) and the parties request the Commissioner to determine the application—the Commissioner must determine the application; and

   •in any other case—the Commissioner must refer the matter for hearing and determination by the Court;

   (c)     the Court must determine the following matters:

   (i)all matters referred for hearing and determination by the Court under paragraph (b); and

   (ii)all other matters that are, under some other provision of this Act, to be determined by the Court.

7. Proceedings before the Licensing Court and the Licensing Commissioner are to be conducted without undue formality and neither are bound by the rules of evidence, but are to inform themselves on any matter as they see fit.[3]  The term “licensing authority” is defined to mean either the Licensing Court or the  Licensing Commissioner.[4]

   [3]    s 18, s  23.

   [4] s 4.

8. A party to proceedings before the Licensing Commissioner may apply for a review of the Licensing Commissioner’s decision.[5]  The review is in the nature of a rehearing.[6]

   [5]    s 22(1).

   [6] s 22(4).

9. Section 21 provides for appeals against any order or decision of the Licensing Court.  It states:

   (1)     A party to proceedings before the Court may, with the permission of the Supreme Court, appeal against any order or decision of the Court.

   (2)     However, no appeal lies against—

   (a)an order or decision of the Court made on a review of a decision of the Commissioner under this or some other Act; or

   (b)an order or decision of the Court excluded from appeal under a provision of this or some other Act.

10. In the present case, the first plaintiff (K-Generation) applied pursuant to s 51 of the Licensing Act for an entertainment venue licence as defined in s 35 of the Act. The application was heard and determined by the Licensing Commissioner. When the application was refused, the plaintiffs applied to the Licensing Court for a review of the Licensing Commissioner’s decision. A judge of the District Court, who had authority to exercise the jurisdiction of the Licensing Court conferred upon him by proclamation, affirmed the decision of the Licensing Commissioner.

11. Section 56(1) of the Licensing Act provides that:

    (1)     An applicant for a licence must satisfy the licensing authority –

    (a)that the applicant is a fit and proper person to hold the licence; and

    (b)if the applicant is a trust or corporate entity – that each person who occupies a position of authority in the entity is a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application.

12. A copy of an application for a licence must be given to the Commissioner of Police[7] who has a right to intervene in the proceedings.[8]

    [7]    s 51A.

    [8] s 75A.

13. Section 55 states:

    (1)In deciding whether a person is a fit and proper person for a particular purpose under this Act, a licensing authority must take into consideration—

    (a)     the reputation, honesty and integrity (including the creditworthiness) of the person; and

    (b)     the reputation, honesty and integrity of people with whom the person associates.

    (2)If a licensing authority is to decide whether a person is a fit and proper person to supervise or manage, or to be involved in the supervision or management of, the business conducted or to be conducted under a licence, the licensing authority must also give consideration to—

    (a)     whether the person has the appropriate knowledge, experience and skills for the purpose; and

    (b)     in particular—whether the person has knowledge, experience and skills in encouraging the responsible supply and consumption of liquor.

    (3)For the purposes of determining whether a person is a fit and proper person for a particular purpose under this Act, the Commissioner may cause the person's photograph and fingerprints to be taken.

    Section 28A

14. Section 28A was enacted on 8 December 2005. The section introduced a procedure for dealing with material classified by the Commissioner of Police as “criminal intelligence”. “Criminal intelligence” is defined in s 4 of the Licensing Act as meaning:

    Information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement.

15. The information thus classified cannot be disclosed to any person except the Minister, a court, or a person to whom the Commissioner of Police authorises its disclosure.[9]

    [9]    s 28A(1).

16. If a licensing authority refuses an application for a licence, the transfer of a licence or an approval, or takes disciplinary action against a person, or revokes or proposes to revoke an approval under Part 4 Division 10A and the decision to do so is made because of information that is classified, the licensing authority is not required to provide any grounds or reasons for the decision other than to observe that to do otherwise would be contrary to the public interest.[10]  In any proceedings under the Act the licensing authority or the Supreme Court must, on the application of the Commissioner of Police, take steps to maintain the confidentiality of the information including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives.

    [10]   s 28A(5).

17. The circumstances of the application to the licensing authority in the present case are set out in the judgment of Gray J.  The Commissioner of Police intervened and information classified as criminal intelligence was tendered and admitted at the hearing of the application by the Licensing Commissioner.

    The Kable Principle

18. The plaintiffs argued before this court that the application of the principle discussed by the High Court in Kable v DPP for New South Wales[11] must lead to the conclusion that s 28A is an invalid exercise of the legislative power of the State parliament.

    [11] (1996) 189 CLR 51.

19. In Kable the court was required to rule on the validity of the Community Protection Act 1994 (NSW) which was enacted prior to the release of the appellant from prison where he was serving a sentence of imprisonment for the manslaughter of his wife.  The legislation applied only to the appellant and authorised the Supreme Court to order his further detention if the court was satisfied on reasonable grounds that the appellant was more likely than not to commit a serious act of violence and that it was appropriate for the protection of a particular person or the community generally that he be held in custody.  The court was empowered to extend the appellant’s detention by a maximum period of six months, but applications could be made for further extensions.

20. The legislation was declared invalid by a majority of the court.  The principal argument advanced by the appellant and accepted by the majority was summarised by Gaudron J as follows: [12]

    … Ch III of the Constitution impliedly prevents the Parliament of a State from conferring powers on the Supreme Court of a State which are repugnant to or inconsistent with the exercise by it of the judicial power of the Commonwealth.

    [12] Ibid at 100.

21. The essence of the decision in Kable was summarised by Gleeson CJ in Fardon v Attorney-General for the State of Queensland[13]:

    The decision in Kable established the principle that, since the Constitution established an integrated Australian court system, and contemplates the exercise of federal jurisdiction by state Supreme Courts, state legislation which purports to confer upon such a court a function which substantially impairs its institutional integrity, and which is therefore incompatible with its role as a repository of federal jurisdiction, is invalid.

    [13] (2004) 223 CLR 575 at [15].

22. His Honour continued[14]:

    The New South Wales legislation in question in that case provided for the preventive detention of only one person, Mr Kable. As was pointed out by Dawson J, the final form of the legislation had a number of curious features, because of its parliamentary history[15]. It was originally framed as a law of general application, but an amendment confined its application to the appellant. The object of the statute in its final form was said to be to protect the community by providing for the preventive detention of Gregory Wayne Kable. Toohey J said that the extraordinary character of the legislation and of the functions it required the Supreme Court to perform was highlighted by the operation of the statute upon one named person only[16]. In that respect, he said, the statute was virtually unique. Senior counsel for the appellant in the case argued that the legislation was not a carefully calculated legislative response to a general social problem; it was legislation ad hominem[17]. That argument was accepted. The members of the court in the majority considered that the appearance of institutional impartiality of the Supreme Court was seriously damaged by a statute which drew it into what was, in substance, a political exercise[18].

    [14] Ibid at [16].

    [15] (1996) 189 CLR 51 at 68-9; 138 ALR 577 at 584-5.

    [16] (1996) 189 CLR 51 at 98; 138 ALR 577 at 607-8.

    [17] (1996) 189 CLR 51 at 62; 138 ALR 577 at 579-80.

    [18] See, eg, (1996) 189 CLR 51 at 133-4; 138 ALR 577 at 636-7 per Gummow J.

23. In her judgment in Kable Gaudron J noted that the proceedings contemplated by the legislation were not proceedings otherwise known to the law.[19]  The appellant was not charged with a further criminal offence, nor did the proceedings involve the resolution of a dispute between contesting parties as to their rights and obligations.  The proceedings involved the making of a guess about future conduct and, in some circumstances, the decision could be based on material which would not be admissible as evidence in regular proceedings.  Her Honour described the procedure authorised by the legislation as “the antithesis of the judicial process”.

    [19] 189 CLR at 106.

1. In the view of McHugh J the legislation invested the Supreme Court with a jurisdiction which was “purely executive in nature”.[20]  Gummow J observed that the most striking feature of the legislation was that it permitted imprisonment in circumstances which did not involve any adjudgment by the court of guilt of any offence[21], describing such a process as “non-judicial in nature” and “repugnant to the judicial process in a fundamental degree”.

   [20] 189 CLR at 122.

   [21] 189 CLR at 132.

2. In the light of this reasoning the decision in Kable is, as its subsequent history has demonstrated, of very limited application.[22]

   [22]   Fardon v Attorney-General (QLD) (2004) 210 ALR 50 per McHugh J at [43]; Kirby J at [144]. Forge v Australian Securities and Investments Commission (2006) 229 ALR 223 at [203].

3. In Kable the State legislature purported to confer the impugned function on the Supreme Court, a court which exercises federal jurisdiction. As has been noted, the Licensing Court does not exercise federal jurisdiction in any respect. Pursuant to s 77(iii) of the Constitution, the Commonwealth Parliament may make laws “investing any court of a State with federal jurisdiction”. It was conceded by the Solicitor-General that the Licensing Court is a “court” for the purposes of s 77(iii) and that, as it was possible for it to be invested with federal jurisdiction, the Kable principle applied.  If this is so, it is necessary to consider whether s 28A should be declared invalid because it confers upon the Licensing Court a function which is incompatible with that court’s role as a potential repository of federal jurisdiction.

   Appointments persona designata

4. In any event, whether or not the Licensing Court is a “court” for the purposes of Ch III, it is also relevant to consider whether s 28A is invalid as a result of the application of a principle which is closely related to that discussed in Kable.

5. It is well recognised that a judge may have a non-judicial function conferred upon him or her persona designata.[23]  However, it has been held that, at least in the case of Federal judges, legislation which authorises the conferral of a non-judicial function which is incompatible with the judge’s role as a Federal Court judge, will be held invalid.

   [23]   Hilton v Wells&Ors (1985) 157 CLR 57.

6. As has been pointed out, a District Court judge may be designated as the Licensing Court judge and other District Court judges may have conferred upon them authority to exercise the jurisdiction of the Licensing Court.  This is accomplished by proclamation made by the Governor and so results in the  conferring of jurisdiction on the judges in their individual capacities.

7. The question arises, therefore, whether a District Court judge designated as the Licensing Court judge and other District Court judges who have the jurisdiction of the Licensing Court conferred upon them, are required to perform a function which is incompatible with the exercise of their judicial power as judges of the District Court, a court which exercises federal jurisdiction.  If so, the further question which presents itself is whether s 28A, which is said to give rise to this incompatibility, is thereby rendered invalid.

