State of Victoria v Sutton
[1997] HCATrans 314
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Melbourne No M5 of 1997
B e t w e e n -
THE STATE OF VICTORIA
First Appellant
THE HONOURABLE STEPHEN GEORGE ALLEY
Second Appellant
and
JOHN DAVID SUTTON
First Respondent
CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION
Second Respondent
GAUDRON J
McHUGH J
GUMMOW J
KIRBY J
HAYNE J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON THURSDAY, 6 NOVEMBER 1997, AT 10.18 AM
Copyright in the High Court of Australia
MR I.G. SUTHERLAND, QC: If the Court pleases, I appear with MR L. KAUFMAN on behalf of the appellants in this appeal. (instructed by the Victorian Government Solicitor)
MR S.C. ROTHMAN, SC: If the Court pleases, I appear with my learned friend, MR H. BORENSTEIN, for the first and second respondents. (instructed by R.L. Whyburn & Co)
GAUDRON J: Yes, Mr Sutherland.
MR SUTHERLAND: Thank you, your Honour. Before I commence, my learned friend, Mr Rothman, has asked me to raise one matter, I suspect of little consequence, relating to the fact that his Honour Justice Hayne was presiding, in an earlier life, in respect to another proceeding involving this matter. There was, as appears at page 632 of the appeal book, a proceeding commenced in the Supreme Court of Victoria by various members of the Builders Labourer’s Federation, seeking orders for the winding up and dissolution of the association.
As I recall the position, his Honour merely heard, whilst judge sitting in the practice court, various matters which resulted in the making of consent orders staying the order. I think the position that my learned friend, Mr Rothman, and I wish to make clear to the Court at the outset is neither the State of Victoria - and I am instructed the Custodian - nor my learned friend’s clients raise any objection in relation to that matter, and nor probably could they, but we thought it appropriate to at least mention the matter to the Court.
GAUDRON J: Yes, thank you. I suppose before you commence, Mr Sutherland, I should note that the Court has received an amended notice of appeal. You do not need leave to file it, do you?
MR SUTHERLAND: As I understood, your Honour, we already had the leave from his Honour the Chief Justice. Your Honours, we have prepared, and we had filed with the Registry, in addition to the written submissions that his Honour the Chief Justice ‑ ‑ ‑
GAUDRON J: Could I interrupt you. The Custodian is not a party to the appeal any more.
MR SUTHERLAND: No, he is not, your Honour.
GAUDRON J: No. The other respondents who appeared before the Chief Justice of the Industrial Relations Court, are they parties to the appeal?
MR SUTHERLAND: No, they are not, your Honour.
GAUDRON J: How can they not be parties? I can understand how they do not appear, but how can they not be parties?
MR SUTHERLAND: The appeal was commenced, naming, as I recall, all respondents as respondents to the appeal, and, as I also recall, now that I think about the matter, all parties were, in fact, served with the appeal papers at the time the appeal was commenced. So that, all parties to the proceeding in the Industrial Relations Court are on notice of the appeal.
GAUDRON J: They must also be parties to it, surely. One matter that concerns me is if you do not appear for the Custodian, what is the point of our making a pronouncement about his rights or otherwise in this proceeding?
MR SUTHERLAND: The Custodian will, your Honour, abide by whatever order the Court makes in respect of this matter.
KIRBY J: But that is not the point. How can you say that if you do not appear for him? He has to say that for himself.
MR SUTHERLAND: Yes, your Honour. It is my understanding of my instructions, your Honour, that that is the position.
KIRBY J: That is why you normally have people as parties, so they can submit and then go their ways.
MR SUTHERLAND: Yes, your Honour. It is correct to say, your Honour, that the Custodian is not a party to this appeal and it is correct also to say that the orders that are sought affect the Custodian. But what the State of Victoria seeks to do, by way of this appeal, is to uphold the effect of the State legislation and no more than that. If, as a consequence of that, it results in the Custodian having possession, custody and control of the assets, then that is the position, but it is not necessary, in our submission, for the Custodian to be necessarily a party to this appeal.
GAUDRON J: Well, he was a party to the proceedings at first instance.
MR SUTHERLAND: He was, your Honour.
GAUDRON J: He was a party to the appeal in the Full Federal Court, was he?
MR SUTHERLAND: He was, your Honour.
GAUDRON J: Well, at the very least, he must be a respondent to this appeal, must he not?
KIRBY J: Do you think you could get instructions during the day? Do you seek leave to amend the record to add him and to enter a submitting appearance?
MR SUTHERLAND: Yes, your Honour.
KIRBY J: If that be the practical solution to the problem?
MR SUTHERLAND: If that be necessary that, I am confident, your Honour, could be done and done in the course of today.
GUMMOW J: That is the present Custodian.
MR SUTHERLAND: The present Custodian, yes.
McHUGH J: After all, he is the subject of orders, is he not?
MR SUTHERLAND: He is, your Honour. The orders were that he transfer - take steps to transfer the assets of the ‑ ‑ ‑
GUMMOW J: Another problem too, of course, no order ever seems to have been taken out consequent upon Chief Justice Wilcox’s judgment. He indicated some orders were being made but no formal order was ever taken out, was it?
MR SUTHERLAND: Well, your Honour, what your Honour says catches me by surprise. I would have assumed that that was the case because there had been applications to stay the order and other consequential steps taken founded upon the existence of the order ‑ ‑ ‑
GUMMOW J: Justice Wilcox said:
It should be sufficient to make a declaration of entitlement -
whatever that means -
and a general order-
whatever that means -
requiring Dr Sharp, within 60 days or such further time as a Judge may permit, to do everything necessary to vest in CFMEU the funds and property presently under his control.
MR SUTHERLAND: Yes.
McHUGH J: That is an order of the court. How can you move to set aside that order? He has to do it himself, does he not? He is the party, he is the person that is bound by it.
MR SUTHERLAND: It is nonetheless, your Honour, founded upon the ‑ ‑ ‑
McHUGH J: It does not matter whether it is now to be found to be wrong in law or not. The fact is that an order of a superior court is binding until it is set aside.
MR SUTHERLAND: I think, your Honours, it may be necessary for me to, in these circumstances, perhaps seek some instructions from the Custodian in order to formalise the Court record.
GUMMOW J: Well you probably should call the appellant.
McHUGH J: Exactly.
GAUDRON J: You would have to substitute - there would be a number of procedural steps which would have to be taken. He would have to be substituted as a party to the proceedings in place of Dr Sharp and there would have to be a grant of special leave to him.
MR SUTHERLAND: Grant of leave, your Honour, yes.
GAUDRON J: Grant of leave, yes, well I do not think there would be any difficulty about that.
KIRBY J: He would be a party appellant because, as Justice McHugh points out, he is bound and has an interest.
MR SUTHERLAND: Yes.
KIRBY J: But you are in cahoots with him, I think, are you not?
MR SUTHERLAND: I do not think I would be prepared to concede that, your Honour, but there is a certain commonality of interest in the positions adopted by the Custodian and the State of Victoria and have been throughout the course of this litigation up until this moment.
GUMMOW J: You have probably got enough interest in the declaration anyway to make yourselves an appellant, I suppose, but not the only appellant because of the injunction situation.
MR SUTHERLAND: I am sorry, your Honour.
GUMMOW J: Because of the nature of the injunctive order against the Custodian.
MR SUTHERLAND: Yes.
GAUDRON J: How long do you think you would need to obtain instructions?
MR SUTHERLAND: It is difficult, your Honour. I suspect I would need to at least make a communication with the Custodian in Melbourne through my instructors, and I apprehend that might take at least 15 or 20 minutes.
GAUDRON J: Would it be possible for you to have your instructors attempt to make that call while you make your submissions?
MR SUTHERLAND: Certainly, your Honour.
GAUDRON J: Perhaps then you could let us know the result of it.
MR SUTHERLAND: Yes.
GAUDRON J: Yes, thank you.
MR SUTHERLAND: If the Court pleases, we prepared, and we had filed, a book of extrinsic materials and can I inquire, your Honour, whether that has found its way to your Honours?
GAUDRON J: Yes, it has.
MR SUTHERLAND: We have also, in response to the Chief Justice’s direction, prepared written submissions which we have also filed, your Honour, and may we take those as having been received and read by the Court?
GAUDRON J: Yes, certainly.
MR SUTHERLAND: The Court will apprehend from the written submissions that have been filed that the grounds of appeal in this case, or this matter, substantially raise a question of construction or the proper construction of clause 2 of the Order in Council made on 13 October 1987, which Order in Council, your Honours, appears at tab 4 of the book of extrinsic materials that we have prepared. The appellant and the Custodian himself, both at first instance and on appeal to the Full Court of the Industrial Relations Court of Australia, propounded the construction that an unauthorised disposition of ‑ ‑ ‑
KIRBY J: You said tab 4. I am sorry, but tab 4 has a case of Byrne. There must be another book of ‑ ‑ ‑
MR SUTHERLAND: I think your Honour Justice Kirby might be looking at the respondents’ book of materials.
KIRBY J: I am sorry, yes. Yes, that came in this morning. I apologise.
MR SUTHERLAND: Thank you. The position adopted below, by both the Custodian and the State of Victoria, was to propound the view that an unauthorised disposition of property was void, although the words in the second sentence of clause 2, “at the option of the Custodian” empowered the Custodian to treat an otherwise unauthorised disposition as a valid disposition at his election. It is true that either construction propounded by either the respondents or the appellant gives considerable power to the Custodian, but it is submitted that the construction we contend for is more consonant with the scope and purpose of the legislation and the Orders in Council made under it.
GUMMOW J: Well, the legislation - section 7(3), that is in tab 1 - would have the result that the first sentence of 2, “No person shall” would be an offence, a criminal offence - the first sentence, is that right?
MR SUTHERLAND: I am sorry, where is your Honour referring?
GUMMOW J: Section 7(3):
A person shall not contravene an Order - - -
MR SUTHERLAND: Yes, it would result in that consequence, your Honour.
GUMMOW J: So, the first sentence in clause 2 is directed to a criminal offence, if you like.
MR SUTHERLAND: Yes.
GUMMOW J: Does that throw any light on the significance of the second sentence?
MR SUTHERLAND: We say it does, your Honour, because it amounts to illegal conduct to make a disposition without the consent of the Custodian, which we say, on the approach propounded or suggested by his Honour, Justice Mason, in the Yango Case to which we have referred the Court, results in a prima facie position of the disposition being void. One then goes from that position, the prima facie position of a void disposition, to look to see whether there is any manifest contrary intention in the legislation to override that and we submit, your Honour, that there is nothing in clause 2, or in the legislation generally, that would point to a manifest contrary intention as referred to by Justice Mason in Yango such as would displace the ordinary rule that such an illegal disposition would be otherwise void.
We also point, your Honours, to the use of the word in clause 2 that the disposition “shall be void”. It does not say “shall be voidable at the option of the Custodian.” It uses the word “void” signifying an intent that any such disposition would be null and void ab initio.
KIRBY J: Yes, but the option of the Custodian by inference is a distinct, clear event, and it is an event that the Order in Council has contemplated, and it is an event to which criminal consequences would attach.
MR SUTHERLAND: Yes, your Honour.
KIRBY J: One would not usually expect that criminal consequences would attach to a contingent event that could be undone, and therefore the bias of construction would be towards attaching the criminal consequences to an event which was clear, namely, the exercise of option by the Custodian. But that at least is the argument that you have to meet.
MR SUTHERLAND: Yes, your Honour.
KIRBY J: It seems to me that when one looks at 7(3) it is a reason for not attaching criminal consequences to something which is not a clear and legal step, which an option of the Custodian would presumably be.
MR SUTHERLAND: Yes. That is certainly a point that leans in favour of the alternative construction that my learned friend contends for, your Honour.
McHUGH J: But, does the second sentence in clause 2 deal with the issue of criminal liability, or is it not concerned with the civil consequences of a transfer without the prior written consent of the Custodian? The first sentence is an act done in breach of the first sentence is an offence under section 7(3), is it not?
MR SUTHERLAND: An unauthorised disposition is, prima facie, an offence under the Act.
McHUGH J: Arguably, whatever the Custodian later does, does not affect that criminal offence. If it is made without written consent, is it your submission that there is then an offence committed, irrespective of even though the Custodian later says ‑ ‑ ‑
MR SUTHERLAND: May later validate it, your Honour, yes. The offence is in the unauthorised disposition of the property or funds of the BLF. The offence is committed by the unauthorised disposition of the funds or property of the BLF, and is void as a disposition subject to a right vested in the Custodian upon learning of the making of the disposition, to treat it as a valid disposition if so disposed. The offence created by section 7(4) attaches to the conduct proscribed by the first sentence of clause 2.
KIRBY J: I think Justice McHugh’s distinction between, arguably, the criminal and the civil consequence is quite a helpful one because the first sentence is in terms which would be apt for a criminal offence, “No person shall”; then, recognising that that can have lots of consequences for third parties who are completely innocent, the order has gone on to make provision for what happens down the track.
MR SUTHERLAND: Yes.
McHUGH J: And if the second sentence had not been there, there would have been a strong argument, perhaps both ways, on the Yango principles, that it was void or it was not. But, the second sentence deals with that consequence and it is certainly strangely worded. Does it not seem to indicate that it is only void when the Custodian makes an election, and that until that moment it is valid? Sir Owen Dixon once complained about the use of the word “such”, and it is rather inapt in a context, “Any such payment”, but I suppose it means any payment made without the prior written consent.
MR SUTHERLAND: Or “disposition”.
McHUGH J: Or:
disposition, encumbrance or charge shall be void, at the option of the Custodian.
But it seems to take its stand on there having been a disposition without written consent, and then gives the Custodian an option to say whether or not it shall be void but it has - he does something that has no consequences at all. It is not voidable.
MR SUTHERLAND: We would submit that what the second sentence does, your Honour, is to treat any disposition, effected with the consent of the Custodian, as a void disposition, as one that has no effect unless, and until, the Custodian learns of it and treats it as a valid disposition. Whether that is properly characterised as the exercise of an option, or an election, is probably - - -
GUMMOW J: The trouble is it says, “shall be void” not “shall be valid”:
at the option of the Custodian.
That is your problem.
MR SUTHERLAND: That is the alternative construction, your Honour, we accept that. But, in our submission, your Honour, the comma, the pause after the use of the word “void” in the sentence, and then the words “at the option of the Custodian”, convey the meaning that it is a void disposition, if it is effected without the consent of the Custodian, but an option or a choice or a right exists in the Custodian to treat it otherwise.
GUMMOW J: Are there any temporal limitations on the exercise of this election by the Custodian? If it was a contract, one would readily introduce notions of reasonable time and so on. Is there any space for that here, or is it unlimited?
MR SUTHERLAND: It is, on its face, an unlimited right, your Honour. It is in the nature of a statutory right. We had some difficulties in analysing or reading the cases dealing with elections.
GUMMOW J: They are based out of contracts.
MR SUTHERLAND: In contract, your Honour, and then applying the principles that are enunciated in those cases and particularly in Sargent’s Case to an election that arises outside the context of a contract. In a contract case where you have a contract vitiating conduct and then a right in a party to elect between affirming or voiding the contract, one can see clearly two inconsistent rights in the context in which an election might properly be made.
Here, where the right exists, the right of election, the right or the option exists in a third party removed from the contract to avoid the disposition or to validate it, depending on which construction you adopt, in one view, it is difficult to characterise it in the same way as an election arising under a contract. It is merely a right vested by statute to elect as to one course of action. If one adopts the construction we contend for and say it is void, the right he has is not to choose between two inconsistent courses of action, it is already void. What he can elect to do is to choose to validate it, and that is the only course of conduct or action that is open to him.
KIRBY J: But an argument against that is, first of all, as Justice Gummow pointed out, that says void not valid, therefore, prima facie, it is valid until voided and secondly, you have to think of third party rights that are affected by this and one would have expected that innocent third parties who are affected not by contract but by a holder in council of legal effect, that their rights would be clear and that, arguably, is the intention of having an affirmative option of the Custodian that will make them not voidable but void. That really is an argument against the construction you urge.
MR SUTHERLAND: It may be said, your Honour, that the prescribing of the conduct as an offence is really designed to illustrate ‑ ‑ ‑
KIRBY J: I am not sure about that. I think Justice McHugh’s point is an answer to that, that it is doing two things. It is, first of all, making the offence of paying and that offence may have been committed.
MR SUTHERLAND: Yes.
KIRBY J: But then it is providing for the consequences recognising that innocent third parties will be affected and it is saying, in those consequences, you need the positive exercise of option by the Custodian.
HAYNE J: May there be more tender regard for the position of innocent third parties given that the principal thrust of the order is that the Custodian is to gather into his custody, at once, everything that is funds and property of the BLF, see paragraphs 1 and 7 of the order.
MR SUTHERLAND: Yes.
HAYNE J: Thus you are dealing only with property that he has not gathered into his possession according to his duty, and likely therefore dealing only with a rump of property that is dealt with with a third party who is innocent.
MR SUTHERLAND: Yes. There is no doubt, your Honour, in our submission, that the Orders in Council were designed to give the Custodian very broad powers of control and possession of the assets.
HAYNE J: Not just powers, the obligation to go and do it.
MR SUTHERLAND: And the obligation, as your Honour points out, to collect and get in those assets in much the same way as a receiver might and then to protect those assets in accordance with the obligations reposed in him, in effect, as a trustee of them.
KIRBY J: I take the point that Justice Hayne made, but may that not be ‑ that does not really come to grips with truly innocent third parties. The vendor may be entirely in the wrong for not having conformed to the requirements of the Custodian but people can acquire property from such persons completely innocently and that, at least, is arguably what the second paragraph of 2 is designed to deal with.
MR SUTHERLAND: I think all that can be said, your Honour, against that is that it would appear that the scheme of the Orders in Council is to entrust the Custodian with control and possession of as much of the funds and property of the BLF as he is able to obtain. It does not preclude the possibility, as his Honour points out, that there may be a disposition of the funds or the property by a person to an innocent third party.
I think I would have to accept that but the prescription of the conduct as an offence, in our submission, is indicative that the legislature intended to treat any such disposition seriously, prescribing it as void irrespective of the consequences it might have on innocent third parties in these circumstances, given that their likely prejudice is likely to be minimised by the degree of control that the Custodian otherwise has over the assets.
McHUGH J: Can I just ask you on a point that puzzles me? This case seems to have been conducted on a fairly narrow basis. Why is not the proper approach to the case to say that, having regard to the legislation and the orders, that no member of the association had any power to enter into the agreement of 30 March 1994? Where do the people who signed this agreement on behalf of BLF get their power to do anything - to enter into such an agreement?
MR SUTHERLAND: This was not a part of the case that the State of Victoria or the Custodian partook of, your Honour, but the issue of the validity of the agreement, that is the amalgamation agreement made between the BLF, on the one hand, and the CFMEU, on the other, was certainly the subject of dispute in the proceeding by the persons who claimed to be BLF members who were parties to the proceeding. There were some 79 individuals who claimed that they were members of the BLF and who were parties to the proceeding, some 74 of which were represented by legal representatives at the hearing. Submissions were put to the court as to the validity of the agreement itself, essentially going to questions as to whether or not the changes in the rules of the BLF and the changes in the rules of the CFMEU to facilitate the making of the agreement and to empower the Federal Council to the BLF to enter into the agreement were void. Those submissions were overruled, both at first instance and on appeal.
