Karpik v Carnival Plc ARBN 107 998 443 & Anor

[2023] HCATrans 99

[2023] HCATrans 099

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 THURSDAY, 3 AUGUST 2023, AT 9.59 AM

Copyright in the High Court of Australia

MR J.T. GLEESON, SC:   May it please the Court, I appear with MR R.J. MAY for the appellant.  (instructed by Shine Lawyers)

MR N.C. HUTLEY, SC:   If it please, I appear with my learned friends, MR T.E. O’BRIEN and MR J.K. KENNEDY for the respondents.  (instructed by Clyde & Co)

MR S.P. DONAGHUE, KC, Solicitor-General of the Commonwealth of Australia:   May it please your Honours, I appear with MS R.C.A. HIGGINS, SC, MS S. ZELEZNIKOW, and MR S.N. RAJANAYAGAM for the Attorney-General of the Commonwealth, intervening as a right, and for the Australian Competition and Consumer Commission, seeking leave to intervene, which your Honours will note is not opposed.  (instructed by Australian Government Solicitor)

GAGELER J:   You have that leave.

MR DONAGHUE:   Thank you, your Honour.

GAGELER J:   Mr Gleeson.

MR GLEESON:   Your Honours, just in terms of the time, we had given an estimate which was in advance of the notice of contention, which raises a new issue.  So, we would seek a little longer than our estimate.

GAGELER J:   Is there a view about when the matter will finish?

MR GLEESON:   Lunchtime tomorrow.

GAGELER J:   Very well.

MR GLEESON:  Your Honours, there were four issues raised in the notice of appeal, and I will deal with them in that order, but, before I do so, could I come to the notice of contention ground 1, which is the new issue.  It is a pure question of law, so the Court can deal with it.  You have the benefit of no reasons, because it was never raised.  It is wrong for three reasons that I will state and then develop.

The first reason it is wrong is that it ignores covering clause 5 of the Constitution.  The second reason is that it is inconsistent with the authority of this Court.  The third reason is that persuasive authority in the Supreme Court of New Zealand and the United Kingdom has rejected the argument.  If I could deal with them in that order, your Honour, and perhaps first identify the argument – the new child in this case.  The argument runs in this fashion:  whenever an Australian court is presented with a cause which has a foreign element and has an Australian statute invoked, the Australian court cannot apply the Australian statute until it has gone through the conflict of laws.  Therefore – this is the first step in the argument – the Australian judge has to open Dicey and Morris, Nygh, other relevant textbooks and do a conflict of laws analysis.

The second step is the conflict of laws analysis requires, firstly, characterisation of the cause; second, the identification of the relevant conflicts rule; third, the application of the rule – and the third step is that if that process leads to a foreign law governing the cause, or a part of the cause, the Australian court cannot apply the Australian statute unless – and the “unless” is indicated in the respondents’ submissions at paragraph 10, last sentence – the Australian statute has made:

manifest that the legislature considered overriding the otherwise applicable lex causae and determined to do so.

So, if that logic were correct in the present case, unlike the way both courts and all parties have approached it below, you do not engage in an exercise of statutory construction of the ACL and the CCA, giving weight perhaps to the presumption against extraterritoriality, you instead ask this question:  if there is a foreign lex causae, has the Australian Parliament made manifest it has determined to override the lex causae?  As per paragraph 18 of these submissions, we are in the territory of the principle of legality and the right, or the principle, that the lex causae applies is to be treated as protected on the same level as other fundamental rights that have attracted that principle.

EDELMAN J:   But you would accept, on the approach that you urge, that the Court needs to go through an exercise of statutory interpretation, in any event, to decide whether or not the statute intends to apply, irrespective of any lex causae.

MR GLEESON:   It does at a statutory interpretation or construction.  It does not do it by treating the conflict of laws as a higher‑ranking instrument than either the Constitution or the statutes of the Parliament.

EDELMAN J:   But if that is right, then the respondents’ approach – albeit as an exception, as the “unless” part of the proposition – one still has to engage in the question of statutory interpretation.  The approaches will not ever really lead to a different result because there is no question of onus of proof.

MR GLEESON: It could lead to a different result, because if you call it statutory construction, they are approaching it through the different prism, which is that the principle of legality has told you the Parliament intends that all matters involving foreign elements to be governed by the appropriate law under the conflict of laws unless the Parliament has told you otherwise. That is a totally different approach that would be brought to statutory construction. Will it matter on our case? We would argue that whichever approach you take, you get to the simple approach – that section 5 applies to the conduct which is that making of the ‑ ‑ ‑

EDELMAN J:   But the real difference between you is the presumption that arises from this principle of legality.  You say there is no such presumption, and the respondent says there is.

MR GLEESON: Yes. Now, your Honours, our three answers to it are firstly covering clause 5 of the Constitution is the command that Australian courts apply statutes of the Parliament. They do not start with the conflict of laws. That is consistent at State level with sections 106 to 108 of the Constitution.  That proposition can be seen in this Court in Akai, which is volume 4 at tab 12, footnote (63) on page 443 of 188 CLR.  In the passage which is commenced on page 442 under “Statutes and choice of law rules” over to 443, the judgment has drawn a distinction – this is the foot of 442 – between the case:

where the statute in question before the Australian court is a foreign law.

Where one must go through a common law choice of law exercise.  Then, over the page:

In the present case, the statute, a law of the Commonwealth, is a law directly in force in the New South Wales forum.

Footnote:

A law of the Commonwealth will apply by the paramount force indicated in covering cl 5 of the Constitution.

Returning:

The question then is whether, according to its terms, the statute applies to the particular contract of insurance which is in issue.

Then, the next sentence is a reference to the presumption against extraterritorial application, or the presumption in favour of comity, whichever way it is expressed, as considered in the judgments in BHP v Impiombato.  That is the first answer.  While your Honours have Akai, if you could go back to the respondents’ submissions at paragraph 10, where I commenced, Akai is said to be authority for the proposition that:

if the forum’s choice of law rules select a foreign law, a statute of the forum will only apply to substantive matters if the statute –

And then there is a quote from the judgment:

“demands application . . . irrespective of the identity of the lex causae”.

End of quote; reference to Akai page 436.  Akai is said to be authority for the approach that one must always go through the conflict of laws exercise and then, if that leads you to foreign law, you apply their presumption; namely, foreign law governs, and the statute does not apply unless it has demanded application in unequivocal words.

Your Honours, that is a misreading of Akai, and an overgeneralisation of Akai.  If the Court goes to the part that is being quoted, which is on page 436, at the end of the first paragraph, and it is in turn a partial extract from the article by Mann in Statute and the Conflict of Laws (1972) at page 135. It is not expressed as a general proposition that Australian courts always apply conflict of laws rules before they apply statutes. It is expressed in the very particular context of that case, which was that section 8 of the Insurance Contracts Act – which is found on page 423 – chose as its extending criterion proper law of an Australian State or Territory, disregarding express provisions which override what would otherwise be the proper law.

In the particular context of a statute which dealt with the problem of general words by choosing proper law and then modifying proper law, in that particular context, the judgment engaged and in the discussion at pages 434 to 436, which ended in the proposition relied upon by the respondents.  So, with respect, it is a case where the respondents have taken a particular proposition and turned it into a general proposition, which the court did not utter.  That can be seen if your Honours read the whole of 434 to 436.

It is a perfectly conventional analysis of statutory construction, in particular at the foot of 434.  The Parliament chose this particular criterion to modify proper law, but it could have chosen other criterion – and then there is an example given from Freehold Land.  Over the page at 435, the extract from Justice Kitto in Kay’s Leasing about the particular way in which the Parliament has chosen to pursue the policy of the legislation linking the statute with Australia in a particular sense, not some more general conflict of laws principle

Your Honours will see that the article by Mann is thus cited in two places:  at footnote (42) and at footnote (61).  The article by Mann is the high point of that branch of conflict scholars who say conflicts trumps all and statutes apply only to the extent conflicts principles allow them to apply.  That is the argument Mr Hutley wants to run.  Your Honours will observe the article, while referenced, has not been picked up in full.  It has been picked up in two particular parts, and it is a proposition which we would ask the Court not to accept as the law of Australia.

GAGELER J:   Well, the rules of conflict of law can only be either common law or statute.  I mean, we are not elevating them to some constitutional status, surely.

MR GLEESON:   No.  It is Mr Hutley ‑ ‑ ‑

GAGELER J:   Nor is Mr Hutley, surely.

MR GLEESON:   Well, what he is saying, though, is that as between the conflicts of laws rules and the statutes, the starting point is always the conflicts of laws rules.  You do not even apply a statute until you have gone through that exercise.  Can I just show your Honours where that proposition is advanced by Mann, so your Honours see the target that we are seeking to address.

GORDON J:   Where do you say that proposition is put in its clearest in the respondents’ submissions?  Just so that I am clear about what you are answering, please.

MR GLEESON:   Yes.  They are paragraphs 9, 10, 17 and 18.

GORDON J:   Thank you.

MR GLEESON:   Your Honours, in volume 14, tab 72, Dr F.A Mann’s article proposes on – using the numbering in the book 5617, in the middle – that there be a “fresh start” to the entire problem.  Then, there is a distinction on page 5621 between:

conflict rules, whether they be general or particular –

and what are described as:

internal rules which embody words of limitation or qualification.

What Dr Mann described as “internal rules” are what we would regard as the rules of statutory construction.  On page 5622, at proposition 1, he says that self‑limiting laws – that is, laws which expressly, or on their proper construction, draw a territorial limit – are not conflict laws:

A conflict rule answers the question which law should be applied to a given set of facts.  Self‑limiting rules define the conditions which determine the happening of a substantive legal result.

Then, on page 5623, after referring to the views which Dr Morris had then expressed, at proposition 2, this is said:

Localized or self‑limiting rules of internal law, however, are, at least in principle, applicable only if it has previously been ascertained that, by virtue of the conflict rule, English substantive law applies.  In such a case it is wrong to say that the court ‘simply applies its own statute’ –

Then, over on page 5624, about five lines down:

On the contrary the principle is that English law, including statute law, even though of a mandatory character, is only applicable if, in accordance with the rules of the conflict of laws, the lex causae is English.  This is not always expressly emphasized, but is in fact implicit in the doctrine of the proper law –

Then, in the next paragraph, as an exceptional point, there are laws which are described as embodying some overriding public policy, which are mandatory laws.  They are regarded as exceptional.  So, that is the thesis and that is the distinction.  The two passages which are referenced in Akai – firstly, footnote (61) references pages 127 to 129, which is proposition 3.  That is an unexceptional discussion.  It is the discussion of self‑limiting laws, as Dr Mann describes them.  That is what we are familiar with as statutory construction, including presumptions against extra‑territoriality.  The other place that is cited in Akai, is page 135, page 5635.  It is the first sentence in the middle paragraph where part of that sentence – namely, quote:

demands application in an English court irrespective of the identity of the lex causae.

That has been picked up in the judgment.  So, the short point is, they are very careful and appropriate selections of a part of this analysis, not an adoption of the whole of the article, and the decision in Akai is inconsistent with an adoption of the whole of the article. 

So, your Honours can see how the Mann approach has divided scholars.  We have referred to two other articles.  The first is in the same volume at tab 73, which is a chapter by Dr Douglas in a book headed, “Choice of Law in the Age of Statutes”.  It is in the context of the Valve decision, which your Honour Justice Edelman decided at first instance and was approved on appeal.  At page 5658, under section C, there is a discussion of whether your Honour’s resolution of that case would by conflicts scholars be treated as mandatory law analysis or whether it was simply statutory construction, which is the way your Honour in the Full Court framed it.  The issue is then clearly identified on page 5660 under heading A:

For private international lawyers, the issue of whether a forum statute applies in cross-border litigation – the key issue in Valve – may turn on whether statutory rules should be characterised as ‘mandatory’.  Mandatory rules ‘purport to exist over and above the domain of private international law’.

However, over on page 5661:

The concept distracts attention from the fact that, at least in Australia, all local statutes are mandatory.  The English dogma of parliamentary sovereignty should be transposed to Australia’s unique constitutional context, but even so, the truth remains that the legislature makes law, and the court’s primary function is to apply the law.  All of this should be trite, but reading a textbook on the subject, it might be forgotten that the conflict of laws is still just law.

That is the approach we commend.  We submit it is ‑ ‑ ‑

EDELMAN J:   It is not really a question of conflict between common law conflict of rules principles and statutory interpretation.  It seems to me that what Dr Mann is really talking about is:  what is the presupposition upon which the statute is operating?  If the statute is silent, is the statute operating on a presupposition about the lex causae, or not?

MR GLEESON:   Your Honour, if that is all Dr Mann is doing, there is no difficulty with it.  If one is in the territory of general words in a statute and one is looking for some limitation in order to comply with appropriate presumptions, e.g. the presumption in favour of comity, as per your Honour Justice Gageler, Chief Justice Kiefel in BHP v Impiombato, presumption against extraterritoriality, the other way it was viewed in that case, or the rule of construction that general words, if not susceptible to some other limitation, might be read as limited to cases governed by the proper law, there is no problem.  We have no difficulty with that.

What has been put up by the respondents is that we are not in that territory; we are in the territory where the principle of legality says the lex causae is a fundamental principle, and the Parliament will be presumed to have legislated in accordance with it unless it has fairly clearly indicated otherwise.  That is what we say is wrong.  So, just to finish this article, your Honours, what is on page 5672 under the heading “How the Forum Statute Applies”, that, we submit, is the traditional and correct approach in Australia.

The other article I wish to refer to which draws out the distinction is in volume 12.  It is Professor Briggs’ article, tab 68, pages 4697 to 4698.  As he says in footnote 15 ‑ ‑ ‑

EDELMAN J:   Which tab was this?

MR GLEESON:   It is tab 68.

EDELMAN J:   Thank you.

MR GLEESON:   Professor Briggs is dealing with an example of a Singapore statute in general terms and asking whether it applies to a case with a foreign element.  At 4697 to 4698, he refers to Dr Mann’s approach, and then says it simply is not right because it is not the way one goes about legislative intention.  As he says in footnote 15, Dr Mann’s:

classic article finds fault with the views of every other writer, English or foreign, who had looked at the question.

JAGOT J:   Sorry, where was that bit?

MR GLEESON:   Footnote 15.

JAGOT J:   Sorry.  Yes.

MR GLEESON:   So, to put our case positively, your Honours construe the statute using the usual tools of text, context and purpose; you take into account any presumptions that may be relevant and give them the weight they deserve, having reward to Parliament’s policy.  The presumption that a Parliament intends to legislate only with respect to matters governed by the proper law may be given some, little or no weight depending on the statute in question.

In terms of the authorities of this Court that have taken the approach I have just outlined, we have referred to them in our reply submissions at paragraphs 2 to 5.  In terms of the foreign authority that I mentioned, the New Zealand authority is found in volume 9 at tab 49.  That is Brown v New Zealand Basing Ltd, a Bench of five.  Your Honours see the question was whether certain age discrimination protections in an employment law were available in the face of employment agreements governed by the law of Hong Kong. 

In the judgment of Justice William Young at paragraphs [4] and [5], the respondents’ approach here was advanced, giving primacy to the conflict of laws such that, as you see from paragraph [5], the governing law would be treated as a limitation on the statute, save if it was excluded by express language or if it was a mandatory overriding statute in the narrow conflict sense.  That approach was rejected by the court at paragraph [8] and the approach that was adopted was the traditional approach of this Court.  That can be seen at paragraphs [56] to [58] and [66] to [72].  In the separate judgment, which commences at [75] ‑ ‑ ‑

GORDON J:   Are those paragraphs identified because they are done by a process of statutory construction?  Is that the simple point?

MR GLEESON:   Yes.

GORDON J:   Thank you.

MR GLEESON:   The same approach is taken in the separate judgment which commences at [75], and this Court’s decision in Old UGC v Industrial Relations Commission in 2006 is followed at paragraph [80].

GAGELER J:   Do you accept that there is some presumption in favour of the proper law of the contract?

MR GLEESON:   It may be an available presumption as an aspect of the larger presumption either in favour of comity or against extraterritorial operation.

GAGELER J:   It is not an independent presumption?

MR GLEESON:   No.  It is an aspect of that.  The way we would put the role of that subsidiary presumption is indicated by this Court in Wanganui‑Rangitikei, which is volume 8, tab 40.

GAGELER J:   Can you give the CLR reference, please, Mr Gleeson?

MR GLEESON: Yes, (1934) 50 CLR 581. That was a case where, while the proper law of the loan agreement was New Zealand law, the New Zealand power authority sought to take advantage of a New South Wales statute reducing the interest payable, and the majority held the New South Wales Act did not apply. In the dissenting judgment of Chief Justice Gavan Duffy and Justice Starke at page 597 of the CLR, the governing law argument is advanced in the first 10 lines and rejected on the ground that it ignored:

the circumstances in which the Act was passed, and the mischief to be remedied; and –

this is highly relevant to the present case:

it would lead to diversities in the operation of the Act according to the expressed intention of the parties.

When we come to the substantive argument on question 1, any limiting of sections 5 and 23 to contracts governed by the proper law of Australia would create that very mischief of diversities of operation of the Act according to the expressed intention of the parties. That is a clear rejection of the applicability of the governing law to the particular statute. Then, in the famous passage of Justice Dixon, at the foot of page 600 to the top of 601, his Honour refers to the “rule of interpretation”, or:

the well settled rule of construction.  The rule is that an enactment describing acts, matters or things in general words, so that, if restrained by no consideration lying outside its expressed meaning, its intended application would be universal, is to be read as confined to what, according to the rules of international law . . . is within the province of our law to affect or control.

The next sentence is the critical one:

The rule is one of construction only, and it may have little or no place where some other restriction is supplied by context or subject matter.

It is a presumption.  It is a more specific aspect of the more general presumptions I have referred to.  It will have such weight as is appropriate in the circumstances of the case.  His Honour thought it had real work to do in the case.  Interestingly, the two other majority judgments, Justice Evatt and Justice McTiernan, did not decide the case on that basis.  They looked at a larger collection of factors which linked the legislation to New South Wales, rather than just the governing law.  This Court’s decision in Insight Vacations also adopted what I have described as the statutory instruction approach.

GORDON J:   Just before you leave Justice Dixon, do you make anything of what sits at the foot of page 631, which is:

the presumption by which, unless a contrary intention appears, statutory provisions are understood as having no application to matters governed by foreign law.

Does that reinforce your argument?  It is a different kind of presumption, I think.

MR GLEESON:   Sorry, your Honour, where was that?

GORDON J:   It is about point 6 or 7 on the page:

The circumstances of the present case illustrate the soundness of the presumption by which –

MR GLEESON:   Yes.  Firstly, we are only in the territory of presumption, we are not on the territory of anything more than that.  It is always subject to a contrary intention – that is, to the full exercise of construction of the statute – and, therefore, may have much, or little, weight as the particular case demands.  That is the reason why I referred to the differing approach of Justice Evatt, which is page 609, about point 4.  It was a concatenation of factors, not simply a presumption of that governing law, which led to his decision and, likewise with Justice McTiernan, at about point 5 on page 613.  We are certainly not in the territory of legality.  This is not some fundamental principle protected by the principle of legality.  Your Honours, in Insight Vacations, which is in volume 5 ‑ ‑ ‑

GAGELER J:   The CLR reference?