8. The judges who formed the majority in Kable said little about the role of State judges performing non-judicial functions as persona designata.  When considering such appointments Gaudron J appeared to confine her consideration to judges of Federal Courts.  She said[24]:

   The prohibition on State legislative power which derives from Ch III is not at all comparable with the limitation on the legislative power of the Commonwealth enunciated in R v Kirby; Ex parte Boilermakers’ Society of Australia[25].  The Boilermakers’ doctrine, as it is sometimes called, prevents the Parliament of the Commonwealth from conferring judicial power on bodies other than courts and prevents it from conferring any power that is not judicial power or a power incidental thereto on the courts specified in s 71 of the Constitution. It also prevents the Parliament from conferring functions on judges in their individual capacity if the functions are inconsistent with the exercise of judicial power in the sense explained in Grollo v Palmer[26].  The limitation on State legislative power is more closely confined and relates to powers or functions imposed on a State court, rather than its judges in their capacity as individuals, and is concerned with powers or functions that are repugnant to or incompatible with the exercise of the judicial power of the Commonwealth.

   Although the limitation is one relating to the conferral of powers on courts, rather than on judges in their capacity as individuals, it is, nevertheless, one that is closely related to the limitation on Commonwealth power to confer functions on judges of this and other federal courts in their capacity as individuals. In both cases the limitation derives from the necessity to ensure the integrity of the judicial process and the integrity of the courts specified in s 71 of the Constitution. (emphasis added)

   [24] 189 CLR at 103.

   [25] (1956) 94 CLR 254.

   [26] (1995) 184 CLR 348.

9. McHugh J allowed some operation of the principle to persona designata appointments of State judges, but restricted it to rare circumstances.  He said[27]:

   Furthermore, although nothing in Ch III prevents a State from conferring executive government functions on a State court judge as persona designata, if the appointment of a judge as persona designata gave the appearance that the court as an institution was not independent of the executive government of the State, it would be invalid.  No doubt there are few appointments of a judge as persona designata in the State sphere that could give rise to the conclusion that the court of which the judge was a member was not independent of the executive government.  Many Chief Justices, for example, act as Lieutenant-Governors and Acting Governors.  But, given the long history of such appointments, it is impossible to conclude that such appointments compromise the independence of the Supreme Courts or suggest that they are not impartial.  Similarly, a law that provided for a judge of a State court to be appointed as a member of an Electoral Commission fixing the electoral boundaries of the State would not appear to suggest that the court was not impartial. However, a State law which purported to appoint the Chief Justice of the Supreme Court to be a member of the Cabinet might well be invalid because the appointment would undermine confidence in the impartiality of the Supreme Court as an institution independent of the executive government of the State. (footnote omitted)

   [27] 189 CLR at 117.

10. In Grollo v Palmer[28] and Wilson v Minister for Aboriginal & Torres Strait Islander Affairs[29] the relevant principles were discussed in the context of non-judicial functions conferred on Federal Court judges.

    [28] (1995) 184 CLR 348.

    [29] (1996) 189 CLR 1.

11. In Grollo the court considered the validity of the issuing of telephone interception warrants by a Federal Court judge.  It was held that this power was non-judicial, but that it was nevertheless validly conferred.  The validity of the conferral of power in such circumstances was held to be dependent upon the fulfilment of the two conditions expressed in the following passage in the judgment of Brennan CJ, Deane, Dawson and Toohey JJ[30]:

    The conditions thus expressed on the power to confer non-judicial functions on judges as designated persons are twofold: first, no non-judicial function that is not incidental to a judicial function can be conferred without the judge’s consent; and, second, no function can be conferred that is incompatible either with the judge’s performance of his or her judicial functions or with the proper discharge by the judiciary of its responsibilities as an institution exercising judicial power (“the incompatibility condition”).

    [30] 184 CLR at 364.

12. In Wilson a Federal Court judge was nominated by the Minister for Aboriginal and Torres Strait Islander Affairs to report on issues relating to the Hindmarsh Island bridge dispute. It was held that the function of reporting to the Minister was not constitutionally compatible with the holding of the office of a judge appointed pursuant to Ch III of the Constitution. Brennan CJ, Dawson, Toohey, McHugh and Gummow JJ set out the relevant principles in their joint judgment[31]:

    Where a non-judicial power is purportedly conferred, constitutional incompatibility is ascertained by reference to the function that has to be performed to exercise the power.  The statute or the measures taken pursuant to the statute must be examined in order to determine, first, whether the function is an integral part of, or is closely connected with, the functions of the Legislature or the Executive Government.  If the function is not closely connected with the Legislature or the Executive Government, no constitutional incompatibility appears.  Next, an answer must be given to the question whether the function is required to be performed independently of any instruction, advice or wish of the Legislature or the Executive Government, other than a law or an instrument made under a law (hereafter “any non-judicial instruction, advice or wish”).  If an affirmative answer does not appear, it is clear that the separation has been breached[32].  The breach is not capable of repair by the Ch III judge on whom the function is purportedly conferred, for the breach invalidates the conferral of the function.  If the function is one which must be performed independently of any non-judicial instruction, advice or wish, a further question arises:  Is any discretion purportedly possessed by the Ch III judge to be exercised on political grounds - that is, on grounds that are not confined by factors expressly or impliedly prescribed by law?  In considering these questions, it will often be relevant to note whether the function to be performed must be performed judicially, that is, without bias and by a procedure that gives each interested person an opportunity to be heard and to deal with any case presented by those with opposing interests.  An obligation to observe the requirements of procedural fairness is not necessarily indicative of compatibility with the holding of judicial office under Ch III, for many persons at various levels in the executive branch of government are obliged to observe those requirements.  But, conversely, if a judicial manner of performance is not required, it is unlikely that the performance of the function will be performed free of political influence or without the prospect of exercising a political discretion.

    [31] 189 CLR at 16.

    [32]   See R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177; Ansett Transport Industries (Operations) Pty Ltd v The Commonwealth (1977) 139 CLR 54.

13. Although the principles discussed in Kable on the one hand and Grollo and Wilson on the other have much in common, it is important to note that the Kable principle focuses on the effect which the impugned legislation has on the court as an institution.

14. In Fardon v Attorney-General for the State of Queensland McHugh J emphasised the exceptional result which the State legislation must produce before the Kable principle will require its invalidation.  He said:[33]

    The bare fact that particular State legislation invests a State court with powers that are or jurisdiction that is repugnant to the traditional judicial process will seldom, if ever, compromise the institutional integrity of that court to the extent that it affects that court's capacity to exercise federal jurisdiction impartially and according to federal law. State legislation may alter the burden of proof and the rules of evidence and procedure in civil and criminal courts in ways that are repugnant to the traditional judicial process without compromising the institutional integrity of the courts that must administer that legislation. State legislation may require State courts to exercise powers and take away substantive rights on grounds that judges think are foolish, unwise or even patently unjust. Nevertheless, it does not follow that, because State legislation requires State courts to make orders that could not be countenanced in a society with a Bill of Rights, the institutional integrity of those courts is compromised.

    The pejorative phrase - "repugnant to the judicial process" - is not the constitutional criterion. In this area of constitutional discourse, it is best avoided, for it invites error. That which judges regard as repugnant to the judicial process may be no more than a reflection of their personal dislike of legislation that they think unjustifiably affects long recognised rights, freedoms and judicial procedures. State legislation that requires State courts to act in ways inconsistent with the traditional judicial process will be invalid only when it leads to the conclusion that reasonable persons might think that the legislation compromises the capacity of State courts to administer invested federal jurisdiction impartially according to federal law. That conclusion is likely to be reached only when other provisions of the legislation or the surrounding circumstances as well as the departure from the traditional judicial process indicate that the State court might not be an impartial tribunal that is independent of the legislative and the executive arms of government.

    [33] (2004) 223 CLR 575 at [41] and [42].

15. In the case of a judge appointed persona designata, the enquiry focuses on the role assigned to the judge and whether there exists an incompatibility between that role and the role of the assignee as a judge of a court exercising federal jurisdiction.

    The case for the plaintiffs

16. According to the case for the plaintiffs, the procedure introduced by s 28A impairs the institutional integrity of the Licensing Court to an unacceptable degree.  It was also argued that the section requires a judge exercising jurisdiction as a licensing authority to act in a way which is incompatible with the role of a judge of the District Court.  The features of the section upon which reliance is placed are the potential use of information by the court which is not available to a person in the position of the plaintiffs and the fact that the court is restricted from giving reasons for its decision to the extent to which the decision rests on the classified material.

17. The full implications of Kable, Grollo and Wilson are yet to be determined.  In particular, the extent to which these principles apply to courts such as the Licensing Court which is invested with a specialist jurisdiction and to judges of State courts exercising non-judicial functions remains to be seen.  However, in view of my eventual conclusion in this matter it is sufficient for present purposes to deal with the arguments on the assumption that the Kable principle applies in the case of the Licensing Court and that the principles discussed in Grollo and Wilson apply to a judge of the District Court who is delegated to exercise the jurisdiction of the Licensing Court.

    Procedural fairness

18. It is clear that, but for s 28A, procedural fairness would require that an applicant for a licence in the circumstances of the present case be entitled to disclosure of information provided to the licensing authority by the Commissioner of Police and, further, would be entitled to the opportunity to test it and comment upon it.[34]

    [34]   Kioa v West (1985) 159 CLR 550 at 582.

19. However, such rights can be removed by unequivocal legislation.  This is apparent from the following statement in the judgment of Mason CJ, Deane and McHugh JJ in Annetts v McCann[35]:

    It can now be taken as settled that, when a statute confers power upon a public official to destroy, defeat or prejudice a person’s rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words of necessary intendment: Commissioner of Police v Tanos[36]; Twist v Randwick Municipal Council[37]; Heatley v Tasmanian Racing and Gaming Commission[38]; J. v Lieschke[39]; Haoucher v Minister for Immigration and Ethnic Affairs[40].  In Tanos[41], Dixon CJ and Webb J said that an intention on the part of the legislature to exclude the rules of natural justice was not to be assumed nor spelled out from “indirect references, uncertain inferences or equivocal considerations”.

    [35] (1990) 170 CLR 596 at 598.

    [36] (1958) 98 CLR 383 at pp 395-396.

    [37] (1976) 136 CLR 106 at pp 109-110.

    [38] (1977) 137 CLR 487 at pp 496, 500.

    [39] (1987) 162 CLR 447 at p 456.

    [40] (1990) 169 CLR 648 at p 680.

    [41]   (1958) 98 CLR at p 396.

20. In Tanos which is cited in the above passage, a judge of the Supreme Court was given power under the Disorderly Houses Act 1943 (NSW) to declare premises to be a disorderly house upon the affidavit of a Superintendent or Inspector of Police which disclosed reasonable grounds for suspecting that liquor or a drug was unlawfully sold on the premises and was likely to be sold again.  The order could be made ex parte in chambers.  The judge was given the power, if he or she thought fit, to provide the owner of the premises with an opportunity to be heard, but this was not mandatory.

21. The High Court held that proceedings which did not give the owner or occupier of the premises an opportunity to be heard should take place only in exceptional circumstances and that no such exigency existed in the circumstances of the case.

