Port of Portland Pty Ltd v State of Victoria

[2010] HCATrans 221

[2010] HCATrans 221

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M62 of 2010

B e t w e e n -

PORT OF PORTLAND PTY LTD

Appellant

and

STATE OF VICTORIA

Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 27 AUGUST 2010, AT 10.02 AM

(Continued from 26/8/10)

Copyright in the High Court of Australia

FRENCH CJ:   Yes, Mr Solicitor.

MR MEADOWS:   May it please the Court.  Yesterday evening I was addressing the application of the principles underlying Article 9 of the Bill of Rights in the context of an undertaking by the Executive Government to do what it could lawfully do to procure legislative change.  The essence of our submission was that this would inevitably result in a contravention of Article 9 of the Bill of Rights and the principles of parliamentary privilege which underlie that article.

Can I complete what I have to say in that regard by referring to the judgment of Chief Justice King in West Lakes v South Australia [1980] 25 SASR 389 where he recognised the invalidity of contracting in such a manner. That case was concerned with an indenture entered into between the Premier of the State and a corporation to enable the development of land for residential purposes. The indenture contained regulations for the planning of the area and provision for any variation of the indenture to be subject to the consent of the corporation. The indenture was expressly approved and ratified by legislation.

A bill was subsequently presented to Parliament which, amongst other things, provided that the consent of the corporation was not required for the varying of the planning regulations.  Chief Justice King recognised that not only was it impermissible for the Executive Government to enter into contractual obligations which fettered the freedom of members of Parliament or their successors to propose, consider and, if they thought fit, vote for laws.  He also recognised that attempting to enforce such an obligation would contravene parliamentary privilege.  At page 390 he had this to say:

To enter into a contract containing a provision purporting to fetter members of parliament in their deliberations and to attempt to enforce any such contractual provision ‑ ‑ ‑

GUMMOW J:   It is not really just entering into a contract, is it?  It is doing so in pursuance of a statutory authority to do so.

MR MEADOWS:   I am about to come to that very point.

GUMMOW J:   Does he not have to face up to some manner and form argument?

MR MEADOWS:   In this particular case?

GUMMOW J:   Yes.

MR MEADOWS:   He said that even though this ‑ ‑ ‑

GUMMOW J:   It is no good talking about the Bill of Rights.  You have to understand how it has come to earth in South Australia and to what extent it is locked into their constitutional structure and to what extent it controls legislative power, I suppose.

MR MEADOWS:   As I understand it, the privileges of Parliament are those of the House of Commons.

GUMMOW J:   Yes, but that is the product of a South Australian statute.

MR MEADOWS:   Of course, it is.

GUMMOW J:   You have another South Australian statute authorising this agreement just like you had in 1870.

MR MEADOWS:   You have.

GUMMOW J:   How does it all square?

MR MEADOWS:   It all squares, your Honour, because notwithstanding the existence of the earlier statute which ratified the contract the Chief Justice was of the view that the members of Parliament were still free “to propose, consider” and discuss ‑ ‑ ‑

GUMMOW J:   Why?  Why were they still free?

MR MEADOWS:   Because of the privileges of Parliament.

GUMMOW J:   Why were the privileges of Parliament overriding, in this sense?

MR MEADOWS:   Because of the parliamentary system in South Australia which gave to the Parliament the power to make laws for the peace, order and good government of the State.  There was nothing in the earlier legislation which imposed a manner and form constraint on the Parliament.

GUMMOW J:   It is the absence of the manner and form restraint that is the problem, is it not?

MR MEADOWS:   With respect, your Honour, it is not the problem, it is the answer.

GUMMOW J:   All right.

MR MEADOWS:   In this particular case – and we put these submissions on the footing that section 4A of the Port of Portland Authority Act did not authorise the Executive Government to give an undertaking in the terms of clause 11.4(a).  We do that because, as we perceive it, section 4A could not authorise the giving of an undertaking by the Executive Government that would fetter the ability of members of Parliament to act according to their conscience, uninfluenced as far as possible by other considerations and also because of issues of public policy.  We outline our submissions in this respect in paragraph 12 of our written submissions.

The Attorney‑General does not wish to make any submissions as to whether section 4A authorised the Executive Government to give an undertaking in terms of paragraph (b).  Suffice it to say, however, that if section 4A did authorise the giving of such an undertaking as has been submitted by my learned friend, Mr Merralls, there would be no need for the Court to consider the question whether that undertaking amounts to a dispensation that offends Article 12 of the Bill of Rights.

If it is necessary to look at the issue of dispensation and the Bill of Rights, we address the scope of that in our written submissions in paragraphs 23 to 30 and we rely on what we say there.  We would also adopt Mr Merralls’ submissions in this regard in his presentation to the Court yesterday afternoon.

GUMMOW J:   Article 9, is it, of the Bill of Rights is directed to what was then the English Parliament at Westminster, is it not?

MR MEADOWS:   That is so.

GUMMOW J:   Not directed to the Parliament of the United Kingdom, actually, which did not then exist.  How did it come to earth in South Australia and how has the text changed so that it applies to the Parliament of South Australia in the West Lakes Case or to the Parliament of Victoria?

MR MEADOWS:   Well, certainly it applies to the Parliament of Victoria because it is in their application of imperial laws legislation.

GUMMOW J:   Exactly, and it is transmuted in some way by virtue of that Victorian statute, I suppose.

MR MEADOWS:   In fact, I think, the text of it is laid out, as my learned friend said.

GUMMOW J:   Texts will not help you very much.  The text would have expired in 1707.

MR MEADOWS:   That may be so, your Honour.

GUMMOW J:   In 1801 probably with the formation of the United Kingdom Parliament.

MR MEADOWS:   I did refer, your Honour, yesterday to what was said by Justice Gaudron, yourself and Justice Hayne in Egan v Willis at page 445 as suggesting that what is said in Article 9 is reflective of the common law.  I think it is sufficient for present purposes to take that position, although we do have the situation where, by virtue of the application legislation, that forms part of the law of Victoria.

Turning then to the issue of dispensation, the effect of our submission is that a distinction exists between an agreement which purports to exempt or confer an immunity from the operation of taxing legislation, in other words, a distinction between an agreement which purports to provide a dispensation.  We say there is a distinction between that and an agreement to pay or make an allowance based on an amount of tax which has been paid.  This is premised on the statute imposing the tax operating and is therefore not a dispensation. 

We submit that section 12 of the Bill of Rights should be construed in its historical context and that its proper construction ought to be informed by the nature of the prerogative power to dispense with the operation of laws.  The essence of a dispensation was that it made an action lawful which, without it, would have been unlawful under a statute. 

In this particular instance clause 11.4(b) is not a dispensation because it presupposes the existence of the law imposing a liability for land tax.  It presupposes the payment of the land tax.  It does not dispense or exempt the appellant from the operation of that law.  All it does is provide that if the land tax has been paid, then it can be refunded.  It therefore cannot contravene section 12 of the Bill of Rights and, in our submission, paragraph 11.4(b) of the agreement is a valid provision.  If it please the Court, they are our submissions.

FRENCH CJ:   Thank you, Mr Solicitor.  Yes, Mr Hanks.

MR HANKS:   Your Honours, I propose to deal with what I think are the three issues that have emerged or, indeed, are identified in the notice of appeal and that is the efficacy or validity of 11.4(a), the validity of 11.4(b) and, one might say, the question that arises by reason of a reservation in section 12 of the Bill of Rights, namely, whether those clauses which otherwise might be a dispensation are allowed of in statute, which will bring us, of course, directly to section 4A of the Port of Portland Authority Act and to the Treasurer’s direction made in the exercise of the power conferred by that section.  I propose to work through the three issues in that order.  No doubt I will be invited from time to time to depart from it, but I will try to persist.  If I could look immediately at the questions that arise in relation to paragraph (a) of clause 11.4 of the agreement ‑ ‑ ‑

GUMMOW J:   You have used the term “invalid”, is that the right term?

MR HANKS:   In relation to?

GUMMOW J:   To 11.4.  This is not a statute.

MR HANKS:   No, it is not.  It is devoid of legal effect, your Honour.

