State of New South Wales; State of Western Australia; State of Queensland; State of South Australia v The Commonwealth of Australia

[1989] HCATrans 206

~

~ ';,-·~

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S92 of 1989

B e t w e e n -

STATE OF NEW SOUTH WALES

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Office of the Registry

Perth No P24 of 1989

B e t w e e n -

STATE OF WESTERN AUSTRALIA

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

C3Tl/l/PLC 35 13/9/89

Office of the Registry

Briskne No B28 of 1989

B e t w e e n -

STATE OF QUEENSLAND

Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

Defendant

Office of the Registry

Adelaide No A32 of 1989

B e t w e e n -

STATE OF SOUTH AUSTRALIA

Plaintiff

and

THE COMM:ONWEALTH OF AUSTRALIA

Defendant

Summons for directions

MASON CJ

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 13 SEPTEMBER 1989, AT 9.15 AM

(Continued from 6/9/89)

Copyright in the High Court of Australia

MR K. MASON, QC, Solicitor-General for New South Wales: If

Your Honour pleases, in the first and third and

fourth matter I appear for the plaintiff.

(instructed by the Crown Solicitor for the State

of New South Wales, the Crown Solicitor for the

State of Queensland and the Crown Solicitor for South Australia)

MR D.F. JACKSON, QC:  Your Honour, I appear with my learned

friend, MR M. BRABAZON for the State of Western

Australia in its action. (instructed by the

Crown Solicitor for Western Australia)

MR G.F. GRIFFITH, QC, Solicitor-General for the Comnonwealth:

If Your Honour pleases, I appear with full strength

C3Tl/2/JM 36 13/9/89

again for the defendant in each matter with

my learned friends, MR D.J. ROSE, MR A. ROBERTSON

and MR SJ .. GAGELER.	(instructed by the Australian
Government Solicitor)

HIS HONOUR:	Yes.
MR MASON:	Your Honour, the parties have been able to agree

upon a form of order which if acceptable to

Your Honour will state for the determination of

the Full Court two questions.

HIS HONOUR:  This agreement must have been very lately

forthcoming, Mr Solicitor, on the information

that I received.

MR MASON:	Yes, as the clock moves round to 9.15 - - -
HIS HONOUR:	It is none the less welcome, for all that.
MR MASON:	As the clock moves round to 9.15 it concentrates

the mind wonderfully.

HIS HONOUR: Yes. I suppose that the proposed statement

was a wonderful inducement to agreement.

MR MASON:  That was on the table for some time earlier.

The problem was with other areas.

HIS HONOUR:  You might explain to me what question 1 is

designed to achieve in terms of the last four

lines of the question.

MR MASON:  Yes. It will encompass, as we see it, the

central issue of whether the Commonwealth

Parliament has power to provide for incorporation

under section Sl(xx), but it will also raise that

issue in the specific context of this legislation

because the way the power has been embraced

involves provision for filing what are called activity statements where those who promote a

company will say whether they intend the company	to be in effect a shelf company, or whether they
intend it to comnence trading and financial activities within a limited amount of time.

(Continued on page 38)

C3Tl/3/JM 37 13/9 /89

MR MASON (continuing): There are provisions for a variation

of statement of intent if the shelf company is

purchased by an "active trader" - if I could use

that expression. We would perceive that there

will be, as I say, the general question of Sl(xx)

but in a specific context which may raise a

matter of long-term difficulty to the Commonwealth

or, if it is answered in a particular way, may

raise a problem of drafting.

I can take Your Honour to the section

HIS HONOUR:	Yes, I think you might do so.
MR MASON:	I think if Your Honour perhaps would go to 114

first, the general subject of this Act being the

critical sections, people can incorporate companies.

HIS HONOUR:  Yes.