GUMMOW J: What is the declaration of entitlement
Chief Justice Wilcox is talking about? What does that mean? Is that related to what Justice McHugh was just putting to you?
MR SUTHERLAND: Presumably, it relates, your Honour, to the entitlement of the CFMEU to the beneficial interest in - and the legal interest - in the BLF funds or property effected by the disposition.
GUMMOW J: Implicit in that is the capacity of the disponer to make the disposition.
MR SUTHERLAND: Yes, your Honour. His Honour the Chief Justice, at first instance, found that the Federal Council of the BLF which entered into the agreement on behalf of the BLF, the unincorporated association, was empowered by the rules of the BLF to bind the membership of the BLF to enter into such an agreement.
McHUGH J: Yes, but the point that strikes my mind is, having regard to the legislation, whether or not they did have such power, irrespective of what they said in their rules. It does not seem to be a point volunteered.
GAUDRON J: The only reason they would not have power is paragraph 2, or clause 2 of the Order in Council, is that correct?
MR SUTHERLAND: Yes, your Honour.
McHUGH J: Well, I am not sure about that. I mean, clauses 1 and 7 requiring “Possession, custody and control of funds” to be given to the Custodian. That seems to - - -
KIRBY J: You have not run this point. It was alive at one point, and you have not argued this, either on the special leave application or in your notice of appeal to this Court.
MR SUTHERLAND: We did not argue it below either, your Honour. When I say “we”, the State of Victoria or the Custodian did not argue it at first instance or on appeal.
GAUDRON J: Well, that Order in Council left legal title and beneficial interest with the BLF, did it not? There is one under tab 4.
MR SUTHERLAND: Upon deregistration of the BLF as an organisation, by operation of section 143(6) of the Conciliation and Arbitration Act, which was preserved in operation, the beneficial interest in the funds or property of the BLF passed to the members of the association.
GUMMOW J: That was debated in Dobinson v Crabb 170 CLR, was it not?
MR SUTHERLAND: That is right, your Honour.
GAUDRON J: And the legal title as well?
MR SUTHERLAND: The legal title to the real estate, your Honour, was vested in trustees, who were the registered proprietors of the land, on behalf of the membership of the BLF, and the funds - the money - was vested both in legal title and beneficial title in the BLF itself.
GAUDRON J: And this Order in Council did not affect either the legal title or the beneficial title, it affected only the possession, custody and control.
MR SUTHERLAND: Yes, and prohibited any disposition, beneficial or legal, of the property, we would submit. We say that the disposition in this case was a disposition of the beneficial interest in the funds or property of the BLF. Presumably, to answer Justice Gummow’s question, the declaration of right was directed to the ownership of the BLF funds or property which was the subject of that disposition.
KIRBY J: I suppose Parliament could have done this in a different way and simply enacted that the property shall be vested in a Custodian.
MR SUTHERLAND: Yes, it could have done.
KIRBY J: Instead of doing that, it did it in this rather complicated way.
MR SUTHERLAND: Yes. And the Custodian did, your Honour, vest in himself not the real estate but the funds which were then deposited in various deposits and bank accounts in the name of the Custodian. There is detail of that in the appeal books as to where those particular funds were deposited.
GUMMOW J: How did all that happen?
GAUDRON J: There was a subsequent Order in Council, was there not?
MR SUTHERLAND: There was a subsequent Order in Council ‑ ‑ ‑
GAUDRON J: I think perhaps you had better take us to it, because there may be - that may impinge on the terms of the declaration that was in fact made by the Chief Justice of the Industrial Relations Court.
MR SUTHERLAND: If your Honour goes to tab 5, clause 2 of the Order in Council made on the - or supplementary Order in Council made on 10 November 1987, empowered the Custodian to “vest in himself as Custodian any funds or property of BLF.” The Act, the BLF De-recognition Act, was amended with effect from 13 October 1987 to empower the making of an Order in Council vesting the property in the Custodian.
GAUDRON J: That was vesting only the legal title.
MR SUTHERLAND: Vesting the title ‑ ‑ ‑
GAUDRON J: Yes, but the beneficial title would remain with the members, would it not, by reason of the provision of the Conciliation and Arbitration Act.
MR SUTHERLAND: Yes, with the members of the association, your Honour. The members of the association, through their federal council and the through the constitution and rules of the association, the former organisation then agreed to effect an amalgamation and a transfer of the property to the CFMEU.
GAUDRON J: It would be of the beneficial interest ‑ ‑ ‑
MR SUTHERLAND: Of the beneficial interest.
GUMMOW J: I mean, this Order in Council, the second Order in Council of November 1987, could not change beneficial ownership, could it, without being inconsistent with 143(6) of the federal Act?
MR SUTHERLAND: Yes, your Honour, I think that is probably right. I think that is right, your Honour.
GUMMOW J: Yes, thank you.
MR SUTHERLAND: Your Honour, in terms of the construction void versus voidable argument in terms of the proper construction of clause 2 of the October Order in Council, I do not know that beyond what we have submitted ‑ ‑ ‑
GUMMOW J: I am still puzzled. I do not understand. So the property the subject of the attacked disposition was - what was it and in whose name was it at the time of the purported disposition?
MR SUTHERLAND: At the time of the purported disposition?
GUMMOW J: Yes.
MR SUTHERLAND: It was property ‑ ‑ ‑
GUMMOW J: What was it, was it all cash?
MR SUTHERLAND: I am sorry, your Honour. It was real estate situated in Victoria, and it was ‑ ‑ ‑
GAUDRON J: Held in whose name? In the trustees’?
MR SUTHERLAND: Registered in the names of individuals as trustees for the membership.
GUMMOW J: I see; but it had not been vested in the Custodian? The land had not been vested in ‑ ‑ ‑
MR SUTHERLAND: The Custodian, upon his appointment as Custodian, shortly after 13 October 1987, caused to be lodged Queen’s caveats on the titles of those properties precluding any transfer of those properties taking place without his consent.
GUMMOW J: Yes, but the registered title is still in the name of these trustees?
MR SUTHERLAND: There was no change to the registered title.
GUMMOW J: Are those trustees parties to this disposition in respect of the land, being the registered proprietors?
MR SUTHERLAND: They were all members of the association, and by reason of that ‑ ‑ ‑
GAUDRON J: Not parties to the proceedings as trustees?
KIRBY J: Maybe you will have to go out and get your solicitors to ring them all up.
HAYNE J: I wish you joy of that task.
GUMMOW J: This is something of a procedural monster, this litigation which need not have been. They were not separately parties?
MR SUTHERLAND: I am not sure, your Honour, whether or not the 79 individual members of the BLF comprise the trustees of the land.
GUMMOW J: Among the 79?
MR SUTHERLAND: Whether they were among the 79. My learned friend, Mr Rothman, is uttering the words, “They were not”.
KIRBY J: They were not the trustees; they were cestui que trust, were they not? They were the beneficiaries. Were there particular trustees, or ‑ ‑ ‑?
MR SUTHERLAND: The title to the property was registered in their names as trustees.
KIRBY J: All of them? All 79?
MR SUTHERLAND: No, I am sorry, your Honour. I think there were about three individuals who were the trustees of the property, of the real estate.
KIRBY J: That is what I understood. Why did not Dr Sharp, a most diligent and experienced officer, perform his duty and forthwith take possession, custody and control of the funds and property in accordance with the Order in Council?
MR SUTHERLAND: Why did he not, your Honour?
KIRBY J: Why did he not, of this real estate? Was it because it was not the property of the BLF? Was that the point in contention?
MR SUTHERLAND: No, your Honour.
KIRBY J: I was thinking of clause 7.
MR SUTHERLAND: He took control of the real estate.
GUMMOW J: Yes, but he did vest the title.
MR SUTHERLAND: He did vest the title, your Honours but ‑ ‑ ‑
GUMMOW J: Under clause 2 of the order of 10 November 1987.
MR SUTHERLAND: We would submit he was not obliged to vest.
GUMMOW J: He could have but he did not.
MR SUTHERLAND: He could have but he chose not to, but he took control ‑ ‑ ‑
GUMMOW J: But this litigation seems to affect the title of the trustees. There is a problem if there is to declarations of entitlement.
GAUDRON J: Is there other property involved?
GUMMOW J: Personal property.
GAUDRON J: May we assume that the trustees have, in fact, done something to acknowledge at least that they now hold it for the CFMEU. We can assume that, can we? Now, is there other property that was held by the Custodian?
MR SUTHERLAND: The only other property, other than the real estate, was moneys on deposit. Personal property.
GAUDRON J: Yes. Well, where was that? Was that held in the name of Dr Sharp?
MR SUTHERLAND: That was vested in the name of Dr Sharp, who then invested the funds in his name, in his capacity as Custodian.
GUMMOW J: In reliance on paragraph 2 of the Order ‑ ‑ ‑
MR SUTHERLAND: In reliance upon paragraph - of the supplementary order, your Honour.
KIRBY J: So, this battle is really about the real estate, then, is it?
MR SUTHERLAND: And the funds, your Honour.
KIRBY J: Dr Sharp gathered in all the personalty, but the real estate he left, subject to the caveats, in the possession of the trustees for the members of the BLF?
MR SUTHERLAND: Yes, but took control of it in the sense of lodging caveats to preclude any dealing with the property without his consent.
GUMMOW J: But the purported disposition which is said to be void, what did it purport to take as its subject matter - the disposition?
MR SUTHERLAND: All of the funds and property of the BLF.
GUMMOW J: Just some global description like that.
MR SUTHERLAND: All assets of the BLF, and all liabilities of the BLF shall become- - -
GUMMOW J: It really means “beneficial interests,” I suppose. It would have to be, because the Custodian is the person who owns the bank accounts, the deposits, and these trustees are the legal owners of the land, but there is beneficial interests and that is what is said to be void, that dealing in beneficial interest.
MR SUTHERLAND: Yes.
McHUGH J: But Dr Sharp has been ordered to hand over the funds that are in his name as well.
MR SUTHERLAND: Yes, he has, your Honour. He sought a stay in the execution of the order pending appeal, and a stay was granted in respect to the real estate, but no stay was granted in respect to the personalty, which was effectively the funds invested by him in his name. So, those funds have now passed, pursuant to the order, to the CFMEU.
KIRBY J: What is the relief you seek in respect of them?
MR SUTHERLAND: We seek an order that the order of the Chief Justice requiring the Custodian to transfer the funds be set aside, with the consequence that the funds will be recoverable by the Custodian from the CFMEU.
GAUDRON J: You did not obtain a stay at any point?
MR SUTHERLAND: We did not obtain one, your Honour, but we sought one.
GAUDRON J: Am I right in thinking that the effect of the Conciliation and Arbitration Act is that the individual members of the BLF have a beneficial interest, individually as members of the BLF, in these funds which eventually got, firstly, to the trustees, and also to Dr Sharp, or to the trustees of Dr Sharp? Is there anything in the Order in Council which prevents them transferring their beneficial interests?
MR SUTHERLAND: The BLF members, your Honour?
GAUDRON J: Yes.
MR SUTHERLAND: We say clause 2 of the ‑ ‑ ‑
GAUDRON J: That is talking about the property of the BLF. I am talking about their beneficial interest in the property.
MR SUTHERLAND: Yes, but the BLF, your Honour, is the association, in our submission, constituted by the membership. If one goes to the - I take your Honour to the definition of “BLF” in the BLF (De-recognition) Act, at tab 1, your Honours will see that BLF is defined in a number of alternative ways. It means either the organisation registered under the Commonwealth Act ‑ ‑ ‑
GUMMOW J: It is (c), is it not?
MR SUTHERLAND: It is (c)(i), your Honour:
the association within the meaning of the Commonwealth Act which was the organization referred to in paragraph (a).
So, upon deregistration of the organisation and by operation of section 143(6) of the Conciliation and Arbitration Act the association was preserved and the funds or property of the former organisation became the funds or property of the association comprised of the membership which then held the beneficial interest in those funds or property. They were then in a position, being vested with the beneficial interest, to make a disposition of that property, leaving aside the proscription contained in the Order in Council, clause 2, of October, by entering into an agreement through their Federal Council on their behalf, in effect, to amalgamate with the CFMEU and, as a consequence of the amalgamation, to pass the beneficial interest from the ‑ ‑ ‑
GAUDRON J: Is the consequence of your argument that nobody now has any beneficial interest in any of these funds? That it is, in fact, bona vacantia?
MR SUTHERLAND: It depends. If the Court accepts our construction of clause 2 of October 1987 and the disposition was void unless validated, then there was no effective passing of the beneficial interest from the members to the CFMEU.
GAUDRON J: And there is no association?
MR SUTHERLAND: So it stayed where it was. There is no association ‑ ‑ ‑
GAUDRON J: Because you have insisted that one cannot look, in your argument, that one cannot look at it as the beneficial interest of the individual members.
MR SUTHERLAND: Well, if I did, your Honour, I did not intend ‑ ‑ ‑
GAUDRON J: But you did by reason of (c)(i). My question to you was, is there anything to prevent the individual members disposing of their individual beneficial interest and you said, well, you go back to (c)(i).
MR SUTHERLAND: Clause 2 prevents it - I am sorry to interrupt your Honour. Clause 2 prevents any member, individually or collectively, from making a disposition of their beneficial interest in the BLF funds or property.
GAUDRON J: I do not read it that way.
MR SUTHERLAND: Because - - -
GUMMOW J: It makes it an offence for them to do it.
MR SUTHERLAND: It makes it an offence, I am sorry, your Honour.
GAUDRON J: No, to:
dispose of any of the funds or property of BLF or of any interest therein -
but of their individual interests as members I am talking about.
MR SUTHERLAND: Yes, your Honour, but by reason of the definition of BLF the BLF, for the purposes of the construction argument is the association.
GAUDRON J: And not the individual members.
MR SUTHERLAND: But the association is just the collective association of the individual members. One could have a disposition by an individual of part of the funds or ‑ ‑ ‑
GUMMOW J: No more than an unincorporated club on that theory.
MR SUTHERLAND: It is just an unincorporated association, your Honour, yes. So they could do it collectively, as they did in this case, by purporting to amalgamate with the CFMEU - I should not perhaps say purporting to - by entering into an agreement to amalgamate with the CFMEU and providing in their agreement that the funds or property of the BLF shall pass, to the extent to which it is capable of passing, to the CFMEU. That is a collective disposition by all the members of the BLF of their funds or property in the association.
GAUDRON J: Which now no longer exists, on your argument.
MR SUTHERLAND: On my argument ‑ ‑ ‑
GAUDRON J: Once you accept the amalgamation, it does not.
MR SUTHERLAND: I go back, your Honour, perhaps circuitously, but I go back to say, “Well, if it is a void disposition ‑ ‑ ‑
GAUDRON J: This is property of which no one has a beneficial interest?
MR SUTHERLAND: It was not effective to achieve a passing of the beneficial interest.
GAUDRON J: And does anyone have a beneficial interest in it?
MR SUTHERLAND: Your Honour asked me before, is the effect that it becomes bona vacantia? We say not. We say it stays where it lay.
GAUDRON J: Which is what?
MR SUTHERLAND: In those individuals that comprise the association.
GAUDRON J: Which does not exist.
MR SUTHERLAND: But the individuals do. If they had, by reason of their association together, a beneficial interest in funds or property, whether or not the unincorporated association has effectively dissolved or gone out of existence as an unincorporated association, what it comes down to, I suppose, your Honour, is to say that they were at liberty to decide not to associate together as members of an unincorporated association, but they were not at liberty, by reason of the operation of the clause 2 of the October Order in Council, to effect a disposition of their interests as members of the unincorporated association. So to the extent to which they purported to do that, it was simply nugatory; it was a void disposition; it stayed where it lay; it achieved nothing.
GUMMOW J: Suppose they had resolved simply to divide the property between themselves and each take their share?
MR SUTHERLAND: I am sorry, your Honour, I did not ‑ ‑ ‑
GUMMOW J: Suppose they decided not to transfer to anybody else but just to sell the property - that is not right either - petitioned any personal property and each take their share and go away, would that be stopped by 2? It would, I suppose. It would just be a disposition to themselves, would it?
MR SUTHERLAND: It may be a payment, your Honour, which would be prescribed by clause 2 rather than a disposition. If, on the other hand, one opts for the voidable construction rather than the construction we contend for, the position may be said to be more difficult in terms of what the effect of the disposition is because, on that construction, it is a valid and binding disposition of the property to the CFMEU subject to a right of election to avoid, or subject to the Custodian electing to avoid it.
If the Custodian did elect to avoid it, the question then is what is the effect of the avoidance in terms of the beneficial interest that passed to the CFMEU pursuant to the amalgamation agreement.
GUMMOW J: What would the beneficial interest be because, by definition, it seems to be beneficiaries cannot call for the legal title? They cannot put an end the trust, can they, on this theory?
MR SUTHERLAND: They can call, your Honour, once the CFMEU had acquired a beneficial interest by reason of avoidable disposition - - -
GUMMOW J: But it cannot come along to the Custodian and say, “Pay the deposits to us”, nor can it go to the three of their number who are the trustees of the land and say, “Transfer the land to us”.
MR SUTHERLAND: Presumably - - -
GUMMOW J: In other words, these provisions seem to have some sterilising effect on this beneficial interest.
MR SUTHERLAND: Yes.
GAUDRON J: If they do not become inconsistent with some other provision of the Conciliation and Arbitration Act upon the newly registered Union obtaining the beneficial interest.
GUMMOW J: It is certainly not a bare trust.
MR SUTHERLAND: The power to make Orders in Council was originally and in the 1987 amendment to the Act, extended to not only persons who are members of the BLF, but persons who had ceased to be members of the BLF, as the definition of BLF appears in the De‑recognition Act. It is a curious provision because the Act as originally enacted in 1985, in tab 1, empowered in section 7, the making of Orders in Council:
For the purpose of protecting the rights of persons who have ceased to be members of BLF.
Then, in 1987, when the Act was amended and the Orders in Council made, it was amended to be:
For the purpose of protecting the rights of persons who are or have ceased to be members of the BLF.
That is in tab 2, section 5(a)(i). The actual section, as amended, is rather poorly reproduced toward the end of tab 1, incorporating the 1987 amendment. The pages are not numbered, but it is four pages in from the end of tab 1, at the very bottom of the page, section 7(1), “ceased to be members of BLF”.
If one goes back to the definition of BLF, BLF is defined in the alternative way, but includes the association. Persons who therefore have ceased to be members of the association by reason, perhaps, of an amalgamation between the BLF unincorporated association and the registered organisation, CFMEU, might be properly characterised as persons who would cease to be members.
