Karpik v Carnival Plc ARBN 107 998 443 & Anor

[2023] HCATrans 100

[2023] HCATrans 100

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney  No S25 of 2023

B e t w e e n -

SUSAN KARPIK

Appellant

and

CARNIVAL PLC (ARBN 107 998 443)

First Respondent

and

PRINCESS CRUISE LINES LIMITED (A COMPANY REGISTERED IN BERMUDA)

Second Respondent

GAGELER J
GORDON J
EDELMAN J
GLEESON J
JAGOT J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 4 AUGUST 2023, AT 9.45 AM

(Continued from 3/8/23)

Copyright in the High Court of Australia

GAGELER J:   Yes, Mr Hutley.

MR HUTLEY:   My learned friend wishes to make an application.

MR GLEESON:   Your Honours, what I seek to do is to supplement our argument in‑chief on issue 1 by providing the Court with three additional materials and to explain why they support our argument.

GAGELER J:   Is it opposed, Mr Hutley?

MR HUTLEY:   Your Honour, my learned friend has adumbrated the three matters.  One concerns section 6 of the Trade Practices Act.  We can deal with that.  The second – a bit like that Danish question, I have forgotten – and the third, your Honour, is relying on the Fair Trading Act and has some contextual construction to the Federal Act.  Now, I just will not be able to meet that because I have no idea of the drafting history in relation to these legislations.  There was a footnote in my learned friend Dr Higgins’ submissions referring to the State Act, but no one has ever relied on it in any way, and as I understand, my learned friend is not seeking to rely upon it substantively, just in some way contextually.

Now, if your Honours allow it, all I will have to ask is to be able to make written submissions in response, because I am not going to get a chance – because I think, unfortunately, having regard to all the issues, we are going to go a goodly part of today, your Honour, and well into the afternoon.  I just cannot see this being able to be done in the morning, having regard to the course of conduct, yesterday, the way it played.  I am not criticising anybody, but I know your Honours were hoping to get away.

GAGELER J:   So, you are asking to put in written submissions if we allow ‑ ‑ ‑

MR HUTLEY:   On that, and as to the second matter my learned could tell you – and I may recall, whether I object – I only, literally learned about them a few minutes ago, your Honour.  Not that ‑ ‑ ‑

GAGELER J:   Mr Gleeson, how long will this take?

MR GLEESON:   Seven minutes.

GAGELER J:   You may put your submissions.

MR GLEESON:   Thank you, your Honours.  Yesterday we relied upon section 131 of the CCA as applying the ACL to the conduct of corporations – the whole of the ACL, including Part 2‑3.  Section 131 is a law based on section 51(xx) of the Constitution.  We also relied upon section 5, which relies upon section 51(xx) to the extent it extends to foreign corporations carrying on business in Australia, and it relies on section 51(xxviii) and perhaps the nationhood power, to the extent it extends to natural persons and residents.  That is the primary argument.  Contextually ‑ ‑ ‑

GAGELER J:   And that is the way in which the matter has been brought up to us.

MR GLEESON:   And that is all we are putting as the application to our particular facts.  Contextually, section 6 of the Trade Practices Act provides additional operations in certain circumstances – two of which are relevant to an unfair terms case – that is the first matter I wish to refer to.  So, in volume 1, at page 136, in section 6(2)(ca), there is an additional ‑ ‑ ‑

GLEESON J:   Sorry, Mr Gleeson, you were referring to the Trade Practices Act.

MR GLEESON:   Sorry, your Honour.  I will take your Honours to the ACL.  The same point is actually in the amending Trade Practices Act that Mr Hutley is going to.  It came in in 2010 in ACL (No. 1).  But, in the current law on page 136, section 6(ca) ‑ ‑ ‑

JAGOT J:   Sorry, which tab are you in now?

MR GLEESON:   Tab 4.  It extends Part 2‑3 to contracts made:

in the course of, or in relation to, trade or commerce –

JAGOT J:   Sorry, I am being very slow today.  Did you say tab 4‑0?

MR GLEESON:   Tab 4.

JAGOT J:   Tab 4, sorry.

MR GLEESON:   Sorry, your Honour.  That is a reliance on section 51(i) to apply section 23 to a narrower species of contracts than it would otherwise apply to in its terms; being those connected with trade and commerce, whether made by corporations or natural persons. 

GLEESON J:   Sorry, Mr Gleeson, are you talking about 6(2)(ca) or (2C)(a)?

MR GLEESON:   Section 6(2)(ca).

GLEESON J:   Thank you.

GORDON J:   So, any reference in Part 2‑3?

MR GLEESON:   Yes, which is the unfair terms jurisdiction is confined to contracts made in relation to trade and commerce.  The generality of section 23 through this alternative operation, which does not cut down the primary operation – see subsection (1) – is limited to contracts pursuant to section 51(i) of the Constitution.  There is a further alternative operation on page 141, in section 6(3A), your Honour.  This the other one I was coming to, which is to limit it to the post and telegraphic power.

The contextual submission is that the Parliament should not be taken to have read in a proper law limitation to section 23 when it has expressly adverted to a variety of hinges.  The primary hinge:  section 131 of the CCA and these two additional hinges.  It would be inconsistent with that scheme to read in proper law.

Your Honours, the one authority that we wish to give the Court on the operation of section 6 is the discussion of Justice Mason in the R v Industrial Court; Ex Parte CLM Holdings 136 CLR 235 which I would seek to hand up. At 244, his Honour explains how section 6 creates a series of additional operations of the Act. We would construe that his Honour says in the first full paragraph on 244 as meaning that it extends the application to persons not being corporations, as well as to corporations whilst engaged in trade and commerce; that is, it covers the field of whether you are a corporation or not a corporation because it is fully embracing the reach of section 51(i). That is consistent with the text of the provision I have taken you to. So, it is not an extension just for natural persons, it is an extension for anyone making contracts in trade or commerce.

Your Honours, the second matter is – Mr Hutley handed up yesterday some additional extracts from Act No. 44 of 2010, additional to what is in the bundle.  We think it is useful for the Court to have the whole of Act No. 44 and we seek to hand up the whole of the Act, which will be relevant to the arguments advanced today.

GORDON J:   Sorry, who handed those up?

MR GLEESON:   Mr Hutley handed up some additions.

GORDON J:   I though it was Act No. 51.

MR HUTLEY:   We handed up the 2010 consolidation of the Trade Practices Act, your Honour is correct.  It is relevant passages.

MR GLEESON:   What I am seeking to hand up is the whole of Act number 44, which is the critical Act in the middle of the year, which introduced all of the changes that are the subject of the argument that you are currently hearing.  Some extracts of that Act are found in the appellant’s supplementary materials.  The respondents’ supplementary materials handed up on Tuesday afternoon – it is page 27 and following of the respondents’ supplementary materials.  This is the whole version of that Act.

GORDON J:   What tab was that, Mr Gleeson, sorry?

MR GLEESON:   It is tab 4.

GORDON J:   Thank you.

MR GLEESON:   The third matter – I think I have made clear on the first matter that we are not seeking a finding that the particular contract in this case engage the alternative operation of the trade and commerce provision I referred to.  It almost inevitably did, but that argument was not sufficiently advanced by us, so I do not seek to raise new, fresh factual arguments.  I do raise it as a contextual argument to show that you do not need the proper law hinge.

Your Honours, the third matter is this:  I referred in‑chief to the fact that this is an applied law scheme.  That is referred to in our submissions at paragraph 26, footnote 8, and the Commonwealth submissions at paragraph 11, footnote 18.  The Commonwealth gives the Court the explanatory memorandum which explains the applied law scheme.  It is in volume 11 at tabs 70 and 71.  You already have that material.

What you do not have to date are the equivalent provisions under the State Fair Trading Acts which apply the uniform text of the ACL.  What we seek to do is to give the Court, for example, the New South Wales Fair Trading Act, including section 32, which does the equivalent work to section 5 of the CCA Act.  The reason we think the Court might be assisted contextually by having the State provisions is that it explains, perhaps, the oddity that your Honour Justice Edelman raised yesterday about the circuitous nature of the declaration and the enforcement mechanisms.