22. However, the court recognised that the common law right to be heard in such a matter could be overridden by the legislature.  In their joint judgment Dixon CJ and Webb J said:[42]

    But the rule [the right to be heard] is subject to a sufficient indication of an intention of the legislature to the contrary.  Such an intention is not to be assumed nor is it to be spelled out from indirect references, uncertain inferences or equivocal considerations.  The intention must satisfactorily appear from express words of plain intendment.  In the present statute no such evidence of a contrary intention is discoverable.  But it is in a broad sense a procedural matter and while the general principle must prevail it is apparent that exceptional cases may be imagined in which because of some special hazard or cause of urgency an immediate declaration is demanded.[43]

    [42] (1958) 98 CLR at 396.

    [43]   See also Re Minister for Immigration and Multicultural Affairs and Anor Ex ParteMiah (2001) 206 CLR 57.

23. In his judgment in Gypsy Jokers Motorcycle Club Inc v Commissioner of Police[44] (“Gypsy Jokers”) Martin CJ referred to a number of situations in various countries and jurisdictions where the rules of procedural fairness had been modified by restricting access to information placed before the court or tribunal.  In his summary of this survey the Chief Justice said:

    No Australian authority has been cited in support of the proposition that unrestricted access by a party to all the information upon which a court relies for its adjudication of the case before it, is an essential or indispensable aspect of a fair trial.  My review of the decisions of the European Court of Human Rights, and the courts of the United Kingdom, New Zealand, Canada and the United States leads me to conclude that the courts in those jurisdictions have not concluded that the right of a party to have unrestricted access to all the information, upon which a court relies, is an essential or indisputable component of a fair trial.

    Rather, my review of those jurisdictions leads me to conclude that in each of the jurisdictions, it has been acknowledged that the content of the requirements of procedural fairness or fundamental justice will depend upon the particular circumstances of the case and cannot be prescribed in the abstract.  Further, in each jurisdiction, it has been expressly recognised that the ordinary requirements of procedural fairness, including the ability of a party to know the case that he or she has to meet, must sometimes yield to a countervailing public interest in the protection of the confidentiality of evidentiary material, even as against a party to the proceedings.  In some jurisdictions with particular statutory charters of human rights, that conclusion has depended upon the provision of legislative safeguards against the abuse of such powers.  However, even in those jurisdictions, the courts have generally, but not invariably, shown an inclination to leave the striking of the appropriate balance to the legislature rather than usurp that function themselves.

    This review therefore supports the conclusion that in Australia, a legislative provision, apparently enacted in the protection of a legitimate public interest in maintaining the confidentiality of investigative information empowering a court to act upon that information, even though it not be disclosed to a party to the proceedings cannot, for that reason only necessarily be said to be unfair, and therefore cannot, for that reason only, be said to compromise the institutional integrity of the court concerned.  This is not, of course, to say that all provisions which have the effect that a court must act upon information which one party to the proceedings will not have disclosed to the other, will necessarily fall within the legislative power of a state.  Rather, the question of validity may turn upon the particular circumstances and context of the legislative provision, including the public interest in the maintenance of confidentiality, the subject matter of the curial proceedings, the procedures to be adopted and so on.

    [44] [2007] WASCA 49 at [56], [57] and [58].

1. Counsel for the plaintiffs relied on the dissenting judgment of Wheeler JA in Gypsy Jokers. In that case, the court was required to determine whether s 76 of the Corruption and Crime Commission Act 2003, (WA) was invalid.  The section is part of a legislative scheme empowering the police to remove or modify “fortifications” which are defined in the legislation as “any structure or device that, whether alone or as part of a system, is designed to prevent or impede, or to provide any other form of countermeasure against, uninvited entry to premises”[45].

   [45]   Corruption and Crime Commission Act 2003 (WA) s 67(1).

2. If certain preconditions have been satisfied, the Commissioner of Police may issue a fortification removal notice relating to the premises concerned (s 72).  The fortification removal notice consists of a direction that the fortification be removed or modified within a fixed period of time.  Section 75 provides that if the fortifications are not removed or modified within the period notified, the Commissioner of Police may cause the removal or modification required by the fortification removal notice.

3. In so far as it is relevant s 76 provides:

   (1)If a fortification removal notice relating to premises has been issued, the owner or an interested person may, within 7 days after the day on which the notice is given to the owner of the premises, apply to the Supreme Court for a review of whether, having regard to the submissions, if any, made before the submission period elapsed and any other information that the Commissioner of Police took into consideration, the Commissioner of Police could have reasonably had the belief required by section 72(2) when issuing the notice.

   (2)The Commissioner of Police may identify any information provided to the court for the purposes of the review as confidential if its disclosure might prejudice the operations of the Commissioner of Police, and information so identified is for the court’s use only and is not to be disclosed to any other person, whether or not a party to the proceedings, or publicly disclosed in any way.

4. . . . . . .

   (5)The court may decide whether or not the Commissioner of Police could have reasonably had the belief required by section 72(2) when issuing the notice.

   (6)If the court decides that the Commissioner of Police could not have reasonably had the belief required by section 72(2) when issuing the notice, the notice ceases to have effect.

5. The validity of the legislation was upheld by the majority (Martin CJ and Steytler P). Wheeler JA dissented and held that s 76(2) was invalid by reason of the Kable principle.  Her Honour was of the view that the cases of Grollo and Wilson were particularly relevant to the issue before the court and she noted that in Kable the decision of Grollo was seen as being of considerable significance to the resolution of that case.

6. After discussing the principles expounded in these cases her Honour said[46]:

   So far as the review function pursuant to s 76 is concerned, it appears to me that it may be described as closely connected with the exercise of executive power; or, at the least, I am not able to say that it is “not closely connected”. It is a step in a process, initial and final stages of which involve the exercise of purely executive power. The Commissioner of Police applies for the fortification warning notice and the Corruption and Crime Commission issues that notice. The Commissioner of Police then, having considered any relevant submissions, either does or does not form the belief referred to in s 72(2). Those three steps are executive ones. The function of the court is one which may be performed either by the Executive or by a court. It is similar to the function of an administrative tribunal (eg, that of the AAT under the Freedom of Information Act1982 (Cth) s 58(5)). It is similar to, but more limited than, many internal review functions exercised by officers of government departments (eg, Freedom of Information Act s 54(2); Social Security (Administration) Act 1999 (Cth)s 126(1)). It is also, however, similar to the function performed on other occasions by courts (see the discussion in McKinnon v Secretary, Department of Treasury [2006] HCA 45; (2006) 80 ALJR 1549 at [9], per Gleeson CJ and Kirby J). The court's function is confined to the consideration of one very narrowly framed question. Unless the court determines that the Commissioner could not have reasonably had the belief required, the next step is that the court's function is ended and the notice simply has effect according to its terms. The Commissioner of Police then may or may not exercise the further powers available to him pursuant to Div 6 of Pt 4.

   If, as I think is the case, the court's function in “reviewing” the decision of the Commissioner of Police cannot be described as not closely connected with the functions of the Executive Government, the question which then arises is whether the court's function is required to be performed independently of any “instruction, advice or wish of the legislature or the Executive Government, other than a law or an instrument made under a law”. In my view, the function conferred by s 76 is not required to be performed independently of any such instruction. On the contrary, the Commissioner of Police, an officer appointed by and answerable to the Executive (Police Act 1892 (WA) s 5) may identify information which he or she may require the court not to disclose to the applicant for review. That is, the legislation confers upon the Executive power to determine, in each individual case, how much of the information presented to the court the court may disclose to the opposing party.

   Further, the direction which the Commissioner may effectively give to the court will often be critical to the court's ability fully and fairly to perform its function. Because the only question for the court is whether the Commissioner of Police could have reasonably had the belief required by s 72(2), the only material which will usually be relevant to such an issue will be the information which the Commissioner had before him, apart from the submissions of the applicant for review. There may be some room in the process for the applicant for review to provide additional information, on the basis that, even if it was not information which the Commissioner formally “took into consideration” (s 76(1)), it formed part of the background known to the Commissioner and which should have informed the decision; (for example, perhaps, the demonstrated previous unreliability of an informant). Generally, however, the applicant for review may not even be aware of the desirability of raising an issue of this kind, if information which could have alerted the applicant to a question of this kind is described as confidential under s 76(2).

   [46] [2007] WASCA 49 at [147], [148] & [149].

7. Her Honour then identified features of the procedure which she said should lead to the invalidation of s 76(2)[47]:

   The features which in combination have that effect are these.  The Commissioner of Police, who is an officer of the Executive Government, decides conclusively what information the court may publish or disclose, both to a party to litigation and (in any reasons which may be published) to the public at large.  That Executive decision, once made, has the potential significantly to disadvantage the individual litigant opposed to the Executive.  The respondent to an application in the Supreme Court (the Commissioner of Police) is empowered conclusively to determine whether and to what extent information which that party makes available to the court can be disclosed to the opposing party.  The court is required to make a determination affecting the property rights of a party in circumstances in which that party may have had no opportunity whatever to consider (even in a summarised or truncated way) the material put against it.  Finally, the court's ability to provide intelligible reasons for its decision, or otherwise to perform its functions in that public way which is generally the hallmark of justice is impaired or destroyed, because of the court's inability to disclose material which may be critical to its determination.  It may be that no one of these factors individually would be sufficient.  However, it seems to me that collectively they represent such a departure from the requirement of independence of the Executive and such a departure from that impartiality which is the hallmark of the judicial process, as to render the legislation invalid.

   [47] Ibid at [159].

8. The removal of the opportunity to comment on material put before the court and the limitation of the court’s ability to provide reasons for its decision were important factors influencing her Honour’s conclusion.  However, the fact that the court was placed in the position of reviewing the reasonableness of the belief of the decision maker, an officer of the Executive Government who could prevent the disclosure to the affected party of information upon which the decision was made, appears to have been an essential step in her Honour’s reasons for deciding that the court’s role was not independent of the Executive.  In my view, this threat to independence does not exist in the present case.

9. In his judgment, Steytler P observed that counsel for the applicant relied upon the following propositions:

   (1)The legislation empowers the Commissioner of Police as one of the parties to the review application to impose his own decision on the Supreme Court by controlling the information to be provided to the applicant for review.

   (2)There was a denial of natural justice by limiting the information made available to the applicant for review.

   (3)The court might be prevented from giving adequate and comprehensible reasons for its decision.

   (4)There was no appeal from the court’s decision.

