Lockton v NorthBuild Constructions Pty Ltd

[2000] HCATrans 75

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B22 of 1999

B e t w e e n -

PETER JAMES LOCKTON as trustee for the LOCKTON FAMILY TRUST trading as P J LOCKTON FABRICATIONS

Applicant

and

NORTHBUILD CONSTRUCTIONS PTY LTD

Respondent

Application for special leave to appeal

GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 10 MARCH 2000, AT 10.25 AM

Copyright in the High Court of Australia

MR B.D. O’DONNELL, QC:   May it please the Court, I appear with my learned friend, MR T. MATHEWS for the applicant. (instructed by Barwicks Wisewoulds, Lawyers)

MR P.A. KEANE, QC:   May it please the Court, I appear with my learned friend, MR T.P. SULLIVAN for the respondent.  (instructed by Ebsworth & Ebsworth, Lawyers)

MR O’DONNELL:   The applicant has to face the amendment that has been made to the legislation since the Court of Appeal decision.

GUMMOW J:   Yes.

MR O’DONNELL:   We accept the amendment means that this issue could not now arise under this piece of legislation.

GUMMOW J:   This is section 4B?

MR O’DONNELL:   Yes, your Honour.  But we submit that the question at issue ‑ ‑ ‑

KIRBY J:   Well, why should we become involved in it then, if it is never going to arise again?

MR O’DONNELL:   The question in issue, we say, extends beyond this legislation and is a more general question.  We would say the question is: whenever legislation is interpreted so as not to bind the Crown in the performance of an act or the provision of services, to what extent will the statute apply to an independent contractor which the Crown has engaged to perform that very act or supply those services where the application of the legislation to that contractor could materially affect the interests of the Crown?

That was the question in issue before the Court of Appeal.  Although it could not arise under this legislation because it binds the Crown, it could arise in other circumstances.  It first arose in the High Court in the case of Roberts v Ahern in 1904.  The matter again arose before the High Court in the Bradken Consolidated Case.  In that case ‑ ‑ ‑

KIRBY J:   Well, there is no doubt that the question of the scope of Crown immunity is a very lively question and it came up and went away in a case recently.  But the issue is whether, given the change of the legislation and the rather collateral way in which this issue is presented in this case, that this is really a very suitable case in which to examine the matter.  That is the issue, I think.

MR O’DONNELL:   The factual circumstance ‑ ‑ ‑

KIRBY J:   Because it only really comes up as a side wind in this case because you are trying to get out of a statute which is no longer in operation, or it has been amended.

MR O’DONNELL:   Yes, we are trying to get out of the statute.  But similar contractors in the past have similarly tried to get out of the statute raising the same grounds, and that was the case in Roberts v Ahern where the contractor said, “I am not bound because I was engaged by the Commonwealth, which is not bound”, and in the ‑ ‑ ‑

KIRBY J:   Was that a contractor or a subcontractor?

MR O’DONNELL:   That was a contractor, your Honour.

GUMMOW J:   Yes.

MR O’DONNELL:   Mr Appleby was the contractor and he engaged a servant to perform the act, and the servant was prosecuted for acting unlawfully, for not having a licence.

KIRBY J:   You are a relative twice removed from the Crown?

MR O’DONNELL:   We are one step removed.  We are a subcontractor.  But we would say the precise relationship between the person and the Crown is not what is important.  What is, is whether the person is performing the act the Crown wants to be performed and which it is the function of the Crown to perform.  And that seemed to be the ratio of the Full Federal Court in the Woodlands v Permanent Trustee decision, which is case No 11 in our bundle of authorities.  In that case, at page 230, just below letter E.

GUMMOW J:   Page 230?

MR O’DONNELL:   Yes, your Honour, page 230 just below letter E.

GUMMOW J:   Thank you.  “The principle of Roberts”?

MR O’DONNELL:   Your Honours:

The principle of Roberts seems to be that the immunity that attaches to the Crown itself, from the effect of a statute making unlawful a particular act, extends also to persons retained by the Crown to perform the act, whatever the precise nature of the relationship between the Crown and them.  The rationale, no doubt, is that the Crown acts through servants and agents. It would make a mockery of Crown immunity if servants and agents ‑ ‑ ‑

GUMMOW J:   Well, you certainly were not a servant, and you were not an agent.

MR O’DONNELL:   No, your Honour.  But the point their Honours are making, we would say, is the immunity is not limited merely to servants and agents, and it was that point which Justice Thomas in dissent in the Court of Appeal emphasised.

GUMMOW J:   Yes.

