Skase v Donnelly; Re Donnelly; Ex parte Skase

[1993] HCATrans 186

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IN THE HIGH COURT OF AUSTRALIA	•
Office of the Registry

Brisbane No Bl of 1993

B e t w e e n -

CHRISTOPHER CHARLES SKASE

Plaintiff

and

MAX DONNELLY

Defendant

Application for costs

Office of the Registry

Brisbane	No B2 of 1993
In the matter of -

An application for a writ of

prohibition against MAX

DONNELLY as trustee in

bankruptcy of the estate of

CHRISTOPHER CHARLES SKASE (a

bankrupt)

Ex parte -

CHRISTOPHER CHARLES SKASE

Skase(2) 1 1/7/93

BRENNAN ACJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 1 JULY 1993, AT 9.32 AM

Copyright in the High Court of Australia

MR A.J.H. MORRIS, QC:  May it please Your Honour, I appear

with my learned friend, MR L.J.A.T. HAMPSON, for

the applicant in both matters.	(instructed by
Gilshenan & Luton)

MR D.J. McGILL:  May it please Your Honour, I appear for the

respondent Attorney-General of the Commonwealth in

each matter. (instructed by the Australian

Government Solicitor)

HIS HONOUR:  Yes. There is no appearance for the defendant,

I gather?

MR MORRIS:  No, Your Honour. Your Honour, in each matter

there is a summons and an affidavit of

Paul William Sayer, filed on 30 June 1993, which I

read.

HIS HONOUR:  Yes, I have those documents, Mr Morris, but I

think perhaps you ought to take me through them

because I have had no more than a quick glance at

them.

MR MORRIS: Well, perhaps I should explain at the outset,

Your Honour, that our client, Mr Skase, commenced

proceedings in this Court in two forms: one by way

of a writ action and one by way of prerogative

proceedings, challenging the constitutional

validity of a provision of the Bankruptcy Act,

namely, section 139ZG(3), (4) and (5). Under those

provisions, broadly speaking, a bankrupt's trustee

in bankruptcy may sign a certificate specifying the

amount of money which is payable by the bankrupt to

the trustee by way of contribution out of the

bankrupt's earnings during the period of his

bankruptcy.

Those provisions provide, in effect, that the

trustee may lodge his certificate with a court of

competent jurisdiction and the certificate

thereupon takes effect as a judgment of the Court.

The challenge, I suppose obviously enough, was

based on cases such as Harris and Callandine

suggesting that that was an unlawful delegation of

judicial power to a trustee in bankruptcy.

What has developed in the meantime is that the Commonwealth, in reaction to these proceedings, has

enacted amending legislation which removes those

provisions from the Bankruptcy Act and it

substitutes provisions to the effect that the

trustee's certificate is merely prima facie

evidence of the amount of the liability rather than

having effect as a judgment of the Court.

I say "in reaction to these proceedings"

because Your Honour will see from the affidavit of

Skase(2) 2 1/7/93

Mr Sayer that both the minister responsible for the

amending legislation in his second reading speech
and the Attorney-General in his explanatory

memorandum explains that the amending legislation

was introduced as a consequence of the institution

of these proceedings in the High Court and on the

basis that the Commonwealth had advice to the

effect that the proceedings were likely to be

successful or that the challenge was likely to be

successful.

Perhaps I might start by taking Your Honour to

the second exhibit to Mr Sayer's affidavit,

exhibit PWS-2.

HIS HONOUR:	In which matter is this, No 1 or No 2?
MR MORRIS:	I am sorry, Your Honour, the affidavits are

almost identical. It might be convenient to refer

to matter No 1.

HIS HONOUR:	Yes.	PWS-2, the statement of claim, is it?
MR MORRIS:	I am sorry, Your Honour.	It may be that my copy

is different. PWS-2 ought to be the

Attorney-General's explanatory memorandum.

HIS HONOUR: Yes, it has a heading different from the endorsement. Yes, 2 and 6 seem to have been

confused in the file.