MR MASON: Section 123 is the operative incorporation section and

then one goes to 153, the commencement of division 6

which is the key di vision which is locked in by the

words "subject to this Act". We are dealing with

companies under division 1, looking at the opening

words of 153(1) and various statements have to be

lodged, particularly 153(l)(e). Then

subsections (2) and (3), I think, are perhaps

sufficient for Your Honour to see why we have

done it this way.

(Continued on page 39)

C3T2/l/DR 38 13/9/89

HIS HONOUR:	Yes.
MR MASON:	Then, subsection (5) is a variation on the theme,

in effect, where there is a shelf company intended to

be sold at an appropriate stage. I think that is

perhaps sufficient to explain the last four lines,

subject to any questions Your Honour may wish to ask.

HIS HONOUR:  Yes. Now, the other question I wanted to ask

you is this: there are quite a large number of

sections involved as to which the Court is asked to

pronounce on validity. Do I take it that each of those

questions will, as it were, raise separate - or each
of those sections will raise separate considerations,

or is it generally thought that most of the sections

will fall within a particular category so that the

arguments will be common?

MR MASON:  Your Honour, I would envisage that there are,

in substance, three groups of sections.

HIS HONOUR:	Yes.
MR MASON:	Section 112 which - Your Honour will see that

sections 112 and 113 have been separated into

questions - - -

HIS HONOUR:	Yes, that is - - -
MR MASON:	- - - that is because they raise slightly

different issues.

HIS HONOUR:	Yes.
MR MASON:	Section 112 is a characterization-type question

which will involve a little bit of an exercise in

history whether that can be reasonably characterized

as a law with reference to trading corportations.

HIS HONOUR:  Yes.

MR MASON:  Section 113 is in part a characterization question, it

partly raises questions of whether the Commonwealth can,

in effect, preclude the operation of State law, perhaps

a feigned section 109 inconsistency question.

HIS HONOUR:	Yes.
MR MASON:	But, as to all the rest, as we would see it, they

raise one central issue, namely, the scope of section 51 1 XX )

with reference to the power to incorporate but raise it

in the context of the specific way the Commonwealth has

sought to do it in this case.

C3T3/l/JH 39 13/9/89

MR MASON (continuing):  Hence, the more detailed question

one, compared to the more general undertaking, though

not strictly so called, in the opening words of the

order.

HIS HONOUR:  Yes. Is there any other comment you wish to make

about the questions before I call on other counsel?

MR MASON:	No, Your Honour.
HIS HONOUR:	Mr Jackson?
MR JACKSON:	I do not wish to add anything, Your Honour.
HIS HONOUR:	You agree with what the Solicitor has said?
MR JACKSON:	Yes, I do, Your Honour.
HIS HONOUR:	Mr Solicitor for the Commonwealth?
MR GRIFFITH:	Your Honour, we do agree with these questions

inasmuch as we propose them and we do agree with mv

learned friend's comment. The effect of question 2

being worded as it is will not decide validity of these
sections for all purposes, Your Honour, but what is

excluded is reliance on the banking power and the

territories power which is not really presently an

active issue between the parties as they are looking
at the matter so that it does seem to be an advantageous

form of expression which will really answer the questions

primarily in dispute between the parties.

Question 1, Your Honour, we agree with my

learned friend, the Solicitor-General for New South

Wales' comments on it and say that, so worded, it

excludes reliance upon the banking power which would

seem to be unnecessary at this level of examination and we feel that there is, in essence, one question there, Your Honour, but it does involve considering the system of activity statements and provisions for

of the one aspect of regulating incorporation. shelf companies and change of control but it is part

HIS HONOUR:  Yes. You might clarify for me, Mr Solicitor,

would you read out to me the additional words that

are added in handwriting at the end of question l?

MR GRIFFITH:

Whether or not the statement also states

as mentioned in section 153(2)?

HIS HONOUR:	Yes.
MR GRIFFITH:	That may well be a redundant suffix but, for the

abundance of caution, we have added it, Your Honour.