MR O’DONNELL:   It is not the nature of the relationship so much as what is the contractor performing?  Is it something which is a government function which the government is asking the contractor directly or indirectly to perform?  The consequence would be if the legislation applied to a contractor or its subcontractor.  It then impacts upon the Crown because it can restrict those the Crown engages to perform the work or who are, in fact, performing the work at the Crown’s request.

So we would say the principle applies more generally and it throws into issue what is the precise ratio of the Roberts v Ahern decision.  Roberts v Ahern, as I have said, did relate directly to a contractor.  The issue is picked up in the Bradken Case which is No 6 in our bundle, particularly in the reasons of Chief Justice Gibbs at page 124.  About half the way down the page, your Honours will see the New Zealand cases of Lower Hutt City and Wellington City v Victoria University.  His Honour goes on:

The decisions of this Court in Roberts v Ahern and Broken Hill Associated Smelters Pty Ltd v Collector of Imposts appear also to be cases where persons who are not servants or agents of the Crown were held immune from legislation which did not bind the Crown, because the application of the legislation to them would have prejudiced the interests of the Crown.  It is not necessary to explore the limits of this principle.

In the end, in that case, it was enough that the principle of Crown immunity, if not extended to those contracting with the Crown, would impact upon the enforcement of the contract the Crown had made.

KIRBY J:   Now, the Woodlands Case that you cited from the Federal Court, that was the one that came up to this Court in Bass and Woodlands.

MR O’DONNELL:   Yes.  That is right, your Honour, and was overturned, but ‑ ‑ ‑

KIRBY J:   And it went off because of the fact that there were various tangential problems.

MR O’DONNELL:   Yes.

KIRBY J:   There is no doubt that this is a very important question.  There is no doubt about that.  And it may even be that it requires some reconsideration of the fundamental principles as happened in Ireland, even when Ireland was a constitutional monarchy between 21 and 47.  But I just think the problem with this case is it only really arises indirectly and you are not a contractor, you are a subcontractor and it is raised in a case where the legislation has been changed.  So it is really not a very good vehicle for this Court to explore these very important questions.

MR O’DONNELL:   It is true we are only a subcontractor, but, we would say, it would not have mattered if we were an employee of the contractor engaged by the Crown, or a subcontractor.  Whether we have Crown immunity depends upon the impact upon the Crown.  The impact upon the Crown is the same, whether we are a servant or a subcontractor.

It is true this question cannot arise under this legislation now, but the question in issue here is acutely one which can arise under any legislation where the Crown engages a contractor to perform a service or provide a function, and that contractor engages a subcontractor to carry out that work.  The impact upon the Crown of the effect of the legislation ‑ ‑ ‑

GUMMOW J:   What do you mean by “impact”?  What do you mean “the impact”?

MR O’DONNELL:   We would submit, your Honour, the effect upon the Crown.  The question of limiting ‑ ‑ ‑

GUMMOW J:   What do mean by “effect”.

MR O’DONNELL:   The limitations which it imposes upon the Crown ‑ ‑ ‑

GUMMOW J:   We are talking about economic consequences of some sort, are we?

MR O’DONNELL:   Yes, your Honour.  It restricts who the Crown can engage to do the work, how the work can be done.  It could result in the work being stopped by an independent ‑ ‑ ‑

GUMMOW J:   No, it does not.  It just produces the result that your client, like all other persons in the industry, has to get the relevant registration.  That is all.

KIRBY J:   At that time.

GUMMOW J:   At that time.

MR O’DONNELL:   We would say, your Honour, that if our subcontractor was required to register, as was the contractor, that can impact upon the Crown.  It can restrict the pool of contractors it can engage to do the work, it could result in ‑ ‑ ‑

KIRBY J:   That is one way to look at it.  But the other point of view is - Mr Keane has put in his submissions that this is, in effect, consumer protection legislation and it was protective of the Crown against people who were unlicensed and possibly fly-by-nights who were not going to be able to give the proper standards and, perhaps, not be insured and all the other problems that, presumably, the legislation of the Queensland Parliament was designed to address, as much for the protection of the Crown as for anybody else.

MR O’DONNELL:   With protection comes control, control from the building tribunal and the authorities.  The Crown could have elected to accept the protection and to succumb to the control by stating the legislation at the outset, that this legislation bound the Crown.  But it did not do so until recently.  We would say the inference is, it sought not to be subjected to the control and not to have the benefit of the protection of the legislation provided.