MR GLEESON: The CLR is 243 CLR 149.

JAGOT J:   The tab is?

MR GLEESON:   The tab is 23.

JAGOT J:   Thank you.

MR GLEESON: The general expressed provision is in paragraph 20, section 5N of the Civil Liability Act.  Paragraph 27 indicates that while the governing law was New South Wales, the contract:

was to be performed wholly outside the State.

So, there were both local and foreign elements.  Paragraph 28, near the end, indicates that this simply threw up the question of what was the limitation to be discerned on the proper construction of the statute?  Was it contracts made in New South Wales, contracts governed by New South Wales law or some other limitation?  Then, a reference to Justice Kitto’s judgment in Kay’s Leasing, and the important proposition at the end of 29, the reconciliation – that is, between:

the generality of the language –

and the:

legislative power of a State parliament –

depends upon:

the context and the subject matter of the Act in question.

Then a reference to Justice Dixon in Wanganui, but the indication that the proper law:

is not the only form of geographical limitation that may be adopted and it may not be the form of limitation that an Act, on its proper construction, should be found to bear.

Then there is a discussion of Kay’s Leasing in paragraph 31 and of Akai, in its particular context; OGC, in paragraph 32.  The Court then engages in the exercise of construction, and the conclusion at 36 is:

Reading s 5N(1) as hinging on place of performance of the contract best gives effect to the purposes and text of the provision when it is read in its statutory context.

So, the approach is tolerably clear.  Your Honours, I have taken up some time on this issue.  The respondents have cited a series of other authorities of this Court for what they say is their approach.  I will just say, in a summary fashion, none of them support their approach and I will leave any further submissions for reply, if I might.

The other critical overseas authority – there are two authorities from the United Kingdom that I wish to mention.  The first is Office of Fair Trading v Lloyds TSB Bank [2008] 1 AC 316, which is in volume 10 at tab 58. This case concerned a provision which is summarised in paragraph 2 of Lord Hoffman’s judgment, whereby the creditor, which was a credit card issuer, was rendered:

jointly and severally liable with the supplier –

of goods and services:

in respect of any misrepresentation or breach of contract by the latter in relation to a “transaction financed by the agreement”.

The word “transaction” was general:

The question is whether a “transaction” . . . includes a transaction which takes place and is performed abroad and is governed by a foreign law. 

So, there were the foreign elements.  What Lord Hoffman does at paragraph 4 is – appropriately, with respect – take into account:

the presumption that legislation was not intended to have extraterritorial effect –

and then says that presumption has no role to play because it really means:

seeking to regulate the conduct or affect the liabilities of people over whom the United Kingdom has no jurisdiction.  In this case, the Office of Fair Trading accepts that section 75(1) applies only to agreements with a creditor carrying on business in the United Kingdom.

So, pausing there, by reason of that concession – which Mr Sumption had made at page 318, letter F – the United Kingdom legislation was on all fours with our legislation. It was the equivalent to section 5 in that it applied to persons carrying on business in the United Kingdom. In that context, Lord Hoffman saw no difficulty with the legislation applying, in terms, and, to similar effect, Lord Hope, at paragraph 11, and Lord Mance, in more detail, at paragraphs 25 to 27. Nothing in this case supports the approach of Dr Mann. One is simply engaging in statutory construction, giving these presumptions such weight as they deserve in the particular case.

The more recent United Kingdom authority is in a bundle headed appellant’s additional materials.  If I can rely upon that, it is case number 2, R v Director of the Serious Fraud Office [2022] AC 519. The Supreme Court were dealing with a statutory provision set out at paragraph 14 on page 525 of the report authorising the director to give notices to persons who are under investigation to produce documents. The issue raised in paragraph 18 was whether that legislation applied where the material was held by a company incorporated outside the United Kingdom with the material itself outside the United Kingdom.

The approach that was taken by the Supreme Court, from paragraphs 21 through to 26, is the same approach as this Court has adopted. It is not the Dr Mann approach. It is statutory construction taking into account the appropriate presumptions, in particular, as relevant to section 5 in our case, paragraph 23 indicates:

international law also recognises a legitimate interest of states in legislating in respect of the conduct of their nationals abroad . . . As a result, in such circumstances the strength of the presumption against extra‑territorial application . . . will be considerably diminished and it may not apply at all.

Citing Lord Mance in Masri. For that purpose, “nationals” include persons who voluntarily bring themselves within the jurisdiction, such as carrying on business in the jurisdiction, under section 5. The Court can see that in paragraph 26, where the court distinguishes the case of what would it be if it was:

a UK national or a UK registered company.

who was holding the documents abroad, in that case, there would be no issue of extraterritoriality at all.  The court says:

Similarly, we are not concerned with the position of a foreign company which –

relevantly, carries on business in the UK.  So, it seems tolerably clear that where legislation is applying to persons who are within the jurisdiction in the sense of nationals, citizens, residents, companies incorporated in the jurisdiction, foreign companies choosing to carry on business in the jurisdiction, the scope of the presumption is weak, at best. 

This authority I rely upon for two reasons. Firstly, to show the conflicts approach is wrong, but, secondly, when we come to issue one – which I will do in one second – there is no offence against international law or comity, no problems with extraterritoriality in section 5 being given its intended work in the context of section 23. Unless your Honours have questions on that topic, I propose to thankfully abandon it and move to the appeal.

Your Honours will see from our outline that I am now addressing paragraphs 2 through to 5. Could I indicate that the argument based upon the history of section 5 and the context of section 5 within the CCA we have made in writing, and we respectfully adopt the Commonwealth’s submissions and will leave that to them to advance orally.

GORDON J:   This is the history of the provisions?

MR GLEESON:   Yes.

GORDON J:   Thank you.

MR GLEESON:   The one that shows that engaging in conduct must include the making of the contract with the alleged unfair term in it or the attempt to enforce that term, because, otherwise, the entire introduction of this provision would have miscarried.  So, it is an argument both about the effect of the 2010 amendments, plus the way this scheme works as a whole.  If Mr Hutley is correct, both of them have wholly failed.  Could I leave that to the learned Solicitor‑General.

EDELMAN J: Where is the argument going? Suppose you are correct about all of these arguments concerning section 5 and section 23 and the application of section 23, is the end run of this argument to say that the exclusive jurisdiction clause should therefore not be enforced?

MR GLEESON:   Yes.

EDELMAN J: Even in light of the undertakings that are given that if the exclusive jurisdiction clause were enforced section 23 could still be applied in the courts of California.

MR GLEESON:   Yes, that is accepted.  What Justice Stewart found, which is what we ultimately commend, is that the – if the class action waiver clause is either void or unenforceable by either of the two routes, if the proceedings are not stayed, what will occur is that Mr Ho and the other 600‑odd people in his category will be permitted to take advantage – to use that term – of the procedures of the Federal Court in the action which is being heard, and there will be a common determination of issues between them and everyone else who was on the same unhappy cruise, and those issues of law, in fact, will be determined for better or worse, in respect to all 2,600‑odd passengers on the ship, in a single forum in a single, consistent manner with all of the benefits of the Part IVA procedure, which are both private benefits and public benefits.

They are private benefits to the individuals; they avoid the cost and expense.  They are public benefits of achieving access to justice and efficiency of judicial resources.  All of that will be allowed to go forward if the stay is refused.  Justice Stewart said that those matters were sufficient to outweigh the promise in the exclusive jurisdiction clause.  If the clause is enforced, all of those benefits are lost, because although the ACL claim can be done – with difficulty through expert evidence, but can be done – one cannot have the benefits of the group action.

That is issue 4, your Honours.  And if we were right on issues 1 to 3, then our submission on issue 4 is simply there was no appealable error in what Justice Stewart did, because what he gave weight to was the fracturing of litigation and the loss of the benefits of the common findings in the group action if the clause were enforced, and that was a perfectly acceptable result in principle.

Your Honours, I just sought to indicate the matters on which we are trying to avoid duplication, and that is the core one.  There are some others that I will simply rely upon our written submissions and leave to the learned Solicitor‑General.  What I do need to say on paragraphs 2 to 5 of our outline is this.  If your Honours can open the statute – this is in volume 1 at tab 4.  I am starting with the Competition and Consumer Act 2010 at page 134 of the volume. Section 5 tells us that:

Each of the following provisions –

Relevantly, paragraph (c):

The Australian Consumer Law (other than Part 5‑3) –

We are not in Part 5‑3:

extends to the engaging in conduct outside Australia by –

three categories of persons:  citizens, persons ordinarily resident, and, relevantly:

bodies corporate incorporated or carrying on business within Australia –

What the Parliament has done by that provision is to say that the identified provisions are considered to be so important to the purposes of this scheme that, in addition to whatever operation they would otherwise have, they extend to conduct outside Australia by those persons.

You can see the critical distinction that Parliament has drawn.  It is not purporting to regulate foreigners generally.  It is only regulating foreigners to the extent they are corporations carrying on business in Australia.  It does not regulate, for example, foreign individuals.  What the Parliament has done is to put foreign corporations who have made that voluntary choice to carry on business here on exactly the same footing as domestic corporations and Australian citizens and residents.

GLEESON J:   Do you rely on the stated object of the Act in section 2?

MR GLEESON: The stated object is important because – sorry, your Honour. The answer is, yes. The question is precisely how it feeds into the argument. What it tells us is that the general object is to enhance welfare of Australians through the promotion of competition and fair trading and provision for consumer protection. How it has then gone about that object is by a whole series of techniques. One of the techniques is section 5, which is to say that if we extend the norms of the Act to conduct outside Australia by this defined category of persons, that is perceived to enhance that more general object. That is so, whether the particular person who might benefit from the norm in the individual case is an Australian consumer.

Of course, it is ultimately Australians who are sought to be benefited through the consumer protection provisions, but that protection can be enhanced by requiring, put simply, Australians – including Australian companies and foreign companies choosing to carry on business here – to apply these standards to all of their conduct outside Australia.  The beneficiary of that standard in a particular case may be an Australian, it may be a foreigner, but the important point is that Australian companies and those who carry on business here observe these standards in all of their conduct wherever in the world.

So, the importance of section 5 is that it has, we would say, fully addressed any concerns of comity or any concerns of presumptions against extra‑territoriality or presumptions in favour of the governing law and said, this is the rule. What section 5 has not done is to allow for any further scope for an inquiry into what might otherwise be the proper law of the transaction. Your Honours, we submit, would then read section 5, together with each of the provisions in the Australian consumer law to which it has been applied. So, to take one example, which is section 18, on page 272, that says:

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

So, it has introduced a limiter with “trade or commerce”, which is defined on page 122 in constitutional terms. “A person” in section 18, in the Commonwealth Act, is limited to corporations by reason of section 131 of the CCA on page 209. But, as the Commonwealth submissions have explained, this is part of an applied law scheme, so that non-corporations are bound by section 18 of the ACL under State or Territory law, not under Commonwealth law. Reading section 5 together with section 18, a person must not, whether in Australia or overseas, in trade or commerce, engage in misleading conduct. That is the beginning and the end of the norm.

Let us assume the misleading conduct leads to the entry of a contract, and the other party wishes to set aside the contract. Let us assume the contract is governed by foreign law. Your Honours will know that one of the most vexed characterisation problems of conflict scholars is: is section 18 to be treated as more like a contract law or more like a tort law when it is used to try and set aside a contract? That problem, on our argument, simply does not arise. Proper law of a contract induced by section 18, completely irrelevant; you just apply the text of section 5 and section 18. If I could then come to the one that concerns us, which is section 23:

(1)A term of a consumer contract or a small business contract is void if:

(a)     the term is unfair –

under sections 24 and 25, and:

(b)     the contract is a standard form contract.

We have a definition of consumer contracts and small business contracts. What the Parliament has done, we would submit, is to say there are two species of contract, which require particular protection: consumer contracts as defined; small business contracts as defined. For those contracts, there is a jurisdiction to declare and provide remedies against unfair terms, and it is a jurisdiction which will be exercised under section 5 against foreign companies who carry on business in Australia wherever their conduct occurs.

The importance of achieving the object in section 2 of the Act is such that this jurisdiction, in respect to these specific categories of contract, requires that degree of protection against foreign companies who have made the voluntary choice to carry on business here wherever they may make the contract.

GAGELER J:   Where does jurisdiction come into this?  Is it not just a rule?

MR GLEESON:   It is a rule, but the Commonwealth has explained this in some detail.  The method for enforcement of it is the following:  under section 15 it is not a contravention, per se – that is page 271 – but, under section 250 on page 352, there is a power to declare terms to be unfair terms.  Subject to that declaration, under section 232(3) on page 337, you can get injunctions “as if [it] were a contravention”.  Under section 237, you can get damages or other orders as if it were a contravention.

So, while most provisions in this scheme are framed as contraventions, and many of them have penalties attached to them, the reason I call it a jurisdiction is the way this particular norm is enforced is through declarations, injunctions, compensation and other orders. The result of that, for example, in section 237(1)(ii) is that where a person is:

relying on . . . a term of a contract that has been declared . . . to be an unfair term –

the court can make orders – subsection (2) – for compensation, or to “prevent or reduce” injury.  The idea is that if a respondent in Mr Hutley’s client’s position is trying to enforce a term which is said to be unfair, subject to going through the declaration, first, you can then obtain injunctions and compensation against that person, in substance, for the conduct of having required the other party to submit to an unfair term in a standard form contract.

EDELMAN J:   What is the purpose of providing for injunctions and compensation in that circuitous manner?

MR GLEESON:   I cannot point your Honour to direct extrinsic material.  Our inference would be that, in terms of the ranking of these provisions, the Parliament has decided these are not to be contraventions – they are not to attract civil penalties, for example.  But they are sufficiently important to enable the declaration – and in some cases, the declaration will be a sufficient remedy.  But if the declaration has been given and, nevertheless, there is either an attempt to reply upon it or there is loss, then you have the usual injunction and damages.  So, it is circuitous, although one would presume in the same proceeding you could do both if you needed to.

GAGELER J:   Just picking up the language of section 237(1)(a)(ii), you say that “relying on” a contract term is conduct for the purpose of the various references in the Act and the law to conduct?

MR GLEESON: Yes. There are two species of conduct here. There is the one – the making of the conduct with the unfair term which Chief Justice Allsop provisionally said was good enough to attract section 5, and we advance that reasoning. His Honour said that in reliance upon the definition in section 4(2) of “conduct” on page 123. It includes the making and the giving effect. It includes:

the making of, or the giving effect to a provision of, a contract –

So, the making is one aspect of it.

GAGELER J:   And “giving effect” includes simply relying on a term or asserting a term?

MR GLEESON:   Yes.

GAGELER J:   Where is that occurring here?

MR GLEESON:   That is occurring in Australia.

GAGELER J:   Yes.

MR GLEESON: Yes. The submission I was coming to was that, unsurprisingly – what section 5 is saying is, making or giving effect to contracts of this defined character with unfair terms in them is contrary to a norm which will be enforced through the appropriate remedies, and section 5 is telling us, whether you engage in that in Australia or outside Australia, you are on the same footing as an Australian if you have chosen to carry on business here.

By that means, the extraterritorial issues become vanishingly thin in this case.  They become vanishingly thin because I have taken your Honours to the authorities which suggest that carrying on business in a country is submitting oneself to the jurisdiction of that country and then to be regulated in your behaviour, wherever that occurs, is no offence to the comity of nations.  They are vanishingly thin because the contract, while made in Canada, is relied upon against us in the Federal Court of Australia.  That then coheres with the text and the context argument which says, if none of this were correct, this provision never had and does not have any work to do.

GORDON J: By that, you mean section 5?

MR GLEESON: This view of section 5, when applied to the making and giving effect to the contract – partly overseas and partly here – thereby gives section 23 operative work when otherwise, if one takes a narrower view of conduct, it has no work to do.

GLEESON J:   Is it going too far to say that the scheme of remedies is consistent with the object of the Act and the recognition that this is not just about enforcement of obligations into parties?

MR GLEESON:   No, your Honour, we would make that submission.  And therefore, within Justice Kitto’s approach in Kay’s Leasing, it would be inimicable to this entire scheme, evidenced by the norm plus the remedies, to say, we are now going to read in some further limitations such as section 23 that is only concerned with small business and consumer contracts governed by Australian law.

GLEESON J:   There are a whole lot of limitations put against you once you pass over this statutory construction question that are said to somehow attach to or limit this approach. 

MR GLEESON:   Yes.

GLEESON J:   Do you say none of them are either necessary or available?

MR GLEESON:  That is what we would submit, your Honour.  Chief Justice Allsop tentatively came to this construction, but where his Honour paused was – his Honour said, maybe it is different for – what he called – Australian consumers or Australian consumer contracts from contracts which otherwise fall within the definition.  We would submit there is no reason to pause short of giving “consumer contract” and “small business contract” the meaning which it bears on its face.

I think one of the arguments put against us, your Honours, was section 67 on page 322. Section 67 is a provision of an anti-avoidance character which applies to the Division in which it sits. That Division starts at section 51 on page 310. For the purpose of those guarantees – which include, for example, at sections 60 and 61 the guarantees positively relied upon in this case – there is the anti-avoidance protection of section 67.

Now, it is true, the Parliament has not attached that anti-avoidance provision to section 23 but nor has it attached it to a number of other provisions in the ACL which involve contracts. It is fairly difficult to see from the express application of an anti-avoidance provision in one particular context that there is to be discerned some general intention of the Parliament that the rest of the ACL is only applying to contracts governed by Australian law.

GORDON J:   So, it is provision out of an abundance of caution, given the subject matter?

MR GLEESON:   Yes, it is that, plus the history of it can be explained:  it came in at a time when the Act was taking a particular form.  One of the problems of reading‑in the proper law is there could be many cases where the contract has some connections with Australia and some connections with an overseas jurisdiction.  There could be cases where the contract was actually made in Australia but has some connections with Australia and another jurisdiction.  For example, a cruise contract made in Sydney to travel to New Zealand and back.  Let us assume that cruise contract is governed by an express choice of New Zealand law.  It might be difficult under conflicts principles to set aside that express choice of law as not bona fide.

The authorities on setting‑aside choice of law clauses in conflicts principles are difficult to apply.  They require the choice to be non‑bona fide – Vita Foods is one of the classic authorities.  But there could be no certainty that in the example I have given, that choice of proper law would be set aside under conflicts principles because there are some connections with New Zealand, some with Australia.  The result of that would be that the person under that consumer contract would not have the protection of the ACL, whereas another person on the same ship who did not have that term would have the protection.  That is to create the diversity and diversion of outcomes which would run contrary to the entire purpose of the Act, including the object in section 2.

GAGELER J:   Mr Gleeson, would that be a convenient time for us to take the morning adjournment?

MR GLEESON:   May it please the Court.

AT 11.16 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.30 AM:

GAGELER J:   Mr Gleeson.