10. Steytler P acknowledged that there were aspects of the legislation which were antithetical to the judicial process. He referred to the matters set out in (2) and (3) above. However he said that these matters did not “compromise the institutional integrity of the court to such an extent that it is no longer a court of the kind contemplated by Ch III of the Commonwealth Constitution”[48].  His Honour pointed out that the function given to the court under the legislation was very limited and he continued[49]:

    It is implicit within s 76 that the Commissioner is required to place before the court all of the information that he took into consideration. Consequently, the court is still able to exercise some form of genuine evaluative or adjudicative review (as to which see Fardon[50]), initiated by the owner of the premises or by an interested person, even if it is one that is likely to be hampered by the inability of an applicant, to whom no, or limited, disclosure is made, to make any useful submissions, for example with respect to other matters that must also have been known by the Commissioner at the time at which he formed the required belief. It consequently seems to me that, accepting that aspects of the review process are antithetical to the ordinary judicial process, these are not such as to render the Supreme Court, as an institution, generally unfit to be a receptacle for the exercise of the judicial power of the Commonwealth, given the restricted nature of the right of review conferred by s 76 and the limited application of that section.

    [48] [2007] WASCA 49 at [107].

    [49] Ibid at [110].

    [50]   At 656 [219] per Callinan and Heydon JJ.

11. Steytler P concluded that the legislation did not impact on the court’s institutional independence.

12. It is appropriate to comment on some other authorities referred to by the plaintiffs.

13. The Kable principle was applied in Re Criminal Proceeds Confiscation Act 2002[51]. The Queensland Court of Appeal accepted a submission that s 30 of the Criminal Proceeds Confiscation Act was so inconsistent with the essential character of the exercise of judicial power that, given the reasoning in Kable, it was invalid.

    [51] [2004] 1 Qd R 40.

14. The Act provided a procedure for the confiscation of unlawfully acquired property. Section 30 enabled a restraining order to be made so as to prevent any person from dealing with the subject property. Further conditions could be imposed, including conditions which authorised the disposal of the property.

15. Section 30 provided that the Supreme Court must hear an application for a restraining order in the absence of the person whose property was the subject to the application and without that person having been informed of the application.

16. In concluding that s 30 was invalid, Williams JA (White and Wilson JJ concurring) said[52]:

    As already noted the initial order made on an application brought pursuant to s 28 affects significant property rights in that the property owner is prevented from dealing in any way with the property, and must subsequently discharge the onus of proving that the property the subject of the order was not illegally acquired property if it is to be released from the order.  Further, and not without significance for present purposes, the Supreme Court in making the initial order must also be satisfied that the “public interest” is not such as to require the court to refuse to make the order.  How could a judge possibly be so satisfied in the exercise of judicial power when the only entity entitled to place material before the court on which a judgment on that issue could be formed was the State?  Similarly, how could a judge possibly determine whether or not it was appropriate to require the State to give an undertaking as to damages and costs when the only entity entitled to place material before the court was the State?  Asking a judge to make a decision on such issues in those circumstances makes a mockery of the exercise of the judicial power in question.  The statutory provision removes the essential protection of the citizen inherent in the judicial process.  Effectively the provision directs the court to hear the matter in a manner which ensures the outcome will be adverse to the citizen and deprives the court of the capacity to act impartially.

    [52] [2004] 1 Qd R at [57].

17. It is apparent from these remarks that the impugned legislation left almost no room for the application to be determined in the course of an appropriate exercise of judicial power.  In my view there has been no such interference with the judicial function in the present case.

18. The plaintiffs also relied on the decision of the Supreme Court of Canada in Charkaoui v Minister of Citizenship and Immigration[53].  In that case the court was required to rule on the constitutional validity of provisions in the Immigration and Refugee Protection Act 2001 which permitted detention without trial.  The legislation enabled information to be put before the decision-maker and a judge on review which was not made available to the detainees.

    [53]   [2007] SCC 9.

19. The court held that these provisions suffered from defects which were inconsistent with s 7 of the Canadian Charter of Human Rights.  Section 7 provides that a person cannot be deprived of liberty except in accordance with the principles of fundamental justice.

20. The court stressed the importance of procedural fairness in a case in which the liberty of the subject is at risk.  However, the fact that the case was decided on a specific provision of the Canadian Charter renders it of little value on the issue before this court.

21. Reliance was also placed on VEAL v Minister for Immigration and Multicultural and Indigenous Affairs & Anor[54] in support of a submission that the licensing authority should have disclosed the substance of the allegations in the present case to the plaintiffs.

    [54] [2005] HCA 72.

22. In VEAL the High Court held that, in the circumstances of the case, procedural fairness did not require disclosure to the appellant of a letter by an informer sent to the Department of Immigration and Multicultural and Indigenous Affairs and passed on to the Refugee Review Tribunal, but that there was a requirement to inform the appellant of the substance of the allegations.  The submission that this approach should have been adopted in the present case ignores the unambiguous stipulation in s 28A that the classified information is not to be disclosed.

    The present case

23. It is clear from the wording of s 28A that the legislature intended to make inroads into the requirements of procedural fairness to the extent indicated in the section.  The legislation unequivocally authorises the licensing authority to have regard to information which is not available to an applicant.  The requirement of the decision maker to provide reasons has also been modified in the manner previously described.

24. The broad function of a judge exercising jurisdiction in the Licensing Court to review a decision of the Licensing Commissioner or to decide an initial application for a licence, can be described as judicial in nature and, of itself, it is not constitutionally incompatible in the sense discussed in the authorities.  And, if it is the case that the legislature can remove or modify aspects of procedural fairness such as the right of access to all the material relied upon by the court and, in addition, can prevent the court from giving all the reasons for its decision, then these matters of themselves do not necessarily impose a role on the courts which is constitutionally incompatible in the sense under discussion.[55]  That is not to say that, taken with other matters, such inroads into procedural fairness are irrelevant to the consideration of constitutional incompatibility.  It is necessary to have regard to all aspects of the procedure under consideration in applying the relevant principles.

    [55]   Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2007] WASCA 49 at [56], [57], [154].

25. The licensing authority must decide whether to grant or revoke a licence or deal with the other applications referred to in s 28A.  In doing so, it is required to consider all material placed before it.  In the event that the Commissioner of Police provides classified material, the court or Licensing Commissioner must assess all the information before it and is not bound to act on any “criminal intelligence” supplied to it.

26. Despite the fact that classified information cannot be tested or addressed by the other party, it is within the power of the licensing authority to determine its weight and, in appropriate cases, have regard to the fact that it may be unreliable suspicion or hearsay.  It would also be entitled to have regard to the fact that the material has not been tested in any way.  In these respects the authority acts in an independent manner.  There is nothing in the procedure which leads to the creation of a close connection between the licensing authority and the executive.  Nor is any inroad made into the independence of the licensing authority when determining the merits of an application resulting from “any instruction, advice or wish of the Legislature or Executive Government”.[56]

    [56] 189 CLR at 17.

27. I am also of the view that s 28A does not introduce a procedure of a political nature which is calculated to influence the discretion of the licensing authority.  The applications to which s 28A applies are assessed in a judicial manner.  There is no room for political bias to affect the court’s decision.  By limiting access to information, the section places an applicant at a disadvantage.  The licensing authority may be prevented from giving full reasons for its decision.  These departures from established rules of fairness are of concern.  However, as I have pointed out, it remains the duty of the licensing authority to assess the matter objectively and subject the classified material to scrutiny as part of the process.

28. In summary, therefore, I am of the view that the enactment does not impose on the Licensing Court a procedure which is constitutionally incompatible with its status as a court which is a potential repository of Federal jurisdiction.  Furthermore, the legislation does not require a District Court judge to perform a non-judicial function.  Even if the function could be described as non-judicial, it is not of such a nature as to be constitutionally incompatible with the role of a District Court judge.

1. The same reasoning applies to the situation where the Supreme Court is required to consider an appeal from a decision of a Licensing Court judge.  I respectfully disagree with the view that the Supreme Court is placed in the position of upholding a breach of the rules of natural justice by the Licensing Court.  As has been pointed out, Parliament may remove the requirement for a court to apply the rules of procedural fairness.  In abiding by that law the court does not breach the common law rules.

2. I would refuse to make the declarations sought by the plaintiffs and dismiss the application for judicial review.

   GRAY J.

   Introduction

3. At issue on this application for judicial review is the proper construction of section 28A of the Liquor Licensing Act 1997 (SA). Broadly, section 28A enacts that “criminal intelligence” is not to be disclosed to any person other than the Liquor and Gambling Commissioner (the Liquor Commissioner), the Licensing Court of South Australia (the Licensing Court),[57] or the Supreme Court of South Australia.  The section authorises the Commissioner of Police to place undisclosed evidence before the Liquor Commissioner and the Licensing Court and have it acted on without there being disclosure of that material at any time to the other parties to the proceedings.  The terms of section 28A are discussed in detail later in these reasons.

   [57]   The first defendant is named in the proceedings as the Liquor Licensing Court.  The Liquor Licensing Act1997 (SA) defines Court, in section 4, as “the Licensing Court of South Australia”.

4. The plaintiffs, K-Generation Pty Ltd and Genargi Krasnov, seek to review a decision of the first defendant, the Licensing Court, which affirmed a decision made by the Liquor Commissioner refusing the grant of a licence.  The plaintiffs complained that they were denied procedural fairness at both hearings.  It was said that information that was taken into account in refusing the application for a licence was withheld from the plaintiffs.  The plaintiffs further submitted that if the legislation allowed this breach of procedural fairness, then the section that permitted the breach is constitutionally invalid.

5. Initially, the second defendant, the Commissioner of Police, was not represented at the hearing before this Court but agreed to abide by the decision.  However, in the course of the hearing submissions were advanced on behalf of the Commissioner of Police.

6. The first question arising is whether section 28A operates to exclude the right to procedural fairness at hearings before the Liquor Commissioner, the Licensing Court and before this Court on hearing appeals or reviews.  In the event that procedural fairness is excluded, a second question arises.  Does the section infringe the Australian Constitution, and in particular the constitutional protections identified in Kable v Director of Public Prosecutions (NSW)?[58]  More particularly, does section 28A require a State court to act in a manner which has the potential to result in a serious denial of natural justice, is antithetical to the judicial process, and so is incompatible with the institutional integrity of the State courts required by Chapter III of the Constitution?

   [58]   Kable v Director of Public Prosecutions (NSW) (1996) 190 CLR 51.

7. The observations of a number of High Court judges would suggest that Chapter III of the Constitution entrenches procedural fairness at both a state and federal level.[59]  Other judges have taken the view that the question remains open.[60]  However, even if procedural fairness is entrenched a question remains as to what extent.  Some aspects of the procedural fairness hearing rule that have support as being entrenched are a party’s right to know what that party has been charged with, the right to know what evidence has been put against that party, and the right to know a court’s reasons for its decision.  At issue in this case is whether a State court, with the capacity to exercise federal jurisdiction, can make a decision affecting the rights and interests of a party while keeping the basis of the complaint, adverse evidence, and reasons for decision wholly secret. 

   [59]These observations are discussed in detail later in these reasons at [163]-[206].

   [60]   Thomas v Mowbray [2007] HCA 33 at [111] (Gummow and Crennan JJ).

