Bass and ANOR v Permanent Trustee Company Ltd and ORS S140/1996 [1997] HCATrans 128 (11 April 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S140 of 1996

B e t w e e n -

MICHAEL REGINALD BASS and EVELYN MAUDE BASS

Applicants

and

PERMANENT TRUSTEE COMPANY LIMITED

First Respondent

FANMAC LIMITED

Second Respondent

STATE OF NEW SOUTH WALES

Third Respondent

PERMANENT CUSTODIANS LIMITED

Fourth Respondent

LIVERPOOL-INGLEBURN CO-OPERATIVE HOUSING SOCIETY

Fifth Respondent

MARKHAM, GEIKIE & RUMORE

Sixth Respondent

CO-OPERATIVE HOUSING SOCIETIES ASSOCIATION OF NEW SOUTH WALES LIMITED

Seventh Respondent

THE ESTATE OF ANTHONY MARKHAM

Eighth Respondent

Office of the Registry

Sydney No S141 of 1996

B e t w e e n -

PAULA CONCA and MARCELO ALBERTO CONCA

Applicants

and

PERMANENT TRUSTEE COMPANY LIMITED

First Respondent

FANMAC LIMITED

Second Respondent

STATE OF NEW SOUTH WALES

Third Respondent

PERMANENT CUSTODIANS LIMITED

Fourth Respondent

MERRYLANDS CO-OPERATIVE HOUSING SOCIETY

Fifth Respondent

LIVERPOOL-INGLEBURN CO-OPERATIVE HOUSING SOCIETY

Sixth Respondent

CO-OPERATIVE HOUSING SOCIETIES ASSOCIATION OF NEW SOUTH WALES LIMITED

Seventh Respondent

KEN LONG

Eighth Respondent

Office of the Registry

Sydney No S142 of 1996

B e t w e e n -

BESSIE MAVIS WOODLANDS and LILIAN MARY BALLARD

Applicants

and

PERMANENT TRUSTEE COMPANY LIMITED

First Respondent

FANMAC LIMITED

Second Respondent

STATE OF NEW SOUTH WALES

Third Respondent

PERMANENT CUSTODIANS LIMITED

Fourth Respondent

FAIRDALE CO-OPERATIVE HOUSING SOCIETY

Fifth Respondent

CO-OPERATIVE HOUSING SOCIETIES ASSOCIATION OF NEW SOUTH WALES LIMITED

Sixth Respondent

Applications for special leave to appeal

DAWSON J

TOOHEY J

KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 11 APRIL 1997, AT 10.04 AM

Copyright in the High Court of Australia

__________________________________

MR J. BASTEN, QC: If the Court pleases, I appear with MS S. WINTERS for the applicants in each of these matters. (instructed by the Public interest Advocacy Centre)

MR C.J. BIRCH: If the Court please, I appear for the first and fourth respondents in each of the proceedings. (instructed by Church & Grace)

MR I.M. JACKMAN: May it please the Court, I appear for the second respondent in each of the proceedings. (instructed by Mallesons Stephen Jaques)

MR R.V. GYLES, QC: If your Honours please, I appear with my learned friend, MR A.J.L. BANNON, SC, for the third respondent (instructed by the State Crown Solicitor's Office) and for the fifth and seventh respondents. (instructed by Church & Grace)

DAWSON J: The Registrar certifies that in matter No S140 of 1996 he has been informed by the solicitors for the sixth and eighth respondents that the sixth and eighth respondents do not wish to be represented at the hearing of the application for special leave to appeal and will abide by any order of the Court save as to costs.

In matter No S141 of 1996 he has been informed by the solicitors for the eighth respondent that the eighth respondent does not wish to be represented at the hearing of the application for special leave to appeal and will abide by any order of the Court save as to costs.

Yes, Mr Basten.

MR BASTEN: If your Honours please. Your Honours, if I may paraphrase a dictum of Mr Justice Dixon which may be found in both Uther's Case and in Cigamatic where a government in its executive arm enters the marketplace or enters into a transaction it may, by so doing, voluntarily submit itself to the laws generally applicable to those operating in that marketplace or undertaking such a transaction. His Honour's comment was made in relation to a statutory provision in the New South Wales Companies Act 1987 concerning the application of contracts or the entering into contracts by companies. Those dicta direct attention in part to the actions of the executive arm of the government. More recent cases have looked at the legislative arm for a solution to such problems. That, relevantly in the present case, is illustrated by the decision of this Court in relation to the Trade Practices Act in Bradken Consolidated Limited v Broken Hill Pty Co Ltd.

We accept that we, in relation to the first point that arises on the application, to demonstrate that we have a real prospect of having the Court reconsider the broader consequence of that case and I will come to that point shortly, if I may. The first question raised in this matter is whether the State of New South Wales has subjected itself to an obligation to comply with the consumer protection provisions of the Trade Practices Act either by means of its own activity or its own legislation in the Crown Proceedings Act or whether it has been subjected to that liability by the Commonwealth through the operation of section 64 of the Judiciary Act.

