Mansfield v State of Victoria

[2004] HCATrans 20

[2004] HCATrans 020

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M248 of 2003

B e t w e e n -

MICHELLE MANSFIELD

Applicant

and

THE STATE OF VICTORIA

Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 13 FEBRUARY 2004, AT 10.46 AM

Copyright in the High Court of Australia

MR J.I. FAJGENBAUM, QC:   If the Court pleases, I appear together with my learned friend, MR M.G.R. GRONOW, for the applicant.  (instructed by Deacons)

MR P.J. HANKS, QC:   Your Honours, I appear with my learned friend, MS R.J. ORR, for the respondent.  (instructed by Victorian Government Solicitor)

MR FAJGENBAUM:   If the Court pleases, there are no factual controversies or uncertainties of fact in this matter, and it raises two important questions of construction of section 82 of the Bankruptcy Act.  One concerns subsection (1) and the other subsection (3).  The first question arising out of that ‑ ‑ ‑

GUMMOW J:   Does it not also involve – though, I understand why you do not put it up front, perhaps – construction of these two Victorian statutes – none the worse for being Victorian, but nevertheless, with the minutiae of the Road Safety Act?

MR FAJGENBAUM:   It does, indeed, your Honour.

HAYNE J:   Until you have got through the Road Safety Act and the Magistrates Court Act when do you ever get to the bankruptcy provision?  You have to get through the two Victorian Acts by a particular part, have you not?

MR FAJGENBAUM:   Yes, your Honour.

HAYNE J:   So it is really a case about the operation of the PERIN system, is it not?

MR FAJGENBAUM:   Ultimately, it comes down to that, whether the PERIN system, within the meaning of subsection (1) – sorry, rather with the Road Safety Act, together with the attached, as it were, PERIN system, operates to create an immediate liability once a parking ticket is issued, and the second question arising under the Magistrates Court Act, is what is a court within the meaning of subsection (3).  Is a court that which any body which a State legislation deems to be a court?

HAYNE J:   The question becomes, “Are they penalties or fines imposed by a court”?

MR FAJGENBAUM:   Indeed, yes.

HAYNE J:   Why should we take on the question of whether the PERIN system in Victoria generates that outcome?

MR FAJGENBAUM:   Because it raises the question of what is a court within the meaning of section 82(3) of the Bankruptcy Act.  Here we have within the PERIN system an obligation imposed upon the registrar who, of course, is a constituent element of the Magistrates Court, to make an order automatically without the exercise of any discretion, either as to the making of the order or as to the amount of the penalty.  Is that an order of the court simply because the State law deems it to be an order of the court?

In contrast, for example, in New South Wales where a similar system operates, the function served by the registrar of the Magistrates Court is performed by the State Debts Recovery Office which is a part of the Attorney‑General’s Department.  If any order made by that body in New South Wales were deemed to be an order of the court – and one can imagine why that might be so because of certain consequences about execution that might flow – would that ‑ ‑ ‑

HAYNE J:   This seems an argument directed to demonstrating how uniquely Victorian the problem is.  It does not seem to be advancing the application quite down the path you are intending to push it, is it, Mr Fajgenbaum?

MR FAJGENBAUM:   It arises out of unique Victorian circumstances, perhaps, but it does raise these questions of construction of section 82. The court below said that the order was an order of the court, simply on the basis that the State law declared it to be an order of the court. If I can take the Court to the application book at pages 45 and 46, paragraph 44, at the bottom of the page:

The absence of discretion in the registrar’s making of an enforcement order and the administrative character of the PERIN process are not necessarily incompatible with a court process.  Courts may exercise administrative powers from time to time, and a controlling statute may limit the extent of a relevant discretion.  Although the making of an enforcement order is critical to the infringer’s liability and, as a result of an enforcement order, a person incurs a liability to pay an infringement penalty and the prescribed amount for costs, there are other steps or stages in the process that confer relevant discretions on the registrar . . . Whilst the registrar must make an enforcement order under cl 5(1) in the event of registration under cl 4(3), it does not follow that the enforcement order is not an order of a court . . . Indeed, such a conclusion appears to be contrary to the express terms of cl 5(2) of Sch 7, which deems the enforcement order “to be an order of the Court”.

There is an error, in our respectful submission, of reasoning in that paragraph because true it is that courts do sometimes exercise administrative functions and true it is, of course, that courts are sometimes confined in matters of discretion, but here is a case where, first, the administrative function that the court is exercising is not one that has traditionally been exercised by courts, nor is it one that can be said to be incidental for the exercise of judicial functions.

HAYNE J:   What is different between this process and the entry of judgment in default of appearance by administrative act?

MR FAJGENBAUM:   Your Honour, that flows, first, from the rules of court, and courts are entitled to have this legislative function to manage their own business, and the entry of judgment in default of appearance, default of defence or whatever, is a way in which the court enforces its own efficiency, protects its own processes, so it is relevant in a sense, to the administration of the business of the court in the conduct of litigation.

HAYNE J:   But the outcome of the PERIN system occurs when the putative offender has not diverted the matter into the disputed category?