GUMMOW J:   Yes, I guess that is right.  That is how it has to be seen.

MR HANKS:   Yes.  It is devoid of legal effect, therefore cannot bind the State, cannot give rise to any legal remedy for inserted breach.  We are content to put it in that way, your Honour.  Now, your Honours know that the clause that we are looking at is ‑ ‑ ‑

GUMMOW J:   It is not illegal, is it, in the terms of contract theory?  I just do not know what the right footing is.

MR HANKS:   There might be an element of that, your Honour, that would emerge by holding, as it were, the obligation contained in the clause up against the amendments made by – the amendments introduced a new definition of “improvements” into the Valuation of Land Act and thereby made, we say, as your Honour will recall from our written submissions, performance of the obligation legally impossible.  That is not illegality at all, it is not even a parallel proposition, but there is a faint echo.

GUMMOW J:   It is a species of frustration, I suppose.

MR HANKS:   Yes.

FRENCH CJ:   You say the executive power of the State does not extend to make an agreement of the kind in 11.4(a).

MR HANKS:   That is what we say.  Our friends for ‑ ‑ ‑

FRENCH CJ:   So it is just without authority.

MR HANKS:   That is right.

KIEFEL J:   No power to bind.

MR HANKS:   Quite so.

KIEFEL J:   To the knowledge of the other party.

MR HANKS:   Indeed.  Shall we put it in this way, to the well‑informed knowledge of the other party, Justice Kiefel.  Our friends for the Port of Portland say that the Executive can enter into contracts without legislative approval unless prohibited by statute from doing so and, of course, they rely on Bardolph which tells us that there is no necessity for an appropriation before the Executive Government or the Crown may enter into a binding contractual arrangement.

Of course, we accept that as a general proposition, the Executive Government can make agreements that will have legal effect.  An agreement under seal, for example, as this one is, would have legal effect.  But it is subject to an important qualification and that is the qualification that your Honour the Chief Justice identified, namely the one that we set out in paragraph 39 of our written submissions, that a contractual promise that the Executive will act or refrain from acting through ministers in their legislative capacity, as distinct from their executive capacity, is void.  It cannot sound in damages.

We have elaborated on what we believe is the distinction between executive acts as the Executive, and executive acts as part of the legislature.  The introduction of a Bill, the moving of the second, third reading, the shepherding of a Bill through the committee stage, all of those are activities in which the Executive will engage.  But they are executive actions as part of the legislature. 

What was said, for example, by Sir Anthony Mason in the Ansett Case, the two airlines agreement case, about agreements by the Executive to constrain – I was not proposing to take your Honours directly to that passage at this stage, but only to make the point that what his Honour said there about certain agreements made by the Executive about the future exercise of executive powers or discretions could be enforceable.  That lies at one end of this spectrum, as it were, two poles to the spectrum.  There is probably no territory in between, but at one end of the spectrum we have promises made by the Executive Government about the exercise of its executive power in the future and ‑ ‑ ‑

FRENCH CJ:   Amphitrite territory.

MR HANKS:   That is the Amphitrite country.  This is really an elaboration or a development or a qualification of what ‑ ‑ ‑

GUMMOW J:   Could the Executive be exposed later to an action in tort for breach of warranty of authority?

MR HANKS:   In this case?

GUMMOW J:   In any such case as you are considering, yes.  I ask in this case because you are here as the State of Victoria, you are not in the body politic, but you are not here in respect of all three branches.  You receive instructions from the Executive, this very same Executive which you say takes advantage now of its own lack of authority.

MR HANKS:   Your Honour put it in somewhat pejorative terms, if I might say so, and we would not put it like that.

GUMMOW J:   I am sure you would not.

MR HANKS:   We would say that there is an important point of principle here.  Obviously what we are doing is putting up, as it were, a third line of defence against the claims that are made on behalf ‑ ‑ ‑

GUMMOW J:   It adds a new hazard to persons contracting with the State of Victoria, it seems to me.

MR HANKS:   Well, your Honour, not if they are well informed, as they ought to be.

GUMMOW J:   So they pop up and say, “Well, let us strike 11.4 out.  It is void of legal content, why put it in?”  It is just a feel‑good provision.

MR HANKS:   That may be the case, your Honour.  We would say that it is undoubtedly a statement of intention, a statement of what the parties agree will happen, but it is not a statement that can have binding legal effect on the State and that is because it would require the Executive Government to proceed in a particular way in the exercise of its legislative functions and that is something that we say is legally not possible.  We have identified, in paragraphs 40 through to 51, a range of authorities which we say establish that proposition. 

They go back, undoubtedly, to an early New Zealand case, a case that we deal with in paragraph 43, Holmes v Rolleston, and progressing at a reasonable pace into the 20th century we will go to a case that came to the Privy Council on appeal from Newfoundland, Commercial Cable Co.  There is no doubt that the propositions that were laid down in those cases were that it was not possible for the Executive to enter into an agreement to submit and to have enacted legislation by the legislature, an agreement that would carry legal consequences.  That is what the authorities say. 

As your Honours know, there are more recent authorities to that effect.  We have referred, in paragraph 48, to Justice Robertson’s judgment in the New Zealand case of Rothmans of Pall Mall and, perhaps more powerfully, the reasons of Justice Cooke, or Lord Cooke as his Lordship now is, then the President of the New Zealand Court of Appeal, but not revived – the late Lord Cooke, I do apologise.  No miracle working today, your Honours.  But we have cited what his Lordship said in, what I will call the Treaty of Waitangi Case, because I am monocultural.  His Lordship was very emphatic that:

it would be quite wrong and almost inconceivable for the Courts to attempt to dictate, by declaration or a willingness to award damages or any other form of relief, what should be placed before Parliament.

GUMMOW J:   What Sir Robin Cooke says there is:

the Courts would not compel a Minister to present a measure -

What is he saying?  They would not grant a mandatory injunction?  I would be surprised if anyone suggested they would.  The question is whether there is liability in damages.

MR HANKS:   We are familiar with the remedial difficulties facing that sort of relief from cases like Trethowan and Clayton v Heffron but his Lordship goes beyond that:

it would be quite wrong and almost inconceivable for the Courts to attempt to dictate, by declaration or a willingness to award damages . . . what should be placed before Parliament.

In our submission, that would carry over into the very situation that we are looking at here if, as the appellant seeks, it was attempted to enforce clause 11.4(a) through an action for damages.  They say, quite frankly, that is the only relief that they can seek.  They are nevertheless seeking to attach a sanction to the actions of the Executive Government acting in its legislative capacity for their complaint is ‑ ‑ ‑

HAYNE J:   Are you not then merging the two ideas.  The root of the problem is that the Executive cannot speak for the legislature.  Do you accept that?

MR HANKS:   Of course.

HAYNE J:   They question is, what can the Executive promise, if anything?  Can it make a promise for best endeavours?

MR HANKS:   It may, your Honour, but I have to qualify that immediately.  Such a promise, in our submission, is devoid of any enforceable content.  I will explain why that is so.

HAYNE J:   The whole argument is being presented on an either/or basis, that is, your side of the argument is being presented as either/or.  What I invite attention to is whether that does not obscure the availability of a middle ground.

MR HANKS:   It is our submission, your Honour, that there is no middle ground available.  That is our submission.

CRENNAN J:   What about the ground that – the third possibility which is that in relation to 11.4(a) that is really a factum or a state of affairs where there is a difference between two amounts of land tax to be taken into account in the context of 11.4(b)?

MR HANKS:   That is right.  If I might be permitted, I will address that when I turn to 11.4(b).  If I might answer the point that Justice Hayne has raised first, the middle ground, one of the pieces of middle ground, perhaps, but this particular piece we say is not available and it is essentially the argument that our friends put in support of Justice Nettle’s approach – who dissented on the 11.4(a) point – that it could be construed as an obligation to do no more than the State could lawfully and effectively do to procure a promised amendment to the legislation.