MR MORRIS:  If I can take Your Honour to paragraph 3 on the

page numbered 1 of that memorandum.	The
Attorney-General mentions that:

There currently are proceedings on foot

in the High Court·of Australia to have

subsections 139ZG(3), (4) and (5) of the Act

declared invalid, as trespassing upon the

judicial power of the Commonwealth ..... The

Government has been advised that there is a

significant likelihood of the challenge to the

Constitutional validity of these provisions

being upheld by the High Court. Accordingly

the Bill proposes amendment to the Act so that

the trustee's certificate will be prima facie

evidence of the nature and amount of a debt

due by a bankrupt to his or her estate in

respect of income contributions -

HIS HONOUR:	Yes.
MR MORRIS:	And the matter was made perhaps even more

clearly in the Minister for Justice's second
reading speech, which is exhibit PWS-3 to

Mr Sayer's affidavit. Rading from the paragraph at the foot of the first page:

Skase(2) 1/7/93

There are proceedings currently on foot in the

High Court of Australia which challenge the

validity of subsections 139ZG(3), (4) and (5)

on the basis that because a bankruptcy

trustee's certificate is given the status of a

judgment of the court in which it is filed,

the provisions enable a person who is not a

judge or holder of other judicial office to

exercise the judicial power of the

Commonwealth, contrary to Chapter III of the

Constitution. The Government has been advised

that there is a significant likelihood of the

provisions being declared to be invalid.

The minister, I think erroneously, said at that

stage that:

The case was scheduled for hearing before the

Court on 7 June 1993.

There was at one time a tentative date arranged

with the Registrar for the hearing before the bench of seven Justices, but the matter had not, in fact,

been scheduled.

I might also point out whilst Your Honour has

that second reading speech in front of you, perhaps

it is not of any great relevance, but in the final
large paragraph on the second page, in the third

sentence, the minister mentions that:

The present High Court challenge was initiated

by one of the persons whose activities gave

rise to the community concern to which I have

referred.

It is clear that the minister is speaking about this litigation and that it was this litigation

which led to the amendments being introduced.

Your Honour, those amendments are now law; a

copy of the amending legislation is for convenience

exhibited to Mr Sayer's affidavit and marked as

exhibit PWS-1. I am not sure if it is necessary

for Your Honour to go to that, but it appears from

the copy of the amending legislation that it came

into effect on 31 May 1993.

HIS HONOUR:	Yes.
MR MORRIS:	Your Honour, in those circumstances, this

application is made under Order 71 rule 39 of the

High Court Rules.

HIS HONOUR:  Yes.

Skase(2) 4 1/7/93

MR MORRIS:  I might say that rule 39 appears to have been

the invention of Sir Samuel Griffith, because it

appears only in the rules of this Court and of the

Supreme Court of Queensland, and by way of judicial

exposition of the effect of the rule, there is only

one major case which we have been able to locate, a

decision of the Queensland Full Court in Reg v Gold

Coast City Council, ex parte Raysun Pty Ltd

(1971) QWN 13. Would it be convenient to hand up a

copy of that decision?

HIS HONOUR:	Thank you. Should I read this, Mr Morris?
MR MORRIS:	I wa·s simply going to draw to Your Honour's

attention the fact that there is some degree of

analogy with the present proceedings; that was a

case in which an order nisi for mandamus was
obtained against the city council but, before the

matter came on for hearing, the council did that

which the mandamus was sought to compel the council

to do, and in those circumstances the Full Court of

Queensland unanimously applied the equivalent

Queensland rule to award the costs to the

prosecutor in the mandamus proceedings.

HIS HONOUR:  Yes. In that case the action achieved the

object which it was instituted to procure.

MR MORRIS:  Yes.

HIS HONOUR: That is not quite the present situation, is it?

MR MORRIS: Well, in our submission, it is, in this sense:

the litigation sought to have legislation declared

to be ineffectual, because it was constitutionally

invalid. That result has been achieved by the

Commonwealth Parliamen~ repealing those provisions

to which objection was taken and replacing them

with provisions to which no objection is taken.

HIS HONOUR: Yes.

MR MORRIS:  Your Honour, there is one further matter I

should draw to your -

HIS HONOUR:  What is the effect then of the altered

legislation upon the state of the litigation?

Litigation was brought simply to challenge the

validity, was it?

MR MORRIS: Yes, Your Honour.

HIS HONOUR: 

Yes.

MR MORRIS: 

Declaratory and injunctive relief was sought in

the writ action and prerogative relief in the other
proceeding, in each case on the basis that the

Skase(2) 

1/7/93

provisions which have now been repealed were

invalid, and to restrain the trustee from

purporting to act in accordance with those

provisions.

