The Mayor, Councillors and Citizens of the City of Camberwell v Camberwell Shopping Centre Pty Ltd

[1992] HCATrans 151

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Melbourne No M20 of 1992

B e t w e e n -

THE MAYOR, COUNCILLORS AND

CITIZENS OF THE CITY OF

CAMBERWELL

Applicant

and

CAMBERWELL SHOPPING CENTRE PTY

LTD

Respondent

Application for special leave

to appeal

MASON CJ McHUGH J

Camberwell 1 8/5/92

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 8 MAY 1992, AT 9.32 AM

Copyright in the High Court of Australia

MR J.D. MERRALLS, QC: May it please the Court, I appear with

my learned friend, MS M. SLOSS, for the applicants.

(instructed by Maddock Lonie & Chisholm)

MR A.C. CHERNOV, QC:  May it please the Court, I appear with

my learned friend, MR P.J. JOPLING, for the

respondent. (instructed by Holding Redlich)

MASON CJ:	Mr Merralls.
MR MERRALLS:	May it please the Court, I have an apology to

begin with. Perhaps not the best way to begin an

application for special leave -

MASON CJ:  It is better to begin with an apology than an

affront, at any rate.

MR MERRALLS: Well, it is a novelty. Your Honours' eagle

eyes, no doubt, have noticed that there are two

paragraphs 20 in the affidavit supporting this

application and that in the second of those two

paragraphs there is a reference to something called

"Those questions of law". I have to confess that

those questions of law were left in the interstices
of the word processor when this affidavit was in

the process of being settled and they have been

omitted from the affidavit itself. We have copies

of the omitted paragraph which Your Honours may

find convenient to have, even though one can deduce

from the second paragraph 20 what those questions

are.

MASON CJ:  Yes. You might hand them up.

MR MERRALLS:  I should say that my learned friends have been

supplied with copies of that document. This case

raises questions affecting the relationship of the

contractual obligations of public authorities and

their public duties.

Here, we have a contract which was made under

a statutory power and we have a statutory duty to

hear objections from the public and a statutory

power to withdraw the proposal. The contract was

made under what was then a new part of the Local

Government Act - - -

MASON CJ: 

Mr Merralls, you can take it that we have read

the judgments, we are familiar in a general way
with the statutory provisions and we have followed

the questions of law you seek to agitate. But

could I begin by saying to you there are concurrent
findings of fact made against you which are
recorded in the judgment of the Full Court at

pages 189 and 190.  Now, do not those concurrent

Carnberwell 2 8/5/92

findings of fact constitute a formidable obstacle

to your success on the appeal?

MR MERRALLS:  No, Your Honour. First of all, Your Honours

are, of course, familiar with Introvigne's case and

are aware that - the fact that there are what

appear to be concurrent findings of fact is not a

necessary bar to success.

MASON CJ: It is not an absolute bar to success, but one can

comb the CLRs and find very little indication of a

willingness on the part of the Court to overturn

such concurrent findings of fact and, of course, at

this stage, which is an antecedent stage, the

question is: would we grant special leave to appeal
against concurrent findings of fact? I would have

thought, myself, subject to what you say, that you

have a Herculean burden ahead of you in

endeavouring to persuade us that we ought to grant

special leave to appeal against concurrent findings

of fact.

MR MERRALLS:  I am prepared to accept that burden,

Your Honour. There are good reasons why the Court

should look at those concurrent findings.	What
happened at first instance is not clear.

His Honour Mr Justice Teague made certain findings

which, on one view, are inconsistent, but they were

made in the light of a construction of the statute

and the contract by which His Honour held that a

decision to withdraw necessarily involved a breach
of contract. That is, he was not concerned with

the correctness or otherwise of the decision to

withdraw. The decision to withdraw ipso facto

involved a breach.