The second question relates to the liability of the non-State parties and does not strictly arise if the State is obliged to comply with the provisions of Commonwealth law. Non-State parties will, on the present matters, inevitably be bound. However, if the State is not bound, the obligations of the non-State parties are in issue.

Your Honours, may I turn to the question of the application of Bradken's Case. We accept that we need to satisfy in some way the matters which were raised in John v Federal Commissioner of Taxation [1989] HCA 5; 166 CLR 417. If I may hand up copies of that decision, I will come to it shortly, but in the meantime may I address what we see as the principal bases upon which we say the Court would be minded to reconsider the application of Bradken. Firstly, we would say that the application of the Trade Practices Act to the States and Territories is an important issue and there are but a handful of cases which are based upon this particular application of the decision of the Court in Bradken. The issue raised is broader, however, than the specific consequences of that case.

Concerning the States themselves, they have in fact ordered their affairs since 1989 in the case of all jurisdictions except the Northern Territory under their own Fair Trading Acts to have the effect of rendering them liable to prohibitions on misleading and deceptive conduct and other provisions of the consumer protection part of the Trade Practices Act. Our arguments are as follows: on one view there is an inherent tension which is unresolved between the approach adopted by this Court in Maguire v Simpson and followed in Evans Deakin v The Commonwealth in applying section 42 of the Judiciary Act and the approach adopted by Bradken on the other, which did not consider the application of section 64.

Secondly, in our submission, there is an unresolved tension between the common law presumption that the Crown is not bound by legislation, as reflected more recently in Bropho Case and the operation of the Crown Proceedings legislation which was not considered in Bropho. It was not considered in Bropho because Bropho itself involved an intrastate matter and there was no equivalent provision in the Western Australian legislation.

Thirdly, in so far as every case in which the application of the Bropho presumption results in the Crown not being bound, there is to that extent an implied repeal of the effect of section 64 of the Judiciary Act. That, in our submission, gives rise to a clear conflict with a principle against implied repeal reflected in Saraswati v The Queen and, in particular, in the extract from Justice Gaudron's judgment to which we refer in our submissions in reply.

TOOHEY J: Mr Basten, how does the Bench of three, on a special leave application, approach the question that you are presently canvassing, namely that while Bradken stands, an appeal would have little prospect of success, at least in certain respects? What is this Court being asked to do in terms of granting special leave so that an application might be made to reopen Bradken?

MR BASTEN: Your Honour, I suggested that we should convince your Honours that we had a real prospect of the Court being willing to reconsider Bradken. That, in my submission, is as high as we need to put it. Where the Court has reconsidered earlier decisions, it has not always in fact followed the practice of expressly granting leave. Even in John's Case - and your Honours have copies of only part of that decision - it is clear that what the Court did was to consider the merit of the argument in relation to the application and correctness of Curran and then turn to the question about whether, given that there was a concern as to the correctness of Curran, it should reopen the matter. So that all we would say that your Honours, as three members of the Court, would need to do would be satisfied that if the matter were to go before a Full Court, there would be a real prospect that we would be entitled to reopen Bradken.

DAWSON J: And, in any event, your section 64 point would still remain, even if Bradken stood?

MR BASTEN: That is so, your Honour, yes, although it may be said against us that, although the specific application of Bradken might not be undermined, the broader principle for which it had been though to stand might be. But I take your Honour's point and we would certainly put it in those terms.

In a sense, your Honours, those points summarise the matters which we would submit are the basis on which we seek to have the Bradken decision reconsidered and why we would say that there are important issues involved which this Court should address. Obviously they could not be addressed below. We did not take the point that Bradken could be disregarded by the Full Federal Court in the light of Bropho. We though the opposite conclusion was correct. It is a matter which can only be raised in this Court.

Your Honours, at page 438 in John's Case, at the bottom of the page, the majority judgment of the Court set out a number of matters which it thought were appropriate factors to be taken into account in considering the application to reopen an earlier decision. Those principles do not fall easily into the context of the present case. However, we would say in relation to the matter which might be of ultimate concern for the Court, namely the extent to which Bradken has been relied upon, that that is a matter which is paramountly in the power of the State to address. The prejudice which it says would flow from a reopening of Bradken in its written submission is directed to the question of whether it would have itself enacted its Fair Trading Act, subjecting itself to liability, if a different view had been taken. That, in our submission, suggests the absence of prejudice rather than the contrary.