What happened in 2010 was in two stages.  The Commonwealth and States came up with a uniform text of the ACL which they then applied under their respective legislation, having regard to their respective legislative powers.  At State level, because of full plenary power, there was no need to limit it to conduct of, for example, a corporation, and so the State application provisions that you see in the Fair Trading Act simply apply the

ACL as law of New South Wales, and in section 32 they apply it extraterritorially to persons carrying on business in New South Wales.

At a federal level, because of the constitutional limitations, there was a need to source it to something; in particular under section 131, the conduct of a constitutional corporation, or under the alternative provisions conduct by anyone in trade and commerce or the post and telegraphs.  That explains the slight oddity that you do not see express conduct referred to in section 23 because you did not need it as part of the uniform text, and the desire was not to upset the uniform text by having variations at Commonwealth level.

The uniform text is operated on by the Commonwealth through section 131 with the relevant conduct being either the making or the enforcing of the contract.  So, for that purpose, in the bundle that I now seek to hand up, tab 5 in the index will give you the statutory provisions of the Fair Trading Act which are referenced in the written submissions, and in particular, page 36, where the Fair Trading Act commences.

You will see in section 28 that the ACL is applied as a law without need to limit it to conduct of corporations, et cetera, and you will see at section 32 the equivalent to section 5.  Our submission would be that under the State law there is no need for an additional hinge of the proper law of the contract, just as under federal law.  The balance of this bundle which, we think, the Court might be assisted by when you consider this morning’s arguments – these are tabs 2, 3 and 4 – is simply chronologically to give you the form of the relevant sections of the Trade Practices Act.  Tab 2 is immediately before the critical amendment.  Tab 3 is after ACL (No. 1) and tab 4 is after ACL (No. 2).

May it please the Court.

GAGELER J:   Thank you, Mr Gleeson.  Mr Hutley, you can deal with all of that in writing, if you choose.

MR HUTLEY:   Yes, we might, your Honour.  I think it raises exactly the same issues as under the current Act, as I have taken it in quickly.

GAGELER J:   Now, two things, Mr Hutley.  You will have received notice that we do not need to hear from you in relation to Mr Gleeson’s earlier application.

MR HUTLEY:   I understand that, your Honour.

GAGELER J:   Dealing with that, our position is that special leave to appeal on proposed ground 2(a) will be refused.  It raises no question of principle warranting the attention of the Court.  To address it at this late stage would unduly disrupt the orderly conduct of the appeal.

MR GLEESON:   May it please the Court.

GAGELER J:   The second question, Mr Hutley, is how are we going for time?

MR HUTLEY:   We are going poorly, your Honour, I am sorry.  I think I can finish it by mid‑afternoon, and I am aiming to allow our friends half an hour before closing time, before the Court would adjourn, to respond.  That is my solemn aim.  But I do not wish to have the threat that your Honours would, as it were, feel a need to sit there and not engage to achieve that aim – not that your Honours would, but ‑ ‑ ‑

GAGELER J:   So, the revised estimate is that the case will go the entire day?

MR HUTLEY:   The full day, your Honour.  I am sorry about that.

GAGELER J:   Very well.

MR HUTLEY:   We gave your Honours a bundle for part of the Trade Practices Act last night.  We found that it is better to give you more provisions, so there was one arranged which was handed to the Court Officer this morning which should be before your Honours.

GAGELER J:   So, what are we looking at?

MR HUTLEY:   I am going to come to that.  That is the Trade Practices Act in the form ‑ ‑ ‑

GORDON J:   Can I just ask a really simple question.  We now have multiple versions of this.  Can we not agree between us which one – is it different from what has just been handed up?

MR HUTLEY:   Your Honour, the one which was handed up to you was the amending Act of 2010.  Because your Honours will find it difficult to understand what was done just using the amending Act, what we have tried to give your Honours is a consolidation of the Trade Practices Act with all the relevant provisions after that amending Act which you have been belaboured with.  That is what we arranged to be delivered to your Honours today and I think your Honours’ associates have given it to you.  They incorporate the relevant amendments in 2010 into the Trade Practices Act. 

Your Honours, when you come to consider that question, my learned friend, the Solicitor‑General’s knock‑out blow, or whatever – his wrecking ball – will find that it was really just puffed‑up and we will deal with that – but that is what I am going to come to. So, the course I want to follow – with your Honours’ leave – is to go through the Act as it is, in its present form. We will seek to submit there is a perfect consistency and harmonious operation on our construction that section 5 does not operate on section 23. After we address that, we will turn to how section 5 had an operation when it amended the 2010 Act to refer to the Australian Consumer Law when the ACL was the schedule to the Trade Practices Act and only included the equivalent of Part 2‑3.

To understand how it fits together, would your Honours bear with me while I take you through the Act as it currently is.  I can understand that is – but would your Honours bear with me?  We were dealing with the text of section 5 – if I can take your Honours to that, that is at 134 in tab 1.4 – and how it refers to “engaging in conduct” in the present tense.  One sees that, too, in the definition of section 4(2)(a) – that, your Honours will find on page 123, which refers to:

the making of . . . a contract –

or, for that matter, the doing of any act.  What we submit – we compare that ‑ ‑ ‑

GAGELER J:   Just hang on a minute, I am sorry.  What was that further section?

MR HUTLEY:   Section 4(2)(a) – which your Honours will find at page 123 – a reference to “engaging in conduct”. 

GORDON J:   I was going to ask you about that.  Yesterday we were taken to (b), but does that not mean, then, that for the purposes of “engaging in conduct” in 5, one reads in what is in 4(2)(a), that it reinforces the argument that was put yesterday?

MR HUTLEY:   Mine, or our learned friends’?

GORDON J:   The learned friends’ argument.

MR HUTLEY:   Your Honour, when we take you through, your Honour, it does not advance it in any way.  The first point to notice:  it is all in the present tense.  It speaks of doing an act, engaging in conduct.

GORDON J:   Just one moment, Mr Hutley.

MR HUTLEY:   I am sorry, your Honour.

GAGELER J:   Subsection (2) of section 4.

GLEESON J:   It is not point 2, it is just subsection (2).

MR HUTLEY:   I do apologise, your Honours.

GAGELER J:   Small point of confusion, Mr Hutley.

MR HUTLEY:   No, your Honour, this is hellish.

GORDON J:   I told you it was not going to be tantalising.

MR HUTLEY:   I do apologise, but it is sort of baroque, the way they do this.  It is just amazing.  Our learned friends’ submissions, for example, on behalf of the interveners, submit at paragraph 17, they said, where they refer to section 23 as:

implicitly depends upon the parties having “engaged in conduct” of a particular kind –

But section 5 does not speak of having engaged in conduct, it extends the ACL to the engaging in conduct.  It is quite irrelevant, then, that in order for section 23 of the ACL to operate there must have been some conduct engaged in at an antecedent point of time, that is, to create a contract.  Section 23 does not refer to that conduct, it just refers to a term of a contract.  You might say there is assumed there has been some act at an antecedent point in time to create the contract, whether that was consensual, whether that was imposed by legislation, whether that – whatever it was, it assumes that a contract has come into existence.

GLEESON J:   Mr Hutley, is the framework here – am I correct to understand – you relied on the class action labour clause to support the stay of the proceedings.  The unfair terms issue comes up in response to your attempt to rely on the clause.  I mean, are you not engaging in conduct by seeking to rely on the class action waiver clause?

MR HUTLEY:   Your Honour could be quite right, but I will come to the legislation.  The legislation does deal expressly with engaging in that sort of conduct, but before you can get an injunction or other relief in relation to it, you have to have had a declaration in respect of section 23.

GLEESON J:   In other words, you can rely on a void term up until such time as someone gets a declaration that the term is void.

MR HUTLEY:   No, because once a declaration is made, you can get relief with respect to past activities – damages, and the like.  But what you cannot do – and what we say the Act does not do, and does not do for very good reason – it does not say in section 23 there is any conduct to which section 23 is concerned with.  It is concerned with the presence in an existing contract of a term which a court finds has the characteristic of unfairness.