Your Honours, the second issue that arises, we would say, in the application is the question whether, in deciding whether a Queensland statute is binding on the Crown for the purposes of section 13 of the Queensland Acts Interpretation Act, regard may be had to delegated legislation made by the Governor in Council under a power conferred by the Act.  The majority and minority in the Court of Appeal differed on that question.  The majority took the view it was enough if the regulation was not repugnant to the Act.  Once you reach that conclusion you could then have regard to the delegated legislation in interpreting the extent to which the Crown was bound by the principal Act.  It was our submission that that

was in conflict with two High Court authorities – The Great Fingall Consolidated v Sheehan and The Brisbane City Council v Group Projects Case, neither of which cases were dealt with by the majority of the Court of Appeal.  No reasons were given for why those cases ought not to apply in this situation.

KIRBY J:   This is really a makeweight, is it not, because one would not really bring the case up on this basis which is merely an aid to the process of construction.

MR O’DONNELL:   We would say, your Honour, it was a substantial injustice to the applicant’s situation, where there were two binding authorities in the High Court which ought to have controlled the hands of the majority in the Court of Appeal which their Honours disregarded, but gave no reasons.  It was critical to their conclusion to have regard to the delegated legislation in order to determine the extent of Crown immunity under the principal Act.  We would say it was a substantial injustice to disregard the binding High Court ‑ ‑ ‑

GUMMOW J:   Yes, Mr O’Donnell.

MR O’DONNELL:   Those are my submissions, your Honour.

GUMMOW J:   Thank you.  Yes, Mr Keane.  Mr Keane, what do you say about the matter Mr O’Donnell was last making, about the failure of the majority in the Court of Appeal to advert to what he says were two material decisions of this Court reflecting the statutory interpretation point?

MR KEANE:   Your Honour, they did not advert to them for the same reason that Mr Justice Thomas, who was in the minority, did not need to found his decision upon them.  If your Honour goes to Justice Thomas’ reasons at page 58 of the record.

GUMMOW J:   Page 58?

MR KEANE:   Page 58, your Honours.

GUMMOW J:   Thank you, line 38?  No, above that.

MR KEANE:   Well, paragraph 37, your Honour.

GUMMOW J:   Yes.

MR KEANE:   If your Honour really starts from the top of the page, your Honour will see that his Honour there sets out the basis upon which his Honour concludes that there was a repugnancy.  And he goes on, in paragraph 38, to say:

I have the advantage of having read the joint reasons of Davies JA and Wilson J.  My point of departure is on the question of recourse to Regulation 3(A) for the purpose of construing the Act.

The point of departure and the basis of his holding of repugnancy appears from the preceding paragraph which was that:

The power to make regulations does not include power to add to the definition of “building work” in the Act.

That point of departure, in our respectful submission, which his Honour elaborates there, is one which is plainly, in our respectful submission, wrong.  Regrettably, this view was not raised during the course of argument.  If it had, we might have pointed out to his Honour the rather obvious circumstance, that the regulation does not purport to add to the definition of “building work” at all but, rather, to emphasise the limits of the exclusionary provision in the regulation.  That is to say ‑ ‑ ‑

GUMMOW J:   Where do we find the text?

MR KEANE:   Your Honour will find the relevant text of the regulation in the judgment of the majority ‑ ‑ ‑

GUMMOW J:   Page 39, is it?

MR KEANE:   At page 39.  Your Honour will see the relevant provision from section 4 of the Act which:

defines “building work” to mean a number of specific kinds of work and then provides that it –

“… does not include work of a kind excluded by regulation from the ambit of this definition.”

The text of the regulation is then set out, and your Honours will see the work excluded from the ambit of the definition of “building work” is:

work performed by the State or an instrumentality or agency of the State (as distinct from work performed for the State or an instrumentality or agency of the State by an independent contractor) -

the point being that the regulation has excluded from the definition of “building work” work performed by the State, but has emphatically left within the definition work performed for the State.  So that, work performed for the State is not removed from the definition of “building work”.  And, your Honours, the case here, might we say with respect, is not a case where the Crown was performing building work at all.  It was not engaging in the business of constructing.  It was a consumer of building services, work was being performed by it, and the situation with which the court was concerned was a situation whether a contractor to the contractor to the Crown who was not licensed was entitled to enforce a claim for recovery of the price for doing that work under that contract between parties, neither of whom was the Crown, and neither of whom was doing building work which could be characterised as work by the Crown.

This is not a case, in our respectful submission, like The Great Fingall Consolidaed or Brisbane City Council v Group Products where the regulation was sought to be used to construe the Act or to override it.  It is simply a case where there is a regulation made, as the legislation contemplates, within power to determine the scope of the operation of a provision of the Act which limits rights to recovery for building work.

KIRBY J:   So the point of distinction is, this is not the use of something external made by the Executive Government to cut down what Parliament has provided.  This is the use of a regulation which Parliament has contemplated will be the definition of the ambit of the Act?  Is that the point?