MR GLEESON: Thank you, your Honours. Just to complete our submissions on the first issue, if your Honours have section 23 of the ACL, and one tries to understand the respondents’ argument, it would seem to be that where you see “consumer contract” defined in subsection (3) you have to somewhere read in the words governed by Australian law or New South Wales law. It is a little hard to see how it actually works. Do you read in:

A consumer contract is a contract –

governed by Australian or New South Wales law:

for:

(a)a supply of goods or services; or

(b)a sale or grant of an interest in land –

Focusing on that limb, is the respondent saying that even if it is a contract for the sale of land in Australia, if it has been made the subject of a foreign choice of law clause, it is not within the definition.  All that seems rather tortuous.  The Parliament has told us what are the criterion for a consumer contract, and they are about the nature of the services or the goods or the property, likewise with a small business contract.

Equally with the definition of standard form contract, which is section 27, the interest to the Parliament is in the circumstances in which the contract came into existence, and the dealings between the parties that led to the contract with no attention being paid to what might otherwise be its governing law. So, the submission is that the Parliament both through section 5 and through the quite precise definitions in sections 23 to 27 has made clear exactly what the application is, and there is no warrant for any further limitations.

GORDON J:   Do you get any benefit from section 28(4)?

MR GLEESON:   Section 28 tells us that the Parliament has directly turned its attention to categories of contract which might otherwise fall within the general definition but are not to be the subject of this jurisdiction, confirming that is the carve‑out, and one would expect there to be a carve‑out there for contracts governed by foreign law if that was Parliament’s intent.

Your Honours, the Chief Justice pointed out that if this were not the case there would be a ready means to evade the statutory purpose and scheme by the stronger party stipulating for a foreign law.  The respondents seek to answer that on two grounds.  One is, do not worry because conflicts of laws principles would allow you to disregard express choices of law, but I submit they will struggle to persuade you that those principles will be sufficiently clear and workable to match the statutory purpose, as per my example before morning tea.

Secondly, they have a submission which we respectfully submit is circular, that somehow you can apply section 23 on a first application to declare unfair express choices of foreign law and then, having done that, you can then apply section 23 on a second application to the term you are trying to strike down. We do not understand how that could possibly work. Your Honours, as to our proposition 5, which is our alternative, that is very much in the alternative, and I rely upon our written submissions.

GORDON J:   So, this is – as I think I put to you just before the break, the other limitations you rely upon are the matters you raised in writing.

MR GLEESON:   Yes.

GORDON J:   And this is a fallback, it is?  Sort of, an acceptance or fallback of some minor limitation?

MR GLEESON:   Yes.  The extreme example posited by the respondent is, what if a company carries on business in Australia but enters a contract which falls within the definition of a consumer contract in Romania with an English person for performance in a foreign jurisdiction?  They say it is absurd; how could the Parliament have intended to regulate that?  We have given our answers to that, and we adopt what the Commonwealth says in answer to that.

We do submit that extreme example illustrates little about the practical working of this legislation and it is certainly remote from the present case where Princess chooses to carry on business in Australia selling cruises to and from Australia in Australian waters, and then beyond Australian waters, where the contract is, in a substantial sense, performed in Australia, and how it could be said the Parliament did not intend to apply these norms that that sort of contract, we submit is hard to fathom.  So, paragraph 5 is an alternative if it were necessary to capture that aspect of parliamentary intent.

Your Honours, if it is convenient, can I move to appeal ground 2(a) and put our submissions as to why this was an unfair term.  It has been common ground – and we have referred to it at paragraph 27 of our submissions – that unfairness is assessed at the date of contract looking forward, looking forward to realistic possibilities in the working‑out of a contract.  Events post the contract could be taken into account as a hindsight confirming a foresight, but the inquiry is ultimately into fairness at the date of the contract.  That is distinct from the jurisdiction in unconscionability in section 21, where the question may focus more precisely on the conduct in the performance of the contract.

For the present purposes, we are looking at it the way I have indicated.  Our second general proposition is that these are Australian norms of fairness that are being embodied in the statute, and the Chief Justice, with respect, was wrong to suggest that the question is significantly governed by whether the class action waiver clause might be enforced in the United States.  That might tell us something about the standards of fairness in the United States, it might tell us about what will happen if the stay is not granted.

GLEESON J:   But he also asked a very narrow question at paragraph 6 in confining his question about significant imbalance to the loss of capacity to participate in an Australia class action.

MR GLEESON:   Yes, your Honour.  This is the paragraph where his Honour said this is, essentially, “a United States problem”.

GLEESON J:   Yes.

MR GLEESON:   And then goes on to say:

Why should the loss of a capacity to participate in an Australian class action . . . cause any significant imbalance when the exclusive jurisdiction clause requires, if enforced, the claim to be stayed anyway?

We would respectfully submit there might be an aspect of circularity in that because we are assuming enforcement and yet the reason we are trying to strike down the clause is that we will then be in a better position to resist enforcement.  But what seems to have happened is that the agreed position of the parties that the United States would allow the class action waiver clause to be enforced has driven, at least in the Chief Justice’s approach, almost the entirety of the analysis, the result of which is, it is fair by Australian standards.

We would submit that what we should be looking at is the application of Australian standards to the specific questions raised in section 24, and it was a distraction to look at the United States position.  Your Honours, could I put our submissions on section 24, if you have it, and then I will come to the judgment.  The first question is whether the term would cause a significant imbalance in the parties’ rights and obligations arising under the contract.  The types of things that might create an imbalance can be illustrated by the examples in section 25, and section 25(k) says that:

a term that limits, or has the effect of limiting, one party’s right to sue another party –

Could be an unfair term.  That tells us we are looking beyond the text of the term to its likely effect and if the term has the effect of limiting your right to sue, it “may be unfair”.  So, the imbalance that is being spoken of in 24(1)(a) includes an imbalance not just in the primary rights and obligations under the contract, but in the secondary enforcement, either of the contract or of remedies related to the contract.  So, for that reason, a clause which says you are not permitted to participate in an advantageous procedure for vindication of your rights is a clause capable of creating a significant imbalance.  Could I take your Honours to the clause – it is in the appellant’s book of further materials.  The United States terms and conditions are at tab 1, and the clause is part of clause 15, commencing on page 19.  The whole of the clause is said to be:

for the benefit of the Carrier and the –

beneficiaries defined in section 1.  The exclusive jurisdiction clause is in subclause (B)(i).

JAGOT J:   Sorry, I think two of us are a bit lost.  Which volume are you in?

MR GLEESON:   It is the appellant’s book of further materials.

JAGOT J:   Sorry, and it is behind – what page were you?

MR GLEESON:   Tab 1, page 20.

JAGOT J:   Thanks, sorry about that.

MR GLEESON:   Thank you, your Honour.  On page 20, Paragraph (B)(i) is the exclusive jurisdiction clause.  Then, the class action waiver clause is at paragraph (C) on page 21.  Your Honours can see the clause.  It presents as a one‑way clause, your Honours.  It is a promise by the passenger to submit to:

EXCLUSIVE RESOLUTION OF DISPUTES THROUGH INDIVIDUAL LEGAL ACTION ON –

the passenger’s:

OWN BEHALF INSTEAD OF THROUGH ANY CLASS OR REPRESENTATIVE ACTION.

It then says:

EVEN IF THE APPLICABLE LAW PROVIDES OTHERWISE, YOU AGREE –

that is the passenger:

THAT ANY ARBITRATION OR LAWSUIT AGAINST CARRIER WHATSOEVER SHALL BE LITIGATED BY YOU INDIVIDUALLY AND NOT AS A MEMBER OF ANY CLASS . . . AND YOU –

the passenger:

EXPRESSLY AGREE TO WAIVE ANY LAW ENTITLING YOU TO PARTICIPATE IN A CLASS ACTION.

So, the first thing we would say about it is that it looks to be or has the effect of limiting the right of the passenger to sue the carrier because the passenger is bound not to participate in what may be an advantageous form of dispute resolution.  The second thing we would say is it does not operate in any way to restrict the options of the carrier.

GORDON J:   In what respects do you mean by that?

MR GLEESON:   If the carrier wished to commence a defendant’s representative action, a bill of peace action, joining a representative for all of the passengers to receive a common determination of a dispute, it is not precluded by this clause.  There is no fetter on the options open to the carrier as to how it litigates, if it is the moving party.

Your Honours, the discussion of the defendant’s representative action was given by Justice Lee.  I will just give the authority.  It is in Perera v Getswift (2018) 263 FCR 1 at paragraphs 145 and following. So, what has happened by this clause is that a barrier has been erected preventing the passengers from engaging in a favourable mechanism of dispute resolution when there is no equivalent barrier imposed against the carrier, and his Honour the primary judge was correct to infer at paragraph 144 on page 54 that at the time of contract, looking forward, it could reasonably said that the clause had the likely effect of rendering:

economically unviable or at least questionable to pursue on his own and in circumstances where other passengers had claims raising common questions or issues, a combination of circumstances that is readily foreseeable as a reasonable possibility, the effect of the clause would be to limit Mr Ho’s practical ability to pursue such a claim; it would adversely affect, and in some cases even remove, his access to justice.

Now, we would commend what his Honour there has found in that paragraph as a straightforward appreciation of a realistic likely effect of the clause at the date of the contract going forward.  It does not need much evidence to reach that conclusion, that cost of the passage was about  $1,600 or $1,700, whether the claim was a small damages claim or a large damages claim, as the present has turned out, the cost of litigating that claim individually were clearly likely to far exceed both the fare and – potentially, at least – the damages that might be recoverable.

Given that we are speaking about effect, his Honour has correctly focused on correct, which is the language of section 25(1)(k), that is a finding which is impeccable, we would submit.  His Honour has then correctly gone on to say that the imbalance is that Princess has the likely effect via this clause that it may free itself from claims which are otherwise bona fide, good claims.

GORDON J:   Where is that, Mr Gleeson?

MR GLEESON:   It is where Justice Stewart said:

The imbalance is that the clause would have the effect of preventing Mr Ho from vindicating rights ‑ ‑ ‑

GORDON J:   No, I got that bit.  It was the next bit –  is that your analysis of the balance of it?

MR GLEESON:   Yes.

GORDON J:   Thank you.

MR GLEESON:   That is the imbalance.  The imbalance is twofold, it is firstly that the clause is one‑way in terms, and secondly the likely effect of the clause is very much to limit or remove the passenger’s ability to sue, correspondingly freeing Princess from what may be bona fide and solid claims.  Your Honours, that was the first factor – the imbalance.  The second factor is not reasonably necessary to protect legitimate interests of Princess ‑ ‑ ‑

GORDON J:   Sorry to go back, can I just go back to one aspect of the first factor?  It is put against you that there was no evidence of that imbalance.  You said a moment ago, I forgot to raise it with you.  You say that you do not need evidence.  Does that matter?

MR GLEESON:   You do not need evidence.  You have evidence of the amount of the fare, you have ample judicial notice of the likely size of claims that might be brought of a personal injury character from small to large, you have ample judicial notice of the cost of litigating these types of issues.  You have all of that.  Justice Derrington, with respect, was wrong, at that paragraph where he said there was no evidence.

GORDON J:   You may be coming to it, Mr Gleeson, but ‑ ‑ ‑

MR GLEESON:   I do want to add this, your Honour.  You do not need evidence, but there was evidence even beyond what I have just said.  The evidence was twofold.  Your Honour Justice Jagot, if you do have the misleadingly‑named appellant’s supplementary booklet materials now, the reason that has been added is that the evidence unsurprisingly included the claim in the main action, which is tab 1.  Your Honours do not need the detail, but it is a carefully‑pleaded 98-page document.  You have, in tab 2, a carefully‑pleaded defence in the main action, which indicates the range of issues that might be raised if these matters have to be litigated.  You have at tab 3, the particular points of claim of Mr Ho, and the types of issues that he would have to prove.

Now, this is taking into account the actual claim as a hindsight to confirm a reasonable foresight, but you can see the complexity of the issues that Mr Ho will have to plead, and then you see at tab 4, most specifically, the range of defences that Carnival has raised to the claim, substantively and procedurally.  All that is evidence that the likely cost of having to do that individually will be a very, very large sum of money far dwarfing the cost of the cruise and likely dwarfing the individual damages that he might recover.  That is one bit of evidence.

The other bit of evidence, I think that is the correct term for it, is the ALRC Report addressed this very issue in volume 11 – this is a report which your Honours and other courts have frequently referred to as informing this.  In volume 11 at tab 66 the ALRC looked at this very problem, and they identified at paragraph 17 to 19 the very situation where the amount of a loss or damage may be low in relation to the likely costs of legal proceedings.  They identified the possibility you may not be able to recover costs even if you win, that appears to be the United States position, and they identified that it is only through the group action that the economics are likely to justify bona fide claims being vindicated.

That is the underlying material, and to the extent Justice Derrington said we needed more or took a different view about the economics of class actions, we would submit that was more than enough to prove the tolerably obvious.  Could I come to the second factor, which is the:

not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term –

Because of subsection (4), the onus was on Princess on this issue and they led no evidence on this issue, and conversely the applicant did lead evidence, of a comparative kind, which are the terms of the New South Wales contract, which is in the appellant’s first book of further materials at tab 2.

GORDON J:   Is this to make the point that the Australian and the New Zealand ‑ ‑ ‑

MR GLEESON:   Yes.

GORDON J:   ‑ ‑ ‑ had a ‑ ‑ ‑

MR GLEESON:   They had no such ‑ ‑ ‑

GORDON J:   Had no such waiver.

MR GLEESON:   ‑ ‑ ‑ clause.  Yes, I will just give the reference, it is tab 2, page 43.  In terms of legitimate interest, we have 2,600 people on the same vessel experiencing the same cruise.  It is perfectly acceptable to Princess that 1,700 of them, if they have claims, will bring them through the beneficial procedures of the group action.  One then asks, what did Princess do to prove a legitimate interest in subjecting the other 700 people to an exclusion from that action?  And they did nothing.  On this second point – that is the short answer.

We have some further submissions to make about what Justice Derrington said on this topic because, although there was an absence of evidence led by Princess, his Honour at length, between paragraphs 260 and 268, found that Princess had proved the legitimate interest, and I want to critique that finding.  If I could start with 268, so your Honours can see it in summary, it had three strands to it.  The legitimate interest in avoiding the burden of a class action being brought against it, whether in Australia or the United States, was three‑fold.  The first element was:

the risks associated with the single determination of the core issues of liability which might not be capable of correction on appeal –

Now, your Honours might be forgiven for wondering what his Honour saw as the deficiency in a class – a group action, at least in the Federal Court, by way of creating a single determination of core issues of liability not capable of correction on appeal, because the whole purpose of Part IVA is to enable a single determination of core issues as an efficient use of judicial resources with any error available for correction on appeal to the Full Federal Court and by leave to this Court.

So, what did his Honour have in mind?  As best we can tell, if your Honours go back to paragraph 261, his Honour accepted a submission by the respondent based on the United States Supreme Court decision in AT&T Mobility v Concepcion.  From that decision, which I will go to in one moment, his Honour seems to have found that both when class actions are applied in arbitration and when they are applied in the United States courts, according to his Honour, and apparently in the Australian courts, according to his Honour, there is a real burden and risk for the defendant because you only get one chance to establish a liability and if you can force the plaintiffs to sue individually an error in one action may be remedied in the next.  They can also lead to in terrorem settlements:

Such risks also exist in the Australian jurisdiction.

And so on.  So, what his Honour here has said – and if one speaks of lack of evidence, we would submit there is a significant lack of evidence for this finding – that there is a risk in the Australian jurisdiction in the Federal Court that defendants like Princess are exposed to this terrible burden that if they lose in the first action, they have lost the chance to force someone to sue them individually in a second action where they might correct the error, or maybe in the third or the fourth and so on.  Now, that is contrary to the entire rationale of Part IVA.  We need only refer your Honours to BMW v Brewster paragraph 82 of Chief Justice Kiefel and Justice Keane, as to what the two purposes are.

So, in other words, this fear of Justice Derrington leads to the very mischief that the entirety of this scheme was enacted to embrace.  The mischief was that a well‑resourced defendant, by forcing people to sue individually or through the inadequate equity representative action, could multiply the chances to try and eventually persuade a judge in their favour and remedy the error in one action and the next.  Now, if that is an element of the so‑called legitimate interest, our short submission is it does not qualify as a legitimate interest within section 24(1)(b) because it is directly contrary to Part IVA of the Commonwealth statute.  Now, as to the case, if I can go to it briefly ‑ ‑ ‑

GAGELER J:   Are we allowed at this stage of the analysis to just look to Australian class actions?  I mean, if you are looking at the operation of the way the clause at the time it is enacted, then his Honour cannot be wrong in considering how it would apply to a United States class action, can he?

MR GLEESON:   As to whether it would be enforced in a Unites States class action, his Honour was not wrong in that.  But to the extent this clause is over‑inclusive because it appears to be accepted on everyone’s construction, it bars participation in class actions outside the United States and in Australia, it is at least sufficient to say it is unfair to that extent and therefore it is an unfair term, and therefore it is void.

In addition to that, the error I am trying to tease out is that his Honour has supposedly discerned a Unites States approach to class action and waiver clauses, which is then saying I find those very same risks exist in Australia, and therefore an Australian defendant is entitled, quite fairly, to sign up customers to avoid the benefits of Part IVA.

I just wanted to show your Honours that if you go to AT&T, which is in volume 9, tab 46, the authority, which is a split decision, is not about even class action waiver clauses in the United States courts, it is about the much more controversial area of the use of class action waiver clauses in class arbitration, which might sound like a misnomer to your Honours, but it is by reason of United States State statutes which interfere with the autonomy of the arbitral process by permitting plaintiffs in arbitration to assemble classes.  The United States Supreme Court was dealing with whether that provision as a matter of State law was struck down by the Federal Arbitration Act as inconsistent with the basic premises of arbitration.

It was in that context of whether class action waiver clauses interfere with legitimate interests of defendants in class arbitration that your Honours will see the comments on page 350 of the report, page 3546 of the bundle.  The observation, which one can see is at least arguable, is that if you are a defendant in arbitration where you have limited ability to appeal the result to a higher court, you may suffer some disadvantage in having a class arbitration foisted upon you, contrary to your will, because you face the risk of a once‑and‑for‑all decision which you cannot appeal and which may be wrong and may lead you to paying a lot of money.  The dissentings took a different view.  But the entirety of this concern which his Honour has leveraged off is about an irrelevant problem.  So, that is the first of his Honour’s three aspects of legitimate interest at paragraph 268.  The second aspect, at 268, his Honour says:

the substantial weight of the cost and risk of an adverse judgment effectively forcing a settlement –

To see what his Honour means, one goes to the previous paragraph, 267, near the end.  His Honour is making an observation apparently about Australian procedure as well as the Unites States, that the:

procedure can be abused to oppress defendants by reason of the enormous costs which tend to be billed by the claimants’ legal practitioners and the large portion of recoveries required by funders –

and the next bit is the real sting:

each of which necessarily increases the amount for which the action might be resolved.