I will come to – and it is important to see the framework of the Act.  I will tell your Honours where I am going.  Just about every section – except for two: 23 and 64 – have a limitation beyond section 5.  They are all limited to trade and commerce, not constitutional trade and commerce, trade and commerce.  What we say is that there was a deliberate determination by the legislature not to attach 23 to conduct.  It did not do it.

The suggestion that has been given that section 5 is some extending provision, which applies throughout the Act; when you actually go to the ACL, section 5 is not the territorial limiting provision which our learned friends would have it.  It merely – that is dealt with by the concepts in trade and commerce which suffuses all the substantive provisions.  Section 5 merely overcomes the argument that someone might put that acts done – albeit in trade and commerce – outside Australia, the Act would not extend to.

That is why it is not, as our learned friends would have it, the all‑encompassing territorial limitation provision – it has a completely different structure.  We say that is why – and the decision was made, and we say for good reason – not to so apply that regime to section 23.  But – I have to make good those propositions, your Honour, and I am very conscious of the 131 problem that your Honour has raised, and I will get to it, if I can, in due course.  But I have to go through the legislation, because your Honours have not been taken through the whole structure.

GAGELER J:   Okay, so we are at section 5.

MR HUTLEY:   Yes.

GAGELER J:   And you have made the point that engaging in conduct is in the present tense.

MR HUTLEY:   Quite.  And we say that is irrelevant to section 23.  Thank you, your Honours.  And then when you go to – that is seen in 23 because it says a term of a contract “is” void.  And the test for voidness is a test which is satisfied, and can only be satisfied, by a court.  Because, for example, in section 24(2), it identifies that:

In determining that a contract is unfair . . . a court must take into account –

various matters.  But, in other words, the process of determining that the clause is void is unable to be divorced from a court decision.

GAGELER J:   Have we moved from the Act to the law at this stage, or are you coming back to the Act?

MR HUTLEY:   You have to move between the two, unless your Honour has a - - -

GAGELER J:   No, there are contextual issues that arise in section 15 of the law, for example.  But you will come to these, I hope.

MR HUTLEY:  Well, I was not exactly sure that I was going to come to section 15, so if I could just park that for a moment and come back ‑ ‑ ‑ 

GAGELER J:   Well, it appears to me to assume that section 23 involves conduct, but you might deal with that in due course.

MR HUTLEY:   I have to deal with that – no one has referred to it until this moment, your Honour.  That is not to say it is not there.  Now, if one goes to it , so in other words, section 23 operates to render a clause void but that is only done by a court.

GORDON J:   Can I ask a really silly question ‑ ‑ ‑ 

MR HUTLEY:   You know I am terrified of those.

GORDON J:   Just so I understand the argument, is the argument that, when one looks at Part 2‑1 and the other provisions in the general protections, they deal with conduct, and Part 2‑3 is not?  Is that the general thrust of it?

MR HUTLEY:   Yes.  Unfair contracts ‑ ‑ ‑ 

GORDON J:   Is it not – I mean, that is to identify the fact that the thing upon which they are concerned and directed at in those other Parts is conduct, but is not the thing here that Part 2‑3 is dealing with consumer contracts, it is dealing with a subject matter which ‑ ‑ ‑ 

MR HUTLEY:   I accept that.  But the extension – our learned friends rely on section 5, they say section 5 extends the operation to any contract entered into by a company which satisfies the criterion of section 5.  They say that means any contract, irrespective of its proper law, entered into by a company anywhere in the world, which has the consumer criteria, falls within section 23 if that company happens to carry on business in Australia, of any variety.

GORDON J:   It is a bit more limited than that.  Section 23 is only dealing with consumer contracts, you have to satisfy the other – and it has to be, it is not one that is excluded by 28, to which the Part does not apply.

MR HUTLEY:   But as these – and I will come to the second reading speech and section 28.  Section 28 was excluded, as they said, not because they were worried about extraterritoriality or anything of that variety, it was because they were the sorts of contracts where there were legislative regimes which dealt with them, such things as shipping, such things as ‑ ‑ ‑

GORDON J:   Small business contracts under State or Commonwealth Acts.  That is number (4).

MR HUTLEY:   Yes, does not apply to small:

to which a prescribed law of the Commonwealth, a State or a Territory applies.

So, it is a power to expressly exclude statutes.  But the other – if one comes to second reading speech in relation to – no, I am sorry, the explanatory with respect to section 28, and if your Honours go to the joint book of authorities, page 4995, which is 5.79, your Honours will see that they refer to, with respect to shipping contracts, that:

shipping contracts are already the subject to a comprehensive legal framework –

So, in other words, the exclusion was not because, in effect, these were external or overseas, it is because they were frameworks which dealt with them.  So, it was not a policy which informs the construction of section 5, in our respectful submission, section 28.

JAGOT J:   I am just having trouble following your description of where things are.  What is 5.79?

MR HUTLEY:   Your Honour, that is tab 5.79 – that is paragraph – sorry, I will just have it turned up, I do apologise, your Honour.

JAGOT J:   No, it is fine, I am just on mainly electronic, and it is not making much ‑ ‑ ‑

MR HUTLEY:   I will just turn up what it is.  It is – if your Honour can go to the joint book of authorities page – if your Honour can search it by page, your Honour will find it at 4995.

JAGOT J:   Not so easy electronically.

MR HUTLEY:   Volume 12, tab 71.

JAGOT J:   Tab 71, okay.

MR HUTLEY:   I do apologise, your Honour.

JAGOT J:   No, that is fine, I can find tab 71.

MR HUTLEY:   It is paragraph 5.79.  So, to answer your Honour Justice Gordon’s – section 28 does not inform the question of construction.

GORDON J:   No, it was not really 28, I was just trying to identify that this sort of latching onto conduct as being the thing that is not – to which Part 2‑3 is not dealing with.  I just do not understand why that is so important, but I assume you are going to explain it to me.

MR HUTLEY:   Because our learned friends – our learned friends say by reason of section 5, section 23 applies to any contract, any contract, which satisfies section 5, and section 5 relates to extending to engaging in conduct.  Our short point is section 23 is not concerned with engaging in conduct at all.  Section 5 of the Act does not speak to section 23 of the Consumer Law.  That is the short point.

Our learned friend says it does and, in our respectful submission, there is no textual basis for that at all.  It is an assertion, and no one has yet pointed to any textual basis – and, for example, the Chief Justice in the Court of Appeal in the Full Court in a sense says you really cannot speak of a term – it is hard to think of a contract without its creation, a term without the creation of the contract.  We just say – with respect – it is very easy to do, one often deals with provisions of contract being unconcerned about how they come into existence.  That is really, as it were, the point of the construction.

GAGELER J:   It is the whole point, is it?

MR HUTLEY:   Except our learned friends then go on and say it must, for example, because of section 131 – and your Honour asked me about that yesterday ‑ ‑ ‑

GAGELER J:   As I understand your argument, Mr Hutley, as you are presenting it now, is that section 5 – in its reference to engaging in conduct – simply does not pick up section 23 of the ACL.

MR HUTLEY:   It does not speak to it.

GAGELER J:   But is there another layer to the argument, or is that where all of this is directed?

MR HUTLEY:   Our learned friends, for example, say that it has to speak to it – for example, the Attorney‑General’s argument is that is has to speak to it, otherwise section 23 would have no operation. It would have been a futile Act.  That is their first argument why we must be wrong.

GAGELER J:   No, I understand, but just taking your argument to be, or a part of your argument to be, that section 5 – in referring to engaging in conduct – does not operate on section 23 of the ACL.

MR HUTLEY:   That is our first point.

GAGELER J:   Is there another point?  All I am asking is if you have some point about the construction of section 23 as well, or is there something else, or is that the whole end point of these submissions?