8. It is convenient at the outset to set out the terms of section 28A:

   (1)No information provided by the Commissioner of Police to the [Liquor] Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police as criminal intelligence.

   (2)     If a licensing authority –

   (a)     refuses an application for a licence, the transfer of a licence or an approval, or takes disciplinary action against a person, or revokes or proposes to revoke an approval under Part 4 Division 10A; and

   (b)     the decision to do so is made because of information that is classified by the Commissioner of Police as criminal intelligence,

   the licensing authority is not required to provide any grounds or reasons for the decision other than that to grant the application would be contrary to the public interest, or that it would be contrary to the public interest if the person were to be or continue to be licensed or approved, or that it would be contrary to the public interest if the approval were to continue in force.

   (3)If the Commissioner of Police lodges an objection to an application under Part 4 because of information that is classified by the Commissioner of Police as criminal intelligence –

   (a)     the Commissioner of Police is not required to serve a copy of the notice of objection on the applicant; and

   (b)     the licensing authority must, at least 7 days before the day appointed for the hearing of the application, advise the applicant in writing that the Commissioner of Police has objected to the application on the ground that to grant the application would be contrary to the public interest.

   (4)If the [Liquor] Commissioner or the Commissioner of Police lodges a complaint under Part 8 in respect of a person because of information that is classified by the Commissioner of Police as criminal intelligence, the complaint need only state that it would be contrary to the public interest if the person were to be or continue to be licensed or approved.

   (5)In any proceedings under this Act, the [Liquor] Commissioner, the [Licensing] Court or the Supreme Court –

   (a)     must, on the application of the Commissioner of Police, take steps to maintain the confidentiality of information classified by the Commissioner of Police as criminal intelligence, including steps to receive evidence and hear argument about the information in private in the absence of the parties to the proceedings and their representatives; and

   (b)     may take evidence consisting of or relating to information classified by the Commissioner of Police as criminal intelligence by way of affidavit of a police officer of or above the rank of superintendent.

   (6)The Commissioner of Police may not delegate the function of classifying information as criminal intelligence for the purposes of this Act except to a Deputy Commissioner or Assistant Commissioner of Police.

9. The Liquor Licensing Act, in section 4, defines “criminal intelligence” as:

   [I]nformation relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement.

   Background

10. In October 2005, K-Generation applied for an entertainment venue licence pursuant to section 31(2)(d) of the Liquor Licensing Act.  That section relevantly provides:

    (1)A licence authorises the licensee to sell and supply liquor in accordance with the terms and conditions of the licence.

    (2)Licences are to be of the following classes:

    …

    (d)entertainment venue licence;

11. The Commissioner of Police intervened before the Liquor Commissioner and before the Licensing Court, pursuant to section 75A of the Liquor Licensing Act. The Commissioner of Police produced evidence that had been classified as criminal intelligence under section 28A of the Liquor Licensing Act.  The plaintiffs were not provided with any of the criminal intelligence. 

12. The plaintiffs’ application was heard by the Liquor Commissioner on 20 December 2006.  The decision not to grant the application was made on 17 January 2007.

13. The plaintiffs sought a review of the Liquor Commissioner’s decision by the Licensing Court. The review was in the nature of a rehearing, pursuant to section 22(4) of the Liquor Licensing Act.  Section 22 provides:

    (1)A party to proceedings before the [Liquor] Commissioner who is dissatisfied with a decision made by the [Liquor] Commissioner in the proceedings may apply to the [Licensing] Court for a review of the [Liquor] Commissioner’s decision.

    ...

    (4)A review is in the nature of a rehearing.

    (5)On a review, the [Licensing] Court may exercise any one or more of the following powers:

    (a)affirm, vary or quash the decision subject to the review;

    (b)     make any decision that should, in the opinion of the [Licensing] Court, have been made in the first instance;

    (c)     refer a matter back to the [Liquor] Commissioner for rehearing or reconsideration;

    (d)make any incidental or ancillary order.

    The hearing by the Licensing Court occurred on 8 and 12 February 2007.  The plaintiffs were not provided with any of the criminal intelligence.  On 12 February 2007 the Licensing Court affirmed the decision of the Liquor Commissioner. 

    The Proceedings

14. As earlier observed the plaintiffs have now sought judicial review of the Licensing Court’s decision, contending that they were denied procedural fairness, that the Liquor Licensing Act did not allow this denial, and in the alternative that section 28A is constitutionally invalid insofar as it does allow a breach of procedural fairness.

15. The plaintiffs claimed the following relief:

    A declaration that the provisions of section 28A of the Liquor Licensing Act 1997 (SA) are invalid in so far as they impermissibly interfere with the exercise by the [Licensing Court] of the judicial power of the Commonwealth.

    A declaration that [Licensing Court], in affirming the decision of the [Liquor Commissioner] dated 17 January 2007, failed to observe the requirements of procedural fairness.

    A declaration that the decision of the [Licensing Court] made on 12 February 2007 affirming the decision of the [Liquor Commissioner] made on 17 January 2007 refusing the application of [K-Generation] for an entertainment venue licence on the ground that to grant the application would be contrary to the public interest is void and of no effect.

    An order for judicial review in the nature of certiorari quashing the decision of the [Licensing Court] made on 12 February 2007 affirming the decision of the [Liquor Commissioner] made on 17 January 2007 refusing the application of the [K-Generation] for an entertainment venue licence on the ground that to grant the application would be contrary to the public interest.

    An order for judicial review in the nature of mandamus compelling the [Licensing Court] to consider [K-Generation’s] appeal from the decision of the [Liquor Commissioner] made on 17 January 2007 according to law.

16. The matter was referred to this Full Court for hearing and determination.  At the hearing, affidavits were received by consent.  They included three affidavits of Mr Krasnov.  The Licensing Court tendered affidavits from an executive solicitor for the South Australian Police, an assistant Commissioner of Police, the Liquor Commissioner and an officer of the Police Prosecution Services Branch.  The affidavits set out the facts relevant to these proceedings.  There was no application to cross-examine any deponent.  The undisclosed criminal intelligence in evidence before the Liquor Commissioner and the Licensing Court was not tendered in the proceeding in this Court.

    The Scope of Judicial Review

17. Rules 199-201 of the Supreme Court Rules 2006 (SA) provide for judicial review by this Court.  An order for judicial review is defined to include an order setting aside the decision of another court or tribunal that has a duty to act judicially because of error, absence of jurisdiction, failure to observe the requirements of natural justice or fraud.  Judicial review is intended to replace the former prerogative remedies including certiorari. 

18. When considering an application for an order in the nature of certiorari the court may have regard to the record of the tribunal including any reasons incorporated into that record.[61]

    [61]   Craig v State of South Australia (1995) 184 CLR 163.

19. Rule 200(7) provides that claims for other relief may be included in proceedings for judicial review and the rule provides as an example, a claim for declaratory relief. This sub-rule would appear to permit declarations being sought in aid of judicial review as well as declarations being sought pursuant to the provisions of section 31 of the Supreme Court Act 1935 (SA).[62]

    [62]   Manna Hill Resources Pty Ltd v South Australia (2001) 82 SASR 18.

    The Facts

20. Before coming to discuss the issues arising in the application, it is necessary to record a number of factual findings.  These findings are made on the basis of the affidavit evidence.

21. K-Generation is the trustee of the Krasnov Family Trust.  Mr Krasnov is the sole director of K-Generation and a beneficiary of the trust.  K-Generation is the registered proprietor of a business named Sky Lounge KTV.

22. Mr Krasnov was earlier approved by the Office of the Liquor Commissioner as a responsible person and licensee of the Sweet Chilli Restaurant and the La Sing Karaoke Bar.  Those licences span the period from 1995 to 2002.  Mr Krasnov relinquished both licences on the sale of the businesses.

23. On 20 October 2005, K-Generation lodged its application for an entertainment venue licence.  Previously, Mr Krasnov had completed a personal information declaration form in support of the application. 

24. The affidavits filed by the Licensing Court disclose that Judith Jefferson, the executive solicitor for the South Australian Police, was present when the Assistant Commissioner, Madeleine Glynn, was shown two files – PCO file 3522/06 and PCO file 3523/06.  Ms Jefferson observed Assistant Commissioner Glynn look at both files.  She then handed them to Ms Jefferson.  Ms Jefferson retained custody of both files until they were produced to the Liquor Commissioner. 

25. Assistant Commissioner Glynn considered the information in the two files on 26 April 2006.  She classified the information contained within the two files as criminal intelligence within the meaning of the Liquor Licensing Act. She did so in the exercise of the function delegated to her by the Commissioner of Police by virtue of section 28A(6) of the Liquor Licensing Act.  At the time of classifying the information, Assistant Commissioner Glynn was aware that the information related to proceedings before the Liquor Commissioner. 

26. In June 2006, the plaintiffs became aware that the South Australian Police Licensing Enforcement Branch proposed to intervene in the proceedings. The plaintiffs sought the reason for intervention and were advised “[i]t would be contrary to public interest if Mr Genargi Krasnov and Mrs Adeline Tay were approved as fit and proper persons. Section 28A of the Liquor Licensing Act 1997.”  Further requests for reasons and details were unsuccessful.

27. On 20 December 2006, the Liquor Commissioner conducted a hearing of the application for the entertainment venue licence.  The application was refused.  The following written reasons were delivered on 17 January 2007: 

    K-Generation Pty Ltd as trustee for the K-Generation Unit Trust has applied for an entertainment venue licence in respect of premises … to be known as Sky Lounge K.T.V.

    The application was advertised under section 52 of the Liquor Licensing Act.

    The application attracted an objection from Wright Street Chambers which was settled by conciliation, the terms of the settlement being documented in order no 106036, dated 6 April 2006, copy on file.

    The application also attracted an intervention from the Adelaide City Council which was resolved by agreed conditions Ex-1 (hearing 20 December 2006) and an intervention from the Commissioner of Police.  The purpose of the police intervention is to introduce evidence and to make representation on the question of whether GENARGI KRASNOV and ADELE TAY are fit and proper persons to occupy a position of authority in the proposed licensee company.

    Section 56(1)(b) of the Act provides that:-

    56 (1)        An applicant for a licence must satisfy the licensing authority –

    (b)if the applicant is a trust or corporate entity – that each person who occupies a position of authority in the entity is a fit and proper person to occupy such a position in an entity holding a licence of the class sought in the application.

    Section 55 then provides that:-

    55 (1)In deciding whether a person is a fit and proper person for a particular purpose under this Act, a licensing authority must take into consideration –

    (a)the reputation, honesty and integrity (including the creditworthiness) of the person; and

    (b)the reputation, honesty and integrity of people with whom the person associates.

    The sole director of K-Generation Pty Ltd is Genargi Krasnov.