So, if one is in the territory of evidence, Mr Hutley’s side led no evidence to cast what I would kindly describe as a slur upon the entire group action proceeding regime in this country, that it has the effect – contrary to everything the ALRC and the Parliament intended – of necessarily increasing the amounts of settlements and thereby oppressing defendants.

GLEESON J:   Not just in this country.  We would be expressing an opinion about class action procedures in the United States.

MR GLEESON:   In the United States – and there just was nothing there to that effect.  So, what has happened is that some comments of certain Supreme Court justices in the context of class action arbitration, which raises some particular issues, have been led into this more general proposition where we are accused of having no evidence about what a class action waiver clause does for us when it is tolerably obvious, but we are then forced to accept a finding – subject to this Court – that this procedure causes abuse.  Your Honours only need to know that the Federal Court has ample powers to control abuse.

Under section 33V, the Federal Court approves the settlement.  It only approves just settlements.  If the poor carrier has been bullied into an unjust settlement, you would expect them to say so to the court.  Under section 33Z, the court makes just judgments and not otherwise.  I will give your Honours the reference without going to it, but the ALRC at paragraphs 115 and 227, dealt with the very issue of the balance created by the proposed regime between plaintiffs and respondents.  So, they looked at it, and they said, part of that balance is that the respondents get the benefit of the common determination of the issues, which is likely to save them cost.  We would ask your Honours to reject the second so-called legitimate interest.  The third one, in paragraph 268, is that: 

it had an interest in dealing with the claims made against it in the one forum of which it was familiar, with its regularly engaged legal representatives –

Pausing there, that might explain the exclusive jurisdiction clause.  It does not explain the next bit: 

and on an individual basis.

If Princess’ argument is, we will save money if we fight 600 individual claims in the United States District Court, or the Californian State courts, as compared to our costs of fighting a class action in the United States or in Australia, they were the ones who ought to have produced evidence.  Your Honours, by that stage, in terms of section 24, we would submit the first two criterion are clearly in favour of this being an unfair contract.  The third criterion is fairly straightforward.  The detriment to Mr Ho, if it were applied or relied upon, is the loss of ability to participate in an economic means of vindicating his rights.

If your Honours continue in section 24, after the first three mandatory factors, there is a further mandatory factor as to whether the term is transparent, and that is explained in subsection (3).  It would appear that Justice Derrington and the Chief Justice concluded this term was transparent.  If your Honours have our chronology, and the appellant’s book of further materials, we take issue with that rather remarkable finding.  You will see from the chronology that when Mr Ho booked the ticket and paid the deposit, he was not provided with the United States terms.

GORDON J:   Where are you reading from now?

MR GLEESON:   This is the chronology, item 1 – appellant’s chronology.

GORDON J:   I see.

MR GLEESON:   So, he books, pays a deposit, not provided with the terms, or even a link to them.  The original contract has been made without Princess in any way bringing the term to his attention.  Item 2, the booking confirmation, is no better.  Item 3, the 8.16 pm, 30 October booking confirmation is no better.  Then the first time you see anything possible is item 4.  This is on the 30 October, so it is five weeks after making the contract.  That document is in the appellant’s book of further materials at page 73.  Remember, we are looking for a term that is plain‑language legible, presented clearly and readily available.  I am tempted to ask your Honours to find, on page 73 or 74, the class action waiver term.  If one gets to the notice at the foot of 74, which is not legible and not clearly presented, you are told that:

Upon booking the Cruise, each Passenger explicitly agrees to the terms of the Passage Contract –

And then there is a web link.  “Please . . . affect”.  On one view, Mr Ho has never seen or never been presented with any terms at this point, so to say that upon booking, which happened five weeks earlier, he agreed to anything is incorrect at best.

If one clicks through to the link – and this is back on the chronology item 4 – which Mr Ho did not do, you would go to a webpage and you are then presented with three different contracts.  Then you would have to log into something called the “Cruise Personalizer” to determine which contract applied to you.  Not hard to forgive Mr Ho for not doing that.  Then, nine months later, when he does log in to check his booking, what he is presented with is the document at page 79.

We are now 10 months after the original booking, after the deposit, and he gets that.  Apparently, the finding is if he were to have clicked and looked at the whole of that document, he would have found the document at tab 1 – and if your Honours now go back to tab 1, the United States terms, even if a person had done all that, the important notice at the top does not tell you there is a class action waiver clause, it tells you, you are waiving jury trial – second last line – and you are waiving in rem claims of arrest.  So, it is not thought sufficiently important to put in the bold.  Then, you find it, if you happened to have gone to clause 15, page 21.

GAGELER J:   Mr Gleeson, within the structure of section 24, given one has to take into account the extent to which a term is transparent under subsection (2) in determining whether the term is unfair under subsection (1), I am finding it a little bit difficult to see how transparency feeds back into subsection (1).  Does it kind of just hover above everything, or is it relevant to one of the factors in subsection (1)?

MR GLEESON:   I think it is an additional factor, although it could potentially overlap with some of the other factors – but, it is an additional factor.  Your Honour, part of its role may be explained by section 27.  We are only in this territory because we are dealing with standard form contracts.  Standard form contracts are ones where, in the process of the bargaining, these things have happened, including paragraph (c) – it is take it or leave it, and no opportunity to negotiate.

EDELMAN J:   Why would it not be read as a matter that is taken into account in determining either (a), (b), or (c) in subsection (1)?  In other words, (2) is just providing that in considering whether (a), (b), and (c) are met, you can take any facts and circumstances into account, but one fact and circumstance that you have to take into account is the contract as a whole and the transparency of it.

MR GLEESON:   I accept that, your Honour.  That is more textual than what I was putting.

GLEESON J:   How would that work?  Subsections (a), (b), and (c) are directed to the substantive obligations.

MR GLEESON:   It may be that a term that has been buried – as this one has – which has been buried as part of the take it or leave it process, and not exposed at all – and even then, badly and belatedly – that, of itself, creates a significant imbalance in the rights and obligations, and cannot be reasonably necessary to protect their interests.

GORDON J:   Is the starting point not you have a contract of adhesion?

MR GLEESON:   Yes.

GORDON J:   That is the lens through which you must look, is it not?

MR GLEESON:   Yes.

GORDON J:   And one is saying, I have a contract of adhesion; I have a standard form contract, you have to look at things as a whole in assessing whether or not (a), (b), and (c) are made out and to what extent.  One looks to see whether the thing you are actually seeking to have declared unfair is – I take an obvious example from the times in law school that one sees it up front in bold, it is not in tiny print, and you cannot pick it up; otherwise, it is creating – it impacts the way in which you look at detriment, and the way you look at significant imbalance.  Is that the way it is put?

MR GLEESON:   Yes, your Honour.  That is the point.  The more imbalance or detriment inherent in the term, the more the need in the contract of adhesion to have Lord Denning’s red hand there saying that if you do come on this cruise, just remember that you do not have any ability to access Part IVA of the Federal Court of Australia or equivalent provisions, even though you are travelling to and from Sydney.

GORDON J:   The other way you might put it – as I understand it, by reference to the lack of transparency – is that chronologically here, one takes into account the chronology and ascertaining and determining whether or not (1)(a), (b), or (c) made out, because you have a temporal question as well as a content and form question.

MR GLEESON:   Yes.

GORDON J:   Is that the way that it is put?

MR GLEESON: It can work in all those ways, your Honour. But to the extent that the Chief Justice and Justice Derrington regarded this as a transparent term, we would say this is the exemplar of a non‑transparent term, and the very type of term that section 23 is aimed at.

GORDON J:   Justice Allsop talked about:

the clarity of the term in the conditions (being relevant both to the operation of the proper law and s 24) –

What does that mean?

MR GLEESON:   We have real trouble with that, your Honour.  This term does not have clarity of presentation.  If his Honour is saying ‑ ‑ ‑

GORDON J:   When he says “clarity of the term in the conditions” I do not know whether it is presentation and/or substance.

MR GLEESON:   If his Honour is saying clarity of presentation ‑ ‑ ‑

GORDON J:   Or effect, I must say.

MR GLEESON:   ‑ ‑ ‑ we would respectfully submit he is wrong.  You could hardly have a less clear presentation of the term.  If his Honour is saying if you get to the term and as a lawyer you are construing it and you work your way through it you will find what it means – namely, you are, in fact, losing class action rights worldwide, including in Australia – it is hard to say that is being said with unmistakable clarity.  That may be its true legal effect, but one hesitates before concluding that is what it has made clear.

Indeed, your Honours, in terms of just the way it is worded, if you have page 21 again of that book, there were in fact numerous arguments before Justice Stewart of construction which we have not troubled the Court with, but one thing about it is:  does it even cover statutory claims under the ACL?  Well, the view has been taken now that perhaps, read broadly, it really means exclusive resolution not just of disputes under these terms, but disputes arising out of or relating to your cruise, including non‑contractual claims.

So, you have to do an exercise in construction to get to that.  And then, does it include waiver of rights to participate in class actions outside the United States?  Again, an exercise in construction.  So, very hard to say all of that has been clearly presented to the poor passenger.  For those reasons the term was void.  It could be declared as such under 250.  There could be an injunction restraining Princess from relying upon it under 232 and we would get to question 4.

Your Honours, the alternative way of getting to question 4 under ground 2(b) concerns whether the clause is inconsistent with the policy and scheme of Part IVA.  The reason that it is, in short, is that it interferes with the free and informed choice that the part requires to be made against the notice settled by the court and thereby tends to undermine the twin objectives of the scheme identified in Brewster at paragraph 82; in particular, increasing the likelihood of multiplicity of proceedings.  That is the short submission, your Honours.

If your Honours have the Federal Court Act with which you are too familiar, which is in volume 2, part 5, the submission we make which Justice Rares adopted that does rely upon the critical role that opt out plays within this scheme that, under section 33C it is the applicant who makes the choice to commence the proceeding, define the class and provided the conditions are met at that point, the judicial process has been engaged in respect to the claims of everyone in the class without their consent being required because of section 33E.  And it is the applicant under 33H that specifies the claims and:

the questions of law or fact common to the claims –

without naming the individual members.  So, at that point in terms of the twin objectives of BMW v Brewster, we have the group brought together “without their consent” in order that the common claims can be litigated in the one proceeding, thereby aiding “access to justice” because costs are saved for them individually, and producing a more efficient use of judicial resources, including avoiding the risk of inconsistent judgments.  That is the essential purposes of the scheme embodied in these provisions.  Within that context, 33J ‑ ‑ ‑

GLEESON J:   I can understand why that objective extends to inconsistent findings in other jurisdictions, but does it really extend to multiple suits in multiple jurisdictions?  In other words, is Part IVA concerned with outside the Australian courts?

MR GLEESON:   I am sorry, your Honour, is it concerned outside the Australian ‑ ‑ ‑

GLEESON J:   Is it concerned with the problem of multiple suits or, in other words, the impact on judicial resources in other jurisdictions?

MR GLEESON:   It is primarily concerned with the impact of judicial resources in this jurisdiction, including each of the Federal and State jurisdictions.  So, it avoids unnecessarily judicial resources.  It avoids inconsistent outcomes within Australia, but it does have ‑ ‑ ‑ 

GLEESON J:   Or inconsistent outcomes outside Australia that might impact on Australian litigation?

MR GLEESON:   Yes, it does have that as a further effect, because if one takes the present action, because of the stay it ran before Justice Stewart on certain common issues for the non-United States terms people for six weeks – 12 people opted out.  So, it will produce, when his Honour gives judgment, answers to the common questions which will create issue estoppels which, at least for 1,700 people on the boat, will be determinative, subject to appeal, certainly in Australia but most probably in other jurisdictions by reason of their law of res judicata.

Your Honour, that is what I would call the further effect.  If one concentrates on the core effect, instead of hundreds of individual actions being started in various Australian courts, the single action is started, and, subject to what comes under 33J, everyone in the group is bound by the determination.  The respondent is bound by the determination, for better or worse, and the respondent gets the finality of that determination – for example, through section 33ZB, which creates the statutory estoppel that the Court dealt with in Timbercorp.

So, 33ZB is worth dwelling on:  it is part of the scheme.  If you do not opt out, under section 33J, you are bound, for better or worse, through the statutory estoppel.  What that tends to tell us is that section 33J is the critical part of the scheme, which governs when it is that a person will fall outside the benefit and burden of the action, as part of achieving the twin public policy objectives.  Under section 33J: 

The Court must fix a date –

for opt out.  Then, under subsection (2): 

A group member may opt out . . . by written notice given under the Rules of Court before the date so fixed.

That the narrow but, we would submit, correct construction argument we make is that subsection (2) creates the ability to opt out after the court has put in place the regime for notices, and before the date fixed under the notices.  What that embodies is the notion that the notice, which the court will approve under 33X, provides the essential information, which you will see in subsection (1).  Based upon that information, the person will be able to make a free and informed choice whether to escape the benefits and burdens of the actions under 33ZB.

GAGELER J:   The potential class member can always compromise the claim in advance of a class action.

MR GLEESON:   Yes.  So, that can be done.

GAGELER J:   With the release waiver?

MR GLEESON:   We are not suggesting anything of that type contravenes the scheme.  But what the scheme is trying to do is to say, because we have gone opt‑out and not opt‑in, the way in which we are balancing the autonomy of the individual with the public purposes of the scheme is through opt‑out occurring under the court control process in the face of the court‑controlled information.

So, if a person receives the notice and is told everything they need to no and says, no, I wish to pursue my own claim individually, or I do not wish to be in litigation against this person at all, that is their autonomy protected – and that is fine.  What the class action waiver clause does – if it is valid – is something wholly different which says, at an anterior point in time – before the services have even been provided; before the dispute has even broken out; before the class action is ever commenced; before the person is in any position to make an informed choice between remaining in the action for better or worse, or moving outside the action, either for individual litigation or not to pursue the claim, their decision has already been made.  

GORDON J:   Does this argument extend to all class action waiver clauses in all standard form contracts?  For example, the Australian contract here, and the New Zealand contract as well.

MR GLEESON:   We think it probably will, because it goes to the centrality of the purposes of this scheme, and ‑ ‑ ‑

GLEESON J:   It extends beyond contracts of adhesion, does it not?

MR GLEESON:   It most probably does as well, because we are here focusing not just on the fairness to the individual; we are focusing on the – because that would not get us where we need to go with Part IVA.  We are focusing on the inconsistency between allowing this contract to do its work and the purposes of this scheme.

EDELMAN J:   Would you accept that its possible for a group member or potential group member to compromise a claim at a very early stage – perhaps even before the action had been formally commenced in court – by a compromise which involved an undertaking to opt out of the proceeding under section 33J?

MR GLEESON:   In your Honour’s example, most probably, that would not be contrary to Part IVA, because that would be respectful of the scheme, and what would in fact happen in that case is you would need to come to court, and you would need to apply for a gap‑filling order under section 33ZF and say, although the notice regime is not yet been set down in play, we have come up with our own free and fair contract which involves a release of the claim.  The judge under 33ZF, with the gap‑filling power, could make an order “appropriate or necessary” to do justice in the proceeding, but would be satisfied that what the judge has is a contract about which there can be no suspicion that it is being forced by one party on the other.

That example can be accommodated with the scheme.  The problem here is the defendant in advance of, as I say, any provision of services, any dispute, any litigation, has prevented this scheme doing its work, and the result will be, as Mr Hutley’s client says, 670 people on the cruise, they get scrubbed from the action without more.  So, the scheme does have an ability to deal with the example of the fair compromise, but the problem here is this far, far deeper one.

One of the examples we gave, which we think is not fanciful, is a corporation inserting in its memorandum or constitution a provision that it may not be sued by a member in a group proceeding in Australia.  Now, we would submit that is contrary to the public purposes of Part IVA, because it means when that corporation is alleged to have done a wrong, each shareholder has to sue it individually, if at all, and that is why there are such profound implications of taking ‑ ‑ ‑

EDELMAN J:   At the other extreme, you have possibilities – I cannot remember whether it was in Concepcion or Hartford Fire where, although it may be a contract of adhesion, there may be very real benefits and rights that are conferred by the other party by the potential defendant in exchange for a waiver of these rights, such as the undertaking to pay all litigation costs, the undertaking to pay an additional amount of damages to ensure that they are never out of pocket, to pay for their lawyers and so on.

MR GLEESON:   Well, that may suggest that the answer I gave to the questions of Justice Gleeson and Justice Gordon of how far does the principle go, one always has to reserve the facts of each case.  But in the territory we are in, where we have the features I have discussed this morning, we would submit it is very difficult to see how the purposes of this scheme – the public purposes – are enhanced by allowing a defendant in this position to bind people in this fashion, prior to any dispute, any provision of services, and without any additional features.

GORDON J:   Sorry to ask a silly question, but what is the cause of action for this kind of declaration?  Where is the source of the ability to do it?

MR GLEESON:   Well, that is the issue Justice Rares raised that, if I am understanding your Honour’s question – which is, there is nothing in this scheme which expressly says a defendant can go to the Court and have persons removed from the action.  There is nothing that says a defendant can obtain a mandatory injunction to require people to opt out.  And his Honour found that absence significant in this comprehensive scheme as reflecting that opt out occurs under section 33J.

GORDON J:   My question is more basic.  Accepting what Justice Rares said, what is my cause of action when I come along and ask for this kind of declaration?

MR GLEESON:   Well, Mr Hutley’s cause of action must be in contract, where he says, I seek a mandatory final injunction that you perform your promise not to participate in this action, thereby requiring you to sign this piece of paper, and failing you signing the piece of paper, I direct that the registrar of the court sign the piece of paper in your absence.

It would be a form of specific performance order.  It is not impossible to conceive of the form of order, but the entire absence in the scheme of any recognition of it is rather telling.  As I say, it does not create a problem for other cases.  As your Honours know, sometimes people are named in group actions who should not be named, like judges, and so there has to be a quick‑and‑ready means of amending the group in order to allow the case to continue.  That happens, as your Honours may know, through the procedures which are in the Act; the applicant can amend the class definition, that is section 33K(1).

Despite the heading, it is a general power of the Court on the application of the representative party to amend the class, and so the applicant should make such an application.  If the applicant, perversely, refused to do so, one could imagine the Court under section 33ZF making a gap‑filling order.  But what this scheme does not to do is give – coming back to your Honour Justice Gordon’s question, it does not give the respondent any ability to amend the class.  That is the applicant’s choice.

GAGELER J:   Mr Gleeson, I may be way behind you here, but if you start with the waiver of class action clause, I am not sure what is said to be being waived.  What is the relevant part of it that somehow bites, or is said to bite, in relation to Part IVA?

MR GLEESON:   I suggested to your Honours that the construction is not tolerably clear.  But, if you look at the foot of page 21, and you expressly agree to waive any law entitling you to participate in a class action ‑ ‑ ‑

GAGELER J:   You cannot do that, can you?

MR GLEESON:   You cannot do that.

GAGELER J:   You can only waive a right.

MR GLEESON:   You can waive a right.

GAGELER J:   You could compromise your right – your underlying claim so you no longer have the claim.  But, apart from that, if you are just within a represented class, you have got no say over the commencement of the proceedings.