MR HUTLEY:   It is emphasised by the fact that, for example, 23 – when referred, in determining unfair – does not speak of conduct, it speaks of the potential of what would happen if something happened.  In other words, it deliberately does not, for example, concern itself with the reliance on the contract, in fact, or any act.  It speaks to an investigation which is wholly what might be called hypothetical, namely, by reference to the point of time to which it is directed – namely, the contract; the time when it exists as a term – you then ask the series of hypothetical questions, or the Court does, looking forward to what might, or could, or would happen, and that, again, is not concerned with any actual conduct.  It is concerned with potentials, so we say every aspect of 23 is the antithesis of being concerned with the engaging in conduct.

EDELMAN J:   Why would all of this not become inutile if the pleading was amended to include a claim for a declaration under section 250?

MR HUTLEY:   Because we say that – in fact, we rely upon 250, because 250 is a declaration, and only a declaration of the satisfaction of the criterion in section 23 and 24.  It does not speak to conduct by us.  That is the declaration, and we rely on it, because, as your Honours – and I will take your Honours through the provisions in a little while – is that that is the predicate to being able to seek relief about actual acts purportedly in reliance on the terms, past and future.  You cannot complain of anything about the term unless you get a section 250 declaration.

EDELMAN J:   I appreciate all of that, but if the pleading is amended in this case to seek a section 250 declaration, why are all of the arguments that the appellants now raise open, following that declaration?

MR HUTLEY:   Because they have to satisfy the conclusion that section 23 speaks to a contract with – the proper law of which is not Australian.  They seek to do that by saying, section 23 is concerned with “engaging in conduct”.  So, section 250 does not advance them.  If they fall within section 23, 250 then satisfies the predicate for the relief that they can get under the other sections.  We accept, immediately, that those sections – and your Honours will have seen them – are concerned with giving effect with conduct.  But – and it is important to take this into account – if one goes to section 250 – if I can take your Honours, in that regard ‑ ‑ ‑

GLEESON J:   Of the Consumer Law?

MR HUTLEY:   Consumer Law, yes, your Honour.  Your Honours will find that at page 352.  That is the declaration power.  The declaration power is qualified in the way it is set out in (2), (3) and (4).

GORDON J:   Yes, but the critical thing is, that it can be:

on application by:

(a)a party to the contract –

MR HUTLEY:   I accept that, your Honour.

GORDON J:   Absent someone seeking to rely upon it, one never has the section 23 inquiry.  You just do not get there.  It just seems to me, it seems to be pregnant that 250 recognises that somebody – putting aside the regulator – a party to the contract has to come along.  As Justice Gleeson put to you, if you are not relying on it – and, here, Princess is relying on it – you would never have a 23 inquiry – you would never have a 250 inquiry.

MR HUTLEY:   With respect, your Honour, you can have a 250 inquiry because the regulator can bring a claim.

GORDON J:   Put the regulator aside for a moment, we are dealing with a party to the contract and whether or not we have this extension by section 5 in the context of foreign – or a corporation in Australia carrying on business in Australia.

MR HUTLEY:   Quite, I accept that, your Honour.  But that does not expect – your Honour, I will just be repeating myself.  Certainly, I accept if one is seeking relief under, for example, section 243, or 237, 238, or 239, they are all dependent on having a declaration made under 250.  They actually deal with conduct and, therefore, any conduct which met the section 5 requirement – like seeking to enforce a contract to which section 23 related overseas, if the company engaged in business here – would fall within those contracts, because section 5 would extend to it.

And an injunction would extend to an injunction to restrain a company seeking to enforce that contract overseas if they met the criteria of section 5.  We accept that.  But that has told one, with respect, nothing about the extent of section 23, because section 5 only speaks to the engaging in conduct.  In other words, we say it is a diversion to look – to divine the construction of 23 by reference to the operation of the other sections which are dependent upon a declaration.

EDELMAN J:   I will have one more go.

MR HUTLEY:   Yes, your Honour.

EDELMAN J:   Suppose that the pleading is amended to seek, as an anterior issue, a declaration under section 250.

MR HUTLEY:   Yes, your Honour.

EDELMAN J:   At that stage do you say that it is open for the applicants to seek that declaration?

MR HUTLEY:   We say that section 23 on a true construction does not extend – is not extended by section 5.

EDELMAN J:   So, they cannot get the declaration at all because there is no conduct?

MR HUTLEY:   Yes.  Our point is one has to, in effect, find the operation of section 23 before one moves to the following sections, and section 23 does not involve any engaging in conduct, and that, we say, was a deliberate drafting decision because, if it does, it has the extraordinary effects which we say follow.

GAGELER J:   Let us look at section 232 of the ACL.

MR HUTLEY:   Yes, your Honour.

GAGELER J:   So, the Court can grant an injunction, admittedly in circumstances where subsection (3) is satisfied.

MR HUTLEY:   Yes, your Honour.

GAGELER J:   What is being enjoined is conduct that constitutes or would constitute, relevantly:

a contravention of a provision of Chapter 2 –

Now, how do you make that language work in circumstances where what is said is that this would be – in circumstances where the provision of Chapter 2 relied upon is section 23?

MR HUTLEY:   Your Honour, “proposing to engage, in conduct . . . a contravention of Chapter . . . 3” – but 23 is not a contravention of Chapter – there is no contravention by section 23.

GLEESON J:   You are saying that is just limited to the unconscionable conduct part of Chapter 2?

MR HUTLEY:   Quite.

GAGELER J:   So you cannot get an injunction?

MR HUTLEY:   You cannot get injunction – you can get an injunction against the contravention of the Chapter, but the contract already exists.  You can get an injunction from giving effect to the provision, if somebody is threatening it, but ‑ ‑ ‑

GAGELER J:   How consistently with the language of section 232, in your submission?

MR HUTLEY:   One goes to subsection (3):

Subsection (1) applies in relation to conduct constituted by applying or relying on, or purporting to apply or rely on, a term of a contract that has been declared –

But you have to get to that “has been declared” first.  So, the injunction has to be predicated that you fall within 23 before you get to the injunctions.  The whole structure depends upon whether you fall within section 23.

GORDON J:   And does that explain – I know you probably have not – the section 15 that Justice Gageler took you to at the outset of today?

MR HUTLEY:   Yes, that is how we explain it, your Honour.

GAGELER J:   Another way of reading it, Mr Hutley, sorry to be obtuse here, but it is just when you read subsection (1)(a) ‑ ‑ ‑

MR HUTLEY:   Of which section, I am sorry, your Honour?

GAGELER J:   Section 232 ‑ ‑ ‑

MR HUTLEY:   Thank you, your Honour.

GAGELER J:   ‑ ‑ ‑ in referring to:

conduct that constitutes, or would constitute:

(a) a contravention of a provision of Chapter 2 –

You read that as applying to conduct constituted by applying or relying upon, or purporting to apply or rely on, the term of a contract only if there has been a declaration under section 50, but otherwise the provisions are entirely consistent ‑ ‑ ‑

MR HUTLEY:   No ‑ ‑ ‑

GAGELER J:   ‑ ‑ ‑ in treating conduct constituted by applying or relying on a term of an unfair contract as conduct that constitutes contravention of section 23.

MR HUTLEY:   Your Honour, perhaps I am being obtuse now.  If one goes to section – the difficulty is you only get to (1) after there has been a declaration.  The declaration does not depend upon engaging in any conduct, it depends upon whether you fall or do not fall within 23.  The question of construction is:  what is the ambit of section 23?  That is not assisted, with respect, by looking at 232.  It cannot be, because it assumes – 232(1) assumes that you have satisfied section 23, and there is no conduct referred to in 23 which would constitute, for example, (a):

a contravention of a provision of Chapter 2 –

It is perfectly lawful to have entered into a contract which happens to come to have found within it an unfair term.  There is no contravention at all.  You cannot say the entry into it is engaging in conduct.  Our learned friends are driven to, in effect, say it must be applied to 23 because – for some reasons which are unidentified.  The Chief Justice – I have said it, it is hard to distinguish a contract from the entering into the contract, and we say that is done every day of the year in just about every contract case one ever deals with.

The question is, and we say it is simple:  why?  There is an obvious reason, we say, why the legislature did not do the simple step, if they wanted to.  It is expressly saying section 23 extends to a contract which has been entered into in accordance with section 5 – in the circumstances provided in section 5.  Why did they not?