May I then turn to the question of Bradken and the non-State parties, which is the second matter raised in the application. The non-State parties to the scheme claim that they, in effect, receive a licence to mislead and deceive by reason of their participation in a scheme involving the executive arm of the State government. That conclusion, too, is said to flow from the decision of this Court in Bradken. But with respect to that argument, Bradken was a case in which the relevant application of the Trade Practices Act was to prohibit certain exclusive dealings and factual conditions between the Crown and its contracting partner. The present case is not that case. Rather it falls squarely within the factual framework of the State Superannuation Board v Trade Practices Commission [1982] HCA 72; (1982) 150 CLR 282. If I may take your Honours briefly to that case. The relevant facts are set out in the judgment of the majority at page 298.

The case involved a body which was established by the Victorian Government by legislation to provide for the administration of a public superannuation scheme for its public servants. The government provided funds and staff to run the scheme but established an independent corporation to administer it. That corporation then entered into mortgage secured lending arrangements which were also said to involve exclusive dealing in contravention of the Trade Practices Act. The similarities of that case to the present are striking. In this case, the government sets up a scheme, indeed without legislative framework, and then by contractual arrangement, enters into a form of joint venture with other parties to administer that scheme for it. The scheme then operates in a manner which causes detriment and damage to the third parties, the customers or consumers, who take out the mortgages in reliance upon statements made in the course of carrying out the scheme.

So that in the present case, rather than a legislative protection, there is only a contractual protection relied on. It is clear that in State Superannuation Board Case the core governmental function of providing for its public service was at issue, rather than the more limited governmental function of providing low cost housing to the public. Thirdly, it involved precisely the same kind of alleged prejudice, namely exclusive dealing, as was in issue in the decision in Bradken. However, the majority of this Court in the State Superannuation Board Case did not think, apparently, that Bradken had any operation to the circumstances of the scheme which they were considering. Having determined that the State Superannuation Board was a financial corporation, their Honours at page 307 noted, perhaps at the bottom on 306:

In Bradken the Court held that the Trade Practices Act did not evince any intention to bind the Crown in right of a State. If the appellant is not the Crown in the right of the State of Victoria it will not be to the point that the State legislation purports to confer some of the privileges and immunities of the Crown on it. The reason is that one finds in the Trade Practices Act neither an intention that the Act should not bind a financial corporation which is not an emanation of the Crown.....nor a grant of authority to a State Parliament impliedly to confer general immunity -

The Federal Court in the present case rejected the application of the State Superannuation Board Case in a passage at pages 134 to 135 of the judgment in which their Honours treated it as a subsidiary matter and suggested, though not entirely clearly in terms of the reasoning, that the argument based upon the case missed the point and begged the critical question. That appears in the middle of page 135, line 36.

In our submission, the effect of the Federal Court's decision is to arm the executive with a novel dispensing power which, as the Court held, will apply to extend the immunity of any laws, including the State's own Fair Trading Act, when it enters into a commercial transaction with others. This, in our submission, is quite the antithesis of Mr Justice Dixon's principle of voluntary submission.

We have a final point in relation to that matter. Even if Bradken were, in its own terms, applicable to the present circumstances, it appears that the Court held, as a matter of law, that the absence of a licence to mislead and deceive on the part of the non-State parties would constitute a significant prejudice to the State. That, in our submission, must be wrong. When one looks at the question of significant prejudice, if that be the test, then it is necessary to consider the significant prejudice which the State would suffer if required to comply with the law.

Your Honours, those are the two principal points on which we seek special leave to appeal.

TOOHEY J: Could I just raise a matter with you, Mr Basten, and it is that these proceedings are presently at an interlocutory stage with answers to questions having been given by the Full Court and with leave to the applicants to amend their statement of claim, so, as I understand it, to take themselves outside the immunity as treated by the Full Court. I take it from your point of view that does not really leave you with a great deal.

MR BASTEN: I think it is fair to say, your Honour, that we would have very little left of our case if we were able to amend at all in compliance with the test applied by the Full Federal Court, so that the leave to amend provision does not give us an benefit which would allow us to avoid, as it were, the consequences of the decision.

KIRBY J: How many persons are affected by the litigation, approximately?

MR BASTEN: There are about 50,000 people altogether involved in the HomeFund scheme. A minority of those possibly do not need to rely upon this proceeding but a significant percentage of that 50,000 would be affected by the result.

Your Honours, the third point concerned the application of the Legal Aid Commission Act. We say that for the many thousands of people who seek and obtain legal aid to pursue and defend claims under federal law, the question of liability for payment of adverse costs orders is a matter of very great practical significance. If a State is not able to transfer that liability to itself or its own authority and provide protection to its citizens in these circumstances, there will be a further burden imposed on people who are not wealthy and who seek access to justice.