One might therefore infer that the original intention of the legislation was to give power to protect the assets from, perhaps, a dissolution that might have been in contemplation at the time the legislation was first enacted but by 1987 when the Orders in Council were made, the Act was amended to broaden the power for making the Orders in Council to include persons who are members of the BLF because that dissolution to that point in time had not occurred or eventuated. There was obviously, in our submission, a concern on the part of the legislature that the assets of the BLF were at some risk.
McHUGH J: Can I tell you I still have this real difficulty in this case. You seem to assume that there has been a payment, disposition and so on within the meaning of clause 2. I have great difficulty in seeing how there has been, at least in relation to some funds or property of the BLF. If I wrote out or entered into an agreement to dispose of the funds or property of the BLF with somebody, there just would not be any payment or disposition.
Now if you have money in a bank account in the name of the Custodian, how can anybody enter into an agreement and dispose or pay those monies. It just does not make any sense to me at the moment. I mean, where does anybody who entered into this agreement get any right or power to pay or dispose of that money? If you look at the whole scheme of the legislation the custody and the right to deal with all this property is vested in the Custodian.
Now irrespective of who owns it, and irrespective of clause 2 and whether it is void or voidable, just how is it disposed of? It seems a strange ‑ at the moment anyway, it is a strange notion to me that you have got X dollars at the ANZ Bank, say, in Melbourne, and you enter into this agreement and that is disposed of, that money. It has been paid. I do not follow how that could be done.
MR SUTHERLAND: Maybe Mr Rothman, your Honour, may be in a better position to try and persuade your Honour that there has been a payment or a disposition. I do not necessarily want to dissuade you from that view if that is the view your Honour has about the payment or the disposition.
KIRBY J: It is not in issue, is it? You do not raise it in your notice of appeal to this Court and we deal with issues here which are raised by the notice of appeal.
MR SUTHERLAND: What your Honour says is correct.
McHUGH J: Is it? What is it that is at issue in this? I mean, underlying. The real issue here is whether or not the funds and property are passed from the BLF to the CFMEU. Is not that the point?
GAUDRON J: Or the beneficial interest.
MR SUTHERLAND: Yes, the real issue, your Honour, is whether or not the disposition of the funds or property effected by the amalgamation agreement of the beneficial interest was a void disposition ‑ ‑ ‑
GUMMOW J: Where do we find the text of this document - this agreement, or whatever it is?
McHUGH J: It is set out in page 2 of your written submissions, I think, is it not?
MR SUTHERLAND: We had extracted - - -
GUMMOW J: It is an extract, though, this one.
MR SUTHERLAND: On page 2, paragraph 5 of our written submissions, we set out the operative provisions of the amalgamation agreement that is said by the respondents to have been entered into on 30 March 1994, which took effect the following day, and which both his Honour the Chief Justice below and the Full Court of the Industrial Relations Court of Australia found was effective to - - -
GUMMOW J: Did the evidence ever include an executed copy of this?
MR SUTHERLAND: Yes.
GUMMOW J: Where do I find that?
MR SUTHERLAND: It is annexed to the affidavit of Mr Sutton.
GUMMOW J: What page in the appeal book? This is just blank.
McHUGH J: He swore three affidavits, did he?
MR ROTHMAN: It is at 534, your Honour.
MR SUTHERLAND: I think it is at page 55, your Honour. They are not executed, I am sorry.
GUMMOW J: Did the evidence ever include any executed copy of it? Well, where is it?
MR SUTHERLAND: It did, your Honour, they were - - -
GUMMOW J: There are volumes of appeal books here, most of which, I suspect, is totally unnecessary, and the one thing that is necessary does not seem to be here.
MR ROTHMAN: Your Honour, there are a number of agreements. The executed copy of the State agreements commence at page 572 in volume 3 of the appeal books, and the executed copy of the federal agreement, or a copy of the executed copy of the federal agreement, is at page 55 of the appeal books.
GAUDRON J: And it is the federal agreement that is relevant?
MR ROTHMAN: Yes, your Honour.
GUMMOW J: And only the federal agreement.
MR ROTHMAN: The federal agreement annexes unsigned copies of the State agreements. That is, the original of the federal agreement annexes ‑ ‑ ‑
KIRBY J: This will not be recorded unless you speak into the microphone.
MR ROTHMAN: I am sorry, your Honour. The federal agreement annexes unsigned copies - that is, the original of the federal agreement annexes unsigned copies of the State agreements. Signed copies of the State agreements are in the position in the appeal books outlined earlier.
HAYNE J: 55 to me does not appear to be an executed copy of the federal agreement. I may be wrong.
MR ROTHMAN: Well, it is in the appeal books, but the original.....was a signed copy of the - an executed copy.
GUMMOW J: This is like the Mad Hatter’s Tea Party. Is there, or is there not, in the appeal books an executed copy of the so‑called federal agreement?
MR ROTHMAN: It appears not, your Honour.
GAUDRON J: So, the relevant clause, then, is clause 11 at page 59, is it?
MR SUTHERLAND: Perhaps clause 3 - or commencing at clause 1, 2, 3, your Honour, at page 56 of the appeal book.
KIRBY J: It is a bit of a hide to be disposing of the moneys which the Act of the Victorian Parliament, assuming it to be valid, under the Orders in Council, obviously intended should be in the possession of Dr Sharp as Custodian.
MR SUTHERLAND: The first notice the Custodian had of this agreement ‑ ‑ ‑
MR ROTHMAN: It is not in evidence.
MR SUTHERLAND: My friend says it is not in evidence but there is no dispute that the Custodian was not asked to give, and did not give, his consent to this disposition - the extent to which this amalgamation agreement may effect a disposition.
GUMMOW J: What was the date of it?
MR SUTHERLAND: Of the agreement?
GUMMOW J: Yes.
MR SUTHERLAND: We understood 30 March, your Honour, with effect from the following day.
GUMMOW J: Thank you.
MR SUTHERLAND: That is the evidence, your Honour.
KIRBY J: Can that be agreed, 30 March?
MR SUTHERLAND: Yes, 30 March, your Honour.
KIRBY J: That is the evidence, you say.
MR SUTHERLAND: Yes. What then happened was on 6 April ‑ ‑ ‑
KIRBY J: Just completely ignored the legislation about the Custodian.
MR SUTHERLAND: On 6 April, a proceeding was commenced in the Industrial Relations Court seeking declaratory relief, in part, as to the validity of the disposition effected notwithstanding the State legislation.
GAUDRON J: Where will we find the exact relief sought?
MR SUTHERLAND: In the amended statement of claim which appears at page 23 of the Court book, your Honour, the amended statement of claim of 4 October 1994.
GUMMOW J: This is one of the appeal books that do not set out the masthead, so one does not know who the parties were in this pleading.
KIRBY J: I think this is a peculiar Victorian practice in assembling appeal books and I have written to the Chief Justice about it, and I believe something is going to be done about it. Who is the first applicant; I mean, who is the second applicant? How do we know who the second and first respondent are if you do not have the definition on the masthead.
MR SUTHERLAND: I see the difficulty it places your Honours in. The first applicant, I can, I think, inform your sHonour, is Mr Sutton, one of the respondents to the appeal. The second applicant is the CFMEU, the other respondent to the appeal.
GUMMOW J: The first respondent is the Custodian.
MR SUTHERLAND: No, I am sorry, your Honour.
GUMMOW J: The first respondent?
MR SUTHERLAND: Is the Custodian.
GUMMOW J: Yes.
KIRBY J: Dr Sharp at the time.
MR SUTHERLAND: Yes, your Honour.
GUMMOW J: And the other respondents? Or, was there only one respondent?
MR SUTHERLAND: The State of Victoria, your Honour.
GUMMOW J: Is there any pleading against the second respondent?
MR SUTHERLAND: No, your Honour. What transpired following the commencement of the ‑ ‑ ‑
GUMMOW J: At the institution of this proceeding, you had a great vice, because it did not join all the appropriate parties.
MR SUTHERLAND: Yes; it certainly did not join any of the persons who were said to have made the disposition.
GUMMOW J: Yes.
MR SUTHERLAND: Directions were then sought on a consent basis.
GAUDRON J: I still have not found the relief, though, that was sought - the relevant relief.
MR SUTHERLAND: In my learned friend’s statement of claim at paragraph 21 ‑ ‑ ‑
GUMMOW J: As it affects you.
MR SUTHERLAND: ‑ ‑ ‑ page 29 of the appeal book.
KIRBY J: It does not ask for a declaration, but is that what is being, in effect, sought?
MR SUTHERLAND: Yes. There was, in addition to this, your Honour - and I should have taken your Honour to it perhaps first - and that was an amended application, page 2 of the appeal book. Page 2, which is dated 3 May 1994, in which relief is sought in terms of section 258 of the Industrial Relations Act, in paragraphs 1 and 2; paragraph 3 also, dealing with invalidities that may have occurred as a consequence of the asserted amalgamation; orders in respect in paragraph 4, and then paragraph 5:
An order that the BLF (De-recognition) Act, in so far as it affected the Australian Building Construction Employees’ and Builders Labourers’ Federation and in so far as it affects the Construction, Forestry, Mining and Energy Union is a contravention of section 92 of the Constitution and is invalid.
And 6:
An order that all funds held by the First Respondent in his capacity as Custodian appointed under the BLF (De-recognition) Act, which are all funds now of the Second Applicant -
the CFMEU -
be transferred to accounts designated by the Second Applicant being accounts in the name of the Building Unions Division of the Second Applicant and the Victorian Building Unions Divisional Branch of the Second Applicant.
And then in 7 ‑ ‑ ‑
KIRBY J: What is the kitty we are talking and all this trouble is all about? I mean, are we talking big money, or is this a big matter of principle that we are dealing with here? Do we know that? Is it in the evidence?
MR SUTHERLAND: There was some evidence, your Honour - I think it is in the Custodian’s report, which is in the appeal book, where ‑ ‑ ‑
HAYNE J: There seemed to be a few certificates of title and land in Carlton involved, do there not, Mr Sutherland?
MR SUTHERLAND: Yes, there are, your Honour.
KIRBY J: I hope we are dealing with large sums.
MR SUTHERLAND: $3 to $4 million is a figure, I think, that has been generally bandied about in the course of trying to put some value on the real estate and the funds.
GAUDRON J: The declaration I am looking at is concerned only with the funds; there does not seem to be anything in this pleading that I am looking at that relates to the real estate, unless there might be some consequence by reason of the invalidity of the De-recognition Act, as claimed in paragraphs 4 and 7.
MR SUTHERLAND: What your Honour says is correct.
GAUDRON J: It does not seem to me that this case is in any way concerned with real estate, on the pleadings.
MR SUTHERLAND: Paragraph 4, my friend directs my attention to, your Honour.
McHUGH J: And “all property assets”, et cetera.
MR SUTHERLAND: All property assets and liabilities. Presumably it is said that that includes the real estate.
GAUDRON J: Yes, but does that - and the trustees were not parties to this proceeding?
MR SUTHERLAND: No, apparently not, your Honour. I do not wish to read it, your Honour, but his Honour the Chief Justice below, in the report of his decision or his judgment in Sutton v Sharp, 125 ALR 643, sets out what is the history of the proceeding up to the time the matter before him, including the relief sought. He sets out in his judgment, in detail, the relief sought in the amended application to which I have referred your Honours and also provisions of the agreement. His Honour says - if I may just read a short passage:
Thirty-first March 1994 was the Thursday before Easter. Immediately after Easter, on 6 April 1994, this proceeding was commenced. The application filed that day showed Mr Sutton as sole applicant. The CFMEU was named as a respondent.
The disposition or the agreement was entered into on 30 March 1994, only a matter of days earlier, so that the way in which the matter came to the notice of the Custodian and was dealt with was by being - the Custodian, was by being served with legal process. Prior to that there was no communication at all between the applicants below and the Custodian.
KIRBY J: Your voice is beginning to tremble with self-righteous indignation.
MR SUTHERLAND: I am trying not to, your Honour.
KIRBY J: But the Custodian did not really do very much. I mean, he just put a caveat on. That is not doing anything. That is just protecting for the future. He did not do what, at least, the legislation and the Order in Council seemed to contemplate, namely, as Justice Hayne said earlier, gather it in.
MR SUTHERLAND: Well, he procured the funds, your Honour, into his possession and invested ‑ ‑ ‑
KIRBY J: But not the property?
MR SUTHERLAND: Not the property.
KIRBY J: This is a battle about the property.
MR SUTHERLAND: No.
GAUDRON J: Could we also find out the exact declaration that was made as it affects the people for whom you act?
MR SUTHERLAND: The declaration made below, your Honour.
GAUDRON J: It would be by the Chief Justice.
MR SUTHERLAND: By the Chief Justice, yes, your Honour.
GUMMOW J: Is it 1044, is it not? Is that all there is? Volume 5.
MR SUTHERLAND: It is at page 1044 and that is the ‑ ‑ ‑
GAUDRON J: That is it.
MR SUTHERLAND: That is it, your Honour.
GUMMOW J: What does it mean? Declaration of entitlement? Of whom, to what?
MR SUTHERLAND: It has been taken, I think, to mean that the CFMEU has, by reason of the disposition effected by the amalgamation agreement, acquired title to the funds or property - beneficial title.
GUMMOW J: And the order?
MR SUTHERLAND: As imposing an obligation on the Custodian to take such steps as are necessary to vest in the CFMEU any funds or property in his control.
GUMMOW J: That would not include the land.
MR SUTHERLAND: There would be nothing that the Custodian could do other than to remove the Queen’s caveats or to seek to remove the Queen’s caveats to effect a disposition of the legal title from the registered trustees to the CFMEU.
KIRBY J: Is this Queen’s caveat a quaint Victorian provision in the Land Act, is it?
MR SUTHERLAND: It is in the Transfer of Land Act, your Honour.
GUMMOW J: There is an example at page 627, I think.
MR SUTHERLAND: Yes, your Honour. It finds its legislative foundation, your Honour, in section 106 of the Transfer of Land Act in Victoria, which provides that the registrar:
may lodge a caveat, on behalf of Her Majesty or of any person under the disability of minority unsoundness of mind or absence from Victoria, to prohibit any transfer or dealing with any land belonging or supposed to belong to any such person, or to prohibit dealing with any land in any case in which it appears that an error has been made by misdescription of such land or otherwise in any folio of the Register or instrument or for the prevention of any fraud or improper dealing.
GUMMOW J: You seem to have these orders at 1044 set aside. That is the end result you have come here to obtain.
MR SUTHERLAND: Yes, your Honour.
GUMMOW J: I can think of various reasons why they might be set aside. A declaration in that form should not have been made, I would have thought. A declaration in that form should not be made by a superior court, in my view.
GAUDRON J: Yes. Nor - and its declaration of entitlement extends to property held by trustees. It must be set aside to that extent by reason of the trustees not having been parties to the proceedings.
MR SUTHERLAND: Perhaps these are matters my learned friend might.
KIRBY J: You have not raised them in your notice of appeal. We are a Court that deals with matters and matters are defined by the pleadings.
MR SUTHERLAND: Yes, your Honour.
KIRBY J: The only matter you have tendered to us is the question of the interpretation of the Order in Council and, if interpreted against you, whether there was nonetheless an election.
MR SUTHERLAND: We do seek the setting aside of the orders on the basis that we have articulated in our submissions.
McHUGH J: Ground 1 of your amended notice of appeal is very wide, is it not?
The Court erred in holding that the BLF De‑Recognition Act.....did not operate to render void the purported disposition of the funds and property ‑ ‑ ‑
MR SUTHERLAND: It is, your Honour.
KIRBY J: Where is there an attack on the form of the declaration? I do not see that.
MR SUTHERLAND: What your Honour Justice Kirby says is correct. With respect, we have not, in terms of the grounds of appeal sought to attack on any of the bases enunciated by Justice Gummow, the relief granted by the Chief Justice below.
GAUDRON J: Have you said all that you wish to say on the construction point?
MR SUTHERLAND: I have, your Honour.
GAUDRON J: Yes, then now what about your second point?
MR SUTHERLAND: The second point, your Honour, is the election point which I have touched upon. We say, in relation to that, that an election to the extent to which clause 2 of the October Order in Council requires the Custodian to elect between two inconsistent rights - this applies to the voidable construction, if that be the proper construction of the Order in Council, can be done in one of two ways; one by a conscious decision to elect to adopt one of the two inconsistent rights or, alternatively, it can be effected by conduct which attributes to the person making the election, the making of the election.
In other words, the election is the result of the conduct which election is attributed as a consequence of the conduct, not dependent upon any subjective intent on the part of the elector, not dependent upon any knowledge of the existence of the right to elect, but by reason of the elector conducting himself in a way that only justifies the conclusion that he has made an election and we submit that that characterisation of the law, in terms of the right of election, is what Justice Mason, as his Honour then was, and Justice Stephen interpret the law to be in Sargent v A.S.L. Developments 131 CLR 634.
I do not wish to read great passages from it, your Honours, but could I just direct the Court’s attention to, firstly, the judgment of Justice Mason at page 655 where, at approximately point 7 of the page, his Honour says:
It will make for greater certainty, therefore, if the present cases are regarded as cases of election. A person is said to have a right of election when events occur which enable him to exercise alternative and inconsistent rights, i.e. when he has the right to determine an estate or terminate a contract for breach of covenant or contract and the alternative right to insist on the continuation of the estate or the performance of the contract. It matters not whether the right to terminate the contract is conferred by the contract or arises at common law for fundamental breach - in each instance the alternative right to insist on performance creates a right of election.
Essential to the making of an election is communication to the party affected by words or conduct of the choice thereby made and it is accepted that once an election is made it cannot be retracted.
Then at the middle of the page, his Honour, says:
The central problem in these cases lies in ascertaining what in the eye of the law are the elements essential to the making of a binding election, in particular whether knowledge of the existence of the alternative right is a prerequisite in the party against whom election is alleged. The question is complicated because in some instances election may take place as a matter of conscious choice with knowledge of the existence of the alternative right and in other cases it may occur when the law attributes the character of an election to the conduct of a party.
His Honour then goes on to consider some of the authorities, and at page 658, in the middle of the page, having considered the authorities, his Honour says:
The justification for imputing to the affirming party a binding election in these circumstances, though he be unaware of his alternative right, is that, having a knowledge of the facts sufficient to alert him to the possibility of the existence of his alternative right, he has acted adversely to the other party and that, by so doing, he has induced the other party to believe that performance of the contract is insisted upon.
His Honour Justice Stephen, at page 646, at the middle of the page, said:
There need be no expressed intention to elect, nor will an express disclaimer of such an intention be of any avail in preserving one right if in fact there be an exercise of another inconsistent right. for an election, there need be no actual, subjective intention to elect, an election is the effect which the law attributes to conduct justifiable only if such an election had been made.
What is said against us, or the Custodian, I should say in this case, is if the proper construction of the Order in Council is voidable, that he has made no election to avoid the disposition, the position that we assert is that the Custodian by his plea in his defence filed on 28 October, at page 30 of the Court book, conducted himself in a way that was only justifiable on the basis that he had made an election if he was electing between two alternative positions.
GUMMOW J: If you construction of the Order in Council is correct, the Custodian could elect this minute. It is unconfined as to time. Is that the submission?