We say it is obvious, when one sits back and thinks about this for a moment – these provisions were brought into existence in 2010.  The world was a world which was getting ever closer, and ever more interconnected, with such things as the internet.  As this Court has heard in the Bathurst City Council Case, for a company to carry on business in this country, a foreign country, it does not take a lot.  In fact, there was before this very Bench the Facebook Case, where those principles were considered and your Honours withdrew special leave.  But the point is – it does not take a lot to carry on business in this country.  Your Honour Justice Edelman’s decision which we will be coming to in Valve points these matters out.

If our learned friends’ construction is right – our learned friend says the examples are unreal – any contract, just about, by any airline in the world, for routes having nothing to do with Australia, not involving Australian citizens, nothing, which happen to have unfair contracts – in cancellation terms, forfeiture terms, for example – by the mere fact that that airline happened to conduct business, which it would probably be likely to do, because you can probably enter into contracts over the internet with them, will – if this construction is right – be the subject of a class action liability exposure, individual or class action, to have all those terms set aside, and perhaps massive damages recovered from the airline, which may happen to have assets in these countries like planes landing.

If this is right, by the – as it were – accident of this drafting, and by the accident of companies happening to carry on business in this country in the ways that one can, this country, through this Act, has become the somewhat serendipitous class action capital of the world.  That is the construction which our learned friends advance.  My learned friend Mr Gleeson says:  that is all right, if you do business here, it is in Australia’s interest that you have fair terms anywhere in the world.  Just to state that, we say, is patently absurd.

Firstly – and I will come to them, I understand, your Honours – all the other provisions, such as misleading and deceptive conduct, bait advertising, and the like, are limited to trade and commerce in the way defined in this Act, which, incidentally is not the constitutional concept, it is the broader concept, because it deals with intrastate trade.  That is section 2 – but set that aside.

Every other one of substance – I will make that good, I know I am – I will make that good – has that requirement.  But for some reason, our learned friends say, using this strained construction of engaging in conduct, any term which happens to have the characteristic of being a standard form contract can be the subject of litigation in this country, which, of course, the Federal Court would have jurisdiction because it would be an action under a statute, an Australian statute.  Even more absurd is our learned friends’ contention that the true construction of section 24 is to be done by reference to Australian standards of fairness.

So, in other words, if your Honours accepted our learned friends’ construction, any contract anywhere in the world, which have the relevant requisite and was productive, had been productive, historically, of loss – moneys, people’s moneys – could be the subject of a class action in this country for the benefit of people who had nothing to do with Australia.  Now, how that advances section 2 of the Act, to take up the point your Honour Justice Gleeson raised with our learned friends, escapes one.  That is why this is not a strained question.  We say the strain is the strain by our learned friends’ construction.  That is why we say then, if that be right ‑ ‑ ‑

EDELMAN J:   Why would it be an appropriate forum to commence a class action in Australia, if it is a plane doing business overseas and it just happens to land in Australia?

MR HUTLEY:   Your Honour, but our jurisprudence says if you have a juridical advantage, and the juridical advantage will be writ large.  I mean, the argument proves too much and, for example, the example given by my learned friend the Solicitor‑General of suing in Germany again proves a point – of course, the Germans would just think it was bizarre, and they would pay no attention to it.  But in our learned friends’ case, the Federal Court of Australia, or any court in Australia, would have to apply it, would determine to apply it, and also would apply it to the idiosyncratic standards of the Australian community in determining whether it was unfair.

Now, if one – if the presumption against extraterritoriality has any interest in this country, this has to be one of an extreme variety, and I will come to that in due course, and ‑ ‑ ‑

EDELMAN J:   It would not be an inappropriate forum for a German consumer to sue a German car owner about a defect in a German contract in an Australian court.

MR HUTLEY:   If the German consumer says the only place where I can get rid of this term is the kind Australian community which is determined because this BMW carries here, I can come here because – the Germans love this term – and on a true construction, I have this right – it is the ultimate juridical advantage.  Therefore – and you cannot – also, it has to assume that the legislature has left this question to the discretion of the courts to determine whether to enforce or allow the enforcement of this provision by reference to criteria which would involve major policy concerns if it was to involve a departure from the known jurisprudence of an existing juridical advantage.

Now, that is our point, and – yes, of course, there is another thing.  Let it be assumed that in this vast array of cases, claims, somebody is able to say out of this class, an Australian had bought one of these vehicles in Germany.  And our learned friends would then say, well they are in the class – we will have another discretionary – but the real point is the substantive juridical advantage.  But can I now take the course of the Attorney-General’s point.

GAGELER J:   Have we finished going through the Act in its current form, Mr Hutley?

MR HUTLEY:   No.  Well ‑ ‑ ‑ 

GAGELER J:   I thought you were going to do that and then you were going to take us to some history.

MR HUTLEY:   Yes.  Now, I will deal it in this way if I might, your Honour, I have been taken somewhat out of – if we could now go to the various other provisions in the Act.  Could we go, if we could, to the Consumer Law.

GORDON J:   Is this to make good the proposition that they all have this other limit?

MR HUTLEY:   Yes, your Honour, I might.

GORDON J:   Thank you.

MR HUTLEY:   Can we start with, for example, section 18:

A person must not, in trade or commerce, engage in conduct that is misleading or deceptive –

Now, you have been told “trade or commerce” is defined in section 2, at page 258:

(a)trade or commerce within Australia; or

(b)trade or commerce between Australia and places outside Australia;

and includes any business or professional activity –

So, in other words, that is the limiting provision which is truly territorial.  If one then moves to section 20 and 21, again, trade and commerce.  Then if we can go there to 29, trade and commerce; 30, trade and commerce – that is land of course, and that is an interesting one, if our learned friend were – yes; 31, misleading to employment, the same; 32 – and so it goes on.

GORDON J:   Sorry, what is your point in relation to section 31?

MR HUTLEY:   Section 31, misleading conduct in relation to:

Must not, in relation to employment . . . as to:

(a)      the availability –

I am sorry, I think there is a limitation:  “engage in conduct”, “mislead” – I am sorry, I will just have that checked.

GORDON J:    Well, the “engage in conduct” in this schedule is defined in section 22.

MR HUTLEY:   I am sorry, your Honour?

GORDON J:   The “engaging in conduct” and “conduct” for the purposes of the ACL is defined in section 22 of the ACL.

MR HUTLEY:   Yes, yes, but essentially the same terms, I think.

GLEESON J:   That is right.  But why is that a limit, here, relevant for your argument?

MR HUTLEY:   Because the limitation – it is said to be that this sort of conduct is a limitation point.  What we say is, the Act has within it the limitations of in trade and commerce.

GORDON J:   I do not see it in section 31.

MR HUTLEY:   I am sorry, your Honour?

GORDON J:   I do not see it in section 31.

MR HUTLEY:   Section 31, your Honour.  I will have it checked – there may be a permit with respect to employment.  I will have that checked, your Honour.

Moving on, you have got 32, 33, 34 – “Bait advertising”, in 35 – 36, 37 and 40 – I will just have 39 checked.  I will just have that checked, your Honour, I think there is a limitation.  Section 41, 42 – then various other provisions.  Also, if one goes to various of the provisions to deal with guarantees.  If your Honours go to 51, 52 and 53, the interesting thing about that – they do not, in terms, have a limitation on trade and commerce but when one goes to the relief section, in relation to those provisions – which is 237 – sorry ‑ ‑ ‑

JAGOT J:   Section 259.

MR HUTLEY:   Section 259, your Honour.  That limits the claims between trade and commerce.  Other guarantees, such as 54, and following – going back to 312 – it limits guarantees to trade and commerce.

GORDON J:   Which ones are we dealing with now, Mr Hutley – sorry, just that last reference?

MR HUTLEY:   The guarantees in 54.  I told your Honour, 51 to 53 did not have that limitation, but the limitation lies in the relief.  Section 54 and the following guarantees have the limitation to trade and commerce.  Your Honours see that all the way through to 63, I think, yes.