MR FAJGENBAUM:   Yes.

HAYNE J:   Just as entry of judgment in default of appearance.  No appearance, no heading off into the disputes in court - what is different?  The prothonotary does it, the registrar does this?

MR FAJGENBAUM:   The difference in this case is that on the face of the penalty notices, which are at the front of the application book at pages 2 and 3, there is a clear election on the part of the municipality, the City of Port Phillip, to enforce this liability by the PERIN system unless something else is done.  So an election is given to the infringer or to the owner of the vehicle to take some other route ‑ ‑ ‑

HAYNE J:   Just like a writ of summons says unless you enter an appearance within 14 days, action will be taken that will astound you is the effect of what is said, though not the words.

GUMMOW J:   Looking at 82(3), is it the word “imposed” or the word “court”?

MR FAJGENBAUM:   It is both, in a sense.  There is a subsidiary question as to whether, in fact, what the PERIN system does is imposes a penalty or simply enforces it, because what is registered is the infringement penalty.  “Infringement penalty” is defined in clause 2 of Schedule 7 to mean the amount payable, the monetary obligation, so what is the subject of the enforcement order is a monetary obligation.  So if what is being enforced by the enforcement order is a monetary obligation about which the court has no discretion whatsoever, can it be said that what is occurring here is the imposition of a penalty by a court.

GUMMOW J:   The phrase “by a court”, you seem to be saying it is not by the court.

MR FAJGENBAUM:   We seem to say, your Honour?

GUMMOW J:   It is not by a court, not imposed by a court.

MR FAJGENBAUM:   Sorry?

GUMMOW J:   Still looking at 82(3).

MR FAJGENBAUM:   Yes, “imposed by a court”, yes.

GUMMOW J:   There is some administrative procedure which takes it outside that description – there is some administrative step that takes what happens outside the criterion of “imposed by a court”?

MR FAJGENBAUM:   Yes, it is not simply the administration but the heart of the scheme.  Insofar as it involves the enforcement of the liabilities we would have it imposed by the service or the issue of the ticket means that there is no liability imposed by a court.  It is simply the enforcement of a monetary obligation.  The question as to whether or not the service of a ticket imposed a liability was answered simply by the Full Court on the basis that the municipality could not sue for the amount of the debt.  That appears, if it please the Court, at page 38 of the judgment at paragraph 26, between lines 315 and 320:

The service of an infringement notice does not of itself give rise to a legally enforceable liability to pay.  The enforcement agency is unable to sue for recovery of any monies merely upon service of the notice ‑ 

which we say answers the question incorrectly, because we have a liability imposed by the notice which is to be enforced, as the Council has elected on the face of the notice, by the PERIN process.  That is the means by which the liability is to be enforced.  There is no suggestion in these proceedings that there is any invalidity about the notice, and if you look at the infringement notices at page 2 of the application book, on its face, it bears the character of a demand for payment, “Penalty:  $40.00, DATE DUE” and at the bottom of the front page, “Failure to pay in 28 days will incur additional costs.”  If you turn over to the reverse side which is printed horizontally at the bottom of the page, you make cheques payable to City of Port Phillip, then at the bottom of the page:

If you do nothing, costs will be added to the penalty and a “Courtesy Letter” issued.  If you still do not respond, PERIN court action will be initiated.

GUMMOW J:   The courtesy letter is a bit Orwellian, really, is not it?

MR FAJGENBAUM:   I beg your pardon?

GUMMOW J:   The phrase “Courtesy Letter” is a bit Orwellian?

MR FAJGENBAUM:   Yes, indeed and when one looks at the courtesy letter which appears at page 1, it is again a demand for payment:

Payment is overdue and you are now obliged to pay costs as well.
Within 28 days you must:

1.   Pay the penalty -

elect to take the matter to court, or declare that although you are the owner, you are not the driver of the vehicle.  Now, with respect, this courtesy letter is delivered under the PERIN system, and it is a demand for payment, on its face, of an accrued obligation, and if we go to Schedule 7 and look at clause 3(5), the language of the system is the language of accrued obligation:

The infringement penalty together with the prescribed costs may be paid within the extended period as if the infringement notice or law under which the notice was served also required the payment of those costs.

In other words, the courtesy letter assumes that there is a requirement to pay the penalty fixed by the notice, you are obliged to pay, and once costs are added in accordance with the PERIN system, there is an additional obligation as if it were imposed by law to pay the costs as well.  The language of the PERIN system, as it is described, a procedure for the enforcement of infringement penalties, one enforces existing obligations.  Clause 1(1):

The procedures set out in this Schedule may be used for the enforcement of infringement penalties – 

again, one enforces, we contend, existing obligations.  So the PERIN system, we contend, sets up a system of enforcement.  What is enforced is

the debt, the infringement penalty, as I have said.  Now, it is true that the Council could not sue to enforce the penalty merely upon service of the notice.  It is also true that any penalties recovered under the PERIN system go back to the municipality by virtue of the operation of law.  So although it is enforced by the registrar and the infringer is obliged to pay the money to the court, the court hands the money that is received, under the statutory scheme, back to the municipality.  So it demonstrates, in our respectful submission, that what the scheme is concerned with is the enforcement of an existing obligation.