MR SUTHERLAND: I do not think I would go so far, your Honour, to say it would be unconfined in time, but - - -
HAYNE J: What confines it? There is nothing in the terms of the order which confines it?
MR SUTHERLAND: No, and it is most probable that no estoppel preventing him from exercising his election could operate against him - - -
GUMMOW J: There is a statutory - - -
MR SUTHERLAND: - - - in the statutory context in which it appears. It may be said against the Custodian that he has got to act reasonably.
McHUGH J: The Full Court took the view it had to be exercised within a reasonable time.
MR SUTHERLAND: Within a reasonable time.
KIRBY J: What is wrong with that, and does that knock you out, or not?
MR SUTHERLAND: We say it does not knock us out, your Honour, because the proceedings commenced on 6 April 1994; the amended application was delivered in May of 1994; the statement of claim, in its amended form, was not delivered until, I think, September of 1994, and the defence in which the Custodian was called upon to plead to, the statement of claim, was filed on 28 October 1994.
GUMMOW J: Given that, even on a narrow construction of the clause, you are at liberty to exercise this voidance power within a reasonable time - given that construction - what was it, as you understood it, was the case being made against you whereby your opponents could avoid that sword that was hanging over them? What did they think they could do by commencing this litigation when, over the litigation - at least at that stage, because the litigation was prompt - was this sword? I just do not understand this case.
MR SUTHERLAND: We do not pretend to understand what motivated the applicants below, your Honour. But presumably they wanted some form of judicial pronouncement from a court that the effect of the disposition - or that the disposition was effective to transfer title in these assets to the CFMEU.
GUMMOW J: Well, any declaration that was then made would have to take into account this sword that was hanging over them, I suppose.
MR SUTHERLAND: The sword being the Act, your Honour, the Order in Council.
GUMMOW J: Yes, the liability to avoidance.
MR SUTHERLAND: Yes. Well, that is so, your Honour.
McHUGH J: The way they seemed to put it was in paragraph 17 of their statement of claim, was it not, which is at page 28 of volume 1, where they said:
The holding of the funds by the First Respondent herein is contrary to the rules of the Second Applicant and in particular the CFMEU Rules.....and is an invalidity in the management of the Second Applicant.
MR SUTHERLAND: There was a challenge to the jurisdiction of the Industrial Relations Court on the basis that the invocation of section 258, which gave the court the jurisdiction to determine whether invalidities had occurred and to rectify them if they had occurred, was a coverable invocation of the jurisdiction. But what the real relief sought was was relief from the Industrial Relations Court declaring the disposition via the amalgamation agreement of this property to be valid. It was not about invalidities that had occurred at all and - - -
GUMMOW J: Order 6 - they sought order 6. They sought this injunction that your client transfer some funds.
MR SUTHERLAND: Yes. Well, that was resolved upon undertakings being given to preserve the status quo pending exchange of pleadings and such matters.
GUMMOW J: Why should he transfer anything while he had the power to pull the rug out?
MR SUTHERLAND: That is why we oppose the proceeding, your Honour. That is why we say that the pleading - but not just the pleading where he says that he regards the disposition as void - and we say the whole conduct of the Custodian in opposing the relief sought, and defending the proceeding, is conduct that is only justifiable on the footing that he has elected to avoid the disposition if an election be necessary to be made on the proper construction of clause 2.
GAUDRON J: That he has, or that he will.
MR SUTHERLAND: That he has.
GAUDRON J: Or that he will.
MR SUTHERLAND: Or that he will, yes, your Honour.
GAUDRON J: There is no need for you to restrict it, is there?
McHUGH J: The fact that his Honour made an order and the present respondents sought an order that property be transferred seems to indicate to me that there has been no payment, no disposition within the meaning of paragraph 2. If there has been a payment you would not want - or if there has been a disposition you would not want this order. I will be interested to hear Mr Rothman’s explanation to all this. It is strange to me.
HAYNE J: If there is an election, Mr Sutherland, as you contend there is, what effect, if any, does any deficiency of parties in the action in which this election is said to have been made have? Is it an election that is good against those who are parties but not against those who were not? How does all that work through?
MR SUTHERLAND: The Custodian, as I am instructed, your Honour, has instructed ‑ ‑ ‑
HAYNE J: I am not concerned at the moment with the deficiency of parties here, I am concerned for the moment with the deficiency of parties at first instance, where, as I understand it, there is at least doubt whether, say, those who held the land on trust for the BLF or members of the BLF were parties to that suit. If there is an election constituted by pleadings in the proceeding, how can that election affect in any way those who are not parties to it?
MR SUTHERLAND: They are not parties to the election, your Honour, but they are persons who would be affected by the election being taken to avoid the disposition.
HAYNE J: Assumedly, if it is communicated to them in some way they may, perhaps, take the benefit of that election and suffer the consequences of it, maybe. But, how can it be communicated to them if they are not parties to the suit?
MR SUTHERLAND: There is no suggestion that the trustees, the registered proprietors of the Victorian land, effected any disposition of their interest in the land. They simply held the title as registered proprietors of it. So, to the extent to which ‑ ‑ ‑
HAYNE J: We are, I think, at cross‑purposes, Mr Sutherland, and no doubt it is my fault, not yours.
MR SUTHERLAND: I am sorry, your Honour.
HAYNE J: You say that the Custodian, on one construction of paragraph 2, had a choice whether to avoid the disposition. You say that he is to be taken as having elected to avoid. Is that the argument?
MR SUTHERLAND: Yes, your Honour.
HAYNE J: That election is said to be constituted by the pleading and conduct of the proceeding before Chief Justice Wilcox. How can that pleading, or that conduct, affect persons who were not parties to that proceeding?
MR SUTHERLAND: I do not think that I can contend that it could, your Honour.
McHUGH J: I am not sure about that. You see, questions of communication are in a contractual context. It may be that this option under this can be done unilaterally, as long - he may not have to communicate it to anybody, as long as there is some outward manifestation of it. I mean, that is one view. That is one possible ‑ ‑ ‑
MR SUTHERLAND: Yes.
KIRBY J: One would have thought, though, that you have got to be a little careful about applying contract principles, because this is a formal instrument of law‑making and it has significant consequences for third parties, some of whom may be innocent, some of whom may not, and one would have thought that, at the option of the Custodian, contemplated a semi‑formal step by the Custodian. At least that is how I would read it, because it has consequences affecting property, which one normally does in a rather formal way. I am also troubled by Justice Hayne’s point: how can you opt, in proceedings to which a person is not a party, of which they may not have formal notice, in which they have got no participation, in a way that affects their rights?
MR SUTHERLAND: The only persons who were not parties were the registered proprietors of the Victorian land.
KIRBY J: Yes, but they are the ones with the property, and that is what the whole battle is about.
MR SUTHERLAND: They are the registered proprietors of the land - the legal interest of the land, your Honour, and ‑ ‑ ‑
GUMMOW J: All this is another reason or a supplemental reason for, on your part, I suppose, querying the orders that were made.
MR SUTHERLAND: Yes.
GUMMOW J: This declaration of entitlement. How can it bind these for the people?
MR SUTHERLAND: His Honour, I think, as his Honour Justice Stephen in Sargent’s Case, referred in a contractual context to the need to communicate the making of the option to the person affected by the exercise of the option. For the reasons stated by Justice Kirby, it may be that my concession was too ready. To the extent to which clause 2 of the October Order in Council requires the Custodian to make an election, he can do that merely by manifesting his intention to avoid the disposition. Whether that manifestation then needs to be communicated to all persons who might be affected in a context which is not contractual is perhaps the issue that I am being asked to address on. On one view of the Order in Council he could do it, unilaterally and silently, just by ‑ ‑ ‑
KIRBY J: Thinking to himself.
MR SUTHERLAND: By thinking to himself, that he avoids the disposition.
KIRBY J: That cannot be so.
MR SUTHERLAND: He would then, presumably, if he so chose, pursue the property the subject of the disposition and say to the person to whom it had been disposed, “I have elected to avoid this disposition, give it back.” It would be in that context in which the exercise of the election to avoid would become an issue as between the parties. That is one ‑ ‑ ‑
McHUGH J: One problem you have, if you do have to communicate it to everyone, is that you may not even know. You may know that the money has been paid out; you may not know to whom it has been paid or where it has gone.
MR SUTHERLAND: Precisely, and may not find out for some time.
McHUGH J: So when does time start to run here?
MR SUTHERLAND: That may all have to be taken into the balance in determining what is a reasonable time, but we would submit that it could not be said to be an unreasonable period of time for the Custodian to be called upon to plead that he regards the disposition as void to do so in October 1994, the disposition having been made at the end of March.
GAUDRON J: I do not know why you do not extend that and say, there being a justiciable issue between the courts as to whether it was or was not void ab initio, the reasonable time extends at least until some reasonable time after the conclusion of those proceedings.
MR SUTHERLAND: Yes. I think what is said against us in relation to that is that a mere plea in a pleading that you do not regard the disposition as avoided.
GUMMOW J: Yes, that is right and what is being ‑ ‑ ‑
MR SUTHERLAND: It cannot amount to an exercise of an election.
GUMMOW J: Quite, but the matter being before a court, in the ring and in debate, it must, on one view, be still open to your client to act when the litigation is concluded.
GAUDRON J: Within a reasonable time.
MR SUTHERLAND: Within a reasonable time thereafter.
KIRBY J: The argument against that is you have obdurately taken the view that you do not have to elect and you are wrong and the time has expired.
MR SUTHERLAND: Yes. The one consistent position the Custodian has adopted is to treat the disposition as void on any objective view of the evidence.
KIRBY J: But why could not the Custodian have said, “Well I contend that it is void, but in case it is held not to be I give you notice that in accordance with clause 2, I avoid the payment, disposition, encumbrance at my option”? Now, a little letter like that would have saved an awful lot of trouble it seems to me.
MR SUTHERLAND: It may have, your Honour, I think I would have to ‑ ‑ ‑
McHUGH J: In subparagraph 3 of paragraph 5 of his defence, he said he regarded any attempt by the BLF to dispose of the funds as void.
MR SUTHERLAND: Yes.
KIRBY J: But that is your primary argument.
MR SUTHERLAND: That is - - -
KIRBY J: You say it is void but can be made devoided at the option but if you lose that, we are now in the realm of arguing how you communicate or whether you have to and in what time.
MR SUTHERLAND: Yes, your Honour. But it is not just the fact of the plea that he regards it as void. It is the defence of the proceeding in which the issue of the disposition is, as your Honour says, a justiciable issue in that proceeding. So we submit that all of that conduct, taken cumulatively, can only be justified on the footing that he has made an election, on an objective assessment of it rather than a subjective intention, irrespective of whether he knew himself that he needed to make the election.
If he had taken, erroneously, a view of the legislation that it was void, it did not call for the making of an election, that he could just treat it as void, if that was his subjective state of mind it would not matter, in our submission, if he conducts himself on the footing that can only be justified on one basis, namely that he has made an election one way or the other.
KIRBY J: It is hard to characterise it as an avoidance or an option, exercise, or an election, when it is completely inconsistent with the stance he has taken.
MR SUTHERLAND: In the contractual sense, your Honour, it is analogous I suppose to a person who is unaware of - - -
KIRBY J: But this is not a contract, this is an exercise of a statutory power by donee of power.
MR SUTHERLAND: That is so, your Honour. In terms of the election, your Honour, I do not think I can put the matter any differently to the way I have. Unless there are any other questions that the Court has, they are the submissions on behalf of the appellant.
GAUDRON J: Now, you did begin to say, I think, that the Custodian wished to be an appellant?
MR SUTHERLAND: I am instructed, your Honour, that the Custodian would consent, or does consent, to being joined in the proceeding as - - -
GAUDRON J: As an appellant or as a respondent?
MR SUTHERLAND: As an appellant.
GAUDRON J: Yes, would you give his full name.
MR SUTHERLAND: Stephen George Alley.
GAUDRON J: He will be joined as an appellant in substitution for Ian Gordon Sharp, the second respondent in the proceedings below?
MR SUTHERLAND: Yes, your Honour.
KIRBY J: He is the Honourable Stephen George Alley. He is a former Deputy President of the Arbitration Commission.
MR SUTHERLAND: Yes, he is so, your Honour.
GAUDRON J: Before we do this, it will be necessary, would it not, for them to be a grant of special leave to the Honourable Stephen George Alley?
MR SUTHERLAND: A grant of leave to appeal.
GAUDRON J: A grant of leave, yes. The orders will be made now. You will need, however, to amend some of your documentation.
MR SUTHERLAND: We shall attend to those formalities, your Honour, in due course, promptly.
GAUDRON J: The grant of leave will be extended to the Honourable Stephen George Alley in substitution for Ian Gordon Sharp, the second respondent in the court below. The title of the proceedings will be amended accordingly.
KIRBY J: But he becomes a second appellant in this Court.
MR SUTHERLAND: Thank you, your Honour.
GAUDRON J: Yes, thank you.
KIRBY J: Could I just ask you, finally for me, the orders you seek on page 1090 are framed with the same austerity of language that has marked other activity in this case. You just ask that the appeal be allowed and judgment set aside. Is that enough? Is that all you want? Would we not have to make the orders which the court below ought to have made? Are you seeking an order in effect that the application to that court be dismissed in its entirety, or dismissed as to the particular relief, or what, or return to them to deal with certain matters, or return to the Federal Court of Australia as the successor to the jurisdiction?
MR SUTHERLAND: The latter matter that your Honour raised was dealt with by amendment to the notice of appeal at the directions hearing before the Chief Justice.
KIRBY J: I see. Where do we find that document?
MR SUTHERLAND: I understood the notice of appeal had been amended, your Honour.
GAUDRON J: Yes.
KIRBY J: I have not caught up with that.
GUMMOW J: 24 September?
MR SUTHERLAND: Yes, your Honour. There is now a third order sought, namely:
That the matters raised in points 6 and 7 of the Respondents Notice of Contention dated 1 April, 1997 be remitted to the Full Court of the Federal Court of Australia together with any issues outstanding.
McHUGH J: That amended notice still does not cover Justice Kirby’s point, because what you need is the appeal to the Full Court be allowed to the extent that it deals with certain - well, you probably cannot, no.
GAUDRON J: There are other outstanding issues in the Industrial Court, are there not, so that, if this matter is determined in your interest, there are other issues which might result in it being determined against you?
MR SUTHERLAND: Yes, there are, your Honour. There are - - -
KIRBY J: I think that is right, and we can just leave it to the Full Court of the Federal Court to dispose of any remaining matters on this point in accordance with the judgment of this Court.
MR SUTHERLAND: Yes, your Honour.
GAUDRON J: Mr Sutherland, there is one other matter, perhaps, I should raise with you. There are other points in the notice of contention which have not been raised in your argument, and I note from the directions hearing it was thought that they might conveniently be remitted to the Full Court unless it became necessary for them to be determined here. So, I take it you have got no objection to that course, if it proves possible to dispose of the matter in that way?
MR SUTHERLAND: Yes, I should have said that, your Honour. None of those matters have been the subject of consideration by the Full Court below, and the matters upon which we have made submissions, which I think are the points of contention numbered 1 to 5, are matters that do not turn upon any finding of fact and, I think, for that reason his Honour the Chief Justice directed that we file submissions in respect of those contentions in the event that they arose in the course of argument today. They have not, it would appear. We would be content - and I think my learned friend’s position is the same - that they be remitted back to the Full Court if the appeal is resolved in our favour.
GUMMOW J: There is the question as to whether on any basis the declaration and order made by the Chief Justice of the Industrial Relations Court should stand in that form.
KIRBY J: You do not raise, even to this last minute of your submission, any application to amend your grounds of appeal, challenging the declaration and form in which it is made?
MR SUTHERLAND: I think, faced with that invitation, your Honour, I perhaps ‑ ‑ ‑
KIRBY J: It is not an invitation; I just want to get the record in order. I deal with issues.
MR SUTHERLAND: Yes, your Honour. I would seek leave, in those circumstances, to amend to challenge the making of that declaration - the form of the declaration. Perhaps I need to formulate the terms of the amendment, your Honour.
GAUDRON J: We will hear Mr Rothman on that. At this stage, we are concerned with the application to amend the notice of appeal.
MR ROTHMAN: In relation to the addition of an appellant?
GAUDRON J: No; in relation to a challenge to the form of the order.
MR ROTHMAN: Can I, perhaps, preclude that by advising the Court that, in fact, an order was entered under Order 36 of the Industrial Relations Court Rules. It is not in the appeal book. It was not an issue, as I understood it, in the proceedings before the court.
GAUDRON J: Then we must have that order.
MR ROTHMAN: I have asked my instructing solicitor to obtain at least a facsimile copy which will be sent from Sydney of that order. My understanding is an order was entered and is not in the form of the adumbrtion by the Chief Justice of the Industrial Relations Court at page 1044.
GUMMOW J: We have to see it. It should have been in the appeal book. It is not a question of whether it is in issue or not. It is just a necessary constituent document of the record.
McHUGH J: It is the order - the order of the court; a primary document for purposes of the appeal.
MR ROTHMAN: It is not our appeal, and we did not understand it was in issue, so we did not raise the matter with my learned friends ‑ ‑ ‑
GUMMOW J: It is not a question of whether it is in issue, Mr Rothman, and you will not escape by saying what you just said. It should have been in the appeal book. The appeal book has to be settled by both sides.
KIRBY J: You say this is the responsibility of the appellants. Even to this moment they have not formulated what they ask to do, and that you should not be called upon to answer until at least they have formulated. You notify the Court that there is, in fact, an order which you will produce which varies from what the Chief Justice said in his reasons for judgment. I think, speaking for myself, we should stand this issue over until later and we might - both sides might be in a better position to help us.
MR ROTHMAN: If your Honour pleases. I would be content to adopt your Honour’s suggestion, with respect, and that would be the submission we would make.
GAUDRON J: When would the order be available?
MR ROTHMAN: I have asked my instructing solicitor to obtain it. To obtain it, he has contacted his office in Sydney and my understanding is, if it can be found it will be faxed down and will be available certainly by the end of the luncheon adjournment.
GAUDRON J: Yes, thank you. We will leave that matter aside. I will ask Mr Sutherland had he concluded his submissions, then, apart from this issue.
MR SUTHERLAND: I am sorry, your Honour, yes I have, if the Court pleases.
GAUDRON J: Yes, thank you. Mr Rothman, thank you.
MR ROTHMAN: If the court pleases, might I hand up to the Court an outline of submissions?
GAUDRON J: We do have your written submissions.
MR ROTHMAN: I understand that, your Honour. I have truncated them into an outline in accordance with what I understood would be the practice. The first six or so paragraphs are, if not identical to the outline that was filed, then certainly in substantially the same terms. The remainder of the contentions, as I understood what fell from the Court earlier, need not be gone to. That is, 7 through to 11, relate only to the ‑ ‑ ‑
GAUDRON J: Unless you raise them - unless you feel the need to raise them.