MR GLEESON:   None at all, your Honour.  So, the language may be apposite to the particular procedures of the United States where, of course, it is not ‑ ‑ ‑

GORDON J:   You have to get leave to issue.

MR GLEESON:   You have to get leave to issue; you have got certification; you have got ‑ ‑ ‑

GORDON J:   That is right – certification and all the processes before you can launch.

MR GLEESON:   You have those.  The language may or may not be apposite there.  But, purporting to apply it here, you agree to waive the law – the law can only be, if anything, Part IVA.  So, it is purporting to bind the person to waive the entitlement.  The only form of entitlement, as your Honour puts to me, is that you are bound without your consent and your entitlement is your limited ability to escape the matter, otherwise you are bound by 33ZB.

That just tends to illustrate, we suggest, the inconsistency between the clause, Part IVA, and the public policies that Part IVA is advancing.  Your Honours, just before the adjournment, we have mentioned the Canadian decision, which Justice Rares has referred to.  His Honour knocked out the scheme, it is volume 10, tab 59, Pearce, it is a considered decision in 2021 of the Court of British Columbia.  The Canadian scheme is analogous in the sense that it is an opt‑out, and for the reasons that court found the inconsistency with the scheme, we advance the argument we make here.

GORDON J:   Perhaps the waiver clause only operates in an opt‑in context?

MR GLEESON:   Yes, your Honour, the opt‑in being more synonymous with an entitlement to participate.

GAGELER J:   We will take the lunch adjournment.

AT 12.45 LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

GAGELER J:   Mr Gleeson.

MR GLEESON:   Thank you, your Honour.  Could I just deal with three outstanding matters from this morning.  The first:  I mentioned the position in British Columbia – now it is easiest to pick up at page 153 of the core appeal book.  The critical extract from the decision in Pearce that we need for our submission, is there set out, paragraphs 265 to 266 – and we adopt that as relevant to Part IVA.

Returning to your Justice Edelman’s questions, the distinction drawn in this reasoning is between a contract where a person has signed away their rights before any alleged wrong, and before any question of the proceeding – of the processes in the proceeding – which is seen to offend the regime, and perhaps a contract to settle a matter after it has been commenced.  We think that is a distinction that matches the purpose of Part IVA.  Your Honours, that is the Canadian case.

In terms of power, your Honour Justice Gordon asked me about the power question.  We embrace what Justice Rares said about there being no obvious power to produce the result that the respondents seek – and that is his Honour’s reasons on page 151 to 153 of the core appeal book, and we support that reasoning.

Your Honours, the third question is the question of construction of the class action waiver clause.  We reviewed the argument below, and on our reading of it, both at first instance and on appeal the reach of the clause was part of the argument about whether it was contrary to Part IVA.  The sort of matters that your Honour Justice Gageler raised with me, Justice Gleeson raised with me.  I want to show your Honours that is the case, and then I want to seek to at least notify a proposed amendment to the notice of appeal to make clear that that is part of the case we seek to make.

I can show your Honours before Justice Stewart at first instance ‑ ‑ ‑

GORDON J:   Are these the submissions that were put, is that what you mean?  Are you taking us to the submissions that were put?

MR GLEESON:   Yes.  In Justice Stewart, he identified this link between the construction question and the Part IVA inconsistency question at paragraphs 110 to 111 on page 44, and then resolved it on page 46 between paragraphs 118 and 119.  At 118 he said if the clause made it a breach of your obligation to be a member of the group ‑ ‑ ‑

GORDON J:   Where are you reading, sorry?

MR GLEESON:   Paragraph 118.

GORDON J:   Thank you.

MR GLEESON:   “If the class action waiver clause”, et cetera, if the mere filing meant those bound by it immediately breached their obligations, then his Honour goes on to reason in that paragraph that:

would in my view be inconsistent with the provisions of Pt IVA such that it would be unenforceable.

On that construction his Honour accepted it was unenforceable.  He then, at 119, went to a broader construction that it requires anyone bound by it to opt out of the proceedings, and that is the construction that he preferred at 120.  On the basis of that construction he found no inconsistency, and that is what we have already challenged.  Albeit at the stage of relief, at page 102, paragraphs 349 to 350, his Honour indicated there might be difficulties in fashioning an appropriate order.

GORDON J:   Is he asking a different question there?  Is he asking a question about a reasonable person would believe, rather than construction?  It may be a different question giving rise to the same answer, but ‑ ‑ ‑

MR GLEESON:   Is this at 119, your Honour?

GORDON J:   Yes.

MR GLEESON:   Yes.

GORDON J:   And 120:

I am of view that the second is what a reasonable person would have understood –

MR GLEESON:   Yes.  That is what we submit is not really the right approach to this clause, and it is a big ask to get out of the words we have seen in the clause.  The promise in paragraph 120 not to consent to membership, and then a positive promise to opt out of class membership where consent to opt in is not required.  His Honour there is adverting directly to the point your Honour Justice Gleeson raised, which is a clause drafted in the context of an opt‑in regime, does it actually work in the context of opt‑out?  His Honour thought it did.

Now, when it came to appeal, Mr Pike on our side of the record re‑engaged these arguments as part of the Part IVA argument.  It is page 245 of the book, and this was in advance of ground 1 of the notice of contention.  At 351, you will see Mr Pike made a construction argument that his Honour’s conclusion was:

founded upon an incorrect interpretation –

of the clause, and 352 is the very argument being put again:

as the US Terms and Conditions contained a US choice of law clause, it ought to have been construed by reference to US laws.  It was submitted that as the US law has an opt‑in regime, the clause required a different construction.

So, Mr Pike, as the entry point to the Part IVA argument, was re‑advancing the construction argument.  At 352, 353, his Honour, it seems, rejected that construction argument.  If your Honours read the top of page 246, it may be something has gone wrong in the second full sentence:

By it the passenger convenanted not –

I think the “not” should be “only”:

to litigate any claim individually or –

and then I think there should be a “not”:

to litigate any claim as a member or part of any class.

Then his Honour starts to construe and tease out implications of that:

Necessarily, the negative aspect of the clause requires that the passenger not take any action by which they prosecute their claim . . . as part of a class action.  That obligation would encompass within it not remaining part of an action into which they have been drawn . . . If that occurred, compliance with the clause would require them to do that which is necessary to opt‑out.

So, as we read it, it is that sentence there:

compliance with the clause would require them to do that which is necessary to opt‑out –

is the construction that the court has placed on the clause, contrary to Mr Pike’s submission, and it is on that basis that the entire Part IVA argument is run.  Chief Justice Allsop, who deals with it much more briefly, appears, as we read it, on page 132, paragraph 11, to adopt the same construction:

Construed as the primary judge did, correctly in my view, the clause places an obligation upon the contracting party to opt out –

JAGOT J:   Which begs the question of the time at which ‑ ‑ ‑

MR GLEESON:   Which begs the entire question.  So, what we would seek to do, and Mr Hutley will need to have time to consider his position, of course, is to hand to the Court a proposed amended notice of appeal, for which I might move on the leave that we seek tomorrow morning, perhaps, or now as appropriate, but could I hand up the document?

GAGELER J:   You can certainly hand it up.

MR GLEESON:   Thank you.

GAGELER J:   Mr Hutley wishes to be heard, at least procedurally.

MR GLEESON:   Yes.

MR HUTLEY:   Just shortly, if I might, your Honour.

GAGELER J:   Yes.

MR HUTLEY:   Two points.  We are not sure what argument is sought to be advanced by our learned friend.  In debate with the Court, the issue was raised whether the clause, in effect, speaks to an Australian class action – so, in other words, it simply does not deal with an opt‑out regime.  Now, if that is the argument that has been advanced, it is unclear to me whether that argument is being advanced or some other argument is being advanced.  If I could have that clear – precisely what argument my learned friend is making about the true construction of this clause, I can then consider our position.  But, at the moment, I am frankly confused as to what actually is being put.

GAGELER J:   Of course.  Mr Gleeson, it would be helpful if you put the entirety of your argument, or proposed argument, in‑chief, now.

MR GLEESON:   Yes.  Thank you, your Honour.  The argument we seek to put – which is recorded in paragraph 2A of the proposed amended notice of appeal, is that the Full Court erred at the paragraphs I have mentioned:  paragraphs 11, 38, 351, 353, in holding that clause 15(C) of the United States terms and conditions – on its proper construction – placed an obligation upon Mr Ho to opt out of the representative proceedings in the Federal Court.  That is the construction finding we challenge, and we submit that on the correct construction of the clause – as Mr Pike was putting – the clause which has the language:

YOU EXPRESSLY AGREE TO WAIVE ANY LAW ENTITLING YOU TO PARTICIPATE IN A CLASS ACTION.

Is directed to and only to a law creating a right to opt in as per the United States regime.

GAGELER J:   All right, and that is the entirety of the argument?

MR GLEESON:   Yes.

MR HUTLEY:   Could I just add one more thing ‑ ‑ ‑ 

MR GLEESON:   Perhaps I can answer the next question.

MR HUTLEY:   I do apologise.  I thought his Honour was going to move on to the specific ‑ ‑ ‑ 

GAGELER J:   If you are correct on proposed ground 2A, what is left of grounds 1 and 2?  Which is why we are here, kind of.

MR GLEESON: Yes. So, we need to get rid of the class action waiver clause as a valid and enforceable clause before we get to ground 3 – which is where we win or lose the case. We have always sought to get to ground 3 by two routes. The first is to use section 23, to have that clause declared void as an unfair term and we continue to press that claim. To win on that claim, we have to win on ground 1 and we have to win on the first part of ground 2. If we win on ground 1 and the first part of ground 2, we then get to ground 3. So, we continue to press that.

The second way of getting to the goal was pursuant to the second part of ground 2, which was to have the clause declared contrary to Part IVA of the Federal Court of Australia Act.  That part of the appeal – but not the other part of the appeal – would fall away if the clause, in fact, did not have the effect that has been found.

GAGELER J:   If the clause is to be construed as you would have it construed in ground 2A, that affects ground 1, does it not?  It is a different effect.  The balancing you took us through this morning – the factors in section 24 would need to be assessed differently, surely.

MR GLEESON:   Can your Honour just pardon me?  The accurate answer is, in part but not in whole.

GORDON J:   I do not understand that answer.  Could you please explain why it is in part and not in whole?

MR GLEESON:   Because some of the arguments we have put about the vice in this clause are completely unaffected by this.  If the clause, in fact, has a narrower reach than we have indicated, then that may feed into the argument.

GAGELER J:   Right.  And in support of obtaining special leave on this ground ‑ ‑ ‑

MR GLEESON:   Yes.

GAGELER J:    ‑ ‑ ‑ do you have anything further to say?

MR GLEESON:   Only this, your Honour.  Firstly, it is a pure point of law which, secondly, it has been fully argued in the courts below.  Thirdly, it is closely related to the main issue.  Fourthly, its capable of being met overnight, therefore there is no irremediable prejudice.  Fifthly, it is, in a sense, an anterior point to the other points, so it is appropriate that the Court decide the matter on the basis of the issues that truly arise.  If there is some false assumption, that ought to be addressed.  Finally, in terms of the balance between the parties, there was a late notice of contention in this matter after the grant of special leave which we have responded to in the course of our argument.  If this is a matter that can be responded to – as we think it can – then it is fair between the parties.

GAGELER J:   Mr Gleeson, thank you.  You have made your application.  You have put your substantive argument.  Mr Hutley, you can deal with these tomorrow in the course of your submissions.

MR HUTLEY:   Yes.  Can I just say one thing, your Honour?  This has the potential to embarrass the assurance that we are going to get this finished – I was worried about it anyway, the way we are progressing – by lunchtime tomorrow.  I just wanted to ‑ ‑ ‑

GAGELER J:   You can say anything further you wish to say tomorrow morning.

MR HUTLEY:   Thank you, your Honour.

GAGELER J:   Mr Gleeson.

MR GLEESON:  Your Honours are ready for our remaining submissions?

GAGELER J:   Yes.

MR GLEESON:   Yes, thank you, your Honours.  I am at the final issue, which I briefly outlined this morning, and the reasons of the primary judge that we submit did not involve error are those found at page 97 through to 99.  The final issue is reached on the assumption that the class action waiver clause, by whatever means, does not stand as a barrier, and in that circumstance, the central reason that Justice Stewart gave for not enforcing the exclusive jurisdiction clause is found in paragraphs 332 to 335, which is the avoidance of the fracturing of litigation.

And what his Honour perceived, we submit correctly, was that if the stay is granted you will have the 1,700‑odd claims continue in the Federal Court of Australia, and then you will have up to 600 essentially identical individual claims being required to be litigated in a United States court in individual proceedings.  That creates not just the waste of judicial resources, which his Honour referred to in paragraph 333, but the risk of producing conflicting outcomes in different courts, including different outcomes on an Australia statute.

That is not to say the United States court cannot do the Australian statute or cannot do it fairly or properly by reason of the undertakings, but it is to say that there is a substantial risk of inconsistent findings if the stay is granted.  His Honour then indicated at paragraph 335 that the fact that 11 individual proceedings might have been brought in the United States does not count strongly against that, in particular given none of them involve ACL claims.

GORDON J:   Is the greater risk not that the claims would not be litigated at all?

MR GLEESON:   I am sorry, your Honour, the gravelling of?

GORDON J:   Is the greater risk not that the claims would not be litigated at all, rather than you would have 600 or 700 claims?

MR GLEESON:   Well, your Honour, it is both – because I keep coming back to paragraph 82 of BMW v Brewster.  The two critical public policy rationales of the entire scheme are, firstly, access to justice – and that is the point your Honour raises with me – that the risk is that the 600 claims, which are bona fide claims, will not be litigated at all if the stay is granted.  That is both a prejudice to the individuals and a denial of access to justice – the very concerns behind the statute.  And then, secondly, there are the questions of judicial resources and avoidance of inconsistent outcomes.  So, it is each of those factors that provides the very strong reasons to refuse the stay. 

Now, if we are correct that the class action waiver clause is not valid or enforceable, then the primary reason for which the Full Court interfered with this discretion falls away, and the discretion remains, we would

submit, legally free from error.  It is said that, perhaps around paragraph 338, his Honour placed weight on having the ACL claims determined in Australia.  That is not of the essence of the exercise of discretion that his Honour made, and there is no error on that account.

Those are our submissions, your Honours.

GAGELER J:   Thank you.

MR DONAGHUE: Your Honours, the Court will be aware that 78B notices were issued in this appeal in circumstances where Chief Justice Allsop and Justice Derrington had both raised a question as to whether it was necessary to read down 5(1)(g) of the CCA, and its application to section 23 of the ACL, in order to avoid exceeding the legislative power of the Parliament. Your Honours do not need to go to it, but you can see that 78B notice at page 292 of the book.

We have addressed in writing, at paragraphs 38 to 43, the reasons why section 23, as extended by 5(1)(c) and (g), is supported, at least by the geographic externality aspect of the external affairs power and by the corporations power. And the respondent, we respectfully say, quite correctly, has conceded that there is no need to read down the provision by reference to constitutional considerations – you see that in paragraph 26 of their submissions. Accordingly, unless your Honours ask me to do so, I do not propose to say anything beyond what we have already said in writing on the constitutional question.

GAGELER J:   Is there a question?

MR DONAGHUE:   Well, there does not seem to be. Assuming the respondent maintains its position, your Honours would not need to say anything on the point. In those circumstances, the Commonwealth parties propose to confine their oral submissions to two issues. The first issue, which I will address, relates to the construction and operation of 5(1)(g) of the CCA and section 23 of the ACL. And the second, which Ms Higgins will address, relates to Part IVA of the Federal Court Act.

I will, of course, in my part of the submission, seek to avoid any repetition with Mr Gleeson, but there are two points that I propose to develop. One is to briefly supplement the submissions that have been made as to why 5(1)(c) and (g) extend to section 23 and to do so by reference to the legislative history of those provisions, in particular, the Act that first introduced those provisions into Commonwealth legislation.

The second is to say something about the point arising from the first ground of the notice of contention and to make submissions about why there is no warrant for concluding that section 23 of the ACL applies only to contracts the proper law of which is the law of Australia or part of Australia.

Turning then to the legislative history point, can I ask your Honours to go to the legislation you will find in volume 3, tab 8, which is the Trade Practices Amendment (Australian Consumer Law) Act (No. 1) 2010.  This is the Act that first introduced the unfair contracts provisions into the ACL, and, indeed, first introduced the ACL which at the time contained only the unfair contracts act provisions. So, your Honours will see, if you go in this Act to Schedule 1, which, using the page numbering in the print, is on page 5. Schedule 1, headed “The Australian Consumer Law”, introduced into the Trade Practices Act a new Schedule 2, “The Australian Consumer Law”.

And at the time that it did that, the Australian consumer law contained only one substantive part, Part 2, which is on page 6 of the print, headed “Unfair contract terms” and the operative section, section 2, your Honours will see was the obvious precursor of section 23 of the ACL, not then applying to small business – well, consumer contracts, rather – but applying – sorry, not applying to small business contracts, but applying to consumer contracts.

There was nothing else, so it was just sections 2 to 8, and the ACL contained no other provision. If you stay in the same Act, the ACL (No. 1) Act, and go on to page 11 of the print, you see Part 2 concerning the application of the ACL, meaning just the unfair contracts terms provisions. Over the page on page 12 of the print, you see in item 6 a provision inserting, after section (5)(1)(e), a new paragraph (ea), “the Australian Consumer Law”.

Now, in order to see what is actually happening there, it is easier if your Honours go to the Trade Practices Act in the form it took immediately after the (No. 1) Act commenced, and you find that in volume 3, tab 7 – the Act in the form that it took at 1 July 2010.  So, if your Honours could go to volume 3, tab 7, the Trade Practices Act as at that date and then turn to section 5, you will see the provision in the form familiar to your Honours from the existing CCA, save that the paragraph numbers are slightly different. So that into section 5(1), the list of provisions, the operation of which is extended by section 5, you now see a paragraph (ea), “the Australian Consumer Law”, and Parliament has provided that “the Australian Consumer law”:

extends to the engaging in conduct outside Australia by –

relevantly, (g):

bodies corporate incorporated or carrying on business within Australia –

Our point is that because at the time section (ea) was enacted, the only substantive provision in the ACL was the provision that is now section 23. The express extension of the ACL by the insertion of 5(1)(ea) was meaningless unless 5(1)(g) is capable of interacting with the unfair contracts terms provisions – because there was nothing else. Parliament can have meant nothing other than that it intended to extend the unfair contracts terms provisions to activity of bodies corporate carrying on business within Australia.

As your Honours well know, this Court has on many occasions striven very hard, as a matter of statutory interpretation, to avoid the conclusion that Parliament has enacted provisions that have no content.  I do not want to take your Honours to them, but at the end of paragraph 2 of our oral outline, we have given your Honours two citations, one to Plaintiff M70 and one to the more recent decision of the Court in Hore v The Queen.  In the pinpoint passages that are cited there – and in the M70 passage at [97] there is a footnote that contains quite a number of other decisions of this Court – there are authorities collected that emphasise the strong nature of the proposition that the Court should not interpret legislative enactments as meaningless.