    The unit holder of K-Generation Unit Trust is Genargi Krasnov as trustee of the Krasnov Family Trust (100 units) and the income and capital beneficiaries of The Krasnov Family Trust are Genargi Krasnov and Adele Tay (refer Schedule on pages 17 and 18 of the Trust Deed).

    Section 28A of the Act provides that

    (1)     No information provided by the Commissioner of Police to the Commissioner may be disclosed to any person (except the Minister, a court or a person to whom the Commissioner of Police authorises its disclosure) if the information is classified by the Commissioner of Police as criminal intelligence.

    Criminal intelligence is defined in section 4 of the Act to mean “information relating to actual or suspected criminal activity (whether in this State or elsewhere) the disclosure of which could reasonably be expected to prejudice criminal investigations, or to enable the discovery of the existence or identity of a confidential source of information relevant to law enforcement.”

    The Commissioner of Police has provided criminal intelligence PCO File No 2006/003522 and 003523 in support of his intervention.

    Section 28A(6) of the Act provides that “the Commissioner of Police may not delegate the function of classifying information as criminal intelligence for the purpose of this Act except to a deputy Commissioner or Assistant Commissioner of Police”. This information was certified as criminal intelligence by the Assistant Commissioner Crime Service.

    I have considered the criminal intelligence together with the submissions made at the hearing on 20 December 2006 including the Statutory Declarations of

    Woon Kit Chong    -      Ex – 6

    Lei Xiao             -      Ex – 7

    Mo Chai Yung     -      Ex – 8

    Brian Ho            -      Ex – 9

    May Siew Fou     -      Ex – 10

    and the submission signed and dated by me 17 January 2007 (copy on file)

    Section 28A(2) of the Act provides that:-

    28A(2)       If a licensing authority

    (a)refuses an application for a licence, the transfer of a licence or an approval, or takes disciplinary action against a person, or revokes or proposes to revoke an approval under Part 4 division 10A; and

    (b)the decision to do so is made because of information that is classified by the Commissioner of Police as criminal intelligence,

    the licensing authority is not required to provide any grounds or reasons for the decision other than that to grant the application would be contrary to the public interest, or that it would be contrary to the public interest if the person were to be or continue to be licensed or approved, or that it would be contrary to the public interest if the approval were to continue in force.

    Accordingly, I refuse the application on the ground that to grant the application would be contrary to the public interest.

1. In the present case, the judicial process has been subverted by the fact that the plaintiffs were not told what the case against them was, and were not given any meaningful reasons for the decision against them.  As Gaudron J has articulated, the judicial process is meant to protect the individual from the arbitrary abrogation of rights.  Justice cannot be seen to be done when a court is required to make decisions affecting people’s rights without disclosing adverse information and the reasons for the decision – the court is exercising power that is not compatible with the fact that it has been vested with judicial power under the Constitution.

2. Further support can be found from the observations of Mason CJ, Dawson and McHugh JJ in Leeth v The Commonwealth, where their Honours observed:[107]

   It may well be that any attempt on the part of the legislature to cause a court to act in a manner contrary to natural justice would impose a non-judicial requirement inconsistent with the exercise of judicial power, but the rules of natural justice are essentially functional or procedural and, as the Privy Council observed in the Boilermakers’ Case, a fundamental principle which lies behind the concept of natural justice is not remote from the principle which inspires the theory of separation of powers.

   Deane and Toohey JJ observed:[108]

   Thus, in Ch III’s exclusive vesting of the judicial power of the Commonwealth in the “courts” which it designates, there is implicit a requirement that those “courts” exhibit the essential attributes of a court and observe, in the exercise of that judicial power, the essential requirements of the curial process, including the obligation to act judicially. At the heart of that obligation is the duty of a court to extend to the parties before it equal justice, that is to say, to treat them fairly and impartially as equals before the law and to refrain from discrimination on irrelevant or irrational grounds.

   [107] Leeth v The Commonwealth (1992) 174 CLR 455 at 470 (footnotes omitted).

   [108] Leeth v The Commonwealth (1992) 174 CLR 455 at 487 (footnotes omitted).

3. In Grollo v Palmer,[109] Gummow J, although finding as a matter of statutory construction that the duty of confidentiality imposed by the legislation did not extend to the discharge of functions as a judge exercising the judicial power of the Commonwealth, expressly stated that but for that conclusion, his Honour would have accepted the submission by the applicant that the impugned provisions of the Act amounted to an impermissible undermining of the Boilermakers’ doctrine.[110]  With respect to the nature of judicial power, his Honour observed:[111]

   An essential attribute of the judicial power of the Commonwealth is the resolution of such controversies by the means described so as to provide final results which are delivered in public after a public hearing, and, where a judge is the tribunal of fact as well as law, are preceded by grounds for decision which are animated by reasoning.  An objective of the exercise of the judicial power in each particular case is the satisfaction of the parties to the dispute and the general public that, by these procedures, justice has both been done and been seen to be done.  Accordingly, the rules as to reasonable apprehension of bias in their application to the courts have, at their root, the doctrine of the separation of the judicial from the political heads of power.  Those rules govern the conduct of other decision-makers also but their paradigmatic application is to the exercise of judicial power.  Their Lordships somewhat understated the position when observing in the Boilermakers' Case that the fundamental principle which makes a combination of actor and judge appear contrary to natural justice “is not remote from that which inspires the theory of the separation of powers”.

   In the same case, McHugh J observed:[112]

   Open justice is the hallmark of the common law system of justice and is an essential characteristic of the exercise of federal judicial power.  Participation in secret, ex parte administrative procedures that approve the acts of federal law enforcement officers by those who hold federal judicial office contravenes the spirit of the requirement that justice in the federal courts should be open; it weakens the perception that the federal courts are independent of the federal government and its agencies.  Much of the litigation in the Federal Court is between the ordinary citizen and the federal government and its agencies.  The maintenance of public confidence in the independence and impartiality of the Federal Court judges in hearing disputes between the citizen and the government and its agencies is contingent upon the public perception that the judges of the federal courts are impartial and entirely independent of the executive arm of government.  That public perception must be diminished when the judges of the Federal Court are involved in secret, ex parte administrative procedures, forming part of the criminal investigative process, that are carried out as a routine part of their daily work.

   [109] Grollo v Palmer (1995) 184 CLR 348.

   [110] Grollo v Palmer (1995) 184 CLR 348 at 397-398.

   [111] Grollo v Palmer (1995) 184 CLR 348 at 394 (footnotes omitted).

   [112] Grollo v Palmer (1995) 184 CLR 348 at 379-380.

4. In Kable v DPP (NSW), McHugh J specifically identified natural justice as being one of the essential elements of judicial power protected by Chapter III of the Constitution, observing: [113]

   Because the State courts are an integral and equal part of the judicial system set up by Ch III, it also follows that no State or federal parliament can legislate in a way that might undermine the role of those courts as repositories of federal judicial power.  Thus, neither the Parliament of New South Wales nor the Parliament of the Commonwealth can invest functions in the Supreme Court of New South Wales that are incompatible with the exercise of federal judicial power.  Neither Parliament, for example, can legislate in a way that permits the Supreme Court while exercising federal judicial power to disregard the rules of natural justice or to exercise legislative or executive power. Such legislation is inconsistent with the exercise of federal judicial power.  However, the Act does not seek to interfere with the invested federal jurisdiction of the Supreme Court.  On its face it is directed to the exercise of State, not federal, jurisdiction.  But for present purposes that is irrelevant.  The compatibility of State legislation with federal judicial power does not depend on intention.  It depends on effect.  If, as Gibbs J pointed out in The Commonwealth v Queensland, State legislation has the effect of violating the principles that underlie Ch III, it will be invalid.

   [emphasis added]

   [113] Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 116 (footnotes omitted).

5. In Nicholas v The Queen,[114] Gaudron J observed:

   Judicial power is not adequately defined solely in terms of the nature and subject matter of determinations made in exercise of that power.  It must also be defined in terms that recognise it is a power exercised by courts and exercised by them in accordance with the judicial process.  Thus, as was said in Chu Kheng Lim v Minister for Immigration, the Parliament cannot make “a law which requires or authorises the courts in which the judicial power of the Commonwealth is exclusively vested to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power”.

   In my view, consistency with the essential character of a court and with the nature of judicial power necessitates that a court not be required or authorised to proceed in a manner that does not ensure equality before the law, impartiality and the appearance of impartiality, the right of a party to meet the case made against him or her, the independent determination of the matter in controversy by application of the law to facts determined in accordance with rules and procedures which truly permit the facts to be ascertained and, in the case of criminal proceedings, the determination of guilt or innocence by means of a fair trial according to law.  It means, moreover, that a court cannot be required or authorised to proceed in any manner which involves an abuse of process, which would render its proceedings inefficacious, or which brings or tends to bring the administration of justice into disrepute.

   [114] Nicholas v The Queen (1998) 193 CLR 173 at [73]–[74] (footnotes omitted).

6. These principles have been endorsed by the High Court in Bass v Permanent Trustee Co Ltd,[115] where Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ observed in a joint judgment:

   Judicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process.[116]  And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence led against them.[117]  It is contrary to the judicial process and no part of judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case.

   [115] Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at [56].

   [116] See Harris v Caladine (1991) 172 CLR 84 at 150, (Gaudron J), referring to R v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 at 374, (Kitto J). See also Re Nolan; Ex parte Young (1991) 172 CLR 460 at 496, (Gaudron J); Polyukhovich v The Commonwealth (War Crimes Act Case) (1991) 172 CLR 501 at 532, (Mason CJ); at 703-704, (Gaudron J); Chu Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 67, (McHugh J); Nicholas v The Queen (1998) 193 CLR 173 at 208-209, (Gaudron J).

   [117] See Harris v Caladine (1991) 172 CLR 84 at 150, (Gaudron J); Re Nolan; Ex parte Young (1991) 172 CLR 460 at 496, (Gaudron J).

7. Recently in Thomas v Mowbray,[118] the High Court considered, among other issues, whether legislation that allowed a Federal Magistrate to authorise a control order against an individual was constitutionally invalid.  Gummow and Crennan JJ defined the issue as:[119]

   [I]t may be accepted for present purposes that legislation which requires a court exercising federal jurisdiction to depart to a significant degree from the methods and standards which have characterised judicial activities in the past may be repugnant to Ch III.  Do the provisions of the Code concerning interim control orders oblige issuing courts to act in a manner inconsistent with the essential character of a court or with the nature of judicial power?  It then becomes necessary in the present case to consider the complaints which the plaintiff makes respecting the processes and outcome of applications for interim control orders.

   [118] Thomas v Mowbray [2007] HCA 33.

   [119] Thomas v Mowbray [2007] HCA 33 at [111].