MR ROTHMAN: No, your Honour. It was agreed before
his Honour Chief Justice Brennan that the matters need not be dealt with by this Court. We understood, indeed it was our chambersummons, which asked the Chief Justice to effectively reserve those matters to be remitted back to the Full Court. His Honour the Chief Justice was simply concerned that something may arise during the course of the argument, on what I will call the simple construction point, that might motivate the Court to ask some questions which arose by the notices of contention and for that reason
his Honour suggested that a separate submission be made in relation to those. There are other contentions as well relating, inter alia, to a constitutional point which clearly does not arise and which has ,been subject to what occurs in relation to the construction point, remitted back to the Full Court.
GAUDRON J: Yes, thank you.
KIRBY J: I saw somewhere in the papers there was a notice of constitutional matter. Is that ‑ ‑ ‑
MR ROTHMAN: One of the remaining points that is not to be argued, under any analysis of today, is a section 92 point in relation to the use of the word “intercourse” in section 92. The only other section 78B notice that was issued in relation to the proceedings today related to an issue which I know is the subject of some debate as to whether section 78B notices are necessary, but that is the section 109 point relating to the operation of section 205 of the Industrial Relations Act. But that is a matter that can be remitted back. It has not been the subject of a decision or judgment by the intervening appeal court and we were aware that this Court deprecated matters coming directly from a single judge without having the benefit, or otherwise, of a Full Court below and that is why we did it in the way it was done.
Can I deal with the matters raised in terms of the procedural issues and to the parties that were involved? Can I commence by reminding your Honours that the action was commenced under section 258 of the Industrial Relations Act which is a remedial provision inserted - I think your Honour Justice McHugh had occasion to deal with it at one stage, as did your Honour Justice Kirby in a different life - inserted after an inquiry conducted by his Honour the late Justice J.B. Sweeney, and related inter alia to the capacity of a court to remedy irregularities that occurred in the management of, and dealings of, an organisation of employees registered under the Act.
The process that is - and the way in which such an application is commenced, because it is - I do not say it is a matter in rem but it is certainly not quite action inter partes When section 171C of the then Conciliation and Arbitration Act was first inserted into the Conciliation and Arbitration Act, the process that was undertaken in relation to the commencement of such proceedings was that proceedings were commenced by an application, either by the organisation itself or by a member of the organisation which named the organisation as a party, and orders were then made by the judge before whom the matter come for the notification of relevant parties. That is still the case, and, indeed, is a matter dealt with in the Act itself. If the Court goes to - I think it has a reference to the Industrial Relations Act - if the Court goes to subsection (6) of section 258, this Court will see that the court in this - in the day and age when this application was made that was the Industrial Relations Court of Australia. The court, being the Industrial Relations Court of Australia, determines:
(a) what notice, summons or rule to show cause is to be given to other persons of the intention to make an application or an order under this section; and
(b) whether and how the notice, summons or rule should be given or served -
It has never been an issue in the proceedings from day one in relation to the question of the trustees; indeed, evidence was given before Chief Justice Wilcox, albeit hearsay but not objected to, that the trustees agreed to the disposition and, indeed, two of them are signaturies to the agreement - or one of the agreements that is in evidence - one of the signed agreements, I might add, your Honours. Mr Cummins and Mr Setka were, respectively, officers of the Victorian Branch of the BLF and are signatories to the Victorian agreement which is, and was, filed before the Court.
GUMMOW J: That is not the point, Mr Rothman. Section 417 gave the Industrial Relations Court power to make binding declarations of right.
MR ROTHMAN: Yes.
GUMMOW J: The question is, should this sort of declaration of right, which we have yet to see, be made without joining the necessary parties? That is all.
MR ROTHMAN: I understand the point, your Honour. My point is this, with respect: that the trustees were given notice in accordance with the direction ‑ ‑ ‑
GUMMOW J: They might have been, they might not have been; they may or may not have been; it does not matter. The question is, should the Court make a declaration of right in that form, without joining them? It is not a question of whether they knew about it. The question goes to the efficacy of the declaration, the propriety of the exercise of that power given by section 417. That is what it is all about.
MR ROTHMAN: Your Honour, they appeared in the proceedings and consented to the orders made, or sought to be made, I should say. As they did - - -
GUMMOW J: You say “they appeared in the proceedings”, what does that mean?
GAUDRON J: As parties?
MR ROTHMAN: Your Honour, what occurs is, and this is what I was trying to put before, what occurs is - - -
GUMMOW J: What occurs may need to be tightened up.
MR ROTHMAN: It may need to be, your Honour, but my point is relatively simple. There were substantial notices given. both public, that is newspaper notices, and individual notices given by order of the court. One of the notices of the proceedings, in accordance with subsection (6), was a notice given to the trustees. The trustees appeared and consented to the orders that were sought and no further issue arose in relation to the trustees.
Now, with respect, your Honour, they are not made party until such time as, having been given notice in accordance with these procedures, they come before the court and apply to be made parties, or seek to be made parties and, indeed, a number of individual builders’ labourers did just that. Indeed, your Honour, in the orders before Justice Hayne in the Victorian Supreme Court, which I think is at 638, they appeared before his Honour as defendants represented by the agent of my instructing solicitor.
KIRBY J: Where is that shown?
MR ROTHMAN: Mr Kotsifas, the solicitor for the first to eighth-named defendants.
KIRBY J: Who are they? I see, we do have that this time.
MR ROTHMAN: The first named is Ronald George Owens and they are officers of the BLF and/or CFMEU. Your Honours will see that they are trustees of the Victorian Branch in relation to it.
KIRBY J: Which ones were the trustees, Mr Cummins?
MR ROTHMAN: Mr O’Malley and Mr Setka.
GAUDRON J: Now, I thought you wished to defer your submissions on the form of the order until you actually had it. Do the matters you are now raising go to anything other than that?
MR ROTHMAN: I understood - and I often wonder about my understanding, but I understood that there were two issues which were issues relating to the form of the proceedings, I will not call them the form of the orders, and one of the issues was the form of the order made by the Chief Justice, that is what order was actually entered. The other was the form of the proceeding in that who were the properly named parties, were they before the court, et cetera, in relation to the declaration.
GAUDRON J: But that goes to the order.
MR ROTHMAN: I see. Well, I apologise for my misunderstanding, your Honour, as I did, perhaps, at the outset. But I certainly wish to draw that to the attention of the Court because of the unusual nature of section 258 proceedings, and the way in which the matter came before the court, and the way in which the trustees were, in any event, before the court, albeit in a submitting appearance and not formally joined. I concede that, they were not formally joined.
McHUGH J: What about the effect of those undertakings given to the Supreme Court of Victoria by the trustees and the other persons, for example, that they would, “maintain separate records of all rents received and expenses paid in respect of those properties”?
MR ROTHMAN: Yes, your Honour, that has been done. That has been done by my clients and the trustees. They were undertakings given by the trustees and the first to eighth named defendants, who are my clients. They were done before the Supreme Court a separate - - -
GUMMOW J: What was the foundation of the Supreme Court jurisdiction?
MR ROTHMAN: There was an application for the winding up of the BLF.
GUMMOW J: As an unincorporated body?
MR ROTHMAN: As an unincorporated association. I was not in those proceedings, but that is the nature of the proceedings.
Your Honours have ordered the substitution of the Honourable Stephen George Alley as an appellant. What occurred was that the Custodian, being the late Ian Gordon Sharp, was an appellant, or an applicant for leave to appeal. That leave to appeal, or application, was withdrawn and the only application for leave to appeal which proceeded was the application for leave to appeal by the State of Victoria.
The issue, and the way in which it arose - I do not complain about that, but the way in which the matter arose was that there were outstanding issues that we brought to the attention of the State of Victoria as to the way in which the subsequent, or the second Custodian, was appointed, and certain issues as to the way in which the property was dealt with between the time of the death of Ian Gordon Sharp and the second Custodian, Stephen George Alley. We would ask, with respect, that the order that is made for the substitution would, nevertheless, reserve to us any matter in relation to that which might be raised properly before the Full Court when the matter, if it is, is remitted back to the Full Court. If the Court pleases.
GAUDRON J: Very well.
MR ROTHMAN: If the Court pleases.
GAUDRON J: That will be noted. Whatever that means, I do not know what it means, but ‑ ‑ ‑
MR ROTHMAN: I am not sure what it means either, your Honour.
GAUDRON J: It will be noted and I do not see how it could be raised in the Full Court on the pleadings as such, but whatever that means, so be it.
MR ROTHMAN: If your Honour pleases. Can I next deal with, rather than the matters that are raised strictly on the construction point, the matter that was raised by his Honour Justice McHugh during the course of the argument of my learned friend. It is a matter that, in part, relies on one of the submissions made as to the election. The Court will see in volume 4 of the appeal books that the transcript of the hearing, that is the two days of hearing before Chief Justice Wilcox, is included in the appeal books, even if the order is not, and at page 779 in volume 3 of the appeal books, the issue of the election, as it has been called, or the option was raised by myself. My learned friend Mr Sutherland sought to file a very late affidavit which, at that stage, was in draft form and at line 15 my learned friend says:
It is a formal matter really.....or two formal matters.
At page 780 line 8 I am asked by Chief Justice Wilcox whether or not I would be likely to cross‑examine Mr Sharp and I respond in this way:
Your Honour, I do not have a copy of the draft, but, your Honour, there are two matters in the affidavit which are contentious. And.....it is not meant to be a trial by ambush, one way or the other ‑ ‑ ‑
GUMMOW J: What does all this go to?
MR ROTHMAN: It goes to both the election and the issue relating to ‑ ‑ ‑
GUMMOW J: It goes to the construction of the clause, or?
KIRBY J: Does it go to power - the question raised by Justice McHugh?
MR ROTHMAN: Yes, your Honour.
KIRBY J: What power you had to be doing anything at all in relation to the property once the Act and the Order in Council were made.
MR ROTHMAN: His Honour Justice McHugh raised, in one sense, a much more fundamental issue, and that is really what are these proceedings about. I do not mean to be flippant when I say that.
KIRBY J: As far as I am concerned they are about the matters raised in the notice of appeal.
GUMMOW J: My brother is not the only one who is a bit puzzled about it.
MR ROTHMAN: Your Honour, puzzlement may not be confined to that side of the Bar table. Can I just take your Honours very briefly to a passage? What we put to my learned friend, Mr Sutherland, was that - and your Honours will see it at line 20:
paragraph two of the affidavit says that the Custodian has -
“possession”, that should read:
custody and control of the funds -
But nothing relation to that. The next is on page 781 at line 16:
The other matter, your Honour, is in paragraph 3 of the draft affidavit.....we would simply cross examine and my friend may be able to give some thought to this in terms of the finalisation of the affidavit. But, it is an issue as to whether or not the custodian has ever, and I notice this is not yet sworn, but ever said that the disposition was void.
Now, “said” is probably a loose term, and I apologise for that:
And I tell you why I say that, your Honour, your Honour may think I am being pedantic, order 2 of the order in council provides that any such payment, disposition, -
that should read “encumbrance”:
or charge shall be void at the option of the custodian.
His Honour says:
So, you say that there - no but is not he saying that it would be void if there was a disposition without his consent.
I say:
Well, I think he goes beyond that, your Honour, that is really what I am putting. All, from my point of view, your Honour, we need to elicit is that.
What then occurred was a filing of an affidavit which did not contain paragraph 3 in any way, shape or form. In other words, having been put on notice that we said there is a requirement under the Order in Council for the Custodian to elect, and we say he has not done so, they chose, in my respectful submission deliberately, not to elicit evidence going to whether or not an election had occurred. Indeed, in their written submissions, which are contained at page 705, or a passage of them is contained at page 705, they make it clear before the Chief Justice that - and this is at point 5, or line 15 on the page - they say in the proceedings at trial:
No situation has arisen or can arise whereby the Custodian is called upon to exercise his powers under paragraph 2 to treat a disposition as void
They make it clear from the outset that there has been no election.
Now, your Honour Justice McHugh asks me, or asks generally perhaps, what is the nature of the proceedings? Your Honour, we say, and if there had been evidence that an election had occurred we would have said before Chief Justice Wilcox, that the second sentence of clause 2 of the Order in Council reposes in the Custodian, whomever he may be or she may be at the time, a discretion. That is a discretion that is not at large. There are factors that are contained in the Act and, of course, in accordance with the principles laid down in 2HD and otherwise, the exercise of discretion must be confined to the purpose and subject matter of the Act itself.
We say that given the nature of section 7, or we would have said, that given the nature of section 7 and the terms of the Order in Council, there could not be an exercise of discretion which did not consent to the disposition of the property and by that it is not only the payment of property, it is the transfer of equitable title in property, but the disposition of the property in the way done in this case. In other words ‑ ‑ ‑
GUMMOW J: You say your opponent was standing or falling on his interpretation of clause 2, namely the interpretation he put to us earlier this morning where, as I see it, you have to read “void” in the second sentence as valid, and he was standing on that. He treats clause 2 as something that patches something up, which is already void under clause 1. He seemed to be standing or falling on that submission, and you say he falls.
MR ROTHMAN: Yes, your Honour. And we say if he had said ‑ ‑ ‑
GUMMOW J: That is it.
MR ROTHMAN: It goes beyond that. It really goes to the question his Honour Justice McHugh asked earlier and I understood was an issue that may have had general ‑ ‑ ‑
GUMMOW J: But he seemed to be saying he did not have to get to the exercise of whatever the second sentence meant because it was already void under 1.
MR ROTHMAN: He was saying that, that is true.
GUMMOW J: And if he is wrong about that, he has a problem.
MR ROTHMAN: Indeed.
GAUDRON J: No. But perhaps you also have a problem if he is wrong about it, because it may go to the order. It may be ‑ ‑ ‑
MR ROTHMAN: The order made by Chief Justice Wilcox?
GAUDRON J: Yes, which we have not yet seen.
MR ROTHMAN: Your Honour, I will answer that in two ways, your Honour. Firstly, until he opts to void, it is valid.
McHUGH J: No, but this is my problem. You assume that there has been a payment or a disposition of the funds. How could your making of the agreement dispose of the funds or property of the BLF?
MR ROTHMAN: Your Honour, with respect, there are a number of answers to your Honour’s suggestion, and I considered that suggestion of your Honour’s a further problem at the moment I am not addressing, and I will address. If I can just get beyond, if it pleases, the issue as to whether or not what is the point of the proceedings, which was a point that your Honour raised at one stage.
If the evidence had been, as we anticipated it might be, that the Custodian opted - either by gazette or some public notice, or whatever - to void what we say was, on the proper construction of the clause, a disposition, then the issue would have turned to whether he could validly opt to do that in terms of the exercise of his discretionary judgment, and there were issues involving the Administrative Law Act in Victoria and issues involving the issue of orders in the nature of property relief and the like. In the event, what actually occurred was nobody raised - and, indeed, until very late in the piece, that is, until a point in time that it was argued before the Full Court of the Industrial Relations Court, nobody argued that there had, in fact, been an election. Your Honour asks me about the purpose of the proceedings. That is, in a sense, one of the purposes of the proceedings.
McHUGH J: Let us take one aspect of the proceedings. Is money sitting in a bank account in Victoria in the name of the Custodian?
MR ROTHMAN: No, your Honour.
McHUGH J: Was it?
MR ROTHMAN: Was it? I thought your Honour said “is it”?
McHUGH J: No, no, it was, one assumes from what we were told. You have an order that the Custodian had to hand it over. Now, there does not seem to me to be any question of election. I just do not understand for the moment how you could get such an order. It is now in his bank accounts, it is in his name and you come along and get an order that he transfers it over.
MR ROTHMAN: Well, it was not quite ‑ ‑ ‑
McHUGH J: Or the cars or whatever else he has vested in.
MR ROTHMAN: Your Honour, it was in an account which was not strictly only in his name. It was in an account which was held in trust for the members of the BLF.
McHUGH J: Well, that may be but under this legislation you could not put an end to it, to the trust.
MR ROTHMAN: Your Honour, I do not have the order in front of me and I apologise to the Court for that but, your Honour, can I go back to the point which is really the second point and that is it is not only the disposition of funds or property. It is the disposition of any interest therein so that one can dispose of an interest in property, be it personal or real, without, in fact, there being a payment of the funds.
McHUGH J: Yes, well I can understand that and it may well be open to you to dispose of such interest as you have, but you have orders here or so it would appear - we have not seen the formal order ordering - in effect, the Custodian to take his name off everything and hand it all over to you.
MR ROTHMAN: That was, your Honour, a combination of two facts: firstly, that there was a finding that there was a disposition of the equitable title and, secondly, the operation then of the rules of the Union which required anyone holding the property of the Union to hold it in particular names and those orders were made in accordance with a number of findings in relation to that. The points raised before ‑ ‑ ‑
GAUDRON J: The rules of your Union could not bind the Custodian, could they?
MR ROTHMAN: If, ultimately, he was holding the property of the CFMEU in accordance with the - your Honour, we say he was under a duty to abide by the rules of the CFMEU as he was under a duty to abide by the rules of the BLF and, yes, he was bound by those rules because that is the nature of the office to which he was appointed and that is a point, I might add, that was conceded before Chief Justice Wilcox, that is, that he was bound at least by the rules of the BLF as to what he could do with the money and he was bound, if there be a disposition, by the rules of the CFMEU in relation to the funds.
McHUGH J: When you say he was bound, he could not have been bound by every rule. He could not have been bound by a rule in which the board or committee directed him to do this or do that with it and, unless the BLF rules have changed a lot since I acted for them, there was a lot of power put in the committee.
MR ROTHMAN: There was and there was up until 1994. Can I say, the issues that were raised before Chief Justice Wilcox were, as one would expect in relation to the refinement of issues as they come before this Court, many and varied. They went to the power of the BLF committee of management to do what they did. There were fairly famous members of the BLF who were opposed to the way in which the matter had been dealt with, and who were parties before Chief Justice Wilcox and parties at the Full Court level. They chose not to appeal. Those points are not raised on appeal and no one seeks to overturn the power in relation to those matters. The only issue that is appealed is the issue that relates to the construction of order 2, that is - - -
McHUGH J: Well, not necessarily. Ground 1 of the amended notice of appeals is wide enough to cover the whole effect of the Order in Council, not merely clause 2. Grounds 2 and 3 deal with ground 2, but ground 1 is in very wide terms. It deals with the whole order and the Act.
KIRBY J: Do you say that because of the way the matter was conducted in the Full Court and, indeed, before Justice Wilcox and the way in which the written submissions have been put before this Court, that you are not in a position to meet the argument of power?
MR ROTHMAN: Your Honour, I have not come here to meet the argument of power because the question of power was dealt with by Chief Justice Wilcox. It was not a matter - and, indeed, dealt with at length in relation to the arguments that were put. There were full written submissions by all parties which are, I think, contained in the appeal books, and there was a long dissertation on the power reposed in the rules, whether there was a power to amend certain rules, the effect of the BLF (De‑recognition) Act. Your Honour would recall, if your Honour appeared for the BLF - and, indeed, it is in evidence below - that the BLF existed beyond the State of Victoria; there are funds and property held throughout Australia.
GUMMOW J: There were these other agreements.
MR ROTHMAN: There was one federal agreement and there was agreement in relation to various State registered bodies.