Now, that is found in the application book at

three places and it appears to be accepted by

Mr Justice Marks and Mr Justice Gobbo that that was

how Mr Justice Teague construed the statute and the

contract. They said, at page 186, line 27, that
perhaps that went too far.	The three places in the

judgment are at application book page 44, line 8,

page 62, line 20 and page 63, line 1. May I take

Your Honours briefly to those passages. Page 44,

His Honour said at line 8:

The difference between the parties lay in

what answer was to be given to the question of
whether to withdraw meant with or without

being liable in damages for withdrawing.

Now, there he is referring to the construction of

the statute which allowed the Council to enter into

a contract and provided for it to decide to

withdraw. At page 62, line 20, His Honour

Camberwell 8/5/92

summarized a submission by my learned friend, which

he appears to have accepted:

Mr Chernov argued that there was nothing

in Part XLB which stated that a municipality

entering a contract while exercising the

rights given by Part XLB should not be liable

in the normal way for breach of that contract.

Then he dealt with, on the next page, the absence
of the words "without penalty" after "proposal".
He said that if those words had been included:

I think that the position of the council would have been very much stronger, if not

unassailable.

The absence of the words is, to my mind,

very significant.

There can be no justification whatever

for construing the section as if the words

were there, since their inclusion or exclusion

is of such great significance.

So His Honour approached the matter by construing

the statute as exposing a Council to liability for

breach of contract for withdrawal ipso facto, and

that was the view accepted by the judges in the

Court of Appeal, Appeal Division, at page 186:

It is true that the learned judge appears to have interpreted the statute to mean that if

the Council did withdraw it was vulnerable to

a claim for damages for breach of contract,

even if it was under a duty to do so, because

the section did not say otherwise. In so

holding his Honour, we think, may have gone

further than was necessary or perhaps

justified.

Mr Justice Marks and Mr Justice Gobbo used

Mr Justice Teague's findings about the previous

conduct of seven councillors - not all, not the

whole 12 - which he regarded as evidence of

repudiation of the agreement at the early stage to

found an independent conclusion that the withdraw

was not a proper exercise of the power conferred by

section 8ll(H)(5). That appears at page 189,

line 23, of the application book. But what they
did not do, in coming to that conclusion, is
consider the finding by Mr Justice Teague that the

decision was not vitiated by bias, that the

councillors did not act otherwise than in what they

perceived to be the best interests of the

ratepayers - so there was no mala fides - and that

individual councillors had duly considered the

Camberwell 4 8/5/92

objections, putting in a lot of time on them over a

substantial period. Those findings appear at page

41, page 71, line 18 and page 132, line 25. He

also held that collective deliberation was not

required.

So although Their Honours thought they were making a concurrent finding, they were really

making a finding of their own, in our submission,

on the strength of Warren v Coombes, and it is this

very finding that raises what, in our submission,
is the second legal point of importance because, in

the light of all those findings by His Honour, the

judges of the appeal division concluded that the

decision to withdraw was vitiated. They concluded

that the Council withdrew because since its change

in composition it no longer supported the proposal,

not because it was persuaded to do so by the

objections. That is what they said at application

book page 190 at line 1.

In our submission, this amounts to saying that

notwithstanding the strength of objections, a
decision maker who holds strong views similar to

those of objectors cannot validly make a decision

consistently with those views. Now, Their Honours

appear to have recognized the weakness of this

approach by immediately after stating the

conclusion stating that it was relevant that the
Council did not hear objections as what they called

a necessary part of the scheme of Part XLB or as a

precondition to the operation of the agreement

because the minister chose to exercise his power

under section 8ll(H), that is to require the

proposal to be advertised and to require the

Council to receive objections and to hear

submissions, and they said that the Council had no

other statutory duty to hear the objections. So

they seem to have relegated the decision-making

process to a subsidiary one.

They sought to avoid the statutory requirement

that the Council make a decision in various ways.