8. The majority in Thomas held that the legislation in question was constitutionally valid.  Gleeson CJ concluded:[120]

   Finally, it was argued that, even if Div 104 confers judicial power, it purports to require that power to be exercised in a manner inconsistent with the essential character of a court or inconsistent with the nature of judicial power.  This argument fails.  We are here concerned with an interim control order which was made ex parte, pursuant to subdiv B, but, as has been pointed out, in the ordinary case a confirmation hearing would have been held before now.  Applications for control orders are made in open court, subject to the power to close the court under the court’s general statutory powers.  The rules of evidence apply.  The burden of proof is on the applicant.  Prior to the confirmation hearing, the subject of a control order is given the documents that were provided to the Attorney-General for the purpose of seeking consent to the application for the interim order, together with any other details required to enable the person to respond (s 104.12A).  The confirmation hearing involves evidence, cross-examination, and argument (s 104.14).  The court has a discretion whether to revoke or vary or confirm the order (s 104.14).  An appeal lies in accordance with the ordinary appellate process that governs the issuing court's decisions.  The outcome of each case is to be determined on its individual merits.  There is nothing to suggest that the issuing court is to act as a mere instrument of government policy.  On the contrary, the evident purpose of conferring this function on a court is to submit control orders to the judicial process, with its essential commitment to impartiality and its focus on the justice of the individual case.  In particular, the requirements of s 104.4, which include an obligation to take into account the impact of the order on the subject's personal circumstances, are plainly designed to avoid the kind of overkill that is sometimes involved in administrative decision-making.  Giving attention to the particular circumstances of individual cases is a characteristic that sometimes distinguishes judicial from administrative action.

   We are not concerned in this case with particular issues as to procedural fairness that could arise where, for example, particular information is not made available to the subject of a control order or his or her lawyers.  Issues of that kind, if they arise, will be decided in the light of the facts and circumstances of individual cases.  We are here concerned with a general challenge to the validity of Div 104.  That challenge should fail.

   Gleeson CJ emphasised that the rules of evidence applied, and the subject of the control order was given the material that was relied on in support of the control order – in essence, the hearing assumed the character of a judicial hearing.  In the present case, it is these safeguards that are missing.

   [120] Thomas v Mowbray [2007] HCA 33 at [30]-[31].

9. Affording a person whose rights will be affected by a court’s decision an opportunity to respond to adverse claims is so fundamental to a fair hearing that legislation which requires a court invested with federal jurisdiction to exercise judicial power without affording this aspect of the natural justice hearing rule is inconsistent with the integrated federal judiciary established by Chapter III of the Constitution.  The operation of the Liquor Licensing Act involved the independent judiciary in incompatible activities, cloaking injustices with the semblance of judicial propriety.

   State Legislation and State Courts

10. The present case involves a State District Court judge (sitting as the Licensing Court), and the Full Court of the Supreme Court (which is required by the legislation to uphold the denial of natural justice), and so additional considerations arise.

11. Section 77(iii) of the Constitution enables the Commonwealth Parliament to confer federal jurisdiction upon State courts.  The District Court and Supreme Court of South Australia are two such courts that have been invested with federal jurisdiction.  Together they form part of the integrated Australian judicial system for which the Constitution provides.

12. In Kable, the High Court held, by majority, that Chapter III invalidated state legislation that empowered the Supreme Court of New South Wales to make an order for the detention of Mr Kable in prison for a specified period if it was satisfied on reasonable grounds that he was more likely than not to commit a serious act of violence and that it was appropriate, for the protection of a particular person or the community generally, that he be held in custody.  Gaudron, McHugh and Gummow JJ held that the exercise of jurisdiction under the Act was incompatible with the integrity, independence and impartiality of the Supreme Court as a court in which federal jurisdiction also had been invested under Chapter III.  Gaurdon J observed:[121]

    Neither the recognition in Ch III that State courts are the creatures of the States nor its consequence that, in the respects indicated, the Commonwealth must take State courts as it finds them detracts from what is, to my mind, one of the clearest features of our Constitution, namely, that it provides for an integrated Australian judicial system for the exercise of the judicial power of the Commonwealth.  Moreover, neither that recognition nor that consequence directs the conclusion that State Parliaments may enact whatever laws they choose with respect to State courts.

    [121] Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 102.

13. Gaudron J further noted:[122]

    Once the notion that the Constitution permits of different grades or qualities of justice is rejected, the consideration that State courts have a role and existence transcending their status as State courts directs the conclusion that Ch III requires that the Parliaments of the States not legislate to confer powers on State courts which are repugnant to or incompatible with their exercise of the judicial power of the Commonwealth.

    [122] Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 103.

14. McHugh J observed:[123]

    One of the basic principles which underlie Ch III and to which it gives effect is that the judges of the federal courts must be, and must be perceived to be, independent of the legislature and the executive government.  Given the central role and the status that Ch III gives to State courts invested with federal jurisdiction, it necessarily follows that those courts must also be, and be perceived to be, independent of the legislature and executive government in the exercise of federal jurisdiction.  Public confidence in the impartial exercise of federal judicial power would soon be lost if federal or State courts exercising federal jurisdiction were not, or were not perceived to be, independent of the legislature or the executive government.

    …

    While nothing in Ch III prevents a State from conferring non-judicial functions on a State Supreme Court in respect of non-federal matters, those non-judicial functions cannot be of a nature that might lead an ordinary reasonable member of the public to conclude that the Court was not independent of the executive government of the State. …

    …

    Furthermore, although nothing in Ch III prevents a State from conferring executive government functions on a State court judge as persona designata, if the appointment of a judge as persona designata gave the appearance that the court as an institution was not independent of the executive government of the State, it would be invalid.

    [123] Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 116-117 (footnotes omitted).

15. In Fardon v Attorney-General (Qld),[124] the High Court held that an impugned statute was constitutionally valid.  This has been interpreted by some as a decision that narrowed the ambit of the Kable principle.  An important point of distinction in Fardon, though, is that the impugned legislation did not prevent the court from affording procedural fairness to parties before it.  McHugh J observed:[125]

    Hearings are conducted in public, and in accordance with the ordinary judicial process.  There is nothing to suggest that the Supreme Court is to act as a mere instrument of government policy.  The outcome of each case is to be determined on its merits.

    Similarly, Gummow J reasoned, as part of his justification as to why the Act in question was constitutionally valid, that “[t]here is nothing in the Act to exclude rules of natural justice from the process of the Supreme Court”.[126]  Callinan and Heydon JJ noted that “[t]he Act requires that the prisoner will be provided with full disclosure and details of the allegations and all other relevant material filed by the Attorney-General against him”.[127]  As earlier observed, the Liquor Licensing Act expressly denies the Licensing Court the power to provide certain adverse information to parties affected by its decisions. 

    [124] Fardon v Attorney-General (Qld) (2004) 223 CLR 575.

    [125] Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at [19].

    [126] Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at [93].

    [127] Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at [221].

1. Callinan and Heydon JJ further noted in Fardon that “[a]nother judicial hallmark of the process for which the Act provides is the requirement that the Court give reasons for its decision”[128] – a hallmark which the Licensing Court is not required to comply with.  The Liquor Licensing Act requires the Licensing Court to exercise judicial power in a way where some of the essential hallmarks of the judicial process are absent.

   [128] Fardon v Attorney-General (Qld) (2004) 223 CLR 575 at [230].

2. The judgments in Fardon make clear that the repugnancy doctrine in Kable does not imply into the Constitutions of the States the same separation of judicial power mandated for the Commonwealth by Chapter III of the Constitution.  However, the States’ power to legislate with respect to courts is not unfettered, and so somewhere between these two positions will be found the point where State legislation is invalid because of the way in which it requires a State court to exercise judicial power.  A fundamental denial of natural justice, as is mandated by the Liquor Licensing Act, is one such characteristic that a State cannot validly impose on a State court invested with federal jurisdiction.  Nothing in Fardon opposes this conclusion, and many of the observations made in Kable and Fardon, cited above, support it.

3. Two cases from the Court of Appeal of Queensland and the Supreme Court of Western Australia provide examples of the application of the Kable principle.

4. In Re Criminal Proceeds Confiscation Act 2002,[129] the Court of Appeal of Queensland held that section 30 of the Criminal Proceeds Confiscation Act 2002 (Qld) was constitutionally invalid. That section provided that where the State applied for a restraining order without giving notice to any person to whom it related, the Supreme Court of Queensland was required to hear the application in the absence of the person whose property was the subject of the application, and without the relevant person having been informed of the application.

   [129] Re Criminal Proceeds Confiscation Act 2002 [2003] QCA 249.

5. Williams JA, with whom White and Wilson JJ agreed, observed that to ask a judge to make a decision in those circumstances “makes a mockery of the exercise of the judicial power in question”.[130]  His Honour held:[131]

   [T]he direction or command to the judge hearing the application to proceed in the absence of any party affected by the order to be made is such an interference with the exercise of the judicial process as to be repugnant to or incompatible with the exercise of the judicial power of the Commonwealth.  Then, because the Supreme Court of Queensland is part of an integrated Australian judicial system for the exercise of the judicial power of the Commonwealth, such a provision is constitutionally invalid.

   [130] Re Criminal Proceeds Confiscation Act 2002 [2003] QCA 249 at [57].

   [131] Re Criminal Proceeds Confiscation Act 2002 [2003] QCA 249 at [58].

6. Section 28A of the Liquor Licensing Act analogously requires the Licensing Court and the Supreme Court to deny natural justice to a plaintiff.  Whilst the Liquor Licensing Act differs from the Criminal Proceeds Confiscation Act in that it allows a person affected to appear before the Licensing Court and make submissions, the right to appear before a court and make submissions is empty when the person does not know anything about the allegations made against them. Section 28A of the Liquor Licensing Act confers no material advantage on a person affected by a decision when compared to section 30 of the Criminal Proceeds Confiscation Act, and equally makes a mockery of the exercise of judicial power.

7. In Gypsy Jokers Motorcycle Club Inc v Commissioner of Police,[132] the Court of Appeal of Western Australia considered whether section 76 of the Corruption and Crime Commission Act 2003 (WA) was constitutionally invalid. Section 76 of that Act relevantly provided:

   (2)The Commissioner of Police may identify any information provided to the court for the purposes of the review as confidential if its disclosure might prejudice the operations of the Commissioner of Police, and information so identified is for the court’s use only and is not to be disclosed to any other person, whether or not a party to the proceedings, or publicly disclosed in any way.

   …

   (5)The court may decide whether or not the Commissioner of Police could have reasonably had the belief required by section 72(2) when issuing the notice.

   (6)If the court decides that the Commissioner of Police could not have reasonably had the belief required by section 72(2) when issuing the notice, the notice ceases to have effect.

   [132] Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2007] WASCA 49 – special leave to appeal to the High Court was granted on 15 June 2007.

8. Immediately it can be seen that section 76 of the Corruption and Crime Commission Act provided the court with a power that section 28A of the Liquor Licensing Act does not provide to the Licensing Court – the power, under section 76(5) and 76(6), to review the Commissioner of Police’s decision.