KIRBY J: But there may not be legislation equivalent to the Victorian legislation and Order in Council, for all we know.
McHUGH J: There was in New South Wales.
MR ROTHMAN: Not to this extent.
KIRBY J: But that was just stopping litigation, I think, the New South Wales ‑ ‑ ‑
MR ROTHMAN: I am sorry, your Honour?
KIRBY J: The New South Wales Act merely stopped certain litigation that was put in track.
MR ROTHMAN: Yes, your Honour, stopped certain litigation, stopped the registration as an industrial union and stopped the capacity of the trade union to do certain things, but it did not vest property, it did not deal with its property, and it did not take the Draconian measures that I have set out - I do not say that critically - that are set out in this Act and Order in Council. I note the time, your Honour.
GAUDRON J: Yes. We might pursue them later. If the facts of the order should turn up, would you be kind enough to have it delivered to the Registry so that it can be distributed to us before Court resumes.
MR ROTHMAN: I will indeed, your Honour.
GAUDRON J: The Court will adjourn until 2.15.
AT 12.49 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.21 PM:
GAUDRON J: Gentlemen, we have received what, I take it, is the order made by Mr Justice Wilcox.
MR ROTHMAN: What your Honours have received, if it is the document that my instructing solicitor gave to the Registry, is the minute of the order that was published at the time that the reasons for judgment were handed down. You will understand the documents in this case go into about 15 cases - but my understanding is an order was entered in those terms, but I do not have a copy of that signed and sealed order, but the minutes of the order were that which were published with the reasons for judgment. Because of the practice, I think one of your Honours alluded to, of taking off the cover sheets of reasons for judgment, these pages were omitted from the judgment, but these actually form the front of - as is the practice in the Federal Court and in the Industrial Relations Court, these form the front of the reasons for judgment handed down by Chief Justice Wilcox at the time that his Honour handed down judgment.
GAUDRON J: Thank you, Mr Rothman. Now, this morning, gentlemen, the Court drew attention to a number of apparent irregularities or difficulties associated with this matter. I shall state what I see them as. Firstly, there is the question whether the absence of the trustees, as parties to the proceedings in front of Mr Justice Wilcox and thereafter, has any bearing on the order as made at first instance; the second is the identity of that which was purported to be transferred by the resolution in issue in these proceedings; the third is what it was that could have been transferred by a resolution of that kind; and the fourth is the possibility that the transaction could have been avoided by the Custodian at any time after the making of the orders by Mr Justice Wilcox, and the possible effect of those matters on the order that was subsequently made. Now, it is not, of course, clear, Mr Sutherland, the extent, if any, to which you rely on any of those matters.
MR SUTHERLAND: Your Honour, can I perhaps hand up to your Honours and to my learned friend our efforts over lunch to formulate a proposed amended ground of appeal in an endeavour to try and deal with at least one of the issues that your Honour has raised.
KIRBY J: Does that mean you have not dealt with the other matters that Justice Gaudron raised?
MR SUTHERLAND: I am sorry, your Honour?
KIRBY J: Does that mean that you have not, in this draft, dealt with the other matters? Do you rely on those other matters or not?
MR SUTHERLAND: Your Honour, in relation to the absence - dealing with the first matter - of the trustee as a party before the Chief Justice below, your Honours will have seen from the minutes of order that have been handed up that the effect of the orders and the binding declarations of right that were made by the learned Chief Justice would, on their face, not appear to extend to the real estate in any event.
GUMMOW J: On the face of it, it seems to require the Custodian to remove the caveats.
MR SUTHERLAND: The binding declaration of right, Justice Gummow, in ‑ ‑ ‑
GUMMOW J: In 4
MR SUTHERLAND: ‑ ‑ ‑ in paragraph 3, if I can perhaps deal with that first, and then go to 4. The binding declaration of right seems to be, on its face, confined to:
funds or property vested in him as Custodian under an Order in Council -
HAYNE J: No, it does not.
GUMMOW J: No it does not.
HAYNE J: Not at all. The first two lines go well beyond what is vested in him.
MR SUTHERLAND: Presently, perhaps, is the word that I should put emphasis on, your Honour Justice Hayne.
GUMMOW J: “presently in.....control of the first respondent”.
MR SUTHERLAND:
beneficially entitled to the funds and property presently in the possession, custody or control of the.....Custodian -
The real estate, on the evidence, was at all material times vested in title in the trustees.
HAYNE J: Who had possession of it? Who had control of it?
MR SUTHERLAND: The CFMEU or the BLF.
McHUGH J: What, had control?
MR SUTHERLAND: On any view, not the Custodian.
KIRBY J: The trustees for the members of the unincorporated association of the BLF.
MR SUTHERLAND: Yes.There was no effective change in possession following the order made by the Chief Justice, following the making of the amalgamation agreement in March of 1994. Up until that time the premises had been occupied by the BLF and by officers of the BLF. Subsequent to that date, the same people remained in possession, although they then claimed by reason of the amalgamation agreement that they were not there wearing the hats of the BLF but rather the hats of the CFMEU.
There was no change of possession to the Custodian, or control by the Custodian at any point in time, so that declaration of right No 3 would, on its face, given that it is confined to:
funds and property presently in the possession, custody or control of the first respondent- -
the Custodian, would not appear to extend to the real estate, on its face.
KIRBY J: We were told, before lunch, that the real battle in this case is about the real estate. Why are you troubling us if the order made by Justice Wilcox does not deal with that problem?
MR SUTHERLAND: It was, your Honour, the real estate and the funds that have been apprehended.
KIRBY J: But the real estate on what you are now telling the Court is not touched by declaration 3 or order 4.
MR SUTHERLAND: That is so, your Honour. It would appear that is ‑ ‑ ‑
KIRBY J: So it just remains where it was.
MR SUTHERLAND: It remains where it was.
KIRBY J: We are not concerned about it.
MR SUTHERLAND: It would appear on the face of those orders that that is the result, your Honour, in respect to the real estate.
McHUGH J: Order 4 says that the Custodian has got to do all things necessary to vest in the CFMEU the profit.
MR SUTHERLAND: The said funds and property, your Honour, and we would say that is a reference back to the property presently in the possession, custody or control of the Custodian.
KIRBY J: Why have you been causing such a lot of trouble for the Industrial Relations Court and us?
MR SUTHERLAND: It relates to both property, your Honour. The ‑ ‑ ‑
GUMMOW J: You say it relates to both.
GAUDRON J: I suppose whatever the decision of this Court is will have a bearing on both.
MR SUTHERLAND: Have a bearing on both, I am sorry, your Honour.
GAUDRON J: What about ‑ ‑ ‑
MR SUTHERLAND: Point 2?
GAUDRON J: Point 2, yes.
MR SUTHERLAND: My note of point 2 was what was purported to be transferred by - is it the amalgamation agreement, your Honour?
GAUDRON J: Yes. I suppose it is. You tell us it is.
MR SUTHERLAND: Presumably what was purported to be transferred was all the funds and all the property of the BLF. That is at least what our learned friends say is the effect of the amalgamation agreement when he takes you to the various provisions of it.
GUMMOW J: Including the beneficial interests in the real property?
MR SUTHERLAND: Including the beneficial interest in the real property, your Honour.
GUMMOW J: As well as the beneficial interests in the personal funds?
MR SUTHERLAND: Yes, your Honour.
KIRBY J: That might be so, but on the construction that you have put on the order that Justice Wilcox made, he just has not said anything in relation to the real estate.
MR SUTHERLAND: Yes. If that construction be the ‑ ‑ ‑
KIRBY J: So we are not dealing with an order which has purported to make declarations of right or to impose obligations by judicial order in respect of the real estate. That remains a matter to be litigated.
MR SUTHERLAND: That is right, your Honour.
KIRBY J: So, do you wish to raise that in this appeal or not?
MR SUTHERLAND: No, your Honour, not in this appeal.
McHUGH J: Before you make that concession, you had better have a look at page 28 of the statement of claim to which declarations 1 and 2 are directed from paragraph 12 through. At page 28 of the appeal book, paragraph 13 says:
The property held in trust.....has been transferred to the use of the Second Applicant but is purportedly subject.....
If the Merger Agreement.....were not effective to allow validity.....set out in paragraph 10 herein then all that was done pursuant to the Merger Agreement.....the acts set out in paragraph 11 herein are invalidities.
That takes you back to various matters. Then paragraph 15 talks about the potential invalidities. Paragraph 16:
The holding of the property in Victoria referred to.....is an invalidity in the management of the Second Applicant.
Then you have got a declaration in paragraph 2, that:
no invalidity has occurred in the management or administration of CFMEU.
So, that seems to be a declaration that this property has been transferred to the CFMEU.
KIRBY J: That may have been what was sought, but it does not seem to be what was given.
MR SUTHERLAND: Well, that is so, your Honour. That is what my learned friend sought in the amended statement of claim. It is not, on the evidence, factually correct to say that the property has been transferred. The property has not moved in terms of title.
KIRBY J: Just for my own part, I would like to know whether you are raising a ground of appeal that puts in issue the second matter that was referred to by Justice Gaudron at the beginning.
GAUDRON J: That is to say, whether they, in fact, purported to do more than transfer their beneficial interest.
GUMMOW J: In the personal property.
GAUDRON J: In the personal property. Well, no, in all property, but so far as is - - -
MR SUTHERLAND: The answer is no, your Honour. As I understand the third question, your Honour - - -
GAUDRON J: Well, they are really quite related, are they not?
MR SUTHERLAND: Yes. What it was that could have been transferred is dependent, I suppose, upon the proper construction of the Order in Council and raises, in any event, the point that Justice McHugh raised about the question of power. That is why I said when I rose and handed up the proposed amended grounds of appeal that we wanted to seek leave to amend the grounds of appeal to incorporate a ground based upon an absence of power to make the disposition, and we have formulated it in the document that we have handed up.
KIRBY J: We would have to delete the property, would we not, in that the order that was made does not refer to the property. It does purport to make reference to - well, that is not quite true. The order does refer to funds and property, but only that presently in the possession of the Custodian.
MR SUTHERLAND: Yes. Well, it is intended to be confined in the same way, your Honour and, consequential upon such an additional ground of appeal, we would seek leave to claim further orders, namely, that the order of the Full Court of the Industrial Relations Court be set aside; that the declaration of right in paragraph 3 of the order and paragraph 4 of the order made by the Chief Justice on 24 August be set aside; that moneys paid by the former Custodian to the CFMEU pursuant to paragraph 4 of the said order be paid forthwith to the second appellant, together with any interest or earnings accrued.
McHUGH J: Can I take you back to this reliance you place on the words “said property?” Paragraph 1 of the Order in Council of 13 October says that:
Possession, custody and control of the funds and property of BLF is hereby committed to Ian Gordon Sharp -
Now, that surely must give him the control of the property of the BLF. And paragraph 3 says that:
CFMEU is beneficially entitled to the funds and property presently in the possession, custody or control of the first respondent -
Now, I would have thought that the intent of the order was to cover everything that was covered by paragraph 1 of the Order of Council, and order 4 confirms that. It is just unthinkable that Justice Wilcox thought he was just dealing with some - whatever was in the physical possession of the Custodian. That was not the way the case was pleaded.
MR SUTHERLAND: The evidence certainly differentiated between the funds and the real estate and there was evidence, and it is in the appeal book in the form of affidavit material, exhibiting the certificates of title, showing the existence of the Queen’s caveats and recording the names of the registered proprietors as trustees.
McHUGH J: I know. That is the legal title but we are talking about who has the custody and control of the property.
MR SUTHERLAND: Well, there was certainly no evidence, your Honour ‑ I do not think my learned friend would disagree with this and probably the evidence went the other way, there was no evidence that the Custodian, at any point of time, had possession, custody or control of the real estate.
HAYNE J: I find that a remarkable statement in the face of page 603, Mr Sutherland, where Sharp swore that:
As at 28 February 1995 the assets of the BLF in my custodianship consisted of the following:
REAL ESTATE -
and a great list of real estate followed by “Cash at Bank”. But again, perhaps, I am mistaken.
I might say also Mr Sutherland, that the notion that when issue has been joined between the parties as it was on the pleadings, about the fate of the real estate, the notion that one party might cut and come again to reagitate those issues in some other and separate proceeding is a proposition which I find equally startling.
MR SUTHERLAND: Your Honour, he deposes in those terms, as your Honour correctly observes, he refers to his custodianship. It is perhaps an unfortunate word for the Custodian to have used in this context but ‑ ‑ ‑
McHUGH J: Why? Having regard to - do not you think that the Order in Council has any legal effect at all? As a matter of law. It does not matter what - if it is a valid order, as a matter of law it has vested the possession, custody and control of the funds and property of the BLF in him. It does not matter what is in the certificate of title. It does not matter what is in any other earlier Act. It is in him as a matter of law. He does not have to go and take possession of it. He is given it by law.
MR SUTHERLAND: Your Honour, I do not think I can take the matter much further. The order is couched in the terms that it is. It is, perhaps, unfortunate if it has been limited in the way at which it appears to have been.
McHUGH J: What is unfortunate, the order or his affidavit?
KIRBY J: Everything is unfortunate. The problem may be in those words “beneficially entitled”. I am not sure.
GAUDRON J: The proposed amended ground of appeal is designed to deal with ‑ ‑ ‑
MR SUTHERLAND: I think the point that Justice McHugh raised ‑ ‑ ‑
GAUDRON J: Justice McHugh raised, namely, what it was open to them to assign.
MR SUTHERLAND: Yes.
GAUDRON J: Does it purport, also, to deal with the possibility that the transaction might be avoided even after the order was made by Mr Justice Wilcox?
MR SUTHERLAND: No, your Honour.
GAUDRON J: So, you rely only on there having been the expression of an option in the pleadings, and not on there remaining an option to exercise?
MR SUTHERLAND: It is intended to differentiate between the question of power that Justice McHugh referred to, and the question of whether or not the exercise of an option was required if you adopt the voidable interpretation of clause 2. As I understood, the point that had been agitated by his Honour was that the first sentence of clause 2 and the effect of the Orders in Council in general is to proscribe any disposition of funds or property of the BLF. It is a question of power, as distinct from a question of whether or not it was void as a disposition, or whether it had been avoided by exercise of an option.
GUMMOW J: Assume you are wrong on your construction of clause 2, and assume the first sentence in clause 2 specifies a criminal offence. The second sentence in clause 2 specifies the civil consequences. Now, assume that that is the correct construction. The question is, is this transaction, and are these orders still, or were they liable as in March, to displacement by exercise of a still subsisting right in the Custodian to exercise that power to void? So that, on that ground, you would support setting aside the declaration and the order because they are expressed in absolute terms rather than subject to this potentiality, at least, of defeasance. That is one of the things you are being asked, and you have to face up to it. You will not answer it just by reiterating what your preferred construction is, but we all know that.
MR SUTHERLAND: I am sorry, I must be approaching it from a different position to your Honour.
GUMMOW J: On your preferred construction of clause 2,......struck at immediately, right, because there was no consent et cetera?
MR SUTHERLAND: Yes.
GUMMOW J: The second sentence enables a reinstatement of validity in some way; that is your submission, is it not? Well, assume that is wrong. Assume the situation is the reverse.
MR SUTHERLAND: It is voidable.
GUMMOW J: To use that word, yes; and has not yet been avoided. The question is, do you seek to preserve that position?
MR SUTHERLAND: The position of it not having been avoided and ‑ ‑ ‑
GAUDRON J: But is still voidable or, more particularly, was still voidable as at the time of the making of the orders by Justice Wilcox.
MR SUTHERLAND: Is it still open to the Custodian on that construction to now or hereafter exercise the option to avoid?
GAUDRON J: Yes, but the relevant time is whether it was open at the time when the order was made for him to exercise that option, or within a short time thereafter.
MR SUTHERLAND: It could not have been at the time the order was made - at the time of him becoming aware of the ‑ ‑ ‑
GUMMOW J: He was aware by then, surely.
MR SUTHERLAND: Of the disposition, yes.
McHUGH J: He was aware by then but, as a matter of construction, was it still open to him as at the date Justice Wilcox made an order for the Custodian to opt to have the transfer or disposition rendered void? Because if it was, arguably any orders that were made should have been made subject to that right in the Custodian to exercise the option conferred by paragraph 2. Now what you are being asked is, do you want to run that point?
MR SUTHERLAND: It is not a point, your Honour, we came to argue and I do not think it is a point we now seek to argue.
KIRBY J: If you were to get up on the point that you have added by, somewhat reluctantly, I think, embracing ultimately the point that was raised concerning power, if you were to win on that point then you would have to tend to the costs, would you not, of the whole proceedings to date, because this is something you have just raised, or you have raised on this day, at such a late stage in the proceedings.
MR SUTHERLAND: I would concede, your Honour, that it is being raised at a late hour.
KIRBY J: It certainly has, after the trial, after the appeal, after the application for leave to appeal, and well into the hearing of the appeal by leave.
MR SUTHERLAND: Yes.
KIRBY J: If you were to win on that point, you would have to pay the costs that have been thrown away by you not having raised the point earlier. It seems logical to me, but I raise it so that you can deal with it if you do not agree with me.
GUMMOW J: I have to tell you, Mr Sutherland, my provisional view is that your preferred construction is not the correct construction. I may be wrong about that, but that is my provisional view, having listened to it all this morning.
MR SUTHERLAND: Your Honour, there are ‑ ‑ ‑
GUMMOW J: If I adhere to that, this appeal will fail, and there is nothing else before us.
KIRBY J: Except the power matter which you have now added, and I have raised with you the question of your bearing the costs, so that you can deal with that if you wish to.
MR SUTHERLAND: Yes.
KIRBY J: If you were to win on that point because my position, at the moment, is the same as Justice Gummow’s on the construction argument but I think there is something in the power question.
MR SUTHERLAND: There are statutory provisions relating to costs in matters of this kind.
KIRBY J: That is right, you remind me of that, but this may be a special situation.
MR SUTHERLAND: It may be, your Honour, and we would have to accept that there has been a lateness in raising ‑ ‑ ‑
KIRBY J: Perhaps you would want to deal with that in writing later.
MR SUTHERLAND: If the Court pleases, they are our submissions. We would seek leave in those terms.
GAUDRON J: Subject to what Mr Rothman has to say, the Court would be minded to grant leave but we need to hear from Mr Rothman on it. But, Mr Rothman, before you come to deal specifically with that application, I should tell you that the general rule is that once appellate jurisdiction is invoked, it is invoked with respect to the whole matter. Now it may be that even though Mr Sutherland does not rely on some of the matters raised, those matters may become relevant to our disposition of the matter.
Accordingly, it would be proposed to give you leave at the conclusion of today’s argument to file written submissions within 14 days with respect to the four matters to which attention has been drawn and to allow you to put submissions on the question of whether the Court can or should make any determination with respect to them with a right reserved to Mr Sutherland to file a reply. So I should tell you that so that you could have that in mind when you deal with the application to add the further ground of appeal.
MR ROTHMAN: Your Honour, without prejudicing my rights to put something in writing to your Honours, obviously, a number of the matters that have been raised are not matters which, on the face of the documents that are before the Court, seen to arise on the appeal.