HIS HONOUR:  Yes. It was the word "states" that I had in mind

but	that is what the parties have agreed upon, the
use	of the word "States", "also states".

C3T4/1/SH 40 13/9/89

MR GRIFFITH:  Of course, Your Honour, that is subject to

Your Honour's views.

HIS HONOUR: Yes, I think, although at first sight it looks

a little odd, I think it is consistent with the

provisions of the section and reflects - - -

MR GRIFFITH: It is the language of the section .....

Your Honour.

HIS HONOUR: 

And how long do the parties estimate that the

hearing will take, if these questions go to the
Full Court?

MR GRIFFITH: 

Your Honour, perhaps my learned friends could

indicate their views because they have

the carriage~ of the - - -

MR MASON:	We are certainly confident to finish within the
four days.  I would think it could finish a little
under that time, but we can confidently tell
Your Honour it would finish within that period.
HIS HONOUR:	And I suppose,Mr Solicitor for the Commonwealth,

your estimate is very much dependent on how long

the plaintiffs think their arguments will take?

HR GRIFFITH:  Your Honour, we can say we will not go very long.

MR MASON: I can assure Your Honour that in the presentation

of the argument there will be in essence one

person solely presenting the argument on one issue,

perhaps with no supplementation at all by the others

and we are working jointly on that single presentation.

HIS HONOUR:	And exchange of written argument in advance?
MR MASON:	That is a bit more of a problem with all of the

strike and the difficulty of us getting together.

The plaintiffs would submit that we have gone as far as we need go and should go in relation to

prior exchange of submissions. There is now pretty well a single issue with fairly obvious	scope and just the difficulties of the four sets
of lawyers getting together, particularly since
they are presenting, in substance,one submission,
is such that we would ask the Court not to
vary the usual practise that there be exchange of submissions - - -

HIS HONOUR:  Yes, I can understand the difficulties that

have been occasioned by transport problems, but

it may be of advantage to the Court if the

plaintiffs were able to lodge with the Court an

outline of their submissions, so that the Court could

give consideration before oral argument commences

to the nature of the attack that the plaintiffs

are going to launch.

C3T5/l/CM 41 13/9/89

MR MASON:	If the plaintiffs would have the leave to do so and if
the Court would accept the plaintiffs' assurance
that if that is practicable and feasible it will
be done, I would prefer it not to go to a higher
level than that unless the Court so directed.
HIS HONOUR:	In other words, you would oppose any direction that

the plaintiffs lodge written argument in advance

of the hearing.

MR MASON:	At the bottom line, yes, but I would prefer that
such direction not be made, yes, Your Honour.
HIS HONOUR:	It may actually be to your advantage, Mr Solicitor,

to lodge - - -

MR MASON:	I appreciate that, Your Honour.
HIS HONOUR:	- - - a written outline in advance of the oral hearing.
MR MASON:	Yes, well, Your Honour, I merely state that it is
foreseen there could be some difficulty,particularly
if it is seen as a final outline. What is proposed
to be produced will be something more than the usual
three-page summation of outline, but a detailed written submission, but I do accept that there is an advantage to the plaintiffs to have that in a
summarized form with the Court earlier; it is just
I have difficulty in being able to assure the Court
when it would be acceptable to be done. If the
Court makes a direction, obviously it will be done.

HIS HONOUR:  Yes. Do you wish to say anything about that,

Mr Jackson?

MR JACKSON: Well, Your Honour, our position is the same. It is

a little more difficult, in fact, because the

Solicitor-General for Western Australia physically

cannot get here and, because of time difference, I

have more difficulty in speaking to him than others.

Your Honour, we would endeavour to have an outline

of submissions to the Court and to our learned

friends before the hearing, but I suspect the reality

of it is that that would not be settled until
after the weekend immediately preceding the hearing.

I do not recall, Your Honour, whether the hearing is due to start on the Tuesday or the Wednesday of

that week.