So, in other words, the Act is suffused by true limitations as to the territorial expanse, and we say that section 5 is properly to be characterised as not a territorial limitation but a general provision which, when one deals with provisions dealing with engaging in conduct, ensures that an argument is not put that, true it is, it is trade and commerce is the territorial limit, but that should be construed as trade or commerce acts within Australia.  So, in effect, that is why it is extending the operation, to overcome a suggestion – an argument in respect of the provisions which have their own internal limitations, that they are limited to acts within Australia and they give, in effect, a limited extension, an extension in the way indicated.

Now, there is one last matter in relation to this.  We say the interveners raise two arguments against the conclusion which we say is the only construction available on the text, context and purpose of section 23.  The first argument is to rely upon the fact that when the unfair contract terms provisions were first introduced into what was then called the Trade Practices Act, section 5 was amended, they say, and specifically refer to those provisions.

Now, your Honours have the copy of the Trade Practices Act which is the compilation as at 1 July 2010, which your Honours received from us today.  Could your Honours take those up and can I just take your Honours through the provisions, relevantly.  Your Honours will see in section 4 on page 13 the definition of “unfair”.  It says it:

has the meaning given in the Australian Consumer Law.

If your Honours then go on to section 5, which is on page 25 on the bottom right‑hand corner, your Honours will see section 5, and it says:

Each of the following provisions –

And it refers to some parts, and (ea) is the Australian Consumer Law and then it is otherwise in terms you know. Would your Honours note that there is no reference to Part VI. Would your Honours also note subsections (4) and (5). I do not need to trouble your Honours with them overly, but I note them. Could your Honours then go on to section 80. That is at page 362. Your Honours will see that is in Part VI. It says:

subject to subsections (1A) . . . where, on the application . . .the court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)a contravention of any of the following provisions:

(i)a provision of Part IV, IVA, IVB, V or VC;

(ii)a provision of the Australian Consumer Law –

. . .

the Court may grant an injunction –

And if your Honours then drop down to 80(1C) your Honours will see:

a reference in paragraph (1)(a) to a contravention of a provision of the Australian Consumer Law includes a reference to applying or relying on, or purporting to apply or rely on, a term of a consumer contract that the Court has declared under section 87AC –

which I will come to in a moment:

to be an unfair term.

Section 87AC your Honours will find at page 402 in the bottom left-hand corner.

GLEESON J:   Mr Hutley, I am not sure why section 5 would be required to extend to Part VI, if it is concerned with enforcement and remedies. 

MR HUTLEY:   I am sorry, yes, your Honour, we say it would be required because, otherwise, if one goes to the injunction, it is provisions:

Where, on the application . . . the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)a contravention of . . .

. . .

(ii) a provision of the Australian Consumer Law –

Then, an injunction follows. So, you could only get an injunction if the act constitutes a contravention of the Australian Consumer Law. And ‑ ‑ ‑

GORDON J:   Or “would constitute”.

MR HUTLEY: Or would constitute. Now, the Australian Consumer Law, at this time, your Honours will find in Schedule 2, and it purely has – and your Honours, that is at 412. And your Honours will see that purely deals with declaring the provisions dealing with unfair consumer terms.

GORDON J:   Sorry, I am lost.  What was that last bit – I see, I have it now.  Thank you.

MR HUTLEY: Schedule 2, your Honour – it starts at 411. The Australian Consumer Law, in terms, only consisted of the provisions dealing with unfair terms, that is all it concerned with. Going back to section 80, you can only get an injunction if:

the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)a contravention of . . .

. . .

(ii) a provision of the Australian Consumer Law –

Subsection (1C) tells you:

a reference in paragraph (1)(a) to a contravention of a provision of the Australian Consumer Law includes a reference to applying or relying on, or purporting to apply or rely on, a term of a consumer contract –

In other words ‑ ‑ ‑

GORDON J:   So, your argument is that you need a contravention; section 23 is not a contravention, or what was then a contravention, but (1C) extends the meaning of contravention to include where there has been a declaration.

MR HUTLEY: Quite. It really, in effect, makes it part of the Australian Consumer Law, and all of the provisions in this amending Act follow that structure. In effect, it is the same structure as the Act has, but it was done in this way for historic reasons which do not matter anymore. In other words, the argument that the Australian Consumer Schedule would have had no operation – if our construction is right – is, with respect, simply wrong. It was necessary to have that the Australian Consumer Law was taken to include the conduct being conduct the subject of the injunction and other provisions which you will see, which replicate the relief provisions which you now find in the Consumer Law. That is the way it was done.

Therefore, the point that the Australian Consumer Law would have been a nullity, which the learned Solicitor‑General referred to, is, with respect, wrong. It really is no different to the structure that it now has. Then, that leads us to the second argument that is raised by the interveners – is the supposed problem that arises from the application of Part II, III as a law of the Commonwealth if that Part does not concern engaging in conduct? That is what I think your Honour the presiding judge indicated to me was the 131 issue. I take your Honours to section 131. Section 131 says – this is at page 209:

Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2, 3, or 4 of Schedule 2 by corporations.

Then, 131(2), et cetera, it says that the entirety of Schedule 2, that is, all provisions:

applies as a law of the Commonwealth –

And they do so:

to the conduct of corporations –

The provision itself, accordingly, does not need to be a provision that is concerned with the conduct of corporations, let alone engaging in conduct of the kind to which section 5 extends.  Rather, to be applied as a law of the Commonwealth, it is so applied in section 131 when it is the provision that is in fact applied to the conduct of corporations.  There is no difficulty in finding that section 23 can apply to the conduct of corporations.

As we have taken your Honours through, section 23 operates as a means of engaging the remedial provisions – and I will not go over them again, 232 and 237 to 239 – that are directed to the conduct of corporations, namely reliance on or seeking to give effect to contracts that have been declared void under section 250 because of section 23.  There is no question that those remedial provisions apply to the conduct of corporations, and therefore do so as laws of the Commonwealth, under section 31, but they can only apply in a relevant respect with a declaration under section 250 being made, which declaration, in turn, can only be made when the state of affairs in section 23 is found to exist.

GLEESON J:   Does it apply to your client’s conduct in relying on the class action waiver clause in support of the stay?

MR HUTLEY:   No, because my client’s contract was entered into overseas, and even if they had conducted business, section 5 does not apply to my conduct because section 23 does not respond to section 5.  You have to find what the construction of 23 is by a process of construction unaided by section 5.

GLEESON J:   But your conduct, in relying on the class action clause, is conduct in Australia.  You are engaging in conduct in Australia.

MR HUTLEY:   But it can only be one, with respect, to which a declaration could properly be made, and our submission is on the true construction of 23 our contract is not a contract with respect to which a declaration under 23 could not be made because section 23 does not extend to it.

EDELMAN J:   Because the proper law of the contract would imply limitation.

MR HUTLEY:   Because one has to find a territorial nexus, because otherwise it applies to every consumer contract in the world, and, as Justice Derrington pointed out, there is no connector as a matter of construction to be found.  One is then thrown back into the Wanganui and other cases which I will come to territory, and that would apply – ordinarily be construed as applying to proper law.  We have, your Honours will see, some of our notice of contention, paragraph 2, we suggest some potential other criteria, but none of them would include our contract – i.e., it was made within the country, et cetera, et cetera.  You could, theoretically, look for another hinge, to use the terminology, but the conventional hinge one goes to is the proper law of the contract, and there we have it.

GAGELER J:   So, is your short point about section 131(1) that it is referring, relevantly, to conduct that occurs only after a declaration is made under section 250?

MR HUTLEY:   Yes, the conduct to which the section – and section 23 is a necessary predicate to that and, therefore, is relevantly within the concept of the provision of 131.  Of course, once a declaration has been made, one can then go back to past conduct in reliance on the contract.  It is not necessarily future contract quoad the moment of declaration.

GAGELER J:   Yes, that is what I am trying to understand.  So, you do not say, I think, that section 232 and 237, which deal respectively with injunctions and compensation, apply only in respect of conduct that occurs after a declaration is made?

MR HUTLEY:   No.  Well, injunction, yes, probably.