The fact that this obligation may be waived by the Council by, for example, if it so chooses to ignore the PERIN system, or the fact that the infringer has an election to avoid the debt by asking to be prosecuted in the normal way in the court, does not mean that there is not an existing obligation that is imposed by the service of the notice, but that that obligation, that liability to pay, is subject to suspensory, as it were, circumstances which may occur, rather, that at the election of the Council thereafter, if it still retains that election, of the election of the infringer.  We say in this case the Council had no election because on the face of the notice it had elected to enforce the infringement penalty by the PERIN system.

Now, they are the only issues that arise on the appeal.  The exercise of discretion by Justice Merkel was not in issue because if we are right in our legal submissions, the discretion that Justice Merkel exercised at first instance to stay the enforcement of the enforcement order was not disputed.  If the Court pleases.

GUMMOW J:   Yes, Mr Hanks.

MR HANKS:   Thank you.  Putting on one side, your Honours ‑ the unique character of the Victorian system, it finds parallels in South Australia and Tasmania, we believe, but the equivalent systems in each of the other States are quite different - it is plain, we would say, that no liability here is imposed, and, therefore, one cannot say that a penalty or fine has been imposed until the order is made by the registrar, who constitutes the Magistrates Court for that purpose, under clause 5(1) of Schedule 7, and that order is then, of course, deemed to be an order of the Magistrates Court.

At no earlier stage, can one say that a final penalty has been imposed in the sense, as we understand it, that it is used in section 82(3) of the Bankruptcy Act, that is, in the sense of creating an obligation, a liability to discharge the penalty or the fine.

HAYNE J: Section 82(3) is a composite expression, “imposed by a court”. Now, there has been no intervention by a court before the invocation of the PERIN system?

MR HANKS:   That is so, your Honour.

HAYNE J:   The question becomes whether the PERIN system leads to a penalty or fine imposed by a court?

MR HANKS:   To answer that, one would look to clause 5 of Schedule 7 and to look at the terms in which it imposes, first, a requirement on the registrar that the registrar make an order, then consider the terms of that order.  It is an order that the person, if it is a natural person “pay to the Court the amount of the infringement penalty” and that, we would submit, is the imposition of the final penalty by the court.

GUMMOW J:   What step is the imposition?

MR HANKS:   It is the making of the order in the terms contemplated by clause 5(1) that, taking the natural person, “pay to the Court the amount of the infringement penalty” and that is the imposition of the penalty.  Up to that point, there is no imposition.  Up to that point, as the terms of the Magistrates’ Court Act, section 99, and the Road Safety Act, section 89(4), they all make clear that the service of an infringement notice imposes no penalty.  What it does is give to the alleged infringer an opportunity to avoid prosecution or an opportunity to avoid the PERIN process by paying up on the notice.

The service of the notice does not preclude the authority – here, the City of Port Phillip – commencing proceedings by laying a charge in the Magistrates Court. That is plain from section 89(4) of the Road Safety Act, alternatively, taking advantage of section 99 of the Magistrates’ Court Act and invoking the procedure in Schedule 7, but it is clear that at that point, there being those options, that there can be no penalty imposed because the procedure has, as it were, a fork in the path and one of those forks would lead to prosecution.

Prosecution might result in conviction if the offence can be proved and conviction may well result then in the imposition of a penalty, that is, prosecution in the ordinary way, but because the procedure contemplates that as a fork in the path, then it is, we would say, quite incongruous to oppose that the final penalty is imposed at some earlier stage through the administrative act of a parking inspector punching in the numbers on the machine that he or she carries and sticking it on the windscreen.

GUMMOW J:   We do not need to hear you any more.  Thank you, Mr Hanks.  Yes, Mr Fajgenbaum.

MR FAJGENBAUM:   Your Honour, one point in reply is to draw the Court’s attention to Schedule 7 clause 1(1) again:

The procedures set out in this Schedule may be used for the enforcement of infringement penalties and penalties imposed by penalty notices.

The scheme assumes that it is the notice that imposes the penalty and not the order of the court which enforces the penalty.  If the Court pleases.

GUMMOW J:   The questions which the applicant seeks to agitate turn ultimately on the construction and operation of those provisions of Victorian statutes, particularly the Magistrates’ Court Act 1989 (Vic) and the Road Safety Act 1986 (Vic), which establish and give effect to what is called the PERIN procedure for enforcement of traffic and parking fines.

It is said that this procedure does not lead to a penalty or fine “imposed by a court in respect of an offence against the law” within the meaning of section 82(3) of the Bankruptcy Act 1966 (Cth). We are not persuaded that the decision of the Full Court of the Federal Court of Australia in dealing with these arguments is attended by sufficient doubt to warrant a grant of special leave. Accordingly, special leave is refused.

I think you do not ask for costs.

MR HANKS:   That is so, your Honour.

GUMMOW J:   Yes, special leave is refused.

AT 11.11 AM THE MATTER WAS CONCLUDED