The State law itself does not directly or indirectly interfere with the power of the Federal Court. Section 47 is set out, so far as it is relevant, at pages 151 to 152 of the application book. It is clear that its operation is dependent on an exercise of power by the Federal Court. The debt which results from an adverse costs order is not immune, we would say, from valid State laws. Absent the federal Bankruptcy Act, a State could undoubtedly, by its insolvency legislation, provide a scheme resulting in the extinguishment of that debt. Therefore, in our submission, it is not correct to say, as the Federal Court held, that by virtue of section 109 of the Constitution section 47 of the Legal Aid Commission Act can have no effect in relation to a costs order made by a Federal Court.

KIRBY J: This is a relatively short point, although it is, from one view, an important point, but you would get up on the other points and want to argue this point.

MR BASTEN: That is correct, your Honour. It is not a point that we would otherwise pursue. Might I just say this: it is put against us that there is an element of prematurity in the point. We accept that, in a sense, that is so. But we point out that the applicants are currently subject to an adverse costs order in the Federal Court and advise of the intention of at least some of the parties to pursue their rights on the basis that section 47 has no operation. We therefore think that the prematurity argument is of little weight in the present circumstances. Those are my submissions, if the Court pleases,

DAWSON J: Thank you, Mr Basten. Mr Birch. I take it that the submissions you are going to make are not going to be repeated down the line, that some arrangement has been made.

MR BIRCH: Your Honour, we have not entered into a formal arrangement. I am going to restrict myself anyway to matters which largely touch upon the non-State parties and I am not going to take anything like the full time reserved to respondents.

DAWSON J: Very well.

MR BIRCH: Your Honours, as I appear for non-State parties, I only wish to deal very briefly with the first part of Mr Basten's submissions, namely that Bradken should be overruled so far as its application of the Trade Practices Act or non-application of the Trade Practices Act to the States is concerned. While in this special leave application there is much said about the important principles about governments entering into business, the simple fact is that the appeal that is now brought ultimately turns simply upon the proper construction of section 2A of the Trade Practices Act, that when one looks at the reasoning of the Full Court it simply finds, on what is a section that deals at length with the question of application to the Crown, a clear implication that the States are not to be bound by the Trade Practices Act. So all the point boils down to ultimately is whether or not the Court is willing to overrule previous findings on whether or not that implication ought properly to be drawn from those sections of the Trade Practices Act.

When one looks at the criteria that need to be met to have the Court undertake that process, in the decision of John v Federal Commissioner that has been handed up, although Mr Basten says those criteria do not really apply, it is my submission that in fact when one goes through the four grounds they are in fact basically against Mr Basten. It is not the case that this construction rests upon just one decision of this Court; it has been touched upon by several decisions of this Court. It is not the case that there is some clear schism in reasoning between various majorities of the Court. It is not the case that some special inconvenience is pointed to and it is certainly the case that it is a decision that has stood for some time and it is not likely that it could now be suggested there has been no reliance upon it.

Your Honours, if I can then turn to the question of the application of the Bradken principle to the non-State parties. There is, I suggest, ambivalence in the approach that is taken by the applicants. It is not suggested that one ought to, if the Court otherwise adopts the Bradken ruling on the application of the Trade Practices Act to the States, sever, if I can use that phrase, the second limb of Bradken and simply say that unless the party involved is in fact the Crown in right of New South Wales, therefore there will be no application of the principle. It appears the applicants are at least accepting impliedly that there is some second limb of Bradken that must be applied by the Court on appropriate occasions, namely that where a party seeks to rely upon the immunity that is not one of the States itself, but has entered into a transaction with one of the States in such a fashion that the interests of the States would be prejudiced by the application of certain legislation, then the immunity will apply to that transaction. It is an immunity which applies, in effect, to the transaction rather than to the non-State party.

What appears to be said by Mr Basten is that the Full Court was simply wrong in the way it applied the criteria to the facts of the present case. The Full Court was mindful of the fact that it was not enough simply that there be some relationship between a non-State party and the Crown for the second limb of Bradken to apply. At application book 134 the Full Court said:

In relation to that matter, we suggest that, despite the use in Bradken and other cases of words like "interests" and phrases like "prejudicially affected", for Crown immunity to attach to a person who is not "the Crown", or a transaction to which the Crown is not a party, the legislation must significantly prejudice the Crown; for example, by restricting actions it would otherwise be free to undertake or diminishing the value of its property. It seems to us that it is not enough that the interests of the Crown will be indirectly affected by the application of the statute.

The indirect statute point is, I would suggest, the one upon which one would explain the Superannuation Case. But the point I am coming to, your Honours, is briefly this, that unless one says that the immunity attaches only to a party who is the Crown itself and cannot be claimed by a non-State party, then what the applicants are really inviting the Court to do is simply to delve into the facts and make judgments about whether there has been the requisite sufficient prejudice. The Full Court had before it a reasonably complex account of the way the HomeFund scheme operated, the complex financial relationships between the various non-State parties and the New South Wales Government, and it made various findings of fact on the basis of that evidence and that is what ultimately led it to conclude that, in fact, there was at least an argument for holding that there had been sufficient prejudice.