His Honour said it was patent that the State through a mistake – which your Honours will see identified in paragraph 92 of the judgment of the Court of Appeal, the reference to the mistake - failed to procure the amendment and therefore failed to do all that it could lawfully and effectively do to procure that amendment.  Now, it is our submission that if it were construed in that way, if 11.4(a) were so construed it would be extraordinarily difficult to establish any breach of its ‑ ‑ ‑

CRENNAN J:   I think one problem would be you get into the twilight zone of the boundary between the Executive and the legislature.

MR HANKS:   Yes, it would be, your Honour.  We make a point, I think, perhaps in passing in paragraphs 41 and again in paragraph 59 of our written outline, that the promise would be devoid of meaningful content if it were framed in that way.  If you exclude, as we say necessarily you must exclude, the steps that the Executive might take as part of the legislative process, such as introducing a Bill and moving the various readings, perhaps proposing government amendments as it moves through the legislative process, responding to amendments that are proposed by other interests in the Parliament, there is nothing left that one could fasten on to prove that there had been a failure to perform that limited obligation – the best endeavours obligation. 

For example, you might look at the terms in which the Bill was drafted, the terms in which instructions to parliamentary counsel were settled.  Now, that might be characterised as something that lies outside the legislative process, it immediately precedes it, but you could not look beyond that to the terms in which the Bill was introduced, the terms in which amendments were either moved or not moved or resisted or passed as it worked its way through the Parliament.  So that it would not be possible, we say, for any court to conclude that the Executive Government had failed to use its best endeavours.

FRENCH CJ:   The introduction into Parliament of Bills is not constitutionally a function conferred on the Executive Government.  A minister is indistinguishable from the humblest backbencher in constitutional theory, is he not, or she, when introducing a Bill or giving instructions?

MR HANKS:   Quite so, your Honour.  What we are dealing with here is a government sponsored Omnibus Amendment Act.  There is no dispute about that.  The question is, how far could any court look into the steps that were taken as that Bill was drafted, introduced and moved its way through the legislative process?  If I might, I trust, make a constructive response to Justice French’s observation, any more than the Court could look at the passage of a private member’s Bill.  That is why we would say that if you construct it in those terms, construct a promise in those terms, it has no legally enforceable content.

HAYNE J:   So there are three questions presented by a promise of best endeavours.  Does the promise have content; if so, what?  Is the promise enforceable?  Is breach capable of proof?

MR HANKS:   Yes.

HAYNE J:    Which of those propositions are you advancing?

MR HANKS:   We understand that our friends for Western Australia say that even such a promise has no validity, has no legal effect.  We say that it may well have legal effect, your Honour, but when you examine what that effect is, it will be impossible to establish that it has been broken – that the promise has been broken.  It will be impossible to establish that there was a failure on the part of the Executive to use its best endeavours.  If all, for example, that the Court can look at is the terms in which the Bill was drafted without considering whether the Bill, as it made its way through the Parliament, was debated, amendments were proposed, amendments were perhaps accepted or rejected, without considering those factors, it is not possible for the Court to conclude that there has been a failure to use, on the part of the Executive, its best endeavours.

CRENNAN J:   So is it an illusory promise?

MR HANKS:   Yes, it is, your Honour.  When it is stripped down in that way as Justice Nettle proposed it is an illusory promise.

HAYNE J:   That is an allegation of the promise has no content, I think, and to use best endeavours would not be broken even if it could be established that absolutely nothing was done towards its implementation?

MR HANKS:   Yes.  I think, your Honour ‑ ‑ ‑

HAYNE J:   That is where you are driven to, is it not, Mr Hanks?

MR HANKS:   That must be correct, your Honour.  That must be correct, but I can step back from that precipice and draw attention to the facts of the present case.  We know that there was a Bill.  We do know that the Bill was enacted, and we do know that the appellant alleges that the resulting Act was insufficient to discharge even a best endeavours promise.  That is what it said.  So we are not dealing with the extreme case here.  That is why I say I am stepping back, just to perhaps – some might say if they were a little rash – to have a reality check.

GUMMOW J:   What we are grappling with is the sort of interface between public and private law, in particular in the mechanism of contract which Sir Owen Dixon was anxiously considering in South Australia v The Commonwealth, the Railways Case 108 CLR 130 at pages 140 to 141. But that was government‑to‑government agreement.

MR HANKS:   It was.

GUMMOW J:   Not government to citizen.

MR HANKS:   Not intended to create legal relationships or legal obligations.  Obviously, if I might say so, your Honour, quite peculiar factors would impinge on that problem.  Undoubtedly we are dealing with a promise the government has made to a private entity, but there are parallel problems.  Ultimately we say it boils down to the inability of the Executive to bind itself to a particular course of action in its legislative capacity.

GUMMOW J:   But the problem that Harris v Moore pinpointed was that what we have here is undertakings as to the exercise of political power, is it not?  That is the problem.  How that gets into a best endeavours clause, for example – there is no clear answer perhaps.  You say there is, but ‑ ‑ ‑

MR HANKS:   Well, we have presented a clear answer.  We have drawn, as it were, this distinction between what the Executive Government can promise that it will do in its executive capacity.  The two airlines agreement is a neat example of that.  As I apprehend the principle, the Executive may not always be held to that promise.  There may be circumstances in which it may say that the public interest demands that it depart from it. 

It may be held to the promise in that capacity but when we move into a promise to procure the enactment of legislation, even if we describe that as best endeavours, it either has no meaningful content, or, if we put it at the other end of the spectrum and say that it is an absolute promise to procure the enactment of the legislation, it is void.  Your Honours we have raised a number of other matters in our written submissions but they are - I think they generally fall within the umbrella of the propositions that I outlined orally.  Unless there are any further issues that your Honours want to explore in this difficult territory ‑ ‑ ‑

GUMMOW J:   Just thinking about South Australia v The Commonwealth again, that is often described as having been determined, in contractual theory, on the basis of lack of animus contrahendi, is it not?

MR HANKS:   Yes, your Honour.  It is articulated, as I recall, by the Court as a lack of intention to create a legal relationship.

GUMMOW J:   That is not one of the three points that you were dealing with in answer to Justice Hayne, is it?

MR HANKS:   No, it is not, your Honour.

GUMMOW J:   As to 11.4(a).

MR HANKS:   I did not use that language.

GUMMOW J:   Lack of animus contrahendi means you never get any legal abrogation of any variety in the first place.

MR HANKS:   Yes.  I did articulate the way in which we say that clause should be understood, namely as a statement on the part of the Executive that that is what it intended to do, as a reassurance perhaps, but not as one that was intended to bind the Executive in a legally enforceable way.  Your Honour, that articulation is quite close to the way in which your Honour put the proposition from what I will call the Uniform Railway Case, or Standard Gauge Case.  That might be a better way of describing it.  That would be, I think, equivalent to an absence of animus contrahendi.  Your Honours, could I turn to ‑ ‑ ‑

GUMMOW J:   So it does become a feel‑good provision?

MR HANKS:   Yes.

FRENCH CJ:   It would not make any difference if it were approved by the Parliament, on your argument.

MR HANKS:   Why would that be, your Honour?  Yes, I think you are right, with respect.  That must be so unless ‑ ‑ ‑

FRENCH CJ:   Unless you think it is not giving statutory effect to any part of the agreement, just scheduled, or ‑ ‑ ‑

MR HANKS:   That is right.  There are ‑ ‑ ‑

FRENCH CJ:   They get over that problem in Western Australia with their Government Agreements Act in relation to – but that is an 11.4(b) issue.

MR HANKS:   Yes.  There are, of course, particular provisions in the Constitution Act (Vic) that demand special majorities, but we are not really in that territory at all. If the Parliament had endorsed this agreement, it might have been a totally different animal, of course. If it had been endorsed, parliamentary counsel now looked at it and thought there were problems here ‑ ‑ ‑

FRENCH CJ:   Yes, that is right, the practical answer.

MR HANKS:   ‑ ‑ ‑ and the memoranda would have flowed backwards and forwards between the Treasurer’s office and parliamentary counsel and something entirely different would have emerged.  Could I go to paragraph (b) of 11.4?  As your Honours know, up to this point, all the judges who have looked at paragraph (b) have described it as an invalid promise, void, unenforceable, and the flag under which those statements have marched has been the prohibition on executive dispensation from the operation of statutes in section 12 of the Bill of Rights.  It is probably developed most thoroughly by Justice Buchanan, but it is also developed by Justice Mandie and the President of the Court of Appeal, Justice Maxwell.  Your Honours will see Justice Buchanan’s paragraphs 42 through to 45 starting on page 448 of the appeal book.