McHUGH J: Ground 1 is the general challenge.
MR ROTHMAN: I am sorry, your Honour.
McHUGH J: Ground 1 of the amended notice of appeal ‑ ‑ ‑
MR ROTHMAN: I take your Honour’s broad reading of ground 1.
McHUGH J: ‑ ‑ ‑is a general view and this Court does not sit here as an umpire between counsels’ arguments. If counsel does not put an argument, it does not stop this Court from deciding an issue on that point subject, in the appropriate case, that the other side gets an opportunity to deal with it.
MR ROTHMAN: Your Honour, there are, with respect, significant matters which the Court is overlooking in dealing with that issue and that is this, that one of the points raised before Chief Justice Wilcox and again before the Full Court, was an issue as to the capacity of the Victorian Government to legislate in relation to ‑ ‑ ‑
GAUDRON J: Yes, that is a matter which is reserved to you and will go back ‑ ‑ ‑
MR ROTHMAN: Indeed, your Honour, but my understanding of his Honour Justice McHugh’s question about the general power is where does the power come from reposed in the committee of management of the Builders Labourers’ Federation. The agreement that was made in relation to property, only one adjunct of it related to this Victorian property. Most of the agreement - agreement is in federal terms. Most of the agreement relates to property beyond the State of Victoria and not caught by this Act and that is the BLF (De‑recognition) Act.
McHUGH J: It is raised by question 3 that Justice Gaudron formulated: what was it that could have been transferred under the agreement? Then the question arises whether the agreement could transfer the property which was the subject of the Order in Council. It is arguably one of the questions that is involved.
MR ROTHMAN: I understand that the point is raised in the questions adumbrated by the Court earlier, I do not suggest it is not raised. My point really, your Honour, is that there was a defence filed and the case has proceeded on a basis well beyond a trial and we are now, albeit not an adjudication between the parties, we are now at the second level of appeal and the ultimate level of appeal.
GAUDRON J: And concerned purely with a matter of construction, at least so far as one aspect is concerned.
MR ROTHMAN: It concerns a matter dealing with the power of construction of the rules of the BLF. It deals with a matter concerning the construction and the interrelationship between the rules of the BLF and the BLF (De-recognition) Act of Victoria. It deals with the issue raised by the interrelationship between what was then section 143(6) of the Conciliation and Arbitration Act and the BLF (De-recognition) Act and the power of the federal committee of management.
GAUDRON J: I think the more precise question is, at least with respect to the property vested in the Custodian, the property being vested in, what was it that, as a matter of law, anyone could transfer? Regardless of the rules as a matter of plain, hard, general law, what can one person transfer of property that is not vested in him or her?
MR ROTHMAN: Your Honour, no one suggests, and perhaps that is why I have misunderstood your Honour’s question, that the beneficial title in the property was not in the BLF.
McHUGH J: But even that is a loose way of describing a situation for the purpose of legal analysis, because there is nothing in the BLF, it is just a name, is it not?
MR ROTHMAN: Your Honour, I use the BLF colloquially, no one suggests - - -
GUMMOW J: Yes, I know you use it colloquially and that is the problem.
MR ROTHMAN: Your Honour, I will be more precise. I use it the same way as the Act uses it. No one suggests that beneficial ownership of the property was not vested in the members of unincorporated association known as the Australian Building and Construction Employees and Builders Labourers’ Federation qua their membership. That beneficial title - - -
McHUGH J: It was vested in trustees to be held for the benefit of the individuals who are members of the association known as the BLF, is it not?
MR ROTHMAN: It was, in a courtroom.
GAUDRON J: In circumstances in which they apparently could not call for the legal title. You have a very unusual trust situation here. It is a peculiar trust, that stands apart from the general law of trusts; a matter that seems not to have been developed anywhere.
MR ROTHMAN: Well, I hear what the Court says and I am grateful for the particulars of the question.
McHUGH J: You are being put on notice about matters that are exercising the Court’s mind, because judgments will be written and these points may float out - they may form the base of the judgment, and we do not want you coming back here when the judgment is given and say, “I want to reopen these orders. I was not given an opportunity to deal with these matters.”
MR ROTHMAN: I understand, but I am not seeking to sidestep the issue, or, indeed, I am certainly not - I am not presumptuous enough - even I am not presumptuous enough to criticise the Court. I am merely asking, really, to - - -
McHUGH J: But you will be putting these things in writing at some stage. You are not required - - -
MR ROTHMAN: Yes, your Honour. I merely sought clarification of what the issue was that you Honours were dealing with and I do not - - -
KIRBY J: It is normal in this Court, and in all courts, for counsel to address matters that are defined by a notice of appeal. Now, in this Court, of the four matters that have been raised by the Presiding Judge, only one was embraced by the appellants. But I think what you will have to try to do, as best you can, is to respond as if those other three points were issues before the Court, just in case they later become necessary to the resolution of the matter before the Court, although the appellants have not embraced them.
GUMMOW J: Now, let me tell you how they may become relevant, Mr Rothman. If you take your outline - the short form outline which you helpfully gave to us this morning, paragraphs 1 and 2 put your construction on clause 2. Just assume that one accepts that, that you are correct about that. Then one comes to clause 3. But suppose one says, okay, the Custodian had not opted to void the transaction, but the potential was still there and the power to do so certainly existed at the time the orders were made in the Industrial Court and that, therefore, the orders simply cannot stand just for that reason, flowing simply from your preferred construction.
MR ROTHMAN: Your Honour, can I deal with that very briefly now?
GUMMOW J: Yes.
MR ROTHMAN: I understand that I have the right to do so in writing, and I appreciate that right. Your Honours would be aware that a number of these points, notwithstanding that one prepares significantly for the High Court, were not prepared in the way in which your Honours have asked. Can I deal with that point very briefly? There are two ways in which to deal with it, firstly, dealing with it by way of reference to the judgment of his Honour Chief Justice Wilcox. His Honour Chief Justice Wilcox, made two findings in relation to the Orders in Council. The first is that he construed them - the simple construction point went, if you like, our way. He felt he had been - as your Honour has put it, it went our way. The second thing is that he then held - my learned friend uses the term “voidable” - it is a term I have tried to avoid - but he then held that the Custodian had the power to opt, but did not.
GUMMOW J: Had not, to that date.
MR ROTHMAN: Yes, your Honour, had not to that date. At that date, the property, therefore, had passed. Leave aside what effect any subsequent avoidance would have, the property had passed. At that date, the interest in the property had passed to the CFMEU and was not held beneficially by the members of the BLF qua their membership. His Honour held, in a passage in his judgment commencing at page 1,038 of the appeal books - it is in volume 5 - the passage - I was going to say the purple passage, but in my book it is pink, but the purple passage, your Honour, is at page 1,039, line 10. He says this:
If it is correct to say that, after the merger, BLF members no longer had any right to the funds and property held by Dr Sharp, whether or not BLF’s interest in the funds and property was transferred to CFMEU, there could thereafter be no extension of the Order in Council.
That relates to an argument based upon the dicta of his Honour Justice Toohey in Dobinson v Crabb that essentially said that the only way a condition precedent to the making of Orders in Council, was that they serve the purpose of protecting the interests of person who are or were members of the BLF. If they had no such interest to protect, no Orders in Council could be made. His Honour dealt with that point, and then said:
The purpose required by s 7 of a valid Order could not be achieved. On the expiration of the last pre‑amalgamation Order in Council, on 16 September 1994, the funds and property would have ceased to vest in Dr Sharp or be subject to his possession, custody or control.
That is how his Honour dealt with ‑ ‑ ‑
McHUGH J: I understand that is how he dealt with it, but one answer that immediately comes to mind is, that having regard to the Order in Council, that the members, themselves, could not have required Dr Sharp to have transferred the title to them, and what right then did they have to transfer their rights to anybody else.
MR ROTHMAN: That, of course, goes back to 30 or 31 March 1994 agreement. I understand that is an issue that your Honour raises, or that the Court raises.
McHUGH J: Yes.
MR ROTHMAN: I raise that simply because your Honour raises the question of subsequent avoidance, and his Honour Chief Justice Wilcox dealt with that in terms of, if a property has passed - your Honour’s point is a condition precedent to that - but, if the property has passed then there are no interests of the BLF or its members, and therefore there is nothing to protect. The purpose of section 7 is denuded. Therefore, no valid Orders in Council can be made. That traced back to a statement in Dobinson v Crabb of his Honour Justice Toohey.
McHUGH J: That seems to suggest that the option was never of any significance at all; had no meaning or effect.
MR ROTHMAN: No, your Honour, because that Order in Council was six months after.
McHUGH J: But if they could transfer it, then that property was outside Dr Sharp’s control. Was it only because they transferred all of it?
MR ROTHMAN: No, your Honour. That passage deals with what happened - whether or not the Victorian Government; whether the Governor in Council had the power to make an Order in Council in or about September 1994, six months after the purported transfer and, indeed, seven months after notification of transfer. That is what that goes to. It goes to whether or not there could be a valid Order in Council, not to whether there was a valid passing of the property. His Honour says there was a passing of property. The Order in Council lapsed on 16 September 1994.
KIRBY J: That was by its own force, was it, there was a provision ‑ ‑ ‑
MR ROTHMAN: It went for a period of six months. On or about 16 September 1994 the Victorian Government issued a further Order in Council extending the time of the previous Order in Council. What his Honour held was that such an extension of time must be based on section 7 of the Act, which requires that the purpose of the Order in Council was to protect the interests of current or past members of the BLF. Since under the rules they had no - and I take your Honour’s point that there may not have been a disposition or a valid rule change, but since they had no interest at that point in time, that is, as at 16 September 1994, there was nothing to protect and no valid Order in Council could be made. That is what his Honour held. There was no appeal against that, certainly to this Court.
GAUDRON J: Is it an issue in the Full Industrial Court if the matter has to go back?
MR ROTHMAN: Is it an issue?
GAUDRON J: Yes.
MR ROTHMAN: It is an issue with which the Full Industrial Court found they did not need to deal.
GAUDRON J: That is right, so it is there if it has to go back.
MR ROTHMAN: Yes, your Honour. I do so expressly at page 1,079 of the appeal book, No 4:
If “yes” to (3), were the Orders-in-Council made after 31 March 1994 effective -
I do not read all of it but ‑ ‑ ‑
KIRBY J: Is this decision reported, by the way?
MR ROTHMAN: Certainly not in authorised reports, which are very much a collector’s item, I would have thought nowadays. But I think they are in the ALRs, your Honour. I apologise for not - and they are in ‑ ‑ ‑
KIRBY J: It is rather better for the profession if we can refer to a report than appeal books.
MR ROTHMAN: I understand that. Because they are Industrial Relations Court decisions they do not get reported in the Federal Court Reports. The Industrial Relations Court Reports are not as up to date as the Federal Court Reports and they are reported, however that decision is reported in the Industrial Reports and I believe in the Australian Law Reports. I can perhaps give the Registry a reference to those in the fullness of time.
It seems, on the face of it, that the four questions asked by the Court and to be answered in writing effectively deal with the preliminary matters, other than the construction point itself. The other matters in the notice of contention, it seems clear by agreement, can be remitted back and they are there only in case the Court wanted to deal with them. The ‑ ‑ ‑
GAUDRON J: Have you finished saying what you have to say about the application to amend the ground of appeal?
MR ROTHMAN: No, your Honour, I am sorry. We would oppose the amended grounds of appeal, your Honour. We say that a statement of defence was filed on 28 October 1994 and grounds of appeal have been lodged and filed since. Those defences went to a whole range of areas, including the area of power, but did not raise the question here raised. There is, we say, an Anshun point as to whether or not the appellants ought now be allowed to raise the issue.
GUMMOW J: I cannot be an Anshun point; it is the same suit.
MR ROTHMAN: I appreciate that, your Honour. But we say that, in any event, they ought not be allowed to now amend their defence at this late stage. We say that the question of the issue of costs is one of the issues of discretion as to whether or not the Court ought allow the amendment. The provisions of the Act do not allow, it seems, the Court to order costs in relation to the proceedings thus far. If they won on that point, there would be no remedy to my clients.
GUMMOW J: I thought there is a letter. I thought it said something like, “except in exceptional circumstances.”
MR ROTHMAN: It says, your Honour, from memory it is, I think, section 347 of the Industrial Relations Act and it ‑ ‑ ‑
KIRBY J: I am glad you remember the section, Mr Rothman. Cost provisions are generally rather important.
MR ROTHMAN: Yes, your Honour. I remember it almost as well as the one that goes to legal assistance which is a special provision as well but, your Honour, section 347, the exception relates to institution of proceedings vexatiously or without reasonable cause. That has been held by the Federal Court of Australia and the Industrial Relations Court of Australia to mean that you would have to institute the proceedings or a respondent could never be held liable to pay costs in a matter.
GAUDRON J: It is an interesting question whether this is a matter under that Act or under the Victorian Act.
MR ROTHMAN: Well, your Honour, that is a question I have not come armed with. Section 258 was the nature of the application originally made. There were a number of ‑ ‑ ‑
GAUDRON J: Yes, but this particular question that is now before us.
MR ROTHMAN: Your Honour, the only reason that that matter is before your Honours is because that matter was held to be within the accrued jurisdiction of the Court under the provisions of the Industrial Relations Act which are identical to the terms in this area. It is identical to the terms in the Federal Court Act and, your Honours, Fendott v Muller and those cases apply. So that, with respect, as much as I would like to be able to make the submission that it does not arise under this Act, I think I am compelled to the point that it does.
In any event, we say the absence of the ability to award costs in a situation like that goes to whether or not leave to amend ought be granted and we would further ask that if we are entitled to put written submissions in 14 days, that we be given leave to put any further submissions in relation to the amendment that we may wish to put in those written submissions. Is that a convenient course to ‑ ‑ ‑
GAUDRON J: Yes. You may do that and there will be a right of reply, of course, to Mr Sutherland.
MR ROTHMAN: Yes, your Honour. The issue before the Court, other than those issues which have taken up the time thus far, are issues relating to what I have, somewhat hesitatingly, called a simple construction point of the Order in Council. My learned friends have taken the Court to the decision of this Court in Yango and, in particular, the judgment of his Honour Justice Mason, as he then was. My learned friend read from a passage at page 423 of that judgment which can be found in 139 CLR 410. I certainly do not read it again. I should draw the Court’s attention to the passage in the same judgment of his Honour Justice Mason at page 429. At about point 3 on the page, his Honour says:
There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law -
and if I might interpose, your Honours in Byrne and Frew and in Nelson suggested that the word “rule” there should read “role”, but in any event -
the rule of the common law in determining the legal consequences of commission of the offence is thereby diminished.
His Honour refers to his own judgment in Jackson v Harrison.
See also the suggestions that the principle cannot apply to all statutory offences ..... and that it would be a curious thing if the offender is to be punished twice, civilly as well as criminally. The main considerations from which the principle ex turpi causa arose can be seen in the reluctance of the courts to be instrumental in offering an inducement to crime or removing a restraint to crime.
KIRBY J: Is there any principle of interpretation that is helpful here? In other words, if you have got an ambiguous provision and you are teetering on the brink of one construction or another, what is the correct approach to this particular clause? Is there any general principle that should guide a court in changing the construction?
MR ROTHMAN: I really, your Honour, do not go past the ordinary grammatical meaning of the words.
KIRBY J: Thank you very much.
MR ROTHMAN: The words specifically say, the first sentence of clause 2 does not deal with the civil effect of a disposition or a purported disposition and the second sentence specifically deals with, or gives the right to the Custodian to void such a transaction. Because it uses the word “void” and not “validate” it necessarily implies that the transaction is valid until voided and, with respect, the construction of my learned friend would, we would say, strain the language of clause 2 or make it otiose. It really is that simple.
My learned friend really goes, as I understand it, in relation to the first sentence of clause 2, to a proposition that if the transaction is illegal at commencement, then it is void in accordance with the ordinary rules of law and the passages to which I have taken, or seek to take your Honours, in Hunter v Melville, although I do not take your Honours to it, I refer your Honour to it; in Yango, in Byrne v Australian Airlines and in Nelson v Nelson, all go to the proposition that whether or not in deciding whether it is void, it is - I do not wish to put it too simply - but it is a simple question of construction. The majority judgment in Byrne v Australian Airlines 185 CLR 428 cites Yango, indeed cites Justice Mason in Yango. At page 428 point 5 they cite the passage of his Honour Justice Mason at page 429 to which I have taken your Honours and they cite from, also with approval, Chief Justice Latham in the minority in Automatic Fire Sprinklers Pty Ltd v Watson to the effect that:
“the fact that a statute prohibits the doing of an act under a penalty does not show that the act cannot be done.”
GUMMOW J: That is directed to a situation when all one had was the first sentence in clause 2. You have got two sentences here.
MR ROTHMAN: Yes, your Honour, I do not wish to labour the obvious. There are two arguments, they are fairly obvious arguments and one would have thought hardly needing of a great deal of submission. I was simply trying to take your Honours to some passages that go to that question. In Nelson v Nelson the passage at page 590 is a passage from a judgment of ‑ ‑ ‑.
GAUDRON J: Reference?
MR ROTHMAN: It is in the folders of cases that were handed up to your Honours and, indeed, Byrne v Australian Airlines;Frew v Australian Airlines 185 CLR 410 is tab No 4. The passage that I have given your Honour is at page 428, point 5. Nelson v Nelson, your Honours, is tab No 5 in the same booklet. Without reading it, in the judgment of their Honours, Justices Deane and Gummow, at page 561, point 5. In the same judgment at page 570, point 8, there is a reference to Yango. In the judgment of his Honour, Justice Dawson - it is unnecessary to go to all of them, but in the judgment of his Honour Justice Toohey, at the foot of page 590, again a reference to Yango and the judgment of his Honour Justice Mason, with whom Justice Aickin agreed, to the top of page 591.
KIRBY J: What is the principle these citations stand for?
MR ROTHMAN: The principle embodied in the first paragraph of the outline, namely, that the mere prohibition on the doing of an act does not render the act void once done, otherwise it is a question of statutory construction as to what the civil effect of such a prohibition is. We say the statutory construction here is really very simple and quite plain.
KIRBY J: But what have all these principles got to do with it when the Order in Council expressly provides for circumstances of voidance? That is where there is nothing, not where there is something. You say a fortiori.
MR ROTHMAN: Yes, your Honour, I say a fortiori.
KIRBY J: Yes, all right.
MR ROTHMAN: Your Honour, I have to say there does not seem to be much that one can put as to the ordinary English words that are used in order 2, and I merely sought to take the Court to the principles lest it be looking at the question of the first sentence by itself. We say, with respect, that the clause and, indeed, the whole Order in Council must be read as a whole and the clause, when read as a whole, makes it absolutely clear it is valid until voided by the Custodian, and that is an option that he must make. Your Honour, the other passage is at the top of page 594, again a reference by his Honour Justice Toohey to Yango and the judgment of his Honour Justice Mason. The last passage is in the judgment of your Honour Justice McHugh, at the foot of page 610 and about point 3 on 611.