9. The Court held, by majority,[133] that section 76 was constitutionally valid. Wheeler JA, in dissent, held that the section was antithetical to the judicial process and so was constitutionally invalid. With respect to the right of review, Her Honour observed:[134]

   Whatever the precise scope of the review, and the precise scope of the materials which might be relevant to such a review, it is clear that the ability of the Commissioner of Police unilaterally to determine that certain materials not be disclosed, has the effect that the judicial function, which would normally involve the affording of natural justice to the applicant for review, and of hearing from the applicant informed submissions relevant to the court’s function, cannot be independently performed, but will be constrained to the extent that the Commissioner of Police identifies information as confidential, and thereby “instructs” that the information not be disclosed.

   With respect to the effect of section 76, Wheeler JA observed:[135]

   The Commissioner of Police, who is an officer of the Executive Government, decides conclusively what information the court may publish or disclose, both to a party to litigation and (in any reasons which may be published) to the public at large.  That Executive decision, once made, has the potential significantly to disadvantage the individual litigant opposed to the Executive.  The respondent to an application in the Supreme Court (the Commissioner of Police) is empowered conclusively to determine whether and to what extent information which that party makes available to the court can be disclosed to the opposing party.  The court is required to make a determination affecting the property rights of a party in circumstances in which that party may have had no opportunity whatever to consider (even in a summarised or truncated way) the material put against it.  Finally, the court’s ability to provide intelligible reasons for its decision, or otherwise to perform its functions in that public way which is generally the hallmark of justice is impaired or destroyed, because of the court’s inability to disclose material which may be critical to its determination.  It may be that no one of these factors individually would be sufficient.  However, it seems to me that collectively they represent such a departure from the requirement of independence of the Executive and such a departure from that impartiality which is the hallmark of the judicial process, as to render the legislation invalid.

   [133] Martin CJ and Steytler P, Wheeler JA dissenting.

   [134] Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2007] WASCA 49 at [150].

   [135] Gypsy Jokers Motorcycle Club Inc v Commissioner of Police [2007] WASCA 49 at [159].

10. The parallels to section 28A of the Liquor Licensing Act are evident.  The power that the Commissioner of Police has under the Liquor Licensing Act to direct the Licensing Court is even greater than the Western Australian counterpart.  There is no equivalent in the Liquor Licensing Act to section 76(5) and 76(6) of the Corruption and Crime Commission Act – the Licensing Court is not given power to review the Commissioner of Police’s decision to classify information as criminal intelligence. Once the Commissioner of Police, an officer of the executive government, classifies information as criminal intelligence, the Licensing Court must abide by this determination. The Commissioner of Police is given power by section 28A of the Liquor Licensing Act to conclusively determine what information the Licensing Court gives to people whose rights and interests are affected by its decisions.  Under these circumstances, the line demarcating the independent operation of the executive and the judiciary has been unacceptably blurred, and the appearance of judicial impartiality dissolved.

11. The legislation in the present case makes a District Court judge and the Full Court of the Supreme Court of South Australia instruments of the executive government.  It expressly removes the ordinary protections inherent in the judicial process.

    The Licensing Court’s Status as a State Court Invested with Federal Jurisdiction

12. It is clear that the Supreme Court of South Australia is a State court invested with federal jurisdiction. Section 28A of the Liquor Licensing Act, by requiring the Full Court of the Supreme Court to uphold a denial of natural justice by the Licensing Court, is invalid under the principles expounded in Kable.

13. But the other ground for invalidity – that the legislation imposes a function on the Licensing Court itself that is inconsistent with the exercise of federal judicial power – requires a further step in the chain of reasoning.  The Licensing Court is not invested with federal jurisdiction, it is a court established by the Liquor Licensing Act to hear applications and other proceedings under that Act. Chapter III of the Constitution is invoked, however, because the Licensing Court is comprised of a District Court judge. The District Court is a court invested with federal jurisdiction, and section 28A of the Liquor Licensing Act is invalid because it requires a judge of the District Court to act, when sitting as the Licensing Court, in a way that is inconsistent with that judge’s role as a member of a court invested with federal jurisdiction.

14. In Wilson,[136] the High Court held that a Judge of the Federal Court could not be nominated to provide a report to the Minister for Aboriginal and Torres Strait Islander Affairs.  The Judge nominated was not nominated as a Judge of the Federal Court, but in a personal capacity.  Brennan CJ, Dawson, Toohey, McHugh and Gummow JJ, referring to the constitutional doctrine of incompatibility, observed:[137]

    Its purpose is to protect effectively the independence of Ch III judges from the political branches of government as a guarantee of liberty and as a buttress to public confidence in the administration of justice by Ch III courts.

    The effect of the application of the constitutional doctrine, which might differ from the effect of application of the common law doctrine, is not to vacate the office to which the Ch III judge has been appointed but to sterilise the power to interfere with the protection which the Constitution gives to the independence of Ch III judges. …

    The capacity of Ch III judges to perform their judicial duties throughout the terms of their appointment independently of the political branches of government cannot be prejudiced by their appointment to non-judicial office or to perform non-judicial functions.  If an appointment to non-judicial office or performance of non-judicial functions prejudices that capacity it is incompatible with the office and function of a Ch III judge.

    [136] Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1.

    [137] Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 15-16.

15. Their Honours continued by giving examples of permissible appointments that a judge may accept, such as to a Royal Commission or the Administrative Appeals Tribunal.  Their Honours made it clear that the terms of a Royal Commission would be significant in determining whether a judge can accept an appointment to it.  As for the Administrative Appeals Tribunal, an appointment there was compatible with the role of a judge, as a member of the Administrative Appeals Tribunal must still decide applications independently of any instruction, advice or wish of the executive government.  This may be contrasted with the present case, where the Licensing Court has no input into the classification of criminal intelligence, and once told that something has been certified by the Commissioner of Police to be criminal intelligence, has no discretion to inform the applicant of the allegations made within it.

16. Similarly, Gaudron J in Wilson stated:[138]

    The function purportedly conferred on Justice Mathews pursuant to s 10 of the Act is not one that has, historically, been performed by judges.  Moreover, it is not a function that must be carried out in public.  Perhaps the interests of justice require that the matter upon which she was asked to report be considered in confidence.  Whether or not that is so, the function of reporting under s 10 of the Act is not one which, in my view, can be conferred on a judge in his or her individual capacity.  As the report need not be made public, it cannot be judged according to its own terms.  …

    The function of reporting under s 10 of the Act is one which, if performed by a judge in his or her individual capacity, gives the appearance that the judge is acting, not in any independent way, but as the servant or agent of the Minister.  Thus, it is not a function that Parliament may confer on a judge of a court exercising the judicial power of the Commonwealth.

    [138] Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1 at 26.

17. In the present case the Licensing Court has been reduced to a servant of the executive.  The fact that it is a District Court judge who holds the position as the Licensing Court, and that the Full Court of the Supreme Court has no option under the legislation but to uphold the Licensing Court’s breach of natural justice, results in section 28A being constitutionally invalid.

    Conclusion

18. The Liquor Licensing Act compelled the Licensing Court to breach what would ordinarily be a fundamental aspect of the natural justice hearing rule. The plaintiffs had no right to receive the criminal intelligence, by virtue of section 28A, and so were denied the opportunity to know the case against them. That does not give rise to a remedy in itself, however, because the plaintiffs, by virtue of section 28A, did not have any right to know the case against them when the allegations were criminal intelligence. I have reached the conclusion that section 28A is constitutionally invalid by the operation of Chapter III of the Constitution.

19. It must be emphasised that the question that has been considered in this case is not whether the legislature can specify that applications for liquor licences be refused, and liquor licences varied or removed, on the basis of secret material.  Parliament clearly has the power to legislate for this.  These acts, though, should be carried out by the executive.  What is impermissible is the involvement of the independent judiciary in the process of denying natural justice.  By involving the judiciary in such determinations, the legislature obtains the advantage of giving the determinations the appearance of legitimacy and impartiality.  But if the court is required to act in a way that denies procedural fairness to one party, then the appearance of legitimacy and impartiality is lost.  It brings the court itself into disrepute.  The court is forced to act as an arm of the executive.  If the legislature wishes these decisions to be made by the judiciary, it must accept that members of the judiciary cannot exercise power in a manner that offends Chapter III of the Constitution.  It must accept that the judiciary’s appearance of legitimacy and impartiality arises in part from the natural justice obligations that it owes to parties who come before it.  If the legislature does not want natural justice to be afforded to applicants for, and holders of, liquor licences, then the decisions to refuse applications, and vary or remove licences, should be carried out by the executive.

20. The constitutional validity of section 28A of the Liquor Licensing Act cannot depend on how the judges of the Licensing Court or the Full Court of the Supreme Court discharge the duty that the Act imposes upon them.  The provision was either valid or invalid when given the Royal Assent.  Nothing that a judge of the Licensing Court did after its enactment could change its status as a valid or invalid piece of legislation.

21. At the time of its enactment, ordinary reasonable members of the public might have seen the Liquor Licensing Act as making the Licensing Court and the Full Court of the Supreme Court parties to and responsible for implementing political decisions of the executive government, acting through the Commissioner of Police, without giving persons who are affected by these decisions the benefit of the ordinary processes of law.  As McHugh J observed in Kable:[139]

    Any person who reached that conclusion could justifiably draw the inference that the Supreme Court was an instrument of executive government policy. 

    That being so, public confidence in the impartial administration of the judicial functions of the District Court and the Supreme Court must inevitably be impaired.  The courts no longer exhibit all of the “defining characteristics which mark a court apart from other decision making bodies”.[140] Section 28A of the Liquor Licensing Act infringes Chapter III of the Constitution, is invalid, and should be severed from the Liquor Licensing Act.

    [139] Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 124.

    [140] Forge & Ors v Australian Securities and Investments Commission & Ors [2006] HCA 44.

22. Section 28A of the Liquor Licensing Act creates a situation that is an affront to justice.  The plaintiffs in the present case do not know why they have been refused a licence, they do not know the evidence that was put against them, and they do not even know if the evidence concerns themselves or merely someone whom they “associate” with.  They will never know this information.

23. The section represents the executive arm of government dictating that the judicial arm conduct itself in a way that is procedurally unfair.  It gives rise to a denial of procedural fairness that cuts deep into judicial integrity and independence.  It is an impermissible intrusion into judicial integrity. 

24. This application for judicial review should be granted.  Declarations to give effect to these reasons should be made in terms to be approved.  The application for review should be remitted to the Licensing Court for determination in accordance with these reasons.

25. VANSTONE J:     I have had the benefit of reading the reasons, in draft, of each of Duggan J and Gray J.  I agree with Duggan J that the application should be dismissed and I agree generally with his Honour’s reasons.