HAYNE J:   Is the central conclusion that his Honour reaches that at paragraph 43?

MR HANKS:   It is.

I am also of the opinion that cl 11.4(b ) of the agreement did operate as a dispensation from the obligation to pay tax.

HAYNE J:   Is there a tension between the last two sentences of that paragraph?  What precedes it?  Or perhaps more accurately, is there a tension between the last two sentences of that paragraph and the disposition of the argument about 11.4(b)?  Why have these things got to be once for all?  Why can they not be ambulatory, these adjustments?

MR HANKS:   As I read what his Honour said, that distinction is not drawn.  He does refer to the possibility that:

the executive might have calculated the purchase price in the agreement by notionally deducting the present value of future obligations –

but that does not exclude, we would have thought, a calculation of the purchase price that would allow the purchaser to claim against the vendor if certain eventualities occurred recurrently.  We do not think that his Honour would exclude that, but that is not the situation that we have here; this is not a clause for, as it were, the refund of part of the purchase price.  This is a clause for the refund, or the allowance, of an amount paid, by way of land tax, in the eventuality that the specific promise given in paragraph (a) is not discharged.  In our submission, that is quite different from the example that his Honour had in mind, and I will come back to that shortly if I might be permitted, your Honour.

Simply seeking to identify what the principle was, that supported the courts below in their conclusion that this paragraph was void.  Now, again when we turn to our friends who argue for the appellant, they, as we understand it, make the same point about the capacity of the Executive Government to enter into a contract unless prohibited by a statute and they say that this particular paragraph, paragraph (b), was not prohibited by a statute.  As we understand it, the same point is made by our friends who appear for the Attorney for Western Australia in their paragraphs 21 and 22. 

Going back to what our friends for the appellant say, they say even if there was no implied or perhaps expressed statutory power to make the agreement, there was power at common law.  We accept that generally.  There may be power to enter into agreements, power derived from the common law, but we say that there are some agreements that cannot be made.

GUMMOW J:   When we talk about common law, are we fixing upon the common law at a particular date or the common law in a particular procedural context?  It was not quite right to look at it so simply when in Britain until 1947, was it, you needed a petition of right?  You see what I mean?

MR HANKS:   I do, your Honour, but I think what we are fixing on is the situation at the time that the agreement was made here in Victoria.

GUMMOW J:   Yes.

MR HANKS:   We are looking in 1996.

GUMMOW J:   Yes.

MR HANKS:   The common law will be the common law of Australia and it will be that part of the common law that defines the capacity of the Crown in its various manifestations to enter into contractual arrangements.  Some of that would be articulated by the members of the High Court in Bardolph, a substantial part of it we would think.  We accept that it would provide ‑ ‑ ‑

GUMMOW J:   But Bardolph’s Case is speaking at a time when Australian legislation for a long time had provided direct litigious access.

MR HANKS:   Yes, that is so.  I think your Honour referred to this yesterday.  We have the Crown Proceedings Act which unlocks one of the problems that might otherwise stand in the way of effective remedies for breach of contracts made by the Crown, section 26 of what we might describe as a standing appropriation, once the certificate is given by the court.  We wanted to make this point, your Honour, that to the extent that the common law does confer power on the Crown to enter into binding contractual agreements, it is subject to a significant limitation and that is the limitation which finds a current formulation in section 12.

GUMMOW J:   I am sorry to take you back, Mr Hanks.  It is not just section 26.  It is really 23, is it not, “Liability of the Crown in contract”?

MR HANKS:   Quite so, your Honour.  It is a bit of a pale image of section 64 of the Judiciary Act.

GUMMOW J:   Yes.  Well, there is a section 64 provision in there, is there not?  It is 25, is it not?

MR HANKS:   It is:

nearly as possible be the same and judgment may be given and costs awarded –

et cetera, yes.  We do accept that, but there is a limitation on the contracts or agreements, we say, into which the Crown can enter, and the Crown cannot contract to protect the subject against the operation of the statute, for that is a dispensation. 

Now, to displace that proposition, which we understand the parties are agreed, can be characterised as a fundamental aspect of the constitutional arrangements in Victoria, as in every other jurisdiction in Australia.  It is not merely a received statute, or a received statutory pronouncement as in the form of section 12 of the Bill of Rights.  To displace that proposition would require very clear language and, in our submission, there is nothing in the Crown Proceedings Act which displaces what we would describe as that incapacity on the part of the Executive Government to agree to a dispensation.

If we are correct that in substance 11.4(b) operates to protect in certain contingencies the present appellant from the effect and the impact of the Land Tax Act and is therefore, in substance, a dispensation, then it exceeded the authority that the Executive had, subject to what we will say about section 4A of the Port of Portland Authority Act.  Could I turn to deal with some of the other ways in which it has been put?

HAYNE J:   Just before you that, that characterisation of 11.4(b) as protecting from tax is a characterisation which divorces 11.4(b) from its contractual context, does it not, in this sense.  Clause 11.4(b) is part of a bargain in which Blackacre is sold to the purchaser for a price and the price is to be adjusted, so 11.4(b) says in certain events, and also 11.4(b) says, not only is the price to be adjusted, but if the events occur after completion, refunds are to be made.  How, if at all, do you take account of that contractual setting in attributing the characterisation of dispensation?

MR HANKS:   Well, despite what our friend, Mr Merralls, said yesterday about the circumstances in which the agreement was made, and I think he would have put it the lack of independence on the part of the authority as the vendor acting, as it were, as the puppet – I do not know whether my friend used that language but that was the metaphor my friend was constructing – as the puppet of the government, despite that, this is an agreement for the sale of an asset which is vested in the authority.  It is an agreement that is made under direction of the Treasurer.  That is plain because section 4A gave the Treasurer all those powers to direct the terms and conditions on which the authority would sell the asset and the business, the concern; Blackacre plus whatever goodwill, et cetera, might be associated with Blackacre.

This clause says nothing about the rights of the purchaser against the vendor.  It says only that in the contingency referred to at the commencement or, to use Justice Gummow’s much simpler language from yesterday, if the amendments do not become law – that is the amendments identified in paragraph (a) – and therefore the purchaser has to pay more land tax, the State promises that the State will refund or allow the additional land tax, the land tax that is incurred, levied as a consequence of the omission or perhaps failure to enact the amendments.

CRENNAN J:   The recitals at 128A and B really describe the relationship between the vendor and the State and the Treasurer acting on behalf of the State.  They make reference to that written direction which we looked at yesterday and there is the reference in B to the purchase price and the terms and conditions set out in this document.  It is all subject to that involvement of the State.

MR HANKS:   Subject to the direction by the State.

CRENNAN J:   And the direction by the Treasurer.  It is not just 4A in that Port of Portland Authority Act, there are other sections too which shows the Treasurer having a very significant involvement and the authority in a sense being sidelined.

MR HANKS:   Yes.  I accept that 4A by itself may not be a sufficient part of the picture, but it is not unrepresentative.  I just focused on 4A because it did indicate the very significant ‑ ‑ ‑

CRENNAN J:   It is related to the particular direction, I understand that.

MR HANKS:   Yes, but it also indicates the significant controlling role that the State has through the Treasurer in relation to this transaction.

CRENNAN J:   That is right.  That goes to the point, in a sense, that 11.4(b) is sanctioned by the Act.

MR HANKS:   We will see about that, if I might say so.  We will turn to that shortly.  If your Honour will permit me, I just want to engage with Justice Hayne’s proposition that this paragraph (b) is an adjustment of the purchase price as between, one would assume, the vendor and the purchaser and, plainly, if your Honours conclude that that is the proper characterisation of paragraph (b), then the defence which the State has raised will melt away, if that is the proper characterisation. 