GAGELER J:   Well, depending on the ‑ ‑ ‑

MR HUTLEY:   You could get a mandatory – I mean, theoretically, a mandatory – of course, your Honour, no.

GAGELER J:   You are not saying that?

MR HUTLEY:   No, we are not saying that.  I am not saying that.

GAGELER J:   It is just, if you have an injunction – if you seek an injunction in respect of past conduct you can only get the injunction if you also get a – if you get a declaration as part of the same orders, order 1 is the declaration, order 2 is the injunction.

MR HUTLEY: Yes, quite, but that tells one nothing about the construction of 23 as to what contracts it applies to. One is assuming one’s conclusion. You have to get the declaration before you can get the injunction. So, you have got to find that 23 extends – applies to section 5 – a contract made within section 5 to say it applies to 23 to then go onto the conduct, because 23 – application of 23 is the predicate which has to be satisfied before you get to it. Now, we give an example of a similar provision under this Act. If one goes to sections 105 and ‑ ‑ ‑

JAGOT J:   Are we in the Act or the ‑ ‑ ‑

MR HUTLEY: Yes, if your Honour goes to the respondents’ additional materials index, it is tab 2, page 5. These are also provisions of the Consumer Law. Section 105 and 106 deal with the Minister “Declaring safety standards for consumer goods” – that is 105 – and 104 applies to “Making safety standards”. Now, whatever one says of those provisions, those provisions are the predicate to the operation of section 106 and following, supplying the goods that do not comply with the safety standard.

GORDON J:   So, what is the point?  I am a bit lost, Mr Hutley.

MR HUTLEY:   The point is you cannot say that 104 and 105 are conduct of corporations.  They are provisions which – they are the subject of section 131.  They take effect because they are necessary predicates to other provisions of the Consumer Law, and we say section 23 is exactly the same and the question is, what is the extent of section 23?  And you are not assisted by that, by talking about engaging in conduct.  Section 23 is ‑ ‑ ‑

GORDON J:   I am bit lost, I am sorry.  Sections 104 and 105 set safety standards, do they not?

MR HUTLEY:   Yes.

GORDON J:   And then 106 is the contravention:

must not, in trade or commerce, supply ‑ ‑ ‑

MR HUTLEY:   Yes, your Honour.  Our point is our learned friends say you have to support every provision in the Consumer Law by reference to 131, that it has to be – it applies to conduct of – if you go back to 131(1), the section, as a law of the Commonwealth:

applies as a law of the Commonwealth to the conduct of corporations.

We accept that.  Our simple point is 104 and 105 clearly are supported by 131 and they do not involve conduct of a company.  They are provisions which are predicate provisions such as declaring something a safety standard, not unlike a court declaring a contract to have an invalid term.  No one would suggest that was an exercise in futility because that did not involve conduct of a corporation.  They are clearly provisions which are designed to facilitate and make effective provisions dealing with conduct of corporations.  That is exactly the same as 23; does not tell you anything about the extent of it.  So, we say that the point simply is wrong.

The last point – our learned friends’ last ground is that there would be fracturing.  Now, fracturing, in the principles, is the situation where party A has a claim against party B, and that is the subject of an exclusive jurisdiction clause, but party B has a cross‑claim against party C, or party A responds to a claim, a defence of party B, by claiming against C.  So, the issues involving C are tied up, in any case, and to send off the case between A and B, would lead to a fracturing of the dispute, being a dispute involving party C.  Now that is what fracturing involves. 

No fracturing takes place in relation to Mr Ho’s case.  Mr Ho’s case remains the same.  No fracturing takes place with any other person who has a claim.  He, she, it or they, have the same claim, irrespective of the stay.  So, the fracturing point simply does not arise –  fracturing does not equal multiplicity.  Yes, your Honours, could we have until 18 August to make the submissions in relation to the State Fair Trading Act?  Would that be pushing it?

GAGELER J:   Yes, it would be, because it would be ‑ ‑ ‑

MR HUTLEY:    Well, it is just that – your Honour, the difficulty is – I will be quite frank, your Honour – after this, we are all, or most of us, are flying to Perth, and we are going to be stuck over there. 

GAGELER J:   Well, we have read about that.

GORDON J:   Stuck over there.

MR HUTLEY:   And, yes, but if your Honour sets an earlier time, it is just an ask.

GAGELER J:   No, no, it is all right.  You have until then.

MR HUTLEY:   Your Honours are too gracious, as always.

Those are our submissions.

GAGELER J:   Mr Solicitor.

MR DONAGHUE:   Your Honours, I appreciate that I do not have a right to reply and I also appreciate the time of day.  I seek ‑ ‑ ‑

GAGELER J:   We will not be wasting time disputing your ability to say something.

MR DONAGHUE:   Thank you, your Honour.  I will take I think three minutes, that is my aim, on one point.  Your Honours have been handed up a hard copy of the Trade Practices Act by our friend in the form that it took just post the commencement of ACL (No. 1).  If your Honours could turn to that and then go to section 5, which is on page 25 of the print.

GORDON J:   Page?

MR DONAGHUE:   Page 25, section 5.  This is a provision that existed in the Trade Practices Act before the commencement of ACL (No. 1), extending the operation of the various specified parts of the Trade Practices Act to the three classes of person identified in paragraphs (g), (h) and (i). The effect of ACL (No. 1) was to add a new part in paragraph (ea), the Australian Consumer Law, into that pre‑existing provision. The question is what was the conduct to which the Act was extended by Parliament’s decision to insert paragraph (ea).

Mr Hutley said to your Honours this morning and you will remember, and I think I am quoting him when he said section 5 does not speak to section 23.  At the time of ACL (No. 1) the only substantive provision in the ACL was section 23, or the materially identical section 2, at that time.  If section 5 does not speak to section 23 what was extended?  What was the conduct to which the Act was extended?  We say nothing, which is why we say that the construction must be wrong and that section 5 does speak to section 23.

The answer that Mr Hutley proffered was that the remedies provision solved the problem or gives some content.  Your Honours were then treated to a fast‑moving journey through the remedies provisions which, in some respects, resembled a ball‑and‑cup exercise.  In our submission, the remedies provision actually gives you no content, really, for this reason – or two reasons.  First, while there were remedies provisions introduced by ACL (No. 1) those provisions were not introduced into the ACL, they were inserted into Part 6 of the Act.  If one looks at paragraph 5(1)(ea) and asks

what was the Consumer Law extended to, on the face of it the remedies provisions do not answer that question.

But, perhaps more significantly, if your Honours go to the most important of those remedies provisions in the same bundle, it is section 87AC, it is on page 402.  You see a provision that is materially the same as section 250 of the Act in its present form.  A declaration under this provision that a term of a contract is unfair then being a pre‑requisite to getting to any of the other remedial provisions, injunctions or compensation orders.  It seemed that our friend said that, in some way, the capacity to seek this relief might supply the content that otherwise seemed to be absent if section 5 does not intersect with section 23. 

That argument caused your Honour, Justice Edelman, to ask Mr Hutley, could this problem just be solved by seeking a declaration under section 250 and, once that was obtained, could the appellant get everything they want?  Mr Hutley said, no.  The reason he said no was, he said, the remedies provision, section 250 or 87(ac), depends on the prior scope of section 23.  If section 23 does not already apply to the conduct, independently of the remedies provisions, then, he said, the remedies provision does not bite so you cannot a declaration – because you cannot get a declaration, you cannot get any of the other remedies.  The question comes back to what is the content of section 23.

If that is right, the remedies provisions cannot add to section 23, then they cannot supply the content that we say is missing.  You have no intersection between section 5 and 23, you have nothing added by the remedies provisions, and you, therefore, have a complete miscarrying, both of 5(1)(e) and of section 130, because 130, the provision that applies the ACL as a law of the Commonwealth, also needs conduct and, again, there is no conduct on the respondents’ submission.

In our submission, while it was developed at some length, in the end there is no answer to it, and the construction, therefore, should not be adopted because your Honours should not deprive the provision of content.

If the Court pleases.

GAGELER J:   Thank you.  Mr Gleeson.