Now, in fact what happened, of course, was the Full Court said that it may be that it could be repleaded in such a fashion as to get around the actual Bradken principle but that, of course, is not something which has yet been tested by the applicants and - - -

TOOHEY J: That would really involve establishing that the misleading and deceptive conduct really was outside the scheme, would it not?

MR BIRCH: Yes, that is in effect what the Full Court invited the applicants to do, if they could find - - -

TOOHEY J: And while making no concessions, Mr Basten did not express great optimism in that regard.

MR BIRCH: Indeed, his task is a very difficult one. I do not deny, your Honours, that in practical terms the effect of the Full Court decision may well be to deprive the applicants of any real trade practices relief.

TOOHEY J: Mr Birch, I am not entirely clear as to how far your clients need to disturb Bradken in order to provide an answer. I am sorry, I will put it the other way. I am not sure how far Bradken needs to be disturbed in order to remove the immunity which you claim on behalf of your clients.

MR BIRCH: This is the ambivalence in the applicants' case I point to. It is not altogether clear that they are saying "Disturb the second limb of Bradken at all" if the Court otherwise adopts it.

KIRBY J: I took the written submissions, at least, to say we rely on it but, if need be, we seek to have it elucidated, then the 50,000 people who are said to be affected - or thousands of people - given that you are corporations, given that the business of the Crown is extending into corporate arrangements increasingly, may that not itself merit looking at this second limb to see whether it was expressed in terms that are appropriate to cast the net of immunity over business corporations who would otherwise be caught up in the Act.

MR BIRCH: Your Honour, I think the response is simply that the only practical way to do that is to investigate the structure of the scheme. It becomes ultimately a factual inquiry and it would be very difficult to seek to recast the Bradken formula without the Court ultimately delving into the entire structure of the HomeFund arrangements and the financial scheme. I mean, there were some quite voluminous bundles of documents provided to the Full Court when it heard the separate issues. Although one reads the judgment, and it is a nice crisp set of reasons, it came to them as a result of a factual inquiry as well as a legal inquiry and I would suggest that it is not really likely that the applicant is going to be able to do other than to quarrel about the correct factual characterisation of what took place, rather than legal formula. It certainly cannot discuss the legal formula without engaging in that factual inquiry. Those would, in my submission, not make it suitable for special leave. Your Honours, I will not take up more time.

DAWSON J: Thank you, Mr Birch. Mr Jackman.

MR JACKMAN: May it please the Court. Can I similarly direct my submissions to the peculiar position of Fanmac, the second respondent, and adopt what we anticipate Mr Gyles will say more generally as to Bradken and Bropho and the general question of Crown immunity. I make three basis points. The first is that the emotional hook on which, if I can call it that with respect, Mr Basten's submissions rest is the proposition that the government is engaging in a business in what constituted the HomeFund scheme. Can I ask your Honours to turn to page 170 of the application book for this reason, to indicate that, whether or not this is a business, is a question which remains unresolved. Question 3 in each of the proceedings begins with the words:

Whether, on the assumption that the claim against the State under the Fair Trading Act (NSW) is not maintainable, on the basis of the matters pleaded in the amended Statement of Claim and the material contained in the agreed bundle of documents, the respondents other than the State, or any of them, are immune from the claims under the Fair Trading Act 1993 , in light of the principles referred to in Bradken?

That is a somewhat elliptical question on its face, but the assumption in the first line refers to the provision of the Fair Trading Act which, broadly speaking, does not give the State government a blanket immunity from suit under the Fair Trading Act, it gives it an immunity only to the extent that it is not conducting a business. So that if the State is found to be conducting a business, it loses its immunity under the Fair Trading Act. The court, for obvious reasons, did not wish to consider that question at this preliminary stage because it depends upon a great deal of evidence and it is a difficult question of fact which will ultimately have to be resolved. So that at this stage, the question whether the government has been carrying on a business is a matter which is expressly reserved for later determination.

The second point I wish to make concerns the factual findings which were made concerning Fanmac Limited, the second respondent. Now, my learned friend, Mr Basten, has submitted that this case is really indistinguishable from the State Superannuation Case. The Court was taken to the State Superannuation Case and the factual findings which it has made make this case plainly distinguishable from that which the High Court considered in the State Superannuation Case. Can I take your Honours initially to page 136 of the application book and the simple point before the court here is not an investment fund which is designed to provide not for the retirement of public servants, but it is engaged with the way in which the government of various States, including New South Wales, envisaged it would put into practice the policies it had for providing housing for those of limited means.

Now, the evidence is first referred to on page 136 and the court indicates:

The documents placed before us show that the HomeFund scheme was conceived by New South Wales government functionaries.