Now, there is an adjustment as between the vendor and the purchaser in respect of the value of the asset now found to be diminished for one reason or another, then we are not talking about the dispensation from the operation of the taxing law.  But it is our submission that that is not the proper characterisation, that this is a promise by the State as the authority that is responsible for public finances in the State and, in particular, responsible for the administration of the Land Tax Act, that failing the obtaining of the amendments referred to in paragraph (a), it will protect the purchaser against the effect of the Land Tax Act.

FRENCH CJ:   There is not, literally speaking, any dispensation from the operation of the law.

MR HANKS:   No.

FRENCH CJ:   The liability remains which makes me wonder to what extent there is an overlap between concepts of dispensation when we are talking about non‑collection or refund and executive discretion as to how it enforces or administers a law.

MR HANKS:   Yes.

CRENNAN J:   Does not the Chief Justice’s point get back to the Eastern Extension point that there is a distinction to be made between an exemption and a promise to recoup?

MR HANKS:   In our submission, that distinction is false.  It is not a proper distinction.  One looks at the substantial effect of the executive action and if the effect is to shelter the individual, the subject, from the effect of the statute then it is a dispensation.

CRENNAN J:   But recoupment can involve acceptance of the liability to taxation and constitute no challenge to that liability.

MR HANKS:   I am driven to invoke Sir Owen Dixon in response to your Honour.

CRENNAN J:   I thought you would do that.

MR HANKS:   It just took me a little while to find it.  In Thomson’s Case 77 CLR 1, on page 28 at the bottom of the page ‑ ‑ ‑

GUMMOW J:   It comes down to the question whether 11.4(b) stands in the way of the operation of the land tax statute.  Justice Crennan has been suggesting it does not.

MR HANKS:   Yes.

GUMMOW J:   I do not think Sir Owen gets you across the line.

MR HANKS:   Your Honour may be focusing on the last sentence of the last full paragraph.

GUMMOW J:   Yes.

MR HANKS:   I am focusing on the very next sentence.

GUMMOW J:   I know.  The next sentence is surely sequential to the preceding sentence.  That is what he had in mind.

MR HANKS:  

Any liability ex contractu to replay it in substance, whether as damages, indemnity or recoupment –

If I might say so, very capturing.   The terms used in paragraph (b) –

must be dissolved by force of the statute.

We say that is because otherwise it would be a dispensation from the effect of the statute.

CRENNAN J:   I think the point was made yesterday that it was a subsequent statute and I think the point was also made that possibly, with great respect, his Honour was going wider than he needed to go in terms of the problem presented by the case.

MR HANKS:   There is a lot of that in these cases, your Honour, including in Eastern Extension.  There is a lot of going much wider than they needed to.  Many of these cases are simply decided on points of construction of the statute.  For example, in Eastern Extension it was decided on the construction of the agreement and it was possibly picked up by – I think it was section 85 of the Constitution but it was found that it did not apply to the particular taxes and anything that was said beyond that might fall within your Honours’ criticism.

We do rely on that proposition at the bottom of page 28 and then we do turn to what Justice Hayne said yesterday because, as I understand what your Honour said yesterday – it is at page 62 of the transcript, I think commencing at line 2746 for those who want to check it later, perhaps.  It is not necessary for your Honours in order to follow me - as I understand what your Honour said was that the passage from Thomson’s Case that was quoted by Justice Buchanan in the Court of Appeal - that quotation can be found on page 444 of the appeal book in paragraph 31 - that passage was directed to a subsequent Act that abrogated the contractual obligation.  That is essentially what Justice Hayne said yesterday.

We have a number of responses and that is not what Justice Dixon said, with respect. No doubt further up that page in 77 CLR 1, page 28 at about point 4 on the page, your Honour will see there a reference to – assuming that section 3 of the Loans Securities Act warranted a condition promising immunity – his Honour said:

But even if it did, a subsequent Act of Parliament inconsistent with the immunity promised would operate as a paramount law destroying the obligation of the promise.

So his Honour there was concerned with a subsequent law, but there is no reason in principle ‑ ‑ ‑

HAYNE J:   If we are going to parse it, so also is his Honour concerned with subsequent laws in the first few lines on 29, but I am not sure that we are going to get too far by elaborate parsing.

MR HANKS:   No, because I want to make a more substantial point, your Honour, if I might be permitted.  I apologise for diverting us into those matters.  There is no reason in principle why the distinction should be drawn, because a statute does declare the law while the statute is in force and any contract that stands in the way of the operation of a statute must be set at nil, whether the statute preceded it or followed it.  It is not possible for even the State, by entering into a contract, to vary or overcome the effect of a statute.

CRENNAN J:   But in the context of privatisation, which is the contemporary context which we have this agreement, it is not uncommon, is it, to have some concessions in relation to land tax or rates or concessions which have an impact in the context of income tax legislation because the acquirer of the public assets is undertaking risks and the investments are large.  There are many features of these agreements to which one could point which might mean that recoup needs to be considered in that context, the idea of recoupment, that is to say, that it is not an equivalent, not a straight equivalent to an exemption. 

MR HANKS:   Your Honour wants me to go back to the hat that I forgot perhaps.

CRENNAN J:   I am really wanting you to go forwards, I think, rather than back.

MR HANKS:   Your Honour put that proposition to me, I responded to it.  I thought that I had indicated that it is our submission that that is not the proper characterisation.  That it is merely, as it were, recoupment of the purchase price.

CRENNAN J:   Yes.  I am not asking you to repeat it.

MR HANKS:   But I did want to make this point about the effect of statute.  To pick up on Sir Owen Dixon’s observations on pages 28 and 29 in Thomson’s Case, let us assume that some distinction should be drawn, as Justice Hayne proposed arguendo, between a subsequent act and a prior act.  Let us assume that there might be such distinction.  We have a clear example here on the case that the appellant puts of a subsequent statute that did abrogate the contractual obligation, if any, to be found in clause 11.4(b). 

What is plain is that the Parliament turned its mind to the outcome that it wanted in terms of legislation when it passed the Omnibus Amendment Act.  We know that because we have the Act.  The appellant says that the amendments that were made by the Omnibus Amendment Act did not ensure that it would be exempt from land tax in relation to the improvements on the land, that is, the consequence of the legislative intervention in the Omnibus Amendment Act has been that the appellant is liable to land tax, at least in the relevant years, not in perpetuity but in the relevant years, including the improvements.

If that be the case, then that legislation, we say, is inconsistent with the contractual obligation found in 11.4(b) and abrogated that obligation.  That is, if the legislative scheme following enactment of the Omnibus Amendment Act was such that it was inconsistent with the contingency on which paragraph (b) is framed, then the promise to refund or allow, we say, has been dissolved by the legislature.

CRENNAN J:   But it was not inconsistent; it was consistent, but it did not go far enough.  For example, if there had been an alternation to the supplementary valuation provisions to provide that a supplementary valuation was possible in the circumstances of the passage of the Omnibus Act, the whole distance perhaps would have been covered in relation to the promise made, so my point is that the Omnibus Act was consistent but incomplete in a sense.

MR HANKS:   Not consistent enough.

CRENNAN J:   Not consistent enough, precisely.

MR HANKS:   With respect, your Honour, that means it was inconsistent.  It can either be consistent or inconsistent.

CRENNAN J:   It only required a supplementation for the achievement of the promise, so you cannot say it is inconsistent.

MR HANKS:   I am proceeding on the assumption that what our friends say about the adequacy of the Omnibus Amendment Act is correct, rather than what we say about its adequacy.  I am proceeding on that assumption.

GUMMOW J:   So you are saying that the Omnibus Act stands in similar character to the subsequent legislation in Thomson?

MR HANKS:   Yes, your Honour, that is what I am saying.

GUMMOW J:   Is that in your written submissions?

MR HANKS:   I believe it is.

GUMMOW J:   I am not suggesting it is any worse if it is not.

MR HANKS:   Exactly where we put it – at this point I will have to ask one of my juniors to help me on that, your Honour.  Your Honour, paragraph 36, I am told, of the written submissions.  Probably not as fully developed as I am seeking to develop it here, although your Honours may think – I will not engage in too much self‑criticism, your Honour.

CRENNAN J:   We could say something about consistency.