We submit that, when one looks at the provisions I have just shown your Honours, our friends have to overcome that hurdle because their argument that section 5(1)(g), as a matter of construction, does not extend section 23, necessarily entails the proposition that Parliament just got it totally wrong in the enactment of the provisions that I have just shown you – particularly item 6 of Schedule 1 would have been meaningless.

Our friends’ only answer to that proposition, and you see it in paragraph 31 of their submissions, is weak. They say section 5 was enacted “in anticipation of” the future enactment of other parts of the consumer protection regime. That amounts, really, we say, to a concession that at the time it was enacted 5(e) had no content, and they say, well, it was enacted “in anticipation of” some future content, but that explanation is, we submit, plainly implausible. There is no need for a legislative prepositioning of that kind – Parliament could just enact the provision when it needed it, as it would normally do. So, that argument, just to that point, we submit, is a significant reinforcing factor for the other considerations of construction that Mr Gleeson has developed this morning and that I adopt without repeating.

We make a similar point about another aspect of the ACL (No. 1) Act, and I will not take your Honours back to the Act, but if you still have the consolidated Trade Practices Act from volume 3, tab 7, if I could invite your Honours to turn to section 130 of that Act, which is on page 83 of the print.  This is in Part XI of the Trade Practices Act as it then stood, headed “The Australian Consumer Law”.

JAGOT J:   Did you say section 130?

MR DONAGHUE:   I said 130, your Honour, yes.

GAGELER J:   Did you say tab 7?

GORDON J:   I think you might mean tab 8, do you not?  No?

MR DONAGHUE:   I think I mean tab 7, your Honours.  So, this is the consolidated Trade Practices Act in the form at which it stood on 1 July 2010.

GORDON J:   We do not have very many provisions ‑ ‑ ‑

GLEESON J:   Tab 9?

MR DONAGHUE:   It is excerpts, but you should – the excerpts should include section 130.

GAGELER J:   It does, at page 740 of our bundle.

MR DONAGHUE:   Yes, your Honour.

GAGELER J:   Thank you.

JAGOT J:   Thank you.

MR DONAGHUE:   So, this is the provision – as had been mentioned this morning, the ACL is an applied law scheme, it applies in part as a law of the Commonwealth, and this is the provision as when the ACL was originally enacted that gave the unfair contracts provisions effect as a law of the Commonwealth, and you see in 130:

The Australian Consumer Law applies as a law of the Commonwealth to the conduct of corporations.

Conduct, your Honours will recall, is defined in section 4(2) of the Act. I do not need to take your Honours back to the definition, Mr Gleeson mentioned it this morning, but it is defined – there is a definition of both “conduct” and “engaging in conduct” and it includes “making of, or the giving effect to . . . a contract”. As an aside, our friends’ outline of argument in paragraph 3 seems to suggest that they intend an answer to this proposition that I am now developing by referring to section 4KA of the CCA. I will not take your Honours to that, but what it does is it excludes the definitions in section 4 of the CCA with respect to the Australian Consumer Law.

We make two points about that submission that our friends seem to be proposing to make.  One is that 4KA was not enacted until after ACL (No. 1), so it does not answer the proposition that ACL (No. 1), on our friends’ case, would have had no content, was enacted as part of ACL (No. 2).  That is the first point.  The second point is that when 4KA was enacted in ACL (No. 2) at the same time another provision, section 130A was enacted, and that provision complements 4KA because it says that the definitions that apply to Part 11, that is the part that gives effect to the ACL as a law of the Commonwealth, are the definitions in the ACL itself.

Section 4KA excluded the TPA definitions because 130A substituted the ACL’s own definition regime, and you find in section 2(2) a materially identical definition of conduct. That is a rather technical way of saying there is nothing in the answer that our friends give, and the substantive point that I am making is, really, the same point that I made in relation to 5(1), that if the unfair contracts provisions of section 2 at the time – now section 23 – do not involve conduct, then the provision in section 130 that gives the ACL effect as a law of the Commonwealth to the conduct of corporations would again have been meaningless.

In other words, how – it would not have been possible to contravene the ACL applied as a law of the Commonwealth because that application applies only to conduct of corporations and, on our friends’ argument, section 23 does not involve conduct. Their submission ‑ ‑ ‑

GORDON J:   Is that because – is it any more other than that was the only provision that existed, is it ‑ ‑ ‑

MR DONAGHUE:   Exactly.  That is all, because this whole argument, your Honour, depends on the fact that because the ACL was only about the unfair contracts provisions, Parliament was just, on our friends’ case, completely confused in enacting a provision that extended it to conduct outside of Australia and in applying it as a law of the Commonwealth – because both of those steps that Parliament took depend on the proposition that the unfair contracts terms regime does involve conduct.

For those reasons of legislative history, in our submission, in addition to the submissions that our friend Mr Gleeson developed, your Honours should conclude that as a matter of statutory construction section 5(1)(g) does extend the operation of section 23 as it, on its face, purports to do. The only other thing I need to say on this statutory construction part of the case is that our friends, in writing, seek to answer this point by saying, well, we can give operation or meaningful operation to the Australian consumer law as a law of the Commonwealth by reference to the remedies provisions, so that even if section 23 does not involve conduct, when you read it together with the remedies provisions, it does.

The short answer to that is that at the time that section 130 was enacted the remedies provisions were not part of the ACL.  It is true that the Trade Practices Act contained remedies provisions, and indeed that ACL (No. 1) itself inserted a remedies provision in a form that is now found in section 250 of the ACL, but as your Honours see, if you still have 130 in front of you, what 130 does is apply the ACL as a law of the Commonwealth, and the ACL, as I have already said, contained only Part 2, sections 2 to 8, the unfair contracts provisions.

There were no remedies provisions to be applied, and so our friends’ answer does not provide content to the law of the Commonwealth.  But, the Parliament evidently expected – as one can see from the explanatory memorandum that we have given your Honours the references to in footnote 32 of our submissions, Parliament obviously thought that it was giving effect to the unfair contracts terms provisions as laws of the Commonwealth.  In our submission, the Parliament correctly so thought, and your Honours should not hold that it was wrong about that.  The price of meaning that those various provisions entirely failed to strike the mark.

That is all I wish to say by way of developing the construction point concerning the relationship between 23 and subsection (5).  Can I then turn to the notice of contention point and identify the argument that I am about to seek to meet.  Your Honour Justice Gordon asked a question about where one finds the argument, and Mr Gleeson gave your Honour some paragraphs.  Can I add to that list paragraphs 33 and 35, and ask your Honours to go to our friends’ submissions at 33 and 35?

It is on page 11 of our friends’ submissions. What you see, importantly, at 33, is that the premise for the argument that your Honours are about to read is that our friends have lost the construction issue. Even if section 5 does apply to section 23 – so that it does extend to extraterritorial conduct – they say it still does not provide two things: the sole territorial nexus, one; or two, the requisite intention to override lex causae. Why not? Because it is an extension provision. From about halfway down:

Section 5(1) has the effect of extending the operation of the provisions listed to apply also to conduct engaged in outside Australia by the three classes of person . . . Whether the substantive provision expressly or impliedly requires a further territorial nexus with Australia, and demands its application regardless of the lex causae, must be considered by construing the substantive provision –

Then, what one sees in 35, particularly the last three lines on that page, is our friends’ primary submission in support of their notice of contention:

s 23 is limited to any contract the proper law of which is Australia, irrespective of whether the counterparty conducts business in Australia, or is an Australian resident or citizen –

This part of their argument – and it gets a little lost in the context of this case about extraterritorial operation, and Canadian contracts, and matters of that kind.  This part of their argument is not limited to extraterritorial effects of the ACL.  Their proposition is that the ACL, even in Australia, even in dealings with Australian consumers, applies only to contracts the proper law of which is Australia or part of Australia.

If it is right, it puts a wrecking ball through the unfair contract terms provisions, because all you need to do to avoid those provisions – even in contractual dealings with Australians – is to make sure that the proper law of the contract is foreign law.  So, the very kind of thing Justice Kitto was concerned about in Kay’s Leasing – which I will come to later – to make the operation of the regime dependant on something the parties can change.  So, in our submission, the import of what our friends are asking your Honours to accept should not be overlooked because the ease of evasion, or the ready defeat of the statutory purpose that acceptance of their argument would entail is, we submit, a very powerful reason not to read this Act as turning upon a hinge – or an additional hinge – of the proper law of the contract which is said to contain the unfair terms.

The argument, in effect, requires – and Mr Gleeson made this point – ones to give priority to a common law rule of private international law over the forum statute as construed, applying the ordinary principles of statutory construction that this Court or other Australian courts would apply.  Given the obvious backwardness of elevating a common law over a statutory law, it is not surprising, we submit, that no Australian court has adopted the approached urged.

In our friends’ submissions, in preference to quite a long line of authority in this Court that is fairly directly applicable – and I will take your Honours to a couple of the cases in a moment – one has, particularly in paragraphs 11 to 18 of our friends’ submissions, a cherry‑picking of passages from cases that are not really about the issue that your Honours have to decide, and that are heavily drawn from cases involving tort.

I make that point, really, just to emphasise that the choice of law cases in a tort context do not really have to grapple with the avoidance problem that arises in a contractual context, because the parties cannot easily effect the place where the tort occurs – at least, ordinarily.   Whereas, in a contractual context, the risk of parties deliberately selecting a proper law of the contract that avoids the operation of a statutory regime has featured quite heavily in the cases.

In the cases where the Court has looked at that issue, it has not ever – as far as we can tell – conducted the analysis in the two‑step way that paragraph 10 of our friends’ submissions suggest.  It does not commence by looking at the lex causae and then only apply the statute of the forum after having found the manifest intention to ‑ ‑ ‑

EDELMAN J: Is your wrecking‑ball submission premised upon the assumption that the next lex causae, for the purposes of section 23 of the ACL, would be determined by the proper law chosen by the parties and their contract?

MR DONAGHUE:   Subject to the Vita Foods‑type qualification that if the choice is not bona fide or contrary to public policy.

EDELMAN J: Put aside those extreme cases, why is section 23 a contract lex causae, rather than a delict lex causae, or a lex causae that would follow the rules of wrongdoing, even though it is not a contravention‑type provision?

MR DONAGHUE:   Your Honour, I do not say that it is.  I say that our friends, in paragraph 35, say:

limited to any contract the proper law of which is Australia –

So, it is our friends who say it is a contract lex causae.  I say you do not actually need to answer that question at all.  What you need to do is to look at the statute and apply the proper rules of Australian statutory interpretation, and, if applying those rules you find that it applies, then it applies, so that you do not need to characterise it in either of the ways that your Honour puts to me.

The case I am meeting is that it is proper law of the contract.  If it is proper law of the contract it does not – well, in my submission, the cases in this Court just give no support to the notion that it is only where there is a manifest intention to override the lex causae that the forum statute would apply.  We submit it is definitely true that if a statute uses entirely general language, then that language will be construed by the court as requiring some kind of connection with Australia, but the authorities – and, as I say, I will come to two of them –consistently recognise that various different connections are possible.

They do not start with the assumption that a statute’s effects in contractual rights will apply only if Australian law provides the proper law of the contract.  That is one possible connection – that is what the Wanganui presumption – but the cases show that which kind of connection is required depends on the construction of the statute, so that one might focus instead on the place where the contract was made; one might focus instead on the place where the parties to the contract are located; one might focus on the proper law of the contract.  Which of those connections is the proper one is to be decided by the Court through an exercise of statutory construction.  So, our friends ask you to choose just one possible connection, and to say that is always the connection unless there is a manifest intention to displace it.  That is not what the cases say.

In our submission, before trying to go to the authorities to make this good, critically the authorities also support the proposition that because the court is here engaged in a process of statutory construction, if the statute expressly answers the question, what is the necessary connection with Australia – so it is not using universal or general language where the court has to work out how to wind it back, but the statute has expressly articulated the connection – then it is not necessary to do more.

That is important, obviously, because in this case section 5(1)(g) does exactly that. It does not leave the operation of the ACL at large; it does not apply to foreign individuals; it applies to foreign body corporates, and even then, only if they carry on business within Australia. So, Parliament having articulated that connection, there is not then any need to try to work out by some process of implication what the intended connection with Australia should be.

There certainly is not a need – to return to my wrecking ball – to say Parliament, having enacted these provisions in terms that say nothing about the lex causae – proper law of the contract being Australian law – and that extended to conduct outside Australia, should then be wound‑back in the quite radical way that would be involved in saying whether in Australia or overseas, these apparently general provisions only apply where the proper law of the contract is Australian.

Can I ask your Honours to go to two cases.  First, BHP v Impiombato 96 ALJR 956, which is in volume 9, tab 48. I will not dwell on this at any length. I appreciate that your Honours are familiar with this. So, just to highlight the key passages that support what I have just put to your Honours, starting with the joint judgment of Chief Justice Kiefel and Justice Gageler, could your Honours turn to paragraphs [37] and [38]? This is in a part of the judgment dealing with the Acts Interpretation Act provision but, as I will show in a moment, your Honours recognise the overlap with the common law presumption.  So, from five lines down in [37]:

Depending on what would best achieve the purpose or object of the particular statute in question, a construction which results in the existence of a connection sufficient to satisfy the requirement of the provision might be arrived at in a variety of ways and might well be arrived at through the concurrent application of the common law presumption.

Which includes the Wanganui presumption:

The requirement of a provision like s 21(1)(b) has been found in some contexts to be satisfied by treating a law of “apparently universal application” as “applying to acts and omissions taking place in the territory –

So, that is one possibility:

In other contexts, it has been satisfied by treating the operation of a statute as “hinging on the place of performance –

That is another possibility.  Then, a still third possibility is the:

proper law of which according to applicable principles of private international law –

Then, in paragraph [38], your Honours said:

No one form of connection fits every statutory subject matter in every statutory context, and no implied limitation of statutory language is necessarily required –

Then, going on in that paragraph, over to the top of the next page, give an example from CSL Pacific where “no limited” needed to implied.  Why not?  Because:

The requisite connection between the subject matter and the Commonwealth was apparent –

in effect, from the definitions on the fact of the Act.  We say that is this kind of case.  So, that is a recognition found even more starkly in some other judgments that, where you can see the connection on its face, you do not need more.  It is also, we submit, self‑evidently inconsistent with the idea that of the three identified possible limits, the proper law, applicable under private international law, has some elevated status as a fundamental right attracting the principle of legality that applies unless excluded by manifest intention.

In the joint judgment of your Honours Justices Gordon, Edelman, and Steward, at paragraph 59, one sees the same kind of analysis.  In my submission, the start of this paragraph is important.  The premise is it is a discussion of statutes where there is no express provision relevantly addressing the territorial reach of the subject matter of the statute.  We submit that here, of course, there is one.

If you do not have an express provision, then the task is to identify the hinge, and your Honours identify various different formulations that have been used to describe the hinge of the statute and identify its territorial connection, if any.  The question, your Honours emphasise, is purely a question of statutory construction to be answered by reference to various matters of a kind Justice Leeming in DRJ, including to avoid improbable and absurd outcomes.  Your Honours said:

It will be relevant to have regard to the purpose of the statute, the likelihood that the statutory purpose will be evaded if made to depend upon something readily altered at the instance of the parties –

Which, we submit, is squarely the case here.  The opening sentence addressing the position where there is no express provision addressing reach echoes something said by the majority in Acai in a passage Mr Gleeson took your Honours to this morning, so I will not go back to it, but it is Acai at page 443, point 2, and there the majority said:

Where there is no expressed connecting factor, the issue becomes whether there is to be implied any restraint upon the apparently universal application of the law.

And their Honours give the same kinds of example as mentioned earlier:  place of the act sometimes, proper law sometimes.  In both Acai and Impiombato one sees an acknowledgement that if there is an express provision addressing reach then that usually answers the question, and it is only if not that one goes the implication exercise.  In paragraph 60 of Impiombato, a number of cases in this Court applying that approach are identified.  Then, in paragraph 61, about five lines down, it is emphasised that:

The so-called “presumption” is an interpretive principle –

not really consistent with it being a fundamental right.  Our friends say, in paragraph 14 of their submissions, the presumption is not an interpretive aid.  We submit that is exactly what it is; that is what Impiombato recognises that it is.  At 62, your Honours say:

This Court has never taken a uniform or mechanistic approach to applying the presumption.  Where the hinge or the central focus of the subject matter is identified and it does not have a clear territorial connection (that is, it appears to be at large) –

It is the same as the opening part of 60:

the presumption will generally require that the hinge be construed as territorially limited, subject to a contrary intention.  Where the central focus of the subject matter of the statute, on its proper construction, has a territorial connection, it will ordinarily be unnecessary to look for further territorial restrictions.

That, we submit, is this case.  The other case I will go to – and I will do this very briefly – is Kay’s Leasing (1964) 116 CLR 124, which is volume 5, tab 25. This is a provision where New South Wales, in the Hire‑Purchase Agreements Act of New South Wales – and you can see this in Justice Kitto’s judgment at 142, at about point 4 on the page that the Supreme Court of New South Wales had held that the Act should be read as applying only to agreements the proper law of which was in accordance with private international law; New South Wales law. That was the starting point, if your Honours see that at about point 4.

GORDON J:   Where was that, Mr Solicitor?

MR DONAGHUE:   About point 4 or point 5 on the page, on 142.  There is a paragraph that begins:

The Supreme Court decided –

and it is then in the second sentence.  This Court disagreed.  In the joint judgment of Chief Justice Barwick, Justices McTiernan and Taylor at 135, point 3, their Honours rejected that limitation.  But of more enduring influence was Justice Kitto’s reasons for rejecting it, which have been picked up by majorities in this Court on multiple occasions since, including in Insight Vacations and in Akai.

Our friends seek to constrain what his Honour said here by reference to the reference only a few lines up from the bottom of 142, where his Honour, in the course of explaining Wanganui, drew a distinction between cases where legislation modifies or makes void contractual rights and obligation as an end in itself, and those where it is a sanction for contravening statutory requirements.

In our submission, on a fair reading of the judgment, his Honour was giving an explanation of Wanganui, rather than trying to state the universe of possibilities, and that is certainly consistent with how this Court, in Insight Vacations at 34, read that passage. In our submission, the important point is that his Honour says that – as you see at the end of that page:

It was held that in order to restrain the seeming universality of the enactment it should be presumed that the intention was to affect only those rights and obligations the discharge of which was governed by the law of the enacting country according to the rules of private international law.

That is an explanation of Wanganui.  But then, in the main passage in the middle of 143, starting, “Where a provision” – I will not read it, but that is the passage that has been applied by the Court on multiple occasions.  Your Honours see in the middle of that passage that his Honour says where the law embodies:

a specific policy directed against practices which the legislature has deemed oppressive or unjust, a presumption that the agreements in contemplation are only those of which the law of the country is the proper law according to the rules of private international law has no apparent appropriateness to recommend it –

The reason being that:

salutory reforms might be set at nought by the simple expedient adopted in the present case of inserting in an agreement a stipulation that validity should be a matter for the law of some other country.