There is then a reference to the recitals to an agreement between the Commonwealth and the six States and the Northern Territory. If one goes through the discussion of the evidence to find the correspondence at a ministerial level concerning the proposed scheme, on page 138 a resolution of the New South Wales Governor in Executive Council. At the foot of that page an announcement by the Premier of New South Wales. One goes through until page 141 with references to the evidence which was contained in seven or eight folders of documents before the court. If I can ask your Honours to turn over to page 147 in which the court's conclusion is expressed, the court says, about a third of the way down the page:

The problem, from the applicants' point of view, is that the New South Wales government was intimately involved in both the conception and marketing of the scheme. To the extent that others were involved, they seem to have been acting as mere agents of the government.

What one has is a government policy to provide housing for those of limited means. It has decided at a ministerial level, in conjunction with other States, to put that into practice by a system whereby people of limited means can buy residential housing by paying specified percentages of their income so that they can buy homes which otherwise will be beyond their reach. To the extent that persons in the position of my client were involved, the finding of the court is that we were involved as mere agents of the government which had itself conceived and marketed the scheme. Those findings of fact, in our submission, place the case in a different category from the State Superannuation Case. The most specific complaint, as far as we can tell, is made about the factual findings which the Full Court made but what is presented is a more generalised submission that the case should be regarded as being on all fours with State Superannuation. That, in our submission, raises a factual question, a question which was dealt with by the Full Federal Court and a question which, in itself, is not an appropriate vehicle for leave.

The third proposition which I wish to make concerns section 47 of the Legal Aid Act and, in particular, Mr Basten's recognition that, in a sense, the claim is premature but his submission today that, now that costs are being incurred, it is a live issue. Can I hand up to the Court the judgment, which is now reported, by his Honour Justice Wilcox concerning the costs which were incurred in the hearing of these preliminary questions. Mr Basten made an application under Order 62A of the Federal Court Rules for the court to impose a maximum on the costs liability which his clients would suffer if they happened to lose on these preliminary questions. His Honour Justice Wilcox acceded to that request. It was opposed, but his Honour Justice Wilcox acceded to that application and in that decision, under the name Woodlands v Permanent Trustee Company Limited, his Honour decided that, in respect of one of the proceedings, the applicants would not be liable for more than $12,500 for each of the respondent's costs and for the other proceedings there would be a $10 liability.

Now, his Honour reached that conclusion by reference to the maximum which is now embodied in section 47 of the State Act. The State Act refers to no liability beyond $5,000. That has now been increased to $12,500. His Honour Justice Wilcox decided that, for the purpose of the preliminary questions, he ought to put the applicants on the same basis they would have been on had they sued in the Supreme Court of New South Wales, for example, because had they sued in the Supreme Court of New South Wales, Justice Wilcox thought, they would have the benefit of section 47 of the Legal Aid Act, so they would not be liable for more than $12.500.

Now, that is the way in which costs have been dealt with to date. So that on the facts of this case, the question remains moot and premature because his Honour Justice Wilcox has dealt with costs as though the applicants had sued in the Supreme Court of New South Wales and he found an ability to do that by reference to Order 62A of the Federal Court Act.

KIRBY J: They are good submissions in relation to this case, but the holding that he has made is one of general application presumably, and not every judge may be persuaded to do what Justice Wilcox has done here.

MR JACKMAN: Quite.

KIRBY J: Obviously the legal aid question would not come up on its own. But if we were to bring up the other questions, then the time that would be taken on this very short point would not be very large, the marginal cost in time would be quite small.

MR JACKMAN: That may be so. I was addressing the possibility of this Court giving leave on the costs question but not the other questions and, if that were a realistic possibility, the Court would take into account - - -

KIRBY J: What you have said is relevant to that.

MR JACKMAN: - - -this submission, the upshot of which is that if the applicants lose, then their next step will no doubt be to make a further application under Order 62A to limit the costs of the ongoing proceedings. It is a question for this Court as to whether it ought to take, as a vehicle for this question, a matter where it is premature, where Order 62A gives a facility to the Court to reconcile the difference as a discretionary matter, as opposed to considering the matter at a level of absolute generality which would have an impact on cases where, for example, the Court would make a highly discretionary costs order, either because a.....bank letter had not been accepted or even because of some improper conduct on the part of a party. In our submission, the matter is better left to the discretion of the court, which is the way that it has been dealt with to date. But if the approach of this Court is not to treat the costs question alone as a matter which is subject to leave, then I take your Honour Justice Kirby's point as to the shortness of time which would be involved in it.

May it please the Court, those are my submissions.

DAWSON J: Thank you, Mr Jackman. Mr Gyles.