MR GLEESON:   Could your Honours indicate the closing time?

GAGELER J:   Can you indicate how long you expect to be?

MR GLEESON:   I can finish by 10 to 4, your Honours.

GAGELER J:   Yes.

MR GLEESON:   By 3.50.

GAGELER J:   Very well, proceed.

MR GLEESON:   Thank you.  Your Honours, section 15 supports our basic construction that section 23 imposes a norm of conduct that a person shall not make or enforce a consumer contract or small business contract insofar as it contains an unfair term and is a standard form of contract.  That is because section 15 correctly assumes section 23 does operate as a norm from the moment of the making of the contract.

The consequence is that if the norm is breached the term is void from the moment of making of the contract.  The consumer can safely ignore the term and can plead the term as a defence if sued.  The consumer is not reduced, as per your Honour Justice Edelman’s inquiry, to section 250, although the consumer can invoke section 250 as a predicate to affirmative relief under 232 and 237.

But the critical difference between the parties is, we submit, the term is void, the unfair term, from the moment of the contract as a response to the Parliament imposing the norm of conduct, thou shalt not include unfair terms in contracts of this character.  If that is right, then section 5 amply applies to the conduct of the making of the contract, as well as the conduct of enforcing it.

Section 131 applies schedule 2 to the relevant conduct of corporations, being the making of the contract and the enforcement of it.

GORDON J:   Is another way of putting that when one looks at 237(1)(ii), which talks about how (1):

A court may:

(a)on application of a person (the injured person) who has suffered, or is likely to suffer, loss or damage because of the conduct of another person that:

. . .

(ii)constitutes applying –

It is an odd construction to say that it could be conduct of another person that:

constitutes applying or relying on, or purporting to apply or rely on, a term –

Absent the declaration.

MR GLEESON:   Yes, and it is looking at the second stage of the same conduct.  It is the relying upon that which you should not have included in the contract in the first place, and the deemed contravention, which appears in section 232(3), once you get the declaration is further evidence that the relevant conduct commenced with the making of the contract and continues into the relying upon the contract.

Your Honours, that is the first submission.  The second is that this does not produce absurd width.  It is not mere serendipity or happenstance, as the respondent says, that a foreign corporation carries on business in Australia.  Mr Hutley’s client does not by mere accident, or inadvertently, carry on business here.  It is a voluntary decision of significant character which puts the foreign corporation, within section 5, on the same footing as the local corporation, and on the same footing as an Australian citizen or resident.

EDELMAN J:   Does it apply to every airline in the world that sells tickets to Australian customers?

MR GLEESON:   Not necessarily, your Honour.  First, one checks if the airline carries on business in Australia.  Secondly, it applies to consumer contracts, within which you will already see the concept of services.  That is in section 23(3)(a), which is defined, on page 256 of tab 4, in an inclusive fashion, in a way that already draws in the restriction of trade and commerce.  We already start to see limitations in the section. 

But thirdly, we agree with one aspect of Mr Hutley’s submission that the reason section 5 is there is to avoid against the argument that the presumption requires provisions like section 18, or section 23 we would add, to be limited to conduct in Australia.  The effect of section 5 is for a subset of people, those who carry on business here, et cetera.  They cannot assert that section 23 is limited to conduct in Australia. 

GORDON J:   Just to complete this, one quick question about section 5.  It talks about:

extends to the engaging in conduct outside of Australia by –

a foreign company:

carrying on business in Australia.

Does that extend to the way in which you put it about enforcing the term?

MR GLEESON:   It might, but we do not need it because if we are looking at the enforcement of the term it occurs, in our facts, in Australia, and we do not need section 5, at all.  We just have conduct, and that is sufficient to invoke section 23.

As long as we are correct in defeating the proper law limitation, in this case the stage two conduct does not involve extraterritoriality.  But the making of the conduct did engage section 5 and, to complete the answer to your Honour Justice Edelman, that is why I referred to section 6 this morning, because what the Parliament has, in fact, done is legislate to the full reach of the constitutional corporations power by section 131 and section 5.  If you are a corporation and you carry on business here you are subject to the full reach of section 23, whatever that maybe, without need to read in the proper law, et cetera. 

If, for some reason, that exceeded the scope of the corporations power – which it would not in the present case, everyone agrees, but if it did in some case, that is the reason for the additional operation of the Act in section 6.  If I could go to section 6, we disagree with Mr Hutley.  It is not cumulative in the sense he puts.  What it has are a series of operations where terms in the Act are given an additional operation, and one can look at all of these additional operations together.

For example, under paragraph 2(a) if you see trade and commerce, which, as Mr Hutley says, is not defined in the constitutional sense, it includes what would otherwise be intrastate commerce, 2(a) gives an additional operation which excludes the intrastate commerce.  Paragraph 2(h), which he referred to, has the effect that where you see corporation, for example, in section 131, you can also read it as natural persons.

The whole of the Australian Consumer Law, through an additional operation, applies to both corporations and natural persons, but because that might possibly engage an excess of constitutional power if there is a natural person and nothing else involved, you may then also apply one of the other provisions, such as, relevantly, paragraph (ca). What (ca) does is to say whether you have gone through (h) and picked up natural persons as well as corporations under (ca), Part 2‑3 applies to contracts made in trade or commerce.

Our ultimate answer to your Honour Justice Edelman’s question is the absurdity to which Mr Hutley asserts, if it truly arose, which is unlikely, and if it produced an excess of constitutional power, there is a narrower operation of Part 2‑3 in relation to trade or commerce where all difficulties are avoided.  Your Honours will see in the paragraph above it, paragraph (c), exactly the same thing happens for the guarantees which are in Division 1.

Mr Hutley went to some trouble to say that section 23 is a lonely orphan because it does not have trade and commerce attached to it and that means something.  Well, (ca) tells us that it has trade and commerce in its additional operation, but (c) tells us that the Division 1 provision, such as section 51 and following, which also did not have a limitation on their face to trade and commerce, may additionally be operating in such a limited fashion.

And we indicate to the Court that under section 236 of the ACL, which is on page 340, that is a damages remedy.  It is like the old section 82.  It is available inter alia for Division 1 of Part 3‑2.  On the face of those provisions, they are not limited to trade and commerce.  They have the generality that our provision has, and the Parliament has given an alternative operation in paragraph (c), if necessary, to tie it to trade and commerce.  All that indicates that this statute does not need proper law read in anywhere to allow it to achieve its purposes.

Your Honours, moving to the unfair contract exercise, perhaps the three disputed criteria reduce to one question – is it significant that the term denies Mr Ho choice?  It denies him the ability – after the wrong has occurred, and after the size of the claim and the risks of the case may be known, and after a group action is available – the ability to choose whether to opt out.  That denial of choice is, via the term, a restriction upon his access to favourable facilities of the courts to vindicate any and all rights under the contract.  That, we submit, discharged Mr Ho’s onus, and he needed to prove nothing more – particularly in a context of a beneficial consumer statute about the small claims jurisdiction in California.

Your Honours, in respect to Part IVA, the ultimate vice is, in fact, similar to what I have just put in terms of fairness, but it is viewed from the public perspective, not the private one.  The point is not just about timing under section 33J, although we embrace what Dr Higgins has said.  The essential question for your Honours is whether Part IVA permits a person who supplies goods and services in advance of the wrong – if there be one – in advance of the loss, and in advance of the person having any knowledge as to whether the group action is beneficial or not, to bind their rights away.  If that is a matter of public interest and inconsistency with Part IVA, then the clause is void to that extent.

Your Honours, on the final question of discretion, we would submit that the two primary reasons that Justice Stewart gave at paragraphs 332

to 333, and 338, justified his exercise of discretion – that is, were sufficient to justify it, and on that basis there is no error that requires re‑exercise by this Court.  If the Court does re‑exercise it, the denial of choice that I mentioned is the critical feature which justifies the stay.

May it please the Court.

GAGELER J:   The Court will reserve its decision in this matter and will adjourn until Tuesday, 8 August at 10.00 am.

AT 3.39 PM THE MATTER WAS ADJOURNED