We say, with respect, that the arguments are dealt with by his Honour Chief Justice Wilcox at appeal book 1041 to 1043, and we invite the Court to re-read those sections, and by the Full Court at 1074 to 1077. We say that the second sentence makes it clear that the first sentence of the clause does not void ab initio or in its ordinary meaning the second sentence has no work to do and is otiose. We point out that the effect of it being void ab initio would be that innocent third parties - we are dealing with a number of matters of personal property, of motor vehicle of the like - would be ‑ ‑ ‑
GUMMOW J: Were the applicants in this sued innocent third parties, the transferees?
MR ROTHMAN: I sense a - I withdraw that. Your Honour, the ‑ ‑ ‑
KIRBY J: You are right to sense it, just the same.
MR ROTHMAN: Yes, your Honour. I withdraw what I was about to say. Your Honour, there are not issues are - or I did not think there were issues that were before the Court which dealt with the merits of the matter, but it is instructive to look at the history of this matter in its fulsomeness, and there are, indeed, a lot of documents before the Court. There are two Acts which - and this is all evidence and were matters that were before his Honour Chief Justice Wilcox. There were two Acts which interplayed: one was the Commonwealth Act, being the Builders Labourers’ Federation (Cancellation of Registration) Act - - -
GUMMOW J: I remember all that litigation.
MR ROTHMAN: Yes, your Honour. There were ‑ ‑ ‑
GUMMOW J: But I thought you were saying that if there had been an avoidance here in respect of the CFMEU, that would have been a harsh application of this Order in Council because it would be disrupting the rights of innocent third parties.
MR ROTHMAN: Your Honour, I say two things: firstly ‑ ‑ ‑
GUMMOW J: Some colour came out of that to assist your construction.
MR ROTHMAN: Your Honour, I say two things: firstly, that the Order in Council has to be construed in relation to all of its operations, so therefore it must be construed having in mind that there are innocent third parties or may be innocent third parties who would be affected. Your Honour, I do say that there are ‑ ‑ ‑
GUMMOW J: The parties to this bill of exchange would be an example. Some of these moneys were invested on a bill of exchange, were they not?
MR ROTHMAN: Yes, your Honour.
GUMMOW J: $750,000 at one stage.
MR ROTHMAN: Yes, your Honour, a person who bought a motor vehicle which was being used by the officers of the BLF or the like. There were three types of property; that is in evidence. There was property held by the BLF outside the State of Victoria - I do not deal with any of that. There was property which was the subject of a caveat and/or holding by the Custodian and there was other property which the Custodian, if you like, just simply did not deal with. I mean by that deliberately - it is in the reports - that is property that was needed for the continuing operation of the BLF and was in the hands of the BLF.
In terms of the material that is before the Court, the agreements to which reference was earlier made, being the agreements relating to various branches and, in particular, in relation to the Victorian branch, which can be found at page 588 of the appeal books - these are detailed agreements which deal with certain operations - make clear that, firstly, the CFMEU acknowledged that the - it knew of the BLF (De‑recognition) Act, and that steps were taken by the Custodian in relation to assets and funds:
The BLF and the Victorian Branch hereby warrant that this agreement has been approved by a meeting of the Victorian branch.....The parties hereto agree that they will do all things necessary, including the holding of all necessary meetings.....the making of all necessary applications.....to give effect to this agreement.
At least on one interpretation of it, it is not said and, indeed, there is no cross‑examination of the officers that were called, to the effect that they knew of, or did not know of, for that matter, that consent had not been sought in relation to the CFMEU. But, the history of this agreement, your Honour, was that - the precursors to the agreement, on the evidence, were known to the Victorian Government in 1990 and 1991. They were parties to proceedings before then Vice‑President Moore, and the agreements were made at the express inducement of the then, Federal Minister for Industrial Relations, Mr Cook. It is in the material; indeed, it is the preamble to one of the agreements.
KIRBY J: That might all be so but the fact remains that here is an Order in Council which, if it is valid, drawing on State legislation, says possession, custody or control of property of BLF is hereby given to a Custodian, and then here you are fussing about and purporting to transfer it. It may be that if the power issue goes out and you win the construction point, and subject to any other issues that can properly be dealt by the Court, you win. But, it is a very, very odd result. It is a very odd result.
MR ROTHMAN: Your Honour is really talking, really, about the merits of what should or should not happen and, with respect, his Honour Chief Justice Wilcox ‑ ‑ ‑
KIRBY J: Alas, I can never forget them entirely.
MR ROTHMAN: His Honour Chief Justice Wilcox dealt with those merits in the judgment and, with respect, he came to an opposite to your Honour; he found, with respect, that it would be an extremely odd result that the organisation to whom the coverage was given and to whom all of the members of the BLF became affiliated, and was representing their industrial interest, was not entitled to the funds of the organisation in accordance with the agreement would have been more odd.
With respect, the effect of the agreement with the CFMEU was no different, in effect. I know I am overlooking a number of nice legal points but no different, in effect, if one is talking about the merits of the BLF being reregistered. Would that be a transfer of the funds? Would the Custodian have continued to hold the funds? These are nice questions which, thankfully, no one has to answer.
KIRBY J: But, presumably, the scheme of the Victorian Act was that some decision would be made by the Custodian that it was in the industrial interests of the former members of the BLF before their property would be going over, and that it was not just for the rump of the BLF and the new Union to resolve these matters for themselves, but that a statutory trustee protected by Queen’s caveats would decide these matters in the best interests of the members, not just a little deal in smoke-filled rooms deciding what was in the best interests, by people who are.....involved.
MR ROTHMAN: Your Honour, my address on the history went to show that it was not a deal in smoke-filled rooms and that the agreement had the imprimatur on the evidence of the Australian Industrial Relations Commission, for example. It was an annexure to section 118A orders and the like. I am reminded there was - - -
McHUGH J: Were they informed of the existence of the Custodian’s role?
MR ROTHMAN: Yes, your Honour, but to be fair, it was dealing really with the principle of amalgamation or merger rather than with, perhaps, the niceties of what occurred in relation to each of the particular details. But, your Honour, there was also a ballot of all of the members in Western Australia, South Australia, Queensland and Tasmania, a decision of a branch in Victoria, and New South Wales was not affected, because by that stage there was not a New South Wales branch. The members of the BLF were about 18,000 or 20,000 strong of which 90 members, whether or not financial, were in Victoria and 12 were in New South Wales. According to the evidence of Mr Owens, all of the other former members of the BLF were already members of the CFMEU. So that one talks about odd results, but, in reality, it would be an odder result were anything else to have occurred.
Your Honour, we draw the Court’s attention to the use of the word “shall be” in the second sentence of clause 2 of the Order in Council and we say that the second sentence makes it clear that any disposition shall be void at the option of a Custodian and, necessarily, that until that option is exercised, it is not void.
In terms of the argument that my learned friend raises as to election, we draw your Honours’ attention to a number of passages. The issue was - I think I went to some of this transcript earlier so I do not, perhaps, need to go to it again. The issue was clearly raised by us with - - -
McHUGH J: Just before you go on. Why do you place emphasis on the word “shall be”? I would have thought that was against you, that one would have thought that a support for your argument would be if it said “any such payment may be declared void at the option of the Custodian”.
MR ROTHMAN: No, your Honour, it is the tense of it, rather than use the word “shall”. “Shall” is a future tense, not a mandatory term when used like this, and we say that “shall be” is in the future. It was not void before the option; it shall be void after the option of the Custodian is exercised. It does not say “is void”. And the use of the word “void”, your Honour, in my respectful submission, cannot be strained to mean “validate”, nor can the words “unless validated” be inserted, as was the proposition put to the Full Court of the Industrial Relations Court below.
I took your Honours to - perhaps it is sufficient for me to say that the transcript bears out, at page 779, 780 and 781, that the issue was raised with my learned friend by us - that is, if there had not been an election and if evidence was to be adduced in relation to that, it ought be made clear. My learned friend then, we say deliberately, did not adduce evidence as to the making of an election, either by the terms of the statement of defence, or, indeed, in any other way. At page 896, my learned friend, Mr Sutherland, agreed that in so far as the affidavit went to anything which the Custodian regarded, it was a conclusion based on his interpretation of the first sentence of the clause.
At page 705, in the written submissions made after the evidence had been adduced, my learned friend said, on behalf of the Custodian, at line 15 of the page:
No situation has arisen or can arise whereby the Custodian is called upon to exercise his powers under paragraph 2 to treat a disposition as void.
Now, your Honour, we say it is not open to my friend, in the light of that, to say that ex post facto there was an election in circumstances where it was clear before the court that my friend was relying on the fact that there had been no election and no option to void.
We also say, with respect, that that was a matter which we say went to significant questions of fact which are incapable of now being addressed, and we brought the issue to my learned friend’s attention, and we say, on the principles embodied in Coulton v Holcombe, my friend ought not be allowed now to take the issue, and ought not to have been allowed to take the issue before the Full Court of the Industrial Relations Court of Australia.
HAYNE J: What is the limit on the time by which the Custodian may elect to avoid?
MR ROTHMAN: My learned friend below - that is, before the Full Court of the Industrial Relations Court - made it clear that it was a reasonable time. That, of course, is much like the length of a piece of string but, your Honour, we say and we would, with respect, submit that the view taken by his Honour Chief Justice Wilcox that after September 1994 no valid Order in Council could be made because there was no interests of the BLF, determines the reasonableness of the period.
McHUGH J: But I just do not understand that argument of his Honour. It seems to me it changes the meaning of the statute. Orders can be made to protect the interests of those who have ceased to be members of the BLF. Well, if the BLF has gone out of existence, people have ceased to be members of it, so the property must still be - the Order in Council can still be made.
MR ROTHMAN: But what your Honour has glossed over, with respect, is they use the word “interest”. What is the interest?
McHUGH J: Where does interest appear? In section 7, does it?
MR ROTHMAN: Yes, your Honour.
McHUGH J: They still retain their interest in it, do they not?
MR ROTHMAN: No, your Honour, they do not. Even on the rules unamended.
HAYNE J: That is to say that there can be no declaration of avoidance after there has been a transfer of the whole interest.
MR ROTHMAN: No, your Honour. There can be no avoidance after the expiry of the Order in Council that is currently applying. That is what his Honour Chief Justice Wilcox said. So that, as at September 1994, the Order in Council that was made and pre-dated the 30 March 1994 was valid and validly made and continued in force. The Order in Council that was made that extended the time of that had to operate on something and it had to operate ‑ ‑ ‑
GUMMOW J: Where do we find the later Order in Council? Is it in these extrinsic materials?
MR ROTHMAN: No, your Honour. I do not believe it is. It is an Order in Council which merely extended the - tab 8, your Honour. Your Honour will see an extract of Victorian Government Gazette of 7 August 1997 which sets out the Orders in Council and when they were made. The relevant ones, your Honour, are paragraph 18 on page 2049 of the extract:
Order dated 16 March 1994 and published in the Government Gazette on 17 March 1994 -
and 19:
Order dated 6 September 1994 and published in the Government Gazette on 8 September 1994.
The date of the purported transfer was - the agreement was 30 March. The agreement was effective on its terms on 31 March 1994. What his Honour found was that the order dated 6 September 1994 had nothing to which it could attach. That is, the order dated 6 September 1994 which extended the operation of the Order in Council otherwise expiring six months from 16 March could not, at that stage, have protected the interests of BLF members or former BLF members because there were no such interests.
McHUGH J: But you keep using the word “interest”. That is not what the Act says. The Act says:
For the purpose of protecting the rights of persons who have ceased to be members of the BLF, the Governor in Council may.....provide -
et cetera.
MR ROTHMAN: Yes, your Honour.
McHUGH J: The theory is - assumes that they have rights even after they have ceased to be members of the BLF and for the purpose of protecting those rights you can make Orders in Council. His Honour changes the whole language of the section.
MR ROTHMAN: No, your Honour, with respect. I have probably, unfairly to his Honour, used the word “interest” instead of “rights”, but the ‑ ‑ ‑
McHUGH J: No. I think his Honour talks about it in his capacity as a member of the BLF, does he not?
MR ROTHMAN: Yes, your Honour. But, your Honour’s academic question - and I say it is academic for this reason, it is clearly easy to propose a proposition that there would be rights by the membership of the BLF after one ceased to be members. But, in fact, on the rules, even unamended, to take account of all these transactions, there were no such rights.
McHUGH J: How do you know?
MR ROTHMAN: Your Honour, they have always been before the courts.
McHUGH J: The section assumes that there are rights and for the purpose of protecting those rights the Governor may make orders. You do not have to be able to prove there is some individual out there who has a right. It is for the purpose of protecting the rights that the Governor may make these Orders in Council. It is for the purpose of protecting the rights of persons who cease to be members.
MR ROTHMAN: Yes, your Honour. Indeed, depending on what alterations to rules may have been made over the time ‑ ‑ ‑
McHUGH J: So it is the purpose - the validity of the power depends upon the purpose for which it is made. If it is made for the purpose of protecting the rights of persons who have ceased to be members, it is valid.
MR ROTHMAN: Yes, your Honour. I can do no more, your Honour, than take your Honour to the passage in his Honour Justice Toohey’s judgment in Dobinson v Crabb (1990) 170 CRL 218 . His Honour makes it clear - it may not deal with the point that your Honour raises - at page 235 his Honour Justice Toohey said:
The intent of the sub-section -
He sets out section (7)(1):
The intent of the sub-section is clear enough, namely, to protect the rights of persons who are or have ceased to be members of the BLF. Any order made pursuant to the sub-section must be made for that purpose.
His Honour Chief Justice Wilcox said that ‑ ‑ ‑
McHUGH J: That is what I just put to you.
MR ROTHMAN: Yes, your Honour.
McHUGH J: What Justice Wilcox said at 1038 is that the only rights of members or ex-members were rights held by them as BLF members under BLF rules and once BLF merged, their rights disappeared. It does not seem to me to follow.
MR ROTHMAN: Your Honour, his Honour’s comment, with respect, followed an examination at length in other parts of the judgment of the BLF rules and was a finding made in relation to what rights, if any, the BLF members or former ‑ ‑ ‑
McHUGH J: The hypothesis is that this is made for the protection of people who are not members of the BLF; they have ceased to be members.
MR ROTHMAN: Yes, your Honour. We say whether or not the Custodian opted to void the transaction is a finding a fact which has been made, and we say that there has been no option to void and, albeit somewhat unfortunately, the issue is not one in the proceedings, because no such attempt at voidance has been made. With respect, that is really the be all and end all of it. If an attempt at voidance is made in the future - one hesitates to think of the possibility - but no doubt that will be a matter of another controversy, but it is not the matter of this controversy, because no attempt has been made to void it.
KIRBY J: You say that it is something more than simply filing pleadings and assuming that to be the basis on which the appellants seek to sustain by their whole course of conduct but intend to avoid. You say that is not enough.
MR ROTHMAN: Yes, your Honour, and I say it because we raise the question of the election.
KIRBY J: I realise your Coulton v Holcombe point, but assume that the Court can look at the question of fact. What is your response to the submission?
MR ROTHMAN: We say that the filing of the pleading which is, I might add, consistent with the whole conduct of the proceedings and the statement in the pleading is a statement of the legal effect of the first sentence of clause 2 and we say, therefore, that is not an election and could not be an election if election is the right word. We say that ‑ ‑ ‑
KIRBY J: You say on the contrary, far from avoiding, they were continuing to assert that it had already been avoided.
MR ROTHMAN: They were continuing to assert that no occasion had arisen to opt to void the transaction and that was their submission at page 709, or whatever it was, 705.
McHUGH J: This all seems to me like special pleading at its worst. The Custodian was making plain, as far as he was concerned, these transfers were void and, really, to get into this language, you would think you were back in the days of Mr Baron Parke.
KIRBY J: Industrial cases are often fought that way.
MR ROTHMAN: Your Honour Justice McHugh has won a few of them on special pleading cases, but my point goes much deeper than a special pleading point, your Honour. It goes to the fact that, if, in fact, there was an assertion that there had been an election, we are talking about the exercise of a discretion. That is the point I raised, I think, a little earlier. We are talking about the exercise of a discretion and one has to exercise that discretion in accordance with the 2HD principles, that is taking into account the objects and purpose of the Act and deal with the issues which were before the Custodian, the administrative ‑ ‑ ‑
McHUGH J: I know, and there are a lot of cases on assignment of shares by consent in proprietary companies, assignment of leases, consent not to be unreasonably withheld and so on. Maybe you get some assistance from those.
MR ROTHMAN: Yes, your Honour, but my point - and I do not mean to elevate what is a relatively technical point - but it goes to more than that. What I say is if it had been pleaded it would have been a different case. It would have been a case that involved administrative law principles. Was there a proper exercise of the discretion, whether or not there was a remedy under the Administrative Law Act Victoria, whether or not there was ‑ prerogative writ would have lay for mandamus or prohibition or the like and those matters were never raised because my friend studiously avoided saying there was an election. With respect, we cannot now cross‑examine the Custodian. We are irreparably prejudiced in relation to the Custodian’s failure to give evidence that he had elected, and the fact that in a pleading, albeit the solicitor for the Custodian, says that the Custodian regarded, we would say that requires proof and the defence was not evidence.
GUMMOW J: Mr Rothman, what was it that kept this Order in Council of 13 October 1987, that is the one we have been debating, that kept it alive beyond six months.
MR ROTHMAN: There was an Order in Council. I took your Honour to tab 8 of the extrinsic material that was provided by my learned friend ‑ ‑ ‑
GUMMOW J: Yes, but you referred us to 18 and 19.
MR ROTHMAN: Yes, your Honour.
GUMMOW J: Well they are made after the expiry.
MR ROTHMAN: Your Honour, there was an Order in Council extending the time of six months and it was made - I did not take your Honours through it, but if your Honour traces from 1 through to 18 at tab 8, your Honour will see that every six months there was an Order in Council extending the Order in Council.
GUMMOW J: So, yes, 1 to 18 is a continuous chain?
MR ROTHMAN: Yes, your Honour.
GUMMOW J: I see, thank you.
MR ROTHMAN: We rely on the written submissions that have been filed and I believe that is all of the issues that can be put on that issue, save for the written submissions which your Honours have asked.
GAUDRON J: Yes, thank you, Mr Rothman. Mr Sutherland, anything in reply?
MR SUTHERLAND: No, your Honour, save that we would welcome the opportunity to reply, obviously, to our learned friend’s submissions within a reasonable time.
GAUDRON J: Yes. Seven days I indicated. It will be 14 days for Mr Rothman to make his submissions in writing which will be served on the appellant and you will have a further seven days in which to reply in writing.
MR SUTHERLAND: Thank you, your Honour.
MR ROTHMAN: May it please the Court.
GAUDRON J: Subject to the receipt of those further submissions, the Court will reserve its decision.
AT 3.50 PM THE MATTER WAS ADJOURNED
Key Legal Topics
Areas of Law
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Administrative Law
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Constitutional Law
Legal Concepts
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Judicial Review
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Jurisdiction
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Standing
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Procedural Fairness
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Natural Justice
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