HIS HONOUR:	Yes.
MR MORRIS:	Your Honour, there is one further matter I

should draw to your attention. My learned friend

has helpfully pointed out to us that the summons

seeks costs against the Attorney-General; the

correct form should be "against the Commonwealth"

and ou+ learned friend mentioned section 78A(2) of

the Judiciary Act of 1903, which provides that:

Where the Attorney-General of the Commonwealth

or of a State intervenes in proceedings in a
court under this section, the court may, in
the proceedings, make such order as to costs
against the Commonwealth or the State, as the

case may be, as the court thinks fit.

So the correct form would seem to be an order

against the Commonwealth, rather against the

Attorney-General. Those are our submissions.

HIS HONOUR: Yes. Yes, Mr McGill.

MR McGILL:	Your Honour, my instructions are not to oppose an order for costs against the Commonwealth as
sought in each of the matters.

HIS HONOUR:  Yes, very well. Do you have a draft order,

Mr Morris?

MR MORRIS:  I do not, Your Honour. I beg Your Honour's

pardon for that. Perhaps that is fortunate in one

sense, because the form in the summons is

inaccurate, for the reason specified.

HIS HONOUR:  The summons also seeks an order that the

proceedings be dismissed. Is that the appropriate

order to make in the absence of the defendant?

MR MORRIS:  Your Honour, I do not press for that; it is

equally convenient for the plaintiff to file a

notice of discontinuance and, in the absence of the

defendant, that may not be appropriate. I should

have mentioned to Your Honour that it appears from

Mr Sayer's affidavit that the defendant is aware of these proceedings but was not served because it was not thought to be necessary.

HIS HONOUR:  Yes. The question of the defendant's costs, if

you were to file a notice of discontinuance.

MR MORRIS:  Yes.

Skase(2) 6 1/7/93

HIS HONOUR:  And what impact-that might have upon the order

that you are now seeking.

MR MORRIS: Yes, I take the force of what Your Honour says.

I must say it was in the hope of avoiding

unnecessary expense that the defendant was not

brought here today, particularly in light of the

Commonwealth's attitude.

HIS HONOUR:  I wonder if it might be desirable if I intimate

that I am prepared to make an order substantially

in accordance with paragraph 1 of the respective

summonses but amended to insert "the Commonwealth"

in lieu of "the Attorney-General of the

Commonwealth" in each of those paragraphs, and then

adjourn the matter so that you might get in touch

with the defendant and perhaps return some time

later in the day to indicate what the appropriate

order should be.

MR MORRIS:	We will do that, yes, Your Honour.
HIS HONOUR:	I think that is probably the most desirable

course, so that you can get the matter completely
cleaned up.

MR MORRIS:	Thank you, Your Honour.
HIS HONOUR:	I think in those circumstances, if I adjourn

till 2 pm, that is the most likely time when I will

be free to be able to sit again.

MR MORRIS:	Thank you, Your Honour.
HIS HONOUR:	Does that suit your convenience, Mr McGill?

MR McGILL: Yes, Your Honour.

HIS HONOUR:  Yes, very well, we will adjourn the application

till 2 pm and perhaps your instructing solicitors

might like to prepare a draft order, Mr Morris.

MR MORRIS:  Yes, that will be done, Your Honour.

AT 9.48 AM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.02 PM:

HIS HONOUR:  Yes, Mr Morris.

Skase(2) 7 1/7/93

MR MORRIS:	Thank you, Your Honour. Your Honour, I am very embarrassed to say that my instructing solicitor
who has the documents is not here yet. I do have a
facsimile copy of a form of draft order and I can
inform Your Honour that there is an affidavit on its way which will depose to the fact that my instructing solicitor, Mr Sayer, has spoken to the
solicitor for the defendant in Sydney, and the solicitor for the defendant has indicated that the
defendant has no objection to the action being
dismissed. If it is acceptable to Your Honour, I
can hand up the facsimile copy of the form of draft
order and, on an undertaking to file an affidavit such as I have mentioned, invite Your Honour - - -

HIS HONOUR:  Yes. Is the consent that is forthcoming from

Sydney one which is conclusive of the matter so far

as the costs of the defendant are concerned?

MR MORRIS:  I understand that to be the case, yes,

Your Honour.

HIS HONOUR:  Yes.

MR MORRIS:	That the defendant does not seek to be heard in relation to costs.	I have not in fact, myself,
seen the affidavit.
HIS HONOUR:	Yes, I see.	I am loath to make an order

without satisfying myself about that for obvious

reasons in the absence of the defendant, and I

think that although it may be inconvenient, it

would be necessary for me to adjourn this further

for that purpose.