MR GYLES: Your Honours, what has fallen from my learned friends means that, so far as my submissions on behalf of the fifth and seventh respondents are concerned, I do not need to add anything which relates to their particular position beyond that which has been put already and beyond that which we have put in our written submissions. I also adopt the submissions that have been made so far about Bradken. Could I add, however, before turning to Bradken, your Honours, one other factual issue or background issue. Questions were asked by the Court as to the extent to which people are affected by the scheme and my learned friend, Mr Basten, mentioned, I think, the figure of 50,000 people. It is true that a large number of people were affected by it. However, your Honours, we have provided to your Honours copies of the HomeFund Commissioner Act and the HomeFund Restructuring Act 1993 (NSW) which is a legislative scheme to deal with the problem and a very large number of people are affected by, or have brought themselves within, those provisions. So whilst there is - - -

KIRBY J: Do they have a right to opt into that legislative scheme?

MR GYLES: Yes.

KIRBY J: And only those that do not are potentially caught up in this litigation.

MR GYLES: That is not to say there are not a number of people affected, your Honours, but the numbers are far less than the numbers to which my learned friend has referred.

Could I, your Honours, invite attention to what my learned friend, Mr Basten, has said to support his attack upon Bradken, because really at the heart of his special leave application lies that point. He does not, as it were, attack the root and branch of Bradken, and we would submit wisely so, because if ever we have a sort of governmental activity it is this one, that is providing assistance to low income earners to acquire housing. Now, the means of doing it may have been politically and administratively criticised and may have many faults, but it is a core government activity and, your Honours, it would be surprising to find that sort of activity struck down by Commonwealth legislation unless it were very clear and its constitutional basis were very clear.

The principal argument my learned friend addresses is the fact that section 64 of the Judiciary Act was not referred to in the course of that decision, nor, he refers to, section 5(2) of the New South Wales Crown Proceedings Act. As to the latter, I respectfully submit that the way that the Full Court dealt with the matter at page 120 is convincing and that my friend has raised no question as to the correctness of that particular application. It really, in one sense, is a question of construction of the New South Wales Crown Proceedings Act and we submit that what the Full Court there said, that is that:

A State statute cannot extend the reach of a Commonwealth statute beyond that intended by the Commonwealth Parliament -

with respect must be correct. So far as section 64 is concerned, your Honours, the fact that an argument is not put does not detract from the authority of Bradken and, for the reasons we have outlined in our written submissions and others have referred to, it is a longstanding, by now, decision which has been applied and acted upon as correct. None of the usual criteria for disturbing it are established.

It is further our submission that the argument was not put - it is certainly a credible view that the argument was not put because it was seen to be without substance. It is true that decisions since Bradken on section 64 have made explicit, perhaps more explicit, what would have been the understanding then and that is, where there is a Commonwealth legislative scheme on foot which deals with a topic, a subject matter, section 64 has no part to play. That has been applied in a number of circumstances. We have referred to the cases in our submissions, your Honours, and the Full Federal Court had, in an earlier decision, denied the application of section 64 to another aspect of the Trade Practices Act.

May I also say, your Honours, that the way in which my learned friend, Mr Basten, put this case as saying "giving a licence to mislead" is an attractive advocate's way of putting the point but, your Honours, the question is the application of the whole of this Act, including Part IV, the restrictive trade practices, in the strict sense, provisions, monopolisation provisions and so on. The application of those provisions to a State would have enormous consequences and the question is not to be confused by describing it as a licence to mislead. In so far as government activities are concerned, either the common law or State statutes which are applicable will govern that in so far as it is thought to be necessary. So, in my submission, it is not just that Bradken is a longstanding authority, it is not just that my learned friend does not attack it at its heart, it is that section 64, to which he appeals, is not applicable and to submit that it is applicable would require a substantial reconsideration of the decisions of this Court in Moorebank and Dao and other cases.

TOOHEY J: Mr Gyles, could I ask you this? In the ordinary course, this Court would be reluctant to grant special leave to appeal in a matter which was at the interlocutory stage and particularly where leave had been given to replead. Mr Basten answers that by saying, well, effectively what the applicants can now plead is very limited and it still leaves immunity of the Crown and immunity in the non-Crown parties to a very considerable extent. If special leave were granted, to what extent would this Court become involved in questions of fact?

MR GYLES: As to the matter that principally concerns the third respondent, your Honour, I think probably not to any significant extent because, so far as the State is concerned, we are on the higher ground, if I can put it that way. So far as the other respondents are concerned, your Honours, it would be a very considerable task because, again, my learned friend does not really suggest that there is not a flow on from Crown immunity to others and, with respect to him, the Superannuation Case is of no assistance. That was a case as to whether that was the Crown.

KIRBY J: It is a bit of a catch-22 situation, though. Whilst the decision stands, they cannot get further into the facts and yet, the only way they can challenge the ambit of the protection that is picked up by those who deal in business in relation to the Crown in the right of the State is by in some way trying to show that those facts are not facts which attract that immunity.

MR GYLES: Your Honour, I do not want to suggest any course which might increase the chances of the Court granting special leave on one point and leaving others, but I suppose there are various ways the Court could handle that. But I think I have answered your Honour's question.