It is the ready or easy avoidance of “salutory” legislative responses to oppressive or unjust policies that drove that reasoning, and that has been picked up since, including in Akai, in Old UGC, in Insight Vacations, particularly at paragraph 30 through to 35. We submit that not only does our friends’ two‑step analysis from paragraph 10 of their written outline have no support in authority; it is quite directly contrary to the most relevant cases in this Court which adopt an approach that focuses on the proper construction of the statute and that gives evident significance to avoiding a construction that would allow easy evasion or subversion of the statutory purpose.

Our friends say in response to our easy evasion point – they do not seem to deny that their construction would facilitate evasion of the unfair contract terms provisions, but they say two things.  One, they say it does not really matter because if Parliament had been concerned it could have avoided the risk by enacting specific provisions.  You see that at 41 to 42 of our friends’ submission.  As to the idea that it does not really matter, well, Impiombato at 59, Kay’s Leasing and the passage I just read, Akai at 433, Old UGC at 56 to 58, Chief Justice Allsop in this case, all belie that submission.  All those cases say that it does matter.

What our friends seem to have in mind as what Parliament could or should have done is section 67 of the ACL.  If your Honours could turn to section 67 for a moment – it is volume 1, tab 4.  What we think our friends are doing with their reliance on section 67 is that they are inviting your Honours to draw a contrast between Part 3-2, the consumer transactions Part, and Division 1 thereof concerning consumer guarantees, which is what is governed by section 67.  They are saying, look, Parliament has dealt with the question here in section 67.  There is no equivalent in Part 2‑3, and you should therefore infer from the absence of an equivalent in 2‑3 that Parliament assumed that the Part applied only where the proper law of the contract was the law of Australia.

That submission should be rejected by the Court not least because, even in the context of section 67 itself, that very kind of argument has been advanced and rejected, correctly, in the Federal Court, first by your Honour Justice Edelman at first instance in Valve, and then by the Full Federal Court affirming your Honour’s reasons.  Section 67, in other words, does not support the proposition that this part of the ACL is limited to contracts governed by the proper law of Australia.  And because it does not do that, even in the part in which it appears, its absence can tell you nothing about the proper construction of a Part in which it does not appear.

To try to make that a little more intelligible, could I ask your Honours to go to the Full Court in Valve Corporation v ACCC (2017) 258 FCR 190. It is volume 10, tab 64 – and when your Honours have it, to go to paragraph 110.

JAGOT J:   Sorry, are you in the Full Court ‑ ‑ ‑ 

MR DONAGHUE:   I am in the Full Court, your Honour, yes.

JAGOT J:   I am sorry, what tab was that?

MR DONAGHUE:   It was tab 64 in volume 10.

JAGOT J:   Thank you.

MR DONAGHUE:   Thank you, your Honour.  So, if your Honours go to paragraph 110, this is in the Full Court’s discussion of section 67.  Their Honours say – from the second sentence, they emphasise that there is “no provision” in this part of the ACL – and the same is true, of course, of 2‑3, that: 

expressly states that, where the supply of goods or services is made pursuant to a contract, the provisions of the Division apply only if the law with which the contract has its closest and most real connection is the law of Australia –

Their Honours therefore say, the question is:  can you draw an implication to that effect?  And at 111 they say, no, there appears to be no “sound basis” for that.  At 112, over the page, Valve’s argument:

would have the effect of elevating s 67 to a provision that specifies the scope of application of Div 1 of Pt 3‑2.  But the role of s 67 is more limited.

Effectively, it is held to be avoiding doubt.  So, at 113 and 114:

We do not accept that, in the context of the Div 1 of Pt 3‑2 as a whole, the premise of s 67(a) is that the consumer guarantee provisions apply only where the objective proper law of a contract of supply is the law of Australia or part of Australia.  Granted, s 67(a) is directed to this particular situation . . . But . . . s 67(a) should be seen as being directed to a particular attempt to avoid the operation of the consumer guarantees, rather than resting on the premise suggested by Valve.

Then, in 114, their Honours say that to construe it as limited in that way – that is, to construe this part of the ACL as limited to contracts, the proper law of which is the law of Australia – would be inconsistent with the scheme and its purpose.  And the same is true of Part 2‑3.  At 115, the Full Court acknowledges that its reasons are:

substantially the same as those of the primary judge –

your Honour Justice Edelman’s at first instance.  I was going to take your Honours to that, but I think I do not have time to do so.  The case is behind volume 9, tab 44.  Your Honour, at paragraph 90, summarised four reasons for rejecting the proposition that section 67 could be used in the way that our friends are seeking to use it here, and then went through them in order.  Particularly at paragraphs 98 and 104, your Honour made the point:

Why would the legislation go to such lengths to extend the operation of provisions including Div 1 by techniques such as those in s 5 . . . only to cut back –

by reference to the proper law. Your Honour held that section 5 militated against this part of the ACL being limited by the proper law considerations, and we respectfully embrace and adopt your Honour’s analysis, and your analysis of why to so construe the regime would be contrary to the policy of the ACL at 116 through to 122.

Our friends’ other argument in answer to the easy evasion is the suggestion that somehow private international law would already have the operation, that section 23 could have a partial effect of invalidating a choice of law rule, even though it could not apply to the balance of the contract. Like the appellant, we have quite some difficulty understanding that submission or how it is said that instead of applying the proper law of the contract, the applicable rule is that private international law would apply the proper law of the contract but ignoring any choice of law rule. And it is that alternative submission that seems to be developed at paragraphs 43 and 46 by our friends.

As we understand it, what they are saying is that private international law actually already operates as if section 67 were there.  So, if your Honours will recall section 67, section 67 is a statutory rule that says, if the proper law of the contract would be Australian law but for an express term to the contrary, then you ignore the express term to the contrary.  So that the Division applies despite the term.  It is an anti‑avoidance rule that Parliament has enacted to say you cannot get around the operation of this Part just by selecting a proper law clause if the proper law would not otherwise have been in this way.

You had a similar provision that this Court considered in Akai.  Our friends seem to be just saying, you do not need the anti‑avoidance provision, private international law already will look at the proper law of the contract but without considering the choice of law rule, and we submit that is just plainly not so.  The reason you have these anti‑avoidance provisions is because that is not how private international law works.  Akai recognises that a provision in this form is necessary in order to avoid the easy evasion.  So, the suggestion that your Honours see in 43 and 46 of our friends’ case does not work and is really just an attempt to limit the obvious evasion consequences that would follow from acceptance of their submission.

Finally, your Honours, and very briefly, there is put against us in reliance on Justice Derrington’s conclusion that to accept the appellant’s submission that we support would be to result in absurd breadth for the operation of the unfair contracts provisions of the ACL.  Your Honours will have seen in Justice Derrington’s judgment the European car example.  His Honour seems to contemplate that – to take a German car manufacturer, for example, BMW obviously carries on business in Australia, so it would satisfy the 5(1)(g).  The absurdity is said to be that, on our construction, when BMW in Germany sells a car that it made in Germany to a German consumer that, on our argument, the Australian ACL would regulate that transaction.

Our answer to that is that that difficulty is significantly overstated because were such a proceeding to be commenced in Germany between BMW and the German consumer, the German court would apply either the proper law of the contract or the law of the forum.  Unless the contract between the two German parties made the proper law of the contract the law of Australia, which is so outlandish as to be disregarded, the ACL would not be relevant as part of the proper law of the contract and it equally would not be relevant as a law of the forum.

So, why would a German court care what the Australian ACL says?  It does not matter that the ACL as a matter of Australian law validly extends to and is properly construed as extending to conduct anywhere in the world by businesses that carry on business within Australia.  The foreign court will still need to decide what law it is going to apply and it will apply forum law a proper law of the contract.  It will not apply Australian law.  So, the absurdity that is pointed to does not exist.  I am not just saying that that analysis I have just given your Honours is consistent with the analysis in the Dicey text – which we have cited in footnote 61 of our submissions, and your Honours have it in volume 12, tab 69.  We particularly commend to your Honours paragraph 1‑055.

We think – and this is my last point – that your Honours in Impiombato might well have been making the same point that I have just sought very briefly to make in paragraph 70, when, by reference to the Federal Court Act – which, of course, was what your Honours were there concerned with – in the joint judgment of Justices Gordon, Edelman and Steward, your Honours said: 

As the Full Court emphasised, s 33ZB only binds persons as a matter of Australian law.  The parties accept that s 33ZB is not capable of, and does not purport to, affect a person’s rights under foreign law in respect of the same or similar subject matter.  Whether Australian

judgments will be recognised in other jurisdictions, and in what circumstances, is a matter of for foreign law.

The same is true of the European car example. 

Unless your Honours have any questions, I will ask Ms Higgins to address the remaining submissions.

GAGELER J:   Thank you.  Yes, Ms Higgins.

MS HIGGINS:   Your Honours, we address whether the class action waiver clause is contrary to Part IVA in our oral outline, at paragraphs 8 to 11.  In circumstances where a person can elect to opt out of a representative proceeding, the Attorney submits that the question is not whether a person can contract out of Part IVA at all, but rather, whether Part IVA confines the circumstances in which that may occur.

The Attorney advances three propositions.  First, Part IVA is directed in part to securing a public benefit by promoting judicial economy, and consistency in decision‑making.  Second, when regard is had to the text, context, and purpose of Part IVA, the better view is that a person may only opt out of a representative proceeding after an opt‑out notice has been issued under section 33X(1)(a), but before the date fixed therein, pursuant to section 33J(1).  Third, a class action waiver clause agreed to prior to an opt‑out notice being issued will be void or unenforceable, as contrary to Part IVA, because the rights conferred on individuals thereunder, being conferred in part for the public interest, cannot be forgone in a manner contrary to the operation of the Part.

Mr Gleeson has already addressed your Honours on the twin objectives of Part IVA.  The second of those – increasing the efficiency of the administration of justice by allowing a common binding decision to be made in one proceeding, rather than multiple suits – benefits the public at large, and not merely individual claimants or group members.  That character is captured in the observations of your Honours Justices Gordon and Edelman, and his Honour Justice Steward in Impiombato, at paragraph 74, where your Honours observe that the purposes of Part IVA involve:

the creation of an efficient and comprehensive mechanism for the determination of similar claims:  that, subject to the right to opt out, “everyone with related claims should be involved in the proceedings and should be bound by the result”.

Can I take the Court briefly back to Part IVA, which is volume 2, tab 5, commencing at page 552.

EDELMAN J:   Does this submission go further than Mr Gleeson’s submission?  In other words, does your submission that a class action waiver clause agreed to prior to an opt‑out notice will be void or unenforceable mean that even those clauses that Mr Gleeson accepted might not be void or unenforceable, because they were agreed as part of a compromise after the proceedings had begun, would be caught?

MS HIGGINS:   Your Honour, the answer to the precise question is, no.  We agree with the answer that the circumstance of a compromise is different.  Can I develop why that is so.  The circumstance here is one in which, prior to a proceeding being commenced, a person waives a right to opt out of a proceeding.  We say that once a proceeding is on foot, and once a person falls within the group as alleged within the proceedings and as a group member, that compromise would not offend the twin objectives of Part IVA.  That is because the individual objective of informed participation in the proceeding, which opt out facilitates, would not be offended, because the person would be aware of the proceeding – and more than that, likely, if they were compromising it – but also that it would not promote a multiplicity of suits, it would simply remove one member from the class.

EDELMAN J:   You are really talking about class action labour clauses that are agreed prior to any dispute and not subsequent to any dispute.

MS HIGGINS:   Yes, your Honour.  We would also say that a compromise, generally, may be a broader concept than the waiver in question here.

GORDON J:   Sorry, could you just put that proposition again?  What you just said just then.  You think ‑ ‑ ‑

MS HIGGINS:   If it was a compromise by settlement, for example, that may not be a waiver, per se.  That class may be broader.

EDELMAN J:   There will be other provisions in the compromise.

MS HIGGINS:   Quite.  With respect, your Honour, quite.  If your Honours have Part IVA, which commences at 552 – the scheme of the Part, of course, is permissive.  It permits representative proceedings, and such a proceeding may be commenced by a representative party on behalf of group members under section 33C.  As sections 33E(1) and F(1) disclose, group members’ consent is generally not required.  But within that permissive structure, four matters which underpin the opt‑out structure of the Part are mandatory.  First, by section 33J(1), which is on page 555:

The Court must fix a date before which a group member may opt out of a representative proceeding.

Section 33J(2), in turn, provides that:

A group member may opt out of the representative proceeding by written notice given under the Rules of Court before the date so fixed.

Could your Honours take up in its connection the ALRC report, which is volume 11, tab 66, at page 4509, and in particular, paragraph 183.

JAGOT J:   Sorry, paragraph?

MS HIGGINS:   Paragraph 183, your Honour.

JAGOT J:   Paragraph 183.  Thank you.

MS HIGGINS:   And if your Honours could focus, in particular, on the third, fifth, and sixth sentences.

GORDON J:   What page is that on?

MS HIGGINS:   It is 4509 of the book, your Honour.

GORDON J:   Thank you.

MS HIGGINS:   Paragraph 183.

GAGELER J:   Again?  Paragraph?

MS HIGGINS:   Paragraph 183, your Honour.

GAGELER J:   Thank you.

MS HIGGINS:   And if your Honours could focus on the third, fifth, and sixth sentences and the text beginning:

The benefits of economy and of obtaining a uniform decision –

If your Honours have that.  Your Honours see that the Commission observes:

The benefits of economy and of obtaining a uniform decision for all affected might be lost if people could withdraw at any stage . . . To help avoid these problems it would be appropriate to empower the Court to fix a date after which leave would be required to opt out.  A group member could discontinue without leave up to the date specified by the Court.

The second mandatory matter within the scheme of section 33X(1)(a) – which your Honours find on page 562 ‑ ‑ ‑

GAGELER J:   I am sorry, where is the provision that gives effect to the last sentence of paragraph 183 that, as a group member, could discontinue without leave?

MS HIGGINS:   Your Honour, I have read that as meaning could discontinue by opting out, and is according with section 33J too.  That is as I have understood the paragraph.  The second mandatory matter within the scheme of section 33X(1)(a), which is page 562 of volume 2, tab 5.  That provides that:

Notice must be given to group members of the . . . right of the group members to opt out . . . before . . . the date fixed under subsection 33J(1) –

That provision does not prescribe when such notice is to be given.  However, and thirdly, an outer limit is set for the giving of notice by section 33J(4) – which your Honours find on page 555.  That, in effect, provides that, except with the Court’s leave, the opt‑out notice must be issued before the hearing of a representative proceeding commences.  The fourth mandatory matter is section 33Y(2) – which is on page 562 – which provides that:

The form and content of a notice must be as approved by the Court.

That approval serves at least three purposes.  First, it discharges the Court’s supervisory role in respect of the interest of group members.  Secondly, it empowers the Court to regard recipients of the notice as bound by the decision.  We refer, in that respect, the decision of Justice Hedigan in Gagarimbau, which is cited in the oral outline, at paragraph 9.  The third matter which the approval serves, is that it ensures that group members can make an informed decision concerning their rights.  We rely, in that respect, on the reasons of the Full Federal Court in King v GIO Australia Holdings Pty Ltd [2001] FCA 270 at paragraph [15]. Your Honours have that in the materials at volume 10, tab 57, but it is not necessary to go to it.

Consistent with that last purpose, section 33J(1) has been construed by Justice Flick, at paragraph 22, of the Pharm‑a‑Care decision – cited in our written submissions at footnote 81 – such that adequate time must be allowed before issuing a notice under section 33X(1) and the date by which opt‑out must occur.  We submit that the need for opt‑out to be confined and supervised by the Court is apparent, for while Part IVA is not substantive – in that it does not confer jurisdiction – the opt‑out process substantively affects group members’ rights.  By section 33ZB(b) – which is on page 566 – any judgment given will bind all group members other than those who have opted out under section 33J.  By section 33ZE(2), which is on page 569, any limitation period suspended by the commencement of a representative proceeding under section 33ZE(1) is re‑enlivened when a group member opts out under section 33J.  And so, as your Honours Justices Gordon, Edelman and Steward observed in Impiombato at 58, the integrity of Part IV depends upon members having the right to opt out.

Your Honours, once the interaction of section 33J, X and Y is understood, the three principal submissions advanced by the respondents can be answered.  First, in their written submissions at paragraph 66, the respondents suggest that the clear purpose of section 33J is to set the last date by which group members must exercise their right to opt out, but not to prohibit group members from opting out prior to receiving a notice describing their right to do so, or prior to the last date to do so being fixed.

Now, it can accepted that a group member may opt out before the last date fixed, but a person will only be taken to have opted out for the purposes of a binding decision made by the court in the proceedings where she exercises that right on a date after the opt‑out notice is issued.  If your Honours would turn to section 33J(2) on page 555, that is the provision that confers the right to opt out.  The final phrase of that subsection, “before the date so fixed”, presents a constructional choice as to whether it denotes only an endpoint, or both a start and an endpoint.  We submit it is the latter.  “Before” designates the end, and the phrase “date so fixed” denotes the date fixed by a notice under section 33X(1) and thereby designates as a starting point the date that that notice is issued.

GAGELER J:   Does your argument really come down to saying that section 33J(2) confers on a group member a statutory right which cannot be contracted away by that group member?

MS HIGGINS:   Before the notice is issued under section 33X(1)(a), yes, your Honour.  Subject to that qualification, there was a statutory right conferred.  It is important to public interest and cannot be forgotten until it conforms with the scheme of the Act, and the scheme of the Act is that the opt‑out cannot occur until you have been informed by the notice to be issued under 33X(1)(a).

GAGELER J:   That is a nice, clean submission.  I have some difficulty with some of the earlier concessions that were made about compromises and various forms of contracting that might occur in advance of the proceedings or in the course of the proceedings.  Do you qualify the submission you have just made in any way?

MS HIGGINS:   No, your Honour, that is the primary submission that we make.

GAGELER J:   Okay.  Thank you.

MS HIGGINS:   And we say that emerged as a function of the text and the context and the purpose of the statute.

GLEESON J:   Is it not more than a statutory right?  Are you not talking about an obligation as well?

MS HIGGINS:   An obligation upon the group member, your Honour?

GLEESON J:   Not to enter into a contract containing a class action waiver clause.

MS HIGGINS:   Well, it is a right that is subject to a limit that would entail that preclusion, yes.  Putting that submission differently, a written opt‑out notice cannot be given under section 33J(2) as required before a date so fixed under section 33J(1) until that date has been fixed.

Can I come to the second of three submissions of the respondents to which I am submitting.  The fact relied upon by the respondents at paragraph 67, that under section 33X(2), the court may dispense with a notice requirement, and section 33X(1)(a), where there is no claim for damages, does not gainsay the Attorney’s submission.  That is because, when viewed from the twin perspectives of personal autonomy and the efficient administration of justice, the power in section 33X(2) qualifies, we accept, the objective of individual autonomy, but it does not qualify the public objective of curial efficiency.

The effect of dispensing with the opt‑out and notice procedures is prima facie to bind all those persons to fall within the class as alleged to the relief ordered by the court.