MR KEANE:   Quite, your Honour.  We adopt that, with respect.

KIRBY J:   And that is a very different thing than using a regulation made by the Executive Government to cut down the will of Parliament.

MR KEANE:   Quite, your Honour.

KIRBY J:   That is the point of distinction, is it not?

MR KEANE:   It is the point of distinction, and that is why we took your Honours ‑ ‑ ‑

KIRBY J:   Well, it is a pretty important principle there, and it is a very important distinction, I think, between what this Court has held and what the majority in the Court of Appeal did here.

MR KEANE:   And as we say, your Honours, with respect, one can see the point from the passage in the judgment of the minority, of

his Honour Justice Thomas, that the point is a point about the regulation was within power.  And his Honour’s view as to why it was not depends firstly upon a construction of the legislation and, we would submit, with respect, a point of construction on which his Honour was plainly wrong.

GUMMOW J:   Yes, thank you, Mr Keane.  We do not need to hear you any further.  Anything in reply, Mr O’Donnell?

MR O’DONNELL:   Yes, your Honour.  Could I respond to that last point about the point of the regulation.  Looking at page 4 of their Honours’ reasons – page 39 of the book - the power delegated to the Governor in Council was to identify kinds of work which may be excluded.  It was not a power to say, “What is the extent of Crown immunity?”.  That is what the Governor in Council did by the regulation.  The regulation says the Crown is bound but a contractor engaged is not on the ground of Crown immunity.

We would say that the regulation, therefore, goes beyond the power delegated under the legislation.  And that was the point which Justice Thomas in dissent made at page 46, if I could take your Honours to that page.

KIRBY J:   But if it is work of a kind, it is work of a kind excluded by regulation from the ambit of the definition.  So that, what the rule‑maker has done is to apply that as the basis of excluding work performed for the State.  I do not see why that does not fall within the power the Parliament has given to the rule‑maker.

MR O’DONNELL:   Because what he says is “work performed by the State is immune, but work performed by a contractor engaged by the State is not, whether it is the same work or not”.  So he is not dividing up kinds of work, but rather by whom performed.  And that was the point Justice Thomas made at page 46, if I could take your Honours to that.  In the last paragraph on the page:

In the present Act, it was expressly contemplated that the executive might by regulation cut down the definition in the Act to whatever extent it chose to prescribe by regulation.  The contemplated regulation might exclude various kinds of work;  it might for example exclude work performed by the Crown.  But no power was given to pronounce upon such a matter as whether it was intended that the Act should bind the Crown or not, or to bind those with whom the Crown has dealings.  The regulation‑making authority might, by a process of denotation of kinds of work, affect the scope of persons to whom the provisions of the Act will apply, but it cannot give a different connotation to the principal Act.  In particular it

cannot make the Act apply to someone to whom the Act is not intended to apply.

KIRBY J:   We would not ordinarily get involved in a case concerning whether or not a regulation was made within power.  The only thing that could invite you into it in this case was the sense of injustice of your client losing out because he was not licensed.  But that problem of injustice has been removed by the amendment to the legislation and, therefore, it really comes down to a very particular question of whether a very particular subparagraph in a regulation is within power of a law made by the Parliament which contemplated that work of particular kinds would be excluded from the ambit of the definition.  So it is a very, very narrow point.  It is not the sort of thing we would normally look at.

MR O’DONNELL:   We would say it is a broader point, your Honour.  In applying section 13 we would say no regard should be had to the regulation.  It is simply a question of looking at the Act alone without regard to the regulation at all.  Thank you, your Honours.

GUMMOW J:   The scope in the States of the doctrine of Crown immunity from suit is potentially a matter that, in an appropriate case, might warrant a grant of special leave to consider the present scope of that immunity. However, in this application, the applicant for special leave is a subcontractor. The issue of Crown immunity arises, at most, indirectly. There is no sufficient reason to doubt the correctness of the opinion of the majority in the Queensland Court of Appeal. It also should be noted that the legislation which gives rise to the applicant’s problems that sent the applicant in search of relief under the principles of Crown immunity has been amended. We refer to the amendment by section 5 of the Queensland Building Services Authority Amendment Act 1999 of the principal statute of 1991, the amendment being the insertion of section 4B which states:

This Act binds all persons, including the State and, so far as the legislative power of the Parliament permits, the Commonwealth and the other States.

None of the arguments advanced persuade us to grant special leave.  Accordingly, special is refused and, having regard to the written submissions, refused with costs.

AT 10.49 AM THE MATTER WAS CONCLUDED