MR MORRIS:	I understand that, Your Honour.
HIS HONOUR:	Perhaps what would be most convenient would be

if I were to stand it over till tomorrow morning, and then, assuming that the defendant's solicitor

accepts that the matter may be dismissed without an

order for costs in his favour, there may be some

indication that comes direct from him to the Court
in that behalf, and then tomorrow morning I can

make an order by consent without any difficulty.

MR MORRIS:  I understand that the affidavit would have a

letter from the defendant's solicitor exhibited to

it covering the matters which Your Honour mentions,

but as I say, I am just - - -

HIS HONOUR:  It seems that there may be some instructions

for you now, Mr Morris.

MR MORRIS:  I am told that they are on their way, but it is

obviously inconvenient, as Your Honour is required

next door.

Skase(2) 1/7/93

HIS HONOUR: Well, I am, but I do no~ expect to be required

there for very long. Is either of you gentlemen

engaged after the conclusion of the case next

pending?

MR McGILL:	No, Your Honour.
HIS HONOUR:	Mr Morris?
MR MORRIS:	No, Your Honour.
HIS HONOUR:	Then, let me adjourn this, say, until quarter

past 2 or thereabouts and I will resume my seat as

soon as I am free of my duties in the Full Court.

MR MORRIS:  We are indebted to Your Honour.

AT 2.04 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.37 PM:

HIS HONOUR:	Yes, Mr Morris.
MR MORRIS:	Thank you, Your Honour.
HIS HONOUR:	We are in and out up like a yo-yo here, are we

not?

MR MORRIS:  We are most indebted to Your Honour, and I have

been asked by my instructing solicitor to convey

his apologies.

HIS HONOUR:	Not at all.
MR MORRIS:

I do now have available an affidavit in each

matter sworn by Paul William Sayer, today, 1 July,

exhibiting, as I mentioned, correspondence from the

defendant's solicitors which I seek leave to file

and read.

HIS HONOUR:	Yes.
MR MORRIS:	It is probably convenient for Your Honour to

look at only one copy because they exhibit

identical correspondence.

HIS HONOUR:	Yes, thank you.
MR MORRIS:	I have to say to Your Honour that of course my

solicitor can do no better than the correspondence

Skase(2) 9 1/7/93

which he has received, and it is in one sense,

slightly ambiguous. You will see that the first

letter from Allen Allen & Hemsley dated 29 June

confirms their understanding that the

Attorney-General is not opposing the plaintiff's

application for costs.

HIS HONOUR:	Yes.
MR MORRIS:	And that a confirmation that no costs would be

sought against the defendant, and then the further

letter of today's date says that their client's

position in relation to this application is that he

has no objection to both matters being dismissed by

the Court, and then in relation to costs refers to the earlier facsimile for our client's position in respect of costs.

HIS HONOUR:	Yes.
MR MORRIS:	In our submission, that material is sufficient to satisfy the Court that the defendant is aware of
this application and does not seek its costs. That
is not said explicity - - -

HIS HONOUR: It is not?

MR MORRIS:  It is not said explicitly that the defendant

abandons any claim for costs.

HIS HONOUR:  No. It seems to me that it is sufficient,

however, for the purpose of my making the order which is sought in the summons. What it leaves

unexpressed, I suppose, is the possibility of the
defendant seeking an order subsequently against

your client.

MR MORRIS:	Yes, Your Honour.
HIS HONOUR:	That seems to be a matter which is, in a sense,

at your risk if there is any risk at all and, in	those circumstances, there does not seem to be any	shutting out of the defendant's position if I were
to make the order dismissing the proceedings on the footing of these letters.

MR MORRIS:  Thank you, Your Honour. Your Honour, I did hand

up earlier facsimile copies of the draft order. Is

it convenient that I hand up a properly engrossed

draft order in each matter?

HIS HONOUR:  Yes, thank you very much. You have seen this,

Mr McGill?

MR McGILL: Yes, Your Honour.

HIS HONOUR:  You are content with it?

Skase(2) 10 1/7/93

MR McGILL:  Yes, Your Honour, in each matter.

HIS HONOUR:  Yes, very well. There will be an order as per

the drafts, initialled by me and placed with the

papers.

MR MORRIS:	Thank you, Your Honour.
HIS HONOUR:	Thank you, gentlemen, we will adjourn.

AT 2.41 PM THE MATTER WAS ADJOURNED SINE DIE

Skase(2) 11 1/7/93