Mr Justice Fullagar suggested that because of the

existence of the contract the Council was obliged
not to decide to withdraw, but he seems to have

recognized the dilemma this view of the contract

raised by saying, well, even though they had

entered into the contract, and even though they may

have thought that the objections were so strong as

to require or justify a decision to withdraw, they

ought to decide to proceed and tell the minister

that they thought that he should withdraw.	In our
submission, that involves a misreading of the

statute and is a clear example of the application

of the fetter principle.

Camberwell 8/5/92

Mr Justice Marks and Mr Justice Gobbo

approached it in a slightly different way. At

page 187, line 5, they suggested that if a contract

was in existence, then Parliament may not have

intended that the power to withdraw should be

exercised at all. They thought that the Council

should merely act as an information gathering

agency and should merely forward the objections to

the minister. That, too, in our submission,
involves a misreading of the statute which clearly

postulates or allows the Council only two courses

of action: one, to decide to withdraw; the other to

proceed, with or without modifications by advising

the minister accordingly.

MASON CJ: 

Mr Merralls, is this a usual way for councils to

enter into contracts with a developer before
obtaining the leave of the minister?

MR MERRALLS: This is one of the first contracts entered

into under this new Part, Your Honour.	The Part
has since been repealed or modified.	I do not

know - first of all, I cannot answer the question,

but I do not think there is an answer to the
question because I do not think there was a usual

course of conduct.

MASON CJ:  The next question that follows from your

statement that the legislation has been replaced:

does the legislation in its existing form throw up

the sort of questions that you say are thrown up by

this case?

MR MERRALLS:  No, it does not throw up the precise question

because the proposal now has to be submitted to a

plebiscite of ratepayers.

MASON CJ:  So that a decision in this case is not going to

provide any illumination on the Local Government

Act as it presently stands.

MR MERRALLS:  No, that is perfectly true, Your Honour. That

is not a reason, in our submission, for refusing special leave in respect of a question of public

law which may arise in other contexts. It can be

said of most questions of public law that arise in

a statutory context, "Oh well, they are unique",

and if this statute had not been repealed, perhaps

it might have been said, "Well, the contract here

was unique", or the statute - - -

MASON CJ:	One might be forgiven for thinking that the facts of this case are perhaps so unusual that a decision
on the questions that you are seeking to agitate
would not provide much elucidation in the general run of cases where these questions arise in other contexts.

Camberwell 6 8/5/92

MR MERRALLS:  With the greatest respect, Your Honour, we

would say that they are not unusual in raising

questions involving the interrelationship of, say,

a "best endeavours" clause with statutory powers

which would be exercised by the person who

undertakes to exercise his best endeavours or its

best endeavours. That is on the first of what I

might call the two major questions.

The second question involving the way elected representatives who are given statutory powers to

hear objections ought properly to proceed when they

are, say, elected on a policy which has clearly

defined planks, and they hold views which they have

stated publicly and are publicly associated with,

how they are to exercise their functions where the weight of objections is consistent with the policy

they have espoused or been elected upon is, in our

respectful submission, a question which can arise

in many contexts and it is one upon which the

guidance of the Court would be very useful for

public authorities.

A not dissimilar situation arose in the New

Zealand case that is mentioned in the judgments,

the Devonport case - I say not dissimilar, the

facts were slightly different inasmuch as the

discretionary power was conferred by the contract

and it was held that the statute, which was a

special statute, not a general statute, had given parliamentary imprimatur to the proposal - but it is a not dissimilar case, in another jurisdiction

in which similar questions arose. Certainly

questions involving the way in which a Council

which is elected upon a policy which is

antithetical to that of the previous Council ought

to proceed in exercising powers in relation to

contracts made by the previous Council.

McHUGH J: But there is something to be said for the view,

is there not, that a contract should not be made at

all until after the procedure is dealt with.