GORDON J:   Your point, really, is that when you have a proceeding on foot, you have a statutory right that cannot be contracted away, other than through a particular window of time, because that is the base upon which someone is fully informed about whether they stay in or they opt out.

MS HIGGINS:   Yes, your Honour.  That is so.

GORDON J:   That brings into account the three things you identified earlier as reflective of the purposes of the Part.

MS HIGGINS:   With respect also, your Honour, yes.

GAGELER J:   The slight difficulty I have with the substance of the argument is that you seem to have no difficulty with a group member settling the claim; that is, ceasing to have a claim during the same period before the opt‑out notice.

MS HIGGINS:   Yes, your Honour.  Can I attempt again to identify why that is so.  That is because, having regards to twin objectives identified in Brewster, one is concerned with access to justice, and the context of opt‑out with autonomy and the individual being informed, and the other is concerned with judicial economy and avoiding multiplicity of proceedings.  If a group member compromises a claim, that group member will:  one, know there is a claim on foot; two, one would assume, understand the cause of action ‑ ‑ ‑

GAGELER J:   Not necessarily.

MS HIGGINS:   In a sense, your Honour, it may be that I am assuming those facts in compromising as in a settlement of a claim that is on foot.  That is how I have understood the question, and that is how I have been attempting to answer it; that it would be a settlement of an extant proceeding by a person sufficiently informed to reach the point of settlement.

GAGELER J:   And if it is not?  What do you mean by “sufficiently informed”?

MS HIGGINS:   I mean, your Honour, that it would be predicated in the act of compromise that a person knew enough to settle the proceeding.

GORDON J:   Do they have to be approved?  If I have a proceeding on foot – I am just testing this proposition that they are in a different category.  If they are part of the group, and they settle it, does that have to be approved?

MS HIGGINS:   I do not believe so, your Honour.  I believe that if the representative applicant seeks to do so, that must be approved, but not a group member.

GORDON J:   They are outside the ambit of the scheme.

MS HIGGINS:   Yes, your Honour.

GAGELER J:   I think it has not been unknown for defendants in class actions to pick off quite a number of group members and settle the claim.

GORDON J:   Usually the ones that are relatively large.

MS HIGGINS:   Yes, your Honour.  I am returning to the second of the objectives ‑ ‑ ‑

GAGELER J:   You are saying that there is nothing wrong with that; at least, it is not prohibited by the provisions – as I understand your concession.

MS HIGGINS:   Yes, your Honour.

GLEESON J:   That is because there is no problem about judicial economy.

MS HIGGINS:   I was about to come to that, with respect, thank you, Justice Gleeson.  The second objective of judicial economy in avoiding multiple proceedings is not offended by that, because what results is there is one less member in the group, as opposed to this prospect of another proceeding.  So, the twin objectives of the Act are not offended in the same way that occurs when a person waives their right, and waives it in circumstances where the alternative is, you may bring an individual suit, but you may not participate in a class.  It is the dual characteristic of a person having sufficient information sensibly to exercise a right, and not offending the precept of judicial economy. 

EDELMAN J:   Are you, then, assuming that the compromise will always include terms that the proceeding will not be individually recommenced?

MS HIGGINS:   Yes, your Honour, a settlement of the claim.  It may be – when I answered earlier, saying “compromise” is a larger term, I was, in part, thinking of these shades of the term that might arise that might require ‑ ‑ ‑ 

EDELMAN J:   So, one could not compromise unless it contained a term that prohibited re‑litigation of the subject matter?

MS HIGGINS:   Yes, your Honour.  That would offend the second objective and the public objective of Part IVA.  Can I give two statutory provisions in response to an earlier question:  section 33V and W.  Your Honour Justice Gordon addressed the question of “settlement”.  Section 33V(1) says:

A representative proceeding may not be settled or discontinued without the approval of the Court.

That we understand to be the representative action – and likewise, W.  Completing the submission in respect to 33X, because it is individual autonomy and not judicial autonomy that is offended by the possible disconcertion from the requirement to issue a notice, it has been observed that the power conferred by 33X(2) should be exercised having regard, rather, to matters such as, first, the extent of the effect of any issue estoppel – and we refer your Honours, in that respect, to paragraph 29 of Arthur v Northern Territory, which is cited in our oral outline at paragraph 11 – and, secondly, the practical consequences for group members of an adverse determination, which is a matter identified by the Full Federal Court in Femcare Ltd v Bright (2000) 100 FCR 331 at paragraphs 67 to 68 – and your Honours have that in the materials, at volume 9, tab 52.

Can I deal finally with the third argument put by our learned friends.  At paragraph 67, we suggest that the Attorney’s submission is undermined by the fact that an opt‑out notice may not come to the attention of all group members, including by operation of section 33Y(5) and (8).  That prospect of it not coming to the attention of a group member reflects the fact that it may be impractical, or disproportionately expensive, to require a notice to be given in every circumstance – that is also observed by the Full Court in Femcare, at paragraphs 74 to 75 – but the Act has anticipated this, and any prejudice arising from a person not receiving an opt‑out notice can be ameliorated by the court extending the time to opt out under section 33J(3). That is one way in which Part IVA gives the court flexible powers to ensure that notice is reasonably likely to come to the person’s attention, and to protect the integrity of the opt‑out process, as observed in Impiombato at paragraph 58.

We say that the purpose that the respondents attribute to section 33J in their submissions at paragraph 66 of protecting “individual autonomy and freedom of choice” should be rejected.  It construes section 33J in isolation and neglectful of context.  As I have sought to develop, read together, sections 33J, 33X, and 33Y disclose the twin purposes of facilitating form participation within the group while promoting judicial economy.

This is not a merely temporal quarrel, as suggested at paragraph 65; the construction for which our learned friends contained would frustrate a purpose of Part IVA.  It would permit the group member to be bound by a standard form contract pursuant to which she waived her right to participate in a class action, perhaps long before any such cause of action arises, and unassisted by the information contained in an opt‑out notice approved by

the court.  Significantly, in a manner apt to undermine consistency in decision‑making.

Your Honours, unless you have any questions, those are our submissions.

GAGELER J:   Thank you, Ms Higgins.  Mr Hutley.

MR HUTLEY: Your Honours. Can I deal with one short matter, which arose out of the question by your Honour Justice Edelman and my learned friend Mr Gleeson. In answer to that question, my learned friend indicated that my clients had undertaken not to object to section 23 applications made in the courts of California. That is, with respect to him, not right. The undertaking during the hearing that they would not oppose United States subgroup members advancing their pleaded ACL claims, and your Honours will see that in the primary judgment at paragraph 297 in the core appeal book paragraph 88 – those claims are only for misleading and deceptive conduct, and breach of statutory warranty.

Your Honours will see that from Mr Ho from tab 3 of the appellant’s supplemental book of materials.  It is those claims that informed the observations of the Chief Justice, Justices Rares and Derrington, that the ACL issues were ones which had clear law and were essentially factual.  Your Honours will see that in the full court judgment in the paragraphs 36 to 37 in the core appeal book, paragraphs 141 to 142, and also at paragraph 87 of the Full Court in core appeal book 155, and also paragraphs 384 and 387 at core appeal book pages 259 to 260.

The whole point of what was happening before Justice Stewart was the determination of the section 23 question, not – it was never contemplated that that section 23 question for, as it were, the remainder of those that will have to be determined, would be as it was sent over to the United States. In fact, it is still, as it were, up in the air – no doubt awaiting the outcome of what this Court determines as to how to deal with the implications of whatever your Honours determine for any stay of the balance of what might be called the United States contract class applicants.

Because your Honours appreciate the only ordinance being made which your Honours are considering was an order acting upon Mr Ho, not upon other members of that subclass. That awaits, sensibly – all due respect to all of the courts below – seeing where we get to, as it were, after this case, but it has never, ever been part of the undertaking, never contemplated that, as it were, one would shift to the United States, the section 23 application.

EDELMAN J:   What is the relevance of the undertaking, then for this appeal?

MR HUTLEY:   Your Honour, as I understand it, it is at best marginal.  It was this:  our learned friends said they would lose a juridical advantage if they were sent back to the United States because the United States courts may not allow them to run misleading and deceptive conduct and statutory warranty cases under the ACL in respect of the trip on the Ruby Princess.  My client said, we will accept that those cases can be run, entertained by the United States courts.  That is all it was.  It was to overcome the problem ‑ ‑ ‑

GORDON J:   Can you bind the United States courts to do that?

MR HUTLEY:   There was a lot of expert evidence about what the courts would do, or were likely to do, and so on – everyone came to the conclusion, I think Justice Stewart – I have not got the reference, your Honour – came to the conclusion that on the balance of probabilities, they would be accepted.

GORDON J:   So, just so I am clear, I am being a bit slow, but does that just mean that the things that are pleaded in the claim by Mr Ho, which are the two ACL claims – one is a representation claim and one are section 60 and 61 guarantee claims, they are the three claims which your client says, more probable than not that the United States courts would entertain them.  Does it go any further than that?

MR HUTLEY: It is nothing further than that, your Honour. It is just that my learned friend indicated that the section 23 claim was the subject – that is not the subject of the application, I just wanted to make ‑ ‑ ‑

GORDON J:   I do not understand what the distinction is.  I do not understand what the point that is being taken is by you.

MR HUTLEY: I am just saying that when one got to the stay on the basis of the exclusive jurisdiction clause, the Full Court said, answering the argument of our learned friends, you should not stay this because an Australian court should deal with all claims which can arise under the Australian Consumer Law, even a section 52 – a section 18, I called it 52, your Honour ‑ ‑ ‑

GORDON J:   We have all grey hair, and we all remember section 52, it is fine.

MR HUTLEY:   Your Honour is too gracious, as always.  We relate to the section 18 claim.  Our learned friends made this submission we will lose a juridical advance if you send us to the United States, because they will not allow a section 18 cause of action.  We undertook to the Court to agree that they could run a section 18 case to the extent that it was available to them.  We would not take, in effect, a point that the United States court should not entertain such a case.

EDELMAN J:   But you want to keep your class action waiver clause?

MR HUTLEY:   The class action waiver clause was fought here because that is not what was pleaded in the relevant pleadings.  That arose in the context of what could be called a stay application.  That is how the point arose.  Now, your Honours can see that from paragraph 326 in the primary judge’s reasons, at page 96 of the core appeal book.

Can I turn to our outline, paragraph 2. Your Honours have been taken to section 5 in the joint book of authorities – page 134. The argument, as put by the appellant, for example at their submissions in paragraph 20, is that section 5 provides the relevant hinge on which section 23 of the ACL operates, and that as that contains a territorial limitation – albeit an exceptionally broad one, that is the scope of section 23’s territorial operation.

The interveners put it slightly differently, their paragraph 27 contending that section 5 of the Act applies to section 23 on its terms, and thereby prevents any presumption of the kind we were relying upon. Our learned friends have developed it. It appears to be common ground among all parties that for section 5 to be relevant, one must construe section 23 of the ACL as being concerned with engaging in conduct – it seems also to be accepted that engaging in conduct bears the meaning in section 4(2)(a) of the Act.

The argument goes, as we understand it, is implicit in section 23 of the ACL is the engaging in conduct, because the contractual terms upon which section 23 operates are the product of the making of a contract, which is in turn a form of engaging in conduct under section 4(2)(a). Our submission is that the argument lacks any textual support, and we say is inconsistent with the context and purpose of section 23, and – I will come to it in due course, your Honours, tomorrow – and the argument advanced that our argument would have resulted in the, as it were, introduction of the relevant provisions back in 2010 to be of solemn farce is, with respect, simply wrong – for reasons which we will take you to.

For that purpose, it would be beneficial for your Honours to have the relevant sections of the Trade Practices Act after the amendments effected by the 2010 Act which introduced the Consumer Law in the narrow way it was.  Your Honours may prefer for us to send it through, but we have prepared some copies.

GAGELER J:   You can give it to the Court Crier after the Court adjourns, Mr Hutley, unless you want to go to it now.

MR HUTLEY: No, I do not think I will get to it this afternoon. But we say, with all due respect to the Solicitor, your Honours have not been taken to the critical provisions which make clear that what was being done was sought through and was essential to occur, and the reason for the use of section 5 was to extend the operation of the ACL, but not section 23. I will make that good when I take you through the relevant provisions.

EDELMAN J:   To do so prospectively?

MR HUTLEY:   Yes.

GORDON J: Sorry, extending the operation of the ACL, but not section 23?

MR HUTLEY: Not section 23. It was extending the provisions which made, giving effect to such clauses, contravening conduct, which was – and I will take your Honours to the provision – which was done through a provision in the Trade Practices Act, but provided that that provision constituted a contravention of the ACL, Schedule 2, and therefore you had to have an extension through section 5 into the ACL, as it did, to make that effective.

This is, can I say, pretty byzantine drafting which took place.  For reasons even the Solicitor was not able to explain, the Legislature took the step of introducing the ACL in short form, but in effect importing through the Trade Practices Act those provisions as deemed as to be contraventions of the ACL, even though the ACL then did not contain those provisions, but they were in the Trade Practices Act.  I have to take your Honours through it with a little closeness tomorrow, but that is what occurred.

EDELMAN J:   It was concerned with existing provisions, not prospective or future provisions.  Existing provisions in the Trade Practices Act.

MR HUTLEY: It added provisions into existing provisions to take account of section 23, to constitute contraventions, but they made them contraventions of the ACL even though they did not put those provisions into the ACL. Could your Honours just take that on faith until tomorrow morning. I will take your Honours to it.

GORDON J:   “Tantalising” is not the word.

MR HUTLEY: Your Honour, I can leave your Honours with the Act overnight, if you cannot bear to wait, but I thought your Honours might. Can I now take you – before going to section 23 – we need to start with the words of section 5. Would your Honours kindly take those up. Your Honours will find that at page 134 in the first volume of the authorities.

The first thing to note is the use of the word “extends” after paragraph (f) of the definition. Now that is, this provision is concerned with extending the reach of the provisions of, amongst other things, the Australian Consumer Law, as identified in paragraph (c). That makes perfect sense, given that it is seeking to extend provisions to the engaging in conduct, consistent with what this Court said in Insight Vacations v Young 243 CLR 149, at paragraph 36 where your Honours will see that in the joint book of authorities, page 1795, commencing, and the relevant passages are at page 1808. When a provision is hinged on conduct – in that case, performance of recreational services – it ordinarily is read as only covering conduct that incurs within the territory of the relevant legislature. The work of section 5 is to extend what would otherwise be provisions limited to conduct occurring in Australia to cover conduct occurring outside Australia.

It is an extension provision, not something that limits the reach of the provisions. But we say that is how the appellant and the interveners seek to use section 5 on their construction. On their construction, section 23 has what might be called universal application, applicable to all standard form consumer or small business contracts, whatever their proper law, or wherever made, and that section 5 then operates as a geographical limitation of the provision such that only those contracts made in Australia by a person, or outside Australia by certain persons, including foreign corporations carrying on business in Australia, are covered.

That, we say, is ultimately a strained reasoning in the provision. The strain arises because – as we will come to section 23 – it is not directed to conduct at all. Section 5 cannot then operate on section 23 in a way to extend the reach of this provision, at least not unless one first reads 23 as being confined to some other limitation. But that is not what the appellants or the interveners say. They say section 5 provides the only limitation. Still on the words of section 5, if we might, the engaging in conduct by certain persons is the reference to actual doing, or refusing to do an act as it occurs. The present tense is used, “engaging”, and it does not use conduct that has been engaged in.

GAGELER J:   What about asserting a right under a contract, is that not “engaging in conduct”?

MR HUTLEY:   I will accept that.  The act is the act of asserting, at the moment of asserting.  But I will come to that, your Honour.  But, your Honour, if one is coming to section 24, is your Honour contemplating, with “asserting a right”, concerned with section 24 of the ACL?

GAGELER J: I was not quite there. I was still with you on section 5 of the Competition and Consumer Act, and the word “conduct” in section 5 presumably has to be read in by the definition of section 4(2)(a), and I was just looking at the definition in 4(2)(a), reading the words “giving effect” as including the doing of an act that involves the assertion of a right under a pre‑existing contract.

MR HUTLEY: I accept that. It is any act – I accept that completely. Section 23 does not involve asserting any provision of a contract.

GORDON J:   Sorry, what did you just say then – does not extend to what?

MR HUTLEY: Section 23 is not concerned with somebody asserting a provision of a contract: it operates upon a provision. It takes a contract and has an effect upon it; it says it has a state.

GAGELER J: Is the effect of this submission that section 131 of the Competition and Consumer Act does not apply section 23 of the Australian Consumer Law to a corporation as a law of the Commonwealth?

MR HUTLEY:   No, no, we do not ‑ ‑ ‑ 

GAGELER J:   It does not go that far?  I am not sure how you do it, then.

MR HUTLEY:   Your Honour – can I – what?

GAGELER J:   I am not sure how you get out of that.

MR HUTLEY:   Would your Honour allow me to get to it when I get to it, and we say it is quite clear how it works when one understands what is done by the AC, with respect to giving effect to the terms.

GORDON J:   So, you accept that the provisions extend – so it is an extension – to the “engaging in conduct” in the broad sense defined 4(2)(a)?

MR HUTLEY: I accept that is what section 5 says, yes.

GORDON J:   And that is conduct outside Australia?

MR HUTLEY:   Yes.

GORDON J:   By your client, who carries on business within Australia?

MR HUTLEY:   If, to the extent that provisions of the ACL deal with engaging in conduct, yes.

GLEESON J: And that might be conduct of the kind that is referred to in section 237(1), which is a kind of conduct that has to occur in applying or relying on a term of an unfair contract.

MR HUTLEY: Yes, we accept that. You start relying – you start seeking to enforce it, that is conduct. That is doing an act. Yes, I am reminded, and I was going to come to it. That can only – and I will come to the provisions, it is important, that can only be after there has been a declaration under 250. In effect, that is a declaration of an unfair contract under 250. You cannot – the structure of this is peculiar in that regard – you do not move and you cannot move against the purported reliance until there has been a declaration for the purposes of 250, as it were. That is where we will get to. Section 23 is a predicate.

GORDON J:   Can I just test that?  If you go to 4(2)(a), the definition of conduct, it is the doing of any act.

MR HUTLEY:   Yes, your Honour?

GORDON J:   It is the doing of or the refusing to do any act.  Why does that not extend to things which precede the obtaining of the declaration?

MR HUTLEY:   Because it ‑ ‑ ‑

GORDON J:   It is like saying, all of a sudden – what has gone on before, other than doing an act that it is trying to give effect to?

MR HUTLEY:   Sorry.  I will have to take your Honours with the provisions.  But you cannot complain of doing an act until you have got the declaration.  Even if the declaration is the predicate to being able to complain of seeking to rely on.  That is how the legislation works, your Honour, and I will take your Honours through it in due course.  I see the time, your Honour.

GAGELER J:   Thank you, Mr Hutley.  The Court will adjourn until 9.45 am tomorrow.

AT 4.15PM THE MATTER WAS ADJOURNED
UNTIL FRIDAY, 4 AUGUST 2023