MR HANKS:   In addition to what Sir Owen Dixon said in Thomson’s Case could we also refer you to two passages in Sir John Latham’s judgment on page 17?  It starts at point 5 on the page, and his Honour is proceeding on the assumption that:

the Income Tax Assessment Act 1936 did impose a tax upon the bond interest, and the contract to pay interest without deduction of taxes –

and that contract was valid.   Assuming all of those things, then the Income Tax Act:

destroyed an exemption which previously existed . . . Parliament may, by a law . . . make lawful that which would otherwise be unlawful and, in particular, may so legislate as to deprive an act of the character of a breach of contract.

Then his Honour, at the foot of the page, effectively over onto page 18 speaks in terms that invoke concepts of frustration, we think.

Now, could I say something briefly about what our friends for the Western Australian Attorney said in paragraph 40 of their written submissions.  I think it picks up or anticipated what has been put to me by both Justice Crennan and Justice Hayne this morning.  As we understand our friend’s submission, it is that an agreement made by government that is part of a commercial transaction, that is, the agreement is part of a commercial transaction, to pay or allow a purchaser an amount of money calculated by reference to a tax liability is not a dispensation and therefore it is valid.  That is a rather wide proposition which has some truth to it but may not be entirely supportable.

If you look at clause 11.4(b), which is the clause with which we are concerned, it is contingent on the amendments identified in 11.4(a) not becoming law with the consequence that the purchaser becomes liable to pay, as it were, a higher rate of land tax.  That is the situation in which there is a refund promise.  The 11.4(b) promise operates only if the 11.4(a) promise is not performed.  For that reason the paragraph (b) promise is not simply a promise to make a payment calculated by reference to an amount required to be paid in tax, it is a promise to relieve the purchaser from the burden that may flow from the failure to discharge the promise in paragraph (a).  That is how it is articulated, quite plainly we would say. 

That is why we say, in substance, it is a promise to shelter the purchaser from the effect of the Land Tax Act by returning, as it were, the excess tax and then we would say, in parentheses, that being the tax that the Parliament decided should be paid, assuming that our friends for the appellant are correct in their construction of the Omnibus Amendment Act and in their construction of the Land Tax Act and the Valuation of Land Act as they stood after that amendment. 

There is a further point that we wish to raise about the enforceability of clause 11.4(b) and we trust we are permitted to make this point because we think it arises out of something the Chief Justice said yesterday about the connection between (a) and (b).  Perhaps before I do this I will just go to page 53 of the transcript where your Honour said - I think line 2341.  Your Honour was perhaps rasing a rhetorical question as to whether if paragraph (a) was invalid, could the factum still arise?  Your Honour then provided at least a tentative answer and your Honour said “that cannot be right” because further down the page:

I mean (b) talks about the relevant statutory amendments, which are those of the character described in (a).

Then at 2364 your Honour talked about “severability”.  Our submission is that 11.4(a) was devoid of legal effect.  The Court of Appeal said, at least by majority, that it infringed the primacy of Parliament and was therefore void.  We have said that it is contrary to public policy; the policy that ministers should be free to determine what they will invite the Parliament to consider, and we say that in our written submissions in paragraph 49.

Alternatively we say it is not binding or enforceable because it purports to bind the State to a future course of legislative action.  All of those reasons are advanced; the second one is advanced in our paragraph 51.  Then we ask how can the failure to discharge an obligation that is itself void or contrary to public policy or not binding and enforceable provide the factum on which a contractual obligation hinges?

In substance, that rationalisation, if I might put it that way – and I am not using rationalisation in any disparaging sense, but that way of rationalising the operation of paragraph (b) is a means of providing a basis for awarding damages in consequence of the Executive’s failure to do something which the Executive could not commit itself to do.

It falls into the category – and I go back to Lord Cooke in – I could describe this case of Te Runanga, but I think I would stop there.  It is New Zealand Court of Appeal Te Runanga v Attorney‑General for New Zealand and your Honours I had taken you to this passage a little earlier.  We certainly use it as a key point in our written submissions.  On page 308 ‑ ‑ ‑

GUMMOW J:   What was the issue in this case?

MR HANKS:   The issue in the case was an attempt, as we understand it, to restrain ‑ ‑ ‑

GUMMOW J:   There is an interim injunction application and a strikeout.

MR HANKS:   Yes, but the injunction was intended, as we understand it, to prevent the presentation of certain legislation to the Parliament on the basis that the legislation would be inconsistent with the agreement that the Governor had made.

GUMMOW J:   Yes.

MR HANKS:   The issue in the case places the case itself at an extremity of, perhaps, forensic optimism so far as the litigants were concerned.  I wanted to take your Honours just to that passage on page 308, and to the principle which we think Lord Cooke endorsed there.  Plainly, his Lordship at line 25 approximately is dealing with some sort of coercive remedy, but his Lordship goes on beyond that to say:

it would be quite wrong and almost inconceivable for the Courts to attempt to dictate, by declaration or a willingness to award damages or any other form of relief, what should be placed before Parliament.

GUMMOW J:   That was a statement wider than was needed, was it not?

MR HANKS:   That is so, but it is a statement which we say incorporates sound principle.

GUMMOW J:   It would have been enough to decide that case to say “Go ahead and pass the Act, and then we will see what the situation is”, I would have thought.

MR HANKS:   We think that that might be, if I might say so, your Honour, it might be the point ‑ ‑ ‑

GUMMOW J:   There is a reference to the High Court decisions.

MR HANKS:   Yes, of the passage that commences at the bottom of 307 and cites a number of authorities.  Pickin v British Railways Board, for example, the 1974 House of Lords judgment, and Eastgate v Rozzoli, the New South Wales Court of Appeal judgment from 1990.  As I understand it, they stand for the proposition that we are not going to intervene in the legislative process.  We will have a look at what comes out of the other end, and we will determine whether it is valid.  One might equally cite Cormack v Cope for the same proposition in the federal sphere. 

Our point is that you cannot consider the meaning and the efficacy of paragraph (b) in insolation from paragraph (a).  It is plainly linked because of the words “In the event that” and the words “the relevant statutory amendments”.  They must be the amendments contemplated in paragraph (a) to which the State has committed itself.

Read in that way, paragraph (b), if it were to be enforced, would provide a means for sanctioning the Executive for its omission to discharge the obligation which was, in our submission, no obligation at all.

FRENCH CJ:   If the 11.4(a) had found its place in a letter of comfort outside the agreement with an aspirational statement not intended to be legally binding, does your argument still work in respect of 11.4(b)?

MR HANKS:   It would depend on how 11.4(b) were framed, your Honour.

FRENCH CJ:   It is a matter of the wording, is it?

MR HANKS:   The wording is important.  I mean, the fact that they stand next to each other is part of the context, but we do not rely on their contiguity, the fact that they are contiguous.  We rely on the very clear references in paragraph (b) to what paragraph (a) contemplates and, as our friends would put it, what it binds the State to do.

FRENCH CJ:   I suppose the reason I put the letter of comfort example is that that is a non‑binding letter.  So one asks the question, can that be equated to a circumstance in which 11.4(a) is non‑binding, and you say no?

MR HANKS:   I do, your Honour.

CRENNAN J:   Could you say about (b) that that phrase “the relevant statutory amendments” just incorporates by reference the amendments which are described in (a)?

MR HANKS:   That is what we understand them to do, your Honour, yes.  The amendments that will ensure that the unimproved ‑ ‑ ‑

CRENNAN J:   So (b) can operate even if you characterise (a) as being a statement of intention which is non‑binding?

MR HANKS:   It can operate, but in its operation, putting aside the question of dispensation, put that on one side, in its operation it is providing a sanction, we say, for the omission of the Executive or the failure of the Executive ‑ ‑ ‑

CRENNAN J:   That gets back to the characterisation point.

MR HANKS:   Yes, indeed it does – to do what it unlawfully promised to do or to do what it promised to do without legal effect.  May I go to the final leg of the stool, the third aspect of the case, that is, whether one could say – perhaps we would put it this way but Justice Gummow might put it a little differently – but could you say of 11.4(b) that it is allowed of in statute within section 12 of the Bill of Rights or, perhaps cutting through to the substance of the question, does section 4A and the Treasurer’s direction indicate parliamentary approval of the refund or allowance of the tax in that contingency?  That, I think, is a slightly different way of putting it.