HIS HONOUR:  Yes, but it might be of advantage to the members of

the Court to have an outline of submissions, say, on

the Monday morning in advance of the hearing.

MR JACKSON:  Your Honour, that is what I meant. I did not mean

that it would be a minute or two beforehand, but I

was simply seeking to convey that it might not be

possible to do it until the weekend beforehand.

C3T6/l/FK	42	13/9/89
HIS HONOUR:	Yes.	Mr Solicitor.
MR GRIFFITH:	Your Honour, we have made	great progress because

now we have really narrowed things down to the basic

issue that we always knew was there and these two

other issues which were more or less discrete on

section 112 and section 113, and they are issues

which have always been there too. Your Honour, the

plaintiff's summonses of 11 August did propose,

in paragraph 5, that the plaintiff serve draft

outlines of submissions by 15 September - that is this

Friday - and that the defendant serve draft outline

by 22 September. Your Honour contemplated at the

directions hearing, 17 August, that you would make
a direction that there be written submissions and

that would seem to be confirmed, Your Honour, at

the directions hearing last Wednesday and, indeed,

by our subsequent letter of 7 September where we

propose that the States should file by the 18th,

and we by the 25th.

Now, Your Honours, today is only 13 September,

so we have three weeks less a day to the hearing date.

We would suppose, Your Honour, there should be

little difficulty in the plaintiffs serving at least

a draft outline by the 18th, or, if you like, by

the date they propose in their affidavit of a month

ago that we serve by 22 September, and we have no

objection, Your Honour, to the plaintiffs altering

their approach from any draft outline, but we believe,

Your Honour, that the Court would be assisted,

and that the conduct of the case would be assisted,

if there was at least an exchange of draft outlines.

We are quite prepared to meet any date by way of

exchange and feel, Your Honour, that it would be of
assistance to the Court for it to be 10 days or so

before the hearing, rather than on the Monday before the Tuesday when we might still be driving along the ro~d seeking to get here, if the plane strike is still

going.

Your Honour, it may well be that one can predict

the line of argument, but we do submit, Your Honour,

the reasons which led to the plaintiff suggesting that

there be a draft outline remain as appropriate and

that what with the fax machine, Your Honour, the fact

that the argument has been divided up, as my learned

friend indicates so that in substance one party is
carrying issue one and two other parties carrying the

two separate sections in question 2 mean that there

should not be much difficulty in that party with the

carriage making a draft, faxing it around, getting

comments, faxing it around another four or five times

and having it ready within a week.

C3T7/l/HS 43 13/9/89

HIS HONOUR:  Yes, but, Mr Solicitor, when I initially broached

this question of the exchange of argument, there was no

agreement between the parties that the issues were

going to be confined to incorporation.

MR GRIFFITH:	Of course not.
HIS HONOUR:	Now that the issues are confined to

incorporation, it seems to me that they have been

substantially narrowed and I would have thought that

the arguments are fairly predictable having regard to

the difficulties that have arisen in the meantime,

particularly the difficulties that may affect the
plaintiffs. It does not seem to me reasonable that I

should require the plaintiffs to file and serve an

outline of argument except to the extent that I do think

that they should file and serve an outline of their

arguments on or before 11 o'clock on the day preceding

the commencement of the hearing.

MR GRIFFITH:	If Your Honour pleases.
HIS HONOUR:	Very well, I shall make an order in the terms

of the document handed up to me by the plaintiffs which

I shall initial and place with the papers. In addition, I

order' tba:t:-1 tbs. plain tiffs do file and serve an out 1 in e o f

their argument on or before 11 am on the day preceding

the commencement of the hearing before the Full Court

in the next sittings.

MR MASON:  And that order, I take it, is made in each of

the four matters.

HIS HONOUR:  It is made in each of the four cases, Mr Solicitor.

The Court will now adjourn.

AT 9.34 AM THE MATTER WAS ADJOURNED SINE DIE

C3T8/l/JH 44 13/9/89