MR MERRALLS:  I am grateful for Your Honour to say that

because I was not involved in this case at first

instance, Your Honour, and I must say that that was

how it struck me when I first saw it, but that was

not the way the case was conducted on either side

at first instance, as I understand it. It was too

late on appeal.

MASON CJ:  Yes. I think you get very small comfort from

that in the present application, Mr Merralls. I

can understand, to take up what Justice McHugh has

said, that there might be a reluctance to enter

into - or perhaps the legislation should result in

a reluctance to enter into contracts until the

Camberwell 7 8/5/92

statutory procedure has been followed; I can

understand also a reluctance to enter into a

contract with a developer which contains a "best

endeavours" clause before the statutory procedure

has been complied with.

MR MERRALLS:  The contract contemplated that the statutory

procedure would be complied with and the question

is whether it is a breach of the "best endeavours"

clause to do something which is contrary to the
proposal proceeding or if it is a valid decision,

properly made, in accord with Wednesbury

principles, whether that is consistent with the

"best endeavours" clause, and we say that is the

first point.

The point of law about the fetter principle is

misstated or was misunderstood by the two judges.

They seem to treat the argument as being one that

the contract itself was authorized by the statute,

or rather they seemed to treat the answer to the

argument as being that the contract itself, the

whole contract, was authorized by the statute and

therefore anything done - anything under the

contract, which was lawfully within the contract,

was authorized by the statute and could not involve

a fetter upon the exercise of future powers.

The argument is not that; the argument is that

if the "best endeavours" clause is construed as requiring the Council willy-nilly, whatever the strength of objections if it is required to hear

objections to resolve to proceed, then if it is

correctly construed in that way, then the "best

endeavours" clause is to that extent invalid, ultra

vires, but we say that the "best endeavours" clause

can stand in the contract and can be acted upon,

consistently with the fetter principle, if it is

not regarded as binding the Council to reject

objections properly made.

There is another point we make, Your Honours,

and that is that there are, in this case, interests

of others than the Council - that is the
corporation itself - involved. There were a
substantial number of objectors and the decision at
both levels effectively negates the effect of their

objections by vitiating the decision which was made

consistently with those objections. We say they

have an interest which ought to be borne in mind.

Also, of course, there are the 38,000 ratepayers
who are faced with the possibility of very
substantial liability for the actions of Council or

successive councils, in particular, the actions of

a Council which was elected with a very substantial

majority to do what it did.

Camberwell 8/5/92

If the Court pleases, those are the matters

that we wish to raise. It is true that there are

observations in decisions of the Court that where

points arise under statutes which have been

repealed, special leave ought not to be granted.
We say that those observations ought be read

subject to the particular issues and that this case

does raise matters which are of wider significance

than that of the statute itself. If the Court

pleases.

MASON CJ:  Thank you, Mr Merralls. The Court need not

trouble you, Mr Chernov.

In view of the finding made by the Appeal

Division to the effect that the withdrawal was not
a proper exercise of the power conferred by

s. 8ll(H)(5) of the Local Government Act 1958

(Viet.), we are not persuaded that this case is a

suitable vehicle for the determination of any

question of general principle.

Indeed, even if the questions of law which the

applicant seeks to raise were to be determined on

the particular facts of this case, it does not seem

likely that the determination of the questions

would elucidate problems arising in other cases,

the more so as the relevant statutory provisions

are no longer in existence.

Nor are we persuaded, having regard to the

finding, that the applicant's prospects of success

in an appeal are sufficiently strong to warrant the

grant of special leave to appeal. We would not

grant leave to enable a challenge to be made to the critical finding as it is partly a finding of fact.

The application for special leave to appeal is

therefore refused.

Do you apply for costs, Mr Chernov?

MR CHERNOV:	I do, Your Honour.
MASON CJ:	You do not oppose costs, Mr Merralls?
MR MERRALLS:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 10.01 AM THE MATTER WAS ADJOURNED SINE DIE

Camberwell 9 8/5/92