FRENCH CJ:   Does that reduce to the question, is it authorised by statute?

MR HANKS:   Yes, it does.  Which is just a less archaic way of saying, is it allowed of in statute?  Now, we wanted to draw some comparison, but we will just focus, if I might, on the terms of section 4A first in the Port of Portland Authority Act.  It is in the appellant’s legislation.  This is a constraint, we would say, explicitly a constraint on the authority if directed in writing by the Treasurer, it must sell the assets, the business to the purchasers specified by the Treasury in the direction at the specified price and subject to and in accordance with the specified conditions.  I think that is a fair description of the terms of section 4A(1).  I wanted to take your Honours, if I could, back to Thomson’s Case which dealt with, amongst other problems ‑ ‑ ‑

GUMMOW J:   Just stopping there for a minute, 4A(1) is a Miah v Minister for Immigration type provision, is it not?  It impliedly confers the necessary power in the Treasurer.

MR HANKS:   It does indeed and if I omitted to make the obvious point that it is an explicit limitation on the power of the authority.  It places it under the direction of the Treasurer, but implicitly, necessarily, it gives to the Treasurer the power to make a direction.  The question will then be, a direction of what kind, answering what description?  Your Honours, I had asked if I might take the Court to Thomson’s Case 77 CLR 1.

HAYNE J:   Just apropos the question of power, 4A must be read in light of 6B, the general provision that the Treasurer may give directions to the authority.

MR HANKS:   Yes.

CRENNAN J:   I think also 17A, 17B and 17E are important in the context of 4A.

MR HANKS:   I wanted first, if I might, just to lay a little foundation, by taking your Honours back to Thomson’s Case in volume 77, page 16.  It sets out just below the middle of the page the terms of section 3 of the Loans Securities Act, authorising the Governor‑General:

if an Act authorizes the Treasurer to borrow moneys, [to in turn] authorize the Treasurer to borrow the moneys “on such terms and conditions and issue” such “securities in such form as the Governor‑General approves.”

I would ask your Honours then to turn to page 28 again.  This would have a lot of thumb marks on it by now, your Honours.  Your Honours can see that at about point 3 on the page after summarising section 3 Sir Owen Dixon said:

I am not prepared to hold that this provision warrants a term or condition promising immunity from a present or future Act of Parliament applicable according to the true intention of the legislature.

So his Honour, we would say, considering a provision that is not dissimilar said that it was not sufficient to support the conferral of immunity.  Could I also mention to your Honours, going back to 1916, the Privy Council opinion in Commercial Cable Company v Government of Newfoundland [1916] 2 AC 610. Your Honours will see that on 610 in the headnote, section 79 of the Audit Act authorised the Governor‑in‑Council to:

remit any duty or toll payable to the Crown imposed by an Act of the Colony.

Viscount Haldane at the bottom of page 615, expressed the view of the Privy Council that they did not read that statute as applying to a contract such as the one they were considering, dealing not with remission in a particular case, but with an exemption of a prospective and continuing character. 

Yesterday, there was discussion about the effect of the Act.  It seems, although absolute confidence may be, as far as we are concerned, a little elusive, the statutory provision in the South Australian Act of 1870 that may be thought to have underpinned or authorised the agreement made between the Governor of the province and the commercial entity.  That is Act No 11 of 1870.  It has a long title – no short title, of course.  It does have a preamble which acknowledges, at the foot of the first page of the Act:

doubts and objections have been raised and suggested as to the validity of the said negotiations and contract, and as to the power of the said Executive Government to make and enter into the –

contract and the negotiations.  So this Act is passed to remove those doubts and objections.  The operative provision is found in section 2 which authorises:

The Governor with advice of the Executive Council . . . make and enter into any contract or agreement, either in writing or by deed, with any person or persons . . . for the construction -

of the telegraph line, the land line and its junction with the line to Europe.  I am going now right to the end of the section.  I do not think the intervening words were critical:

upon such terms and subject to such conditions as the Governor, with the advice of the said Executive Council, shall deem most advantageous for the said Province.

This is legislation which authorises the Governor‑in‑Council to enter into a contract, and to include in the contract such terms and conditions as the Governor “shall deem most advantageous for the said Province”.  We would contrast that with section 4A.  It implicitly authorised the Treasurer to give a direction to the Port of Portland Authority, directions which plainly would operate to control the terms on which the authority sold the asset and the business of the Port.

GUMMOW J:   In circumstances where the Minister, having the administration of this Act, is distinguished from the Treasurer.

MR HANKS:   Yes, that is so, your Honour.  I appreciate that, but we are focusing, if I might put it this way, on the nature of the power given to the Treasurer under section 4A(1).

FRENCH CJ:   It really goes to terms and conditions between authority and purchaser, on your submission.

MR HANKS:   It is a power to direct the authority as to what it will negotiate with and what it will agree to so far as the sale of the asset and the business, if I can abbreviate the multiple descriptions that are given in the section.  There is no power - and I think this is essentially the point that our friend, Mr Meadows, made this morning – given to the Treasurer to authorise the State to give away tax receipts.

GUMMOW J:   We are back in the question of characterisation now.

MR HANKS:   Yes, we are, your Honour.  But the next point we would make – this surely is not controversial – once that characterisation is settled, then the direction, which is found in appeal book 391, must be read in the context of the power that is conferred by section 4A(1).  If we are right that the Treasurer was not authorised by Parliament to relieve the purchaser from the consequences of the Land Tax Act as enacted then any direction that purported to do that purported to authorise the Executive Government to refund land tax that was payable under the Land Tax Act.  The direction would, to that extent, be ultra vires.

CRENNAN J:   Do you make anything of section 17C in this context?  That concerns both rates and land tax and, speaking generally, contains some provisions beneficial to a vendor in the context of a sale of the assets.

MR HANKS:   Your Honour, we have two subsections that deal with rates and charges under the Local Government Act.

CRENNAN J:   Yes.  Land tax is just dealt with in subsection (3).

MR HANKS:   And then we have subsection (3) which provides that section 10 ‑ ‑ ‑

CRENNAN J:   Which would have imposed, I think, a special land tax calculated at a particular rate on a vendor in circumstances where the purchase meant that the land became rateable.

MR HANKS:   Yes.  So that will protect the authority.

CRENNAN J:   Yes.  I am just wondering, in the context of your argument, about what the Minister can and cannot do, whether you have made anything of section 17C.

MR HANKS:   In our submission, nothing in that section inflates the authority given to the Minister by section 4A.  There is nothing there.  It is simply dealing with particular consequences under two taxing regimes – the Local Government Act and the Land Tax Act – but it does not authorise – we submit there is no authority to be found in section 4A, nor to be found in these what I might describe as incidental provisions that would support a direction to the effect that the Parliament through me, the Treasurer, endorses the promise by the Executive Government to refund tax that is otherwise payable.  In our submission, that is what you would have to find in section 4A to support the direction as our friends would have it construed, our friends who appear for the appellant.

HAYNE J:   Well, at least in part that argument appears to be an argument about parties, does it not, where the obligation in question is undertaken by the State; “the State” is a defined term; the defined term in the agreement is Crown in right of State of Victoria and that is, you say, different from the authority.  Is that where this argument finds its ultimate root?

MR HANKS:   No.  Its ultimate root is in section 4A.  That is where it lies, your Honour.  It does not lie in the undoubted, we would say, distinction between the State and the statutory authority.  Section 4A contains a particular power conferred on the Treasurer.  One has to identify the extent of that power.  Then one has to ask whether the direction which may be understood as telling the authority the terms on which it shall sell the land and to whom it shall sell the land.  You then ask whether the direction purports to go beyond what section 4A allows it to do and if it does, it will be ultra vires, but you would read it, we say, in order to save its validity and so read, it does no more than tell the vendor the terms on which it must sell the land. 