TOOHEY J: Yes, thank you.

DAWSON J: Mr Basten.

MR BASTEN: Your Honours, there are three things I would wish to say in reply. Firstly, in relation to the question of the factual matters which would be raised before this Court, in relation to the factual matters, at page 101 the court said, at line 10:

there is no agreed statement of facts before the Court and no findings of fact have been made. Nor is it possible for the Court in the present proceeding to make any such findings.

KIRBY J: That may be so, but you would be putting to us the application of principles which you would like to adumbrate and they have to be applied to facts.

MR BASTEN: On the usual basis, your Honour, on a demurrer point, that the pleadings are accepted as the factual basis on which the legal principles are to be discussed. That was how it was done below, that is how it would be done in the - - -

KIRBY J: Mr Birch mentioned large folders of papers and documents. It sounded very unattractive.

MR BASTEN: Very unattractive. Can I refer your Honour to page 100, line 46:

The "agreed bundle" comprises seven lever arch files of documents, some of which were not referred to in argument.

Most, I would submit, were not referred to.

KIRBY J: Some of the bundles or some of the documents?

MR BASTEN: Some of the bundles, I think, your Honour.

TOOHEY J: But is it truly a demurrer point?

MR BASTEN: Yes, it was, your Honour.

TOOHEY J: It may have begun that way, but it has been fragmented, as it were, into questions and answers, has it not?

MR BASTEN: But preliminary questions were derived from the defences raised and they were treated as demurrer points.

TOOHEY J: We do not have that?

MR BASTEN: No, your Honours do not have that, that is true, but the questions were agreed on the basis of the points raised in the defences. The matter was, in my submission, as shown at page 101 but dealt with as a true demurrer point and we are now shut out from taking any benefit from the facts as they were pleaded.

TOOHEY J: Do you say anywhere how you submit the questions should have been answered?

MR BASTEN: Yes.

TOOHEY J: Because the notice of appeal does not really tackle it in that way. It just seeks to set aside a variety of orders made by the court below.

MR BASTEN: The answers given, that is so. The orders made and the answers given appear at page 169. In relation to the first matter, we would say the answer should have been "Yes, the State is bound", though we could not say it absolutely in the court below, given the decision in Bradken. In relation to question 2, we would say that there is no immunity extending to the non-State parties. The same answer in relation to question 3. Question 4, there is no dispute about, and question 5 should be answered yes, not no.

TOOHEY J: But question 2 would have to be answered, I take it, by reference to the material contained in the agreed bundle of documents. It could not be answered in the abstract.

MR BASTEN: In a sense, that is so, and their Honours described what the nature of the scheme was, which was the purpose for which the bundle of documents was put before them. There was no oral evidence, there was no affidavit evidence, there was no cross-examination, and all of these matters were dealt with in, I think, three days, including all of the arguments for all parties and the discussion of the documentary material.

KIRBY J: Presumably under the new practice direction of this Court, we would have to look to the parties to synthesise this material in so far as it is properly before the Court.

MR BASTEN: Your Honour, I think now that the questions have been answered and there is a judgment below, the material which would really be relevant to these questions falls within a much narrower compass and, as tends to happen in these cases, people want to put every document in the bundle so that if they can make any mileage out of it, it is there. But in my submission, it would be a much shorter point in relation to the evidence.

The second point I wish to make is a short one in relation to Mr Jackman's issue in relation to costs. There was a cap imposed on the liability of the applicants but the order made was an order which rendered the applicants liable for the amount as capped. His Honour did not treat the applicants on the basis that they would have been treated if the Legal Aid Commission Act had applied. He put the respondents in that position, namely that they would only get a limited recovery. The order appears at page 179.

Finally, in relation to Mr Gyles' point that the question in relation to Bradken is not simply a question of the application of Part IVA and V of the Trade Practices Act, but also includes Part IV, that of course now applies to the States as a result of the competition policy which resulted in the insertion of section 2B at a time after this case was commenced. If your Honours please.

MR GYLES: Your Honours, I should say that, with respect to my learned friend, we entirely disagree with his statement in answer to a question that this was some sort of demurrer. Your Honours, they were separate questions. The history is set out at 98 and 99 of the book and the parties put before the court such evidence as they wished to and the court determined the facts - or the questions - for all purposes.

DAWSON J: The Court will take a short adjournment to determine the course it will take in this matter.

AT 10.59 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.12 AM:

DAWSON J: The Court is prepared to grant special leave to appeal in this matter but, subject to any directions in relation to the appeal, the notice of appeal should indicate the answers sought to the questions asked and the parties should be aware that the Court will require those questions to be answered as questions of law without being required to determine, as a matter of controversy, factual issues.

AT 11.13 AM THE MATTER WAS CONCLUDED