This analysis, as we understand it, is something that Justice Buchanan dealt with and I think Justice Gummow asked our learned friend, Mr Merralls, yesterday whether the Court of Appeal had missed section 4A, but I think your Honours have already been taken to appeal book 451 to 452, and your Honours will see commencing in paragraph 50 and through to paragraph 53 how his Honour dealt with this section 4A argument.  Naturally and respectfully, we adopt what his Honour had to say.  Your Honours, we have made submissions in ‑ ‑ ‑

GUMMOW J:   The problem is the last sentence, is it not, on paragraph 53 which, in a way, echoes the problem of the last two sentences in paragraph 43, namely, characterisation question?

MR HANKS:   Yes, your Honour.  Your Honours, those are the oral submissions on behalf of the respondent.  We do put a number of things in writing from which we do not resile.

FRENCH CJ:   Thank you, Mr Hanks.

GUMMOW J:   Mr Hanks, Mr Merralls wants an order, if he is successful, sending this matter back to the Court of Appeal, if one looks at page 472, “for an assessment of damages”, etcetera.  If it came to that stage, would that be the appropriate court, rather than a primary judge?

MR HANKS:   A Court of Appeal might think not.  Obviously, it is a matter for discussion here.

HEYDON J:   Can it not be agreed between the parties very readily?  It is a purely mathematical ‑ ‑ ‑

MR HANKS:   Justice Heydon, no, Mr Merralls says they have abandoned that part of their – they say it ought to go back to ‑ ‑ ‑

GUMMOW J:   It should be susceptible to agreement in that stage.

MR HANKS:   It may well be, your Honour.  I think there are still some complicated questions of valuation that were not resolved at trial.  I think you will understand from the position that was put yesterday by Ms Kenny that the State’s position was that the consequence of the omission was relatively minor in terms of potential damages.  It may be that we can come

to agreement on that, your Honour, but if we cannot, it will be necessary to have it remitted and we think that the proper course ought to be to the Supreme Court of Victoria – it could potentially be remitted to the trial judge.  The trial judge is now a member of the Court of Appeal, but that does not disable him from – it would not disable Justice Mandie from presiding at a retrial of these issues.  We are very flexible in Victoria, your Honours.

FRENCH CJ:   Thank you, Mr Hanks.  Mr Merralls.

MR MERRALLS:   If it please your Honours.  May I deal with the question of parliamentary authority?  We say this, that parliamentary authority for granting relief from the effects of the operation of a statute need not be explicit, but may be within the scope of authority conferred to enter into a contract.  Whether authority is conferred in a particular case depends upon the nature and circumstances of the granting of the statutory power. 

We say this is demonstrated by the difference of opinion between Justice Dixon on the one hand, and Justice Williams on the other in Thomson’s Case.  Justice Dixon regarded the right recognised by the Court in Magrath’s Case as an exemption and his judgment, in differing from Justice Williams as to the authority to grant the exemption, was strongly influenced by the practice of Australian Parliaments in granting exemptions from tax liability.

That is mentioned in proposition 3 on page 31 of his judgment from which I read yesterday and it is also influenced by his interpretation of the Loans Securities Act which he mentions in proposition 1 on page 30 where he says:

The Loans Securities Act is not one which contemplates the grant of exemptions from existing taxation laws, still less from future taxation laws.

We say there is nothing to the point that the language adopted by the Parliament of the province of South Australia in 1870 in authorising the Governor of the province to enter into contracts differs from the language of section 4A of the Port of Portland Authority Act.  It all depends upon the general setting in which the section conferring authority is found. 

Nor do we say, for reasons that are set out more fully in our written submissions, that the Treasurer or the State of Victoria should be regarded as the vendor, but we do say that the scope of the authority conferred by section 4A extends to requiring conditions which involve the participation of the State in the contract or in obligations that are created by the contract

at some time in the future after the completion of the contract, in particular where the obligations may take some time to be performed.  We say that it is a significant fact that the authority was in the process of disappearing.  It was eventually going to be defunct and would be abolished. 

GUMMOW J:   Now, the Treasurer is joined as the State, as a party, on page 128 of the sale agreement.  The State is the third party and the individual is the Treasurer on behalf of the State. 

MR MERRALLS:   Yes, he is.

GUMMOW J:   I think it seemed to be said against you at some stage that that participation and requirement under the direction that this contract be in that form was in some ways ultra vires the direction power ‑ ‑ ‑

MR MERRALLS:   Yes, it is.  That was the point that I am dealing with at the moment, your Honour.  We say that the power conferred by section 4A should be construed liberally and that it is not beyond the power to require the participation of somebody else as a party to the contract.  One might have, for example, a third party guarantor for particular obligations. 

Now, what clause 11.4(a) does, in our submission, if I can pass from the first submission to the question of characterisation, is simply to avoid the anomaly that arose from the exception from the definition of “improvements” in the Valuation of Land Act of those created by government authorities on the passing of the Port undertakings from government to private hands.

In those circumstances clause 11.4(b) should not be regarded as providing a dispensation from land tax, but should be regarded as providing compensation for one of the effects of a change of ownership of the utility from the government to a private concern.  In other respects, I think, we simply join issue with my learned friend’s submissions.  I do not know that I have anything that I wish to advance that is not in our written submissions already and I have not advanced orally. 

I do not wish to add to my submissions about clause 11.4(a) except to say one thing and that is that, in our submission, it would be sufficient to regard it as providing the basis for the operation of the obligation imposed by 11.4(b).  It is perfectly possible to construe 11.4(b), not independently of 11.4(a), but as your Honour Justice Crennan said, as incorporating by reference the circumstances in which 11.4(b) is to operate.  May it please the Court.

FRENCH CJ:   Thank you, Mr Merralls.

MS KENNY:   Your Honours, may I be permitted to say one or two things in reply to the submissions on the notice of contention? 

FRENCH CJ:   Yes.

MS KENNY:   One is just by way of correction.  Your Honour Justice Crennan yesterday asked me about whether there was a procedure available for the recovery of land tax and I omitted to mention, your Honour, that there is a specific procedure in section 90AA of the Land Tax Act.

GUMMOW J:   Land Tax Act?

MS KENNY:   Section 90AA, your Honour, of the Land Tax Act which provides an exclusive regime for the recovery or refund of land tax.  I was not proposing to take your Honours to that section, but I simply wanted to point out that it was a section that was relied upon by the State in its defence in paragraph 45B of the defence.  It was said by way of defence that because that procedure was available – that is on appeal book page 33 – the plaintiff should have made its claim pursuant to that procedure and was barred from making the claim that it made in this proceeding.  His Honour Justice Mandie did not address that particular defence and I believe it was asserted by the appellant at trial that this proceeding was properly characterised, not as a proceeding to recover tax, but simply a proceeding for damages for breach of contract.

The other quick matter that I wanted to mention, your Honours, arose out of the discussion between my learned friend, Mr Merralls, and Justice Hayne in relation to the construction of section 13DF of the Valuation of Land Act which appears on page 26 behind tab 5.  As I understood your Honours to be saying yesterday, that ‑ ‑ ‑

CRENNAN J:   Sorry, where are you?

MS KENNY:   It is tab 5, your Honour.

CRENNAN J:   Yes, but what page are you on?

MS KENNY:   Page 26.

CRENNAN J:   Thank you.

MS KENNY:   Section 13DF.  I understood your Honour Justice Hayne yesterday to be saying that if one fell within paragraph (e) of subsection (2), then you may be prevented from also relying upon paragraph (n) of subsection (2).  We say that is not a proper construction of subsection (2)

and the proper construction is really answered by subsection (6).  Subsection (2) is only addressing the circumstances when you may make a valuation.  Subsection (6) addresses how you go about the valuation and, in particular, says that the valuer must have regard to every circumstance which affects the value of the land and, in our submission, if it was intended that you were only relying on the one circumstance, then you would expect to find the words “the circumstance” rather than “every circumstance”.  Thank you, your Honour.

FRENCH CJ:   Thank you, Ms Kenny. 

The Court will reserve its decision.  The Court adjourns to 10.15 am on Tuesday, 31 August 2010.

AT 12.10 PM THE MATTER WAS ADJOURNED