Sweedman v Transport Accident Commission [2005] HCATrans 591 (10 August 2005)

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Sweedman v Transport Accident Commission [2005] HCATrans 591 (10 August 2005)

Last Updated: 18 August 2005

[2005] HCATrans 591

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Melbourne No M28 of 2005

B e t w e e n -

HELEN MARGARET SWEEDMAN

Appellant

and

TRANSPORT ACCIDENT COMMISSION

Respondent

GLEESON CJ
GUMMOW J
KIRBY J
HAYNE J
CALLINAN J
HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON WEDNESDAY, 10 AUGUST 2005, AT 9.52 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR J.K. KIRK, for the appellant. (instructed by Henry Davis York)

MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR P.H. SOLOMON, for the respondent. (instructed by Transport Accident Commission)

MR D.M.J. BENNETT, QC, Solicitor-General of the Commonwealth of Australia: If the Court pleases, I appear with my learned friend, MR G.A. HILL, for the Attorney-General of the Commonwealth intervening. (instructed by Australian Government Solicitor)

MR M.G. SEXTON, SC, Solicitor-General for the State of New South Wales: If the Court pleases, I appear with my learned friend, MR M.J. LEEMING, for the Attorney-General for New South Wales who intervenes. (instructed by Crown Solicitor for New South Wales)

MR C.J. KOURAKIS, QC, Solicitor-General for the State of South Australia: If the Court pleases, I appear with my learned friend, MR M.J. WAIT, for the Attorney-General of Western Australia and South Australia intervening. (instructed by Crown Solicitor for the State of Western Australia and Crown Solicitor’s Office (South Australia))

MS P.M. TATE, SC, Solicitor-General for the State of Victoria: May it please the Court, I appear with my learned friend, MR M.K. MOSHINSKY, for the Attorney-General for the State of Victoria intervening. (instructed by Victorian Government Solicitor)

GLEESON CJ: Yes, Mr Walker.

MR WALKER: Your Honours, I can tell the Court that the parties and interveners have agreed on a division of time to complete the hearing today.

GLEESON CJ: Thank you, Mr Walker.

MR WALKER: Your Honours, at the heart of the differences revealed by the written submissions there is a fundamental elementary and first step which presents as an obstacle in our way and that is whether or not there is anything in the difference of operation according to their tenor of the New South Wales statute and the Victorian statute which falls to be described either as inconsistent as presenting a clash, as presenting a conflict in the sense it has been explained from time to time in this Court, so as to require attention to the problem adverted to by this Court which may or may not present difficulty in this case in Port MacDonnell.

In our submission, however, before coming to that main obstacle in the presentation of our position, it is of cardinal import that this was a case in federal jurisdiction. Thus far, it has been clear and uncontested as a matter of agreement between everyone involved in the case that the federal jurisdiction comes about by reason of 75(iv) of the Constitution and that the Supreme Court of Victoria was invested with the relevant federal jurisdiction pursuant to section 77(iii) of the Constitution by section 39 of the Judiciary Act.

Another possibility which is not relied upon in our argument and is unnecessary for our argument which nonetheless involves consideration of constitutional text which may be of moment in this case is to observe the terminology of what might be called the neglected 76(iv) and, in particular, to note that those are provisions which contemplate the laws of different States relating to the same subject matter claimed, and that it is another piece of text like section 74, the first paragraph, to which we referred in our written submissions, which contains explicit acceptance of a possibility that there will be differences of laws as well as clearly lines to be drawn between powers of sister States.

Because this is in federal jurisdiction your Honours have been pressed in written submissions with a deal of reference to the effect, severally or combined, of sections 79 and 80 of the Judiciary Act, although in light of the arguments as presented and in light of the reliance, particularly on this Court’s reasoning in Blunden, one could be forgiven for saying rather sections 80 and 79 in that order.

The position of the appellant in relation to those matters of the federal jurisdictional quality is related to our position in relation to the choice of law matters upon which, in particular, we would single out the written submissions from our learned friends for the Attorney-General for Victoria and for New South Wales as raising matters (a) of great interest, but (b) perhaps not of central relevance to this case, and at the outset, if we could - - -

GUMMOW J: I would have thought that is a starting point.

MR WALKER: The starting point is federal jurisdiction, and thus sections 80 and 79 are critical - - -

GUMMOW J: Or another starting point is the characterisation of the claim.

MR WALKER: Your Honour, I was about to say, therefore, we start by observing the nature of the cause of action upon which we were sued. That cause of action, on all hands, is accepted as being entirely a creature of statute. It does not matter to call it sui generis; it is simply a statutory cause of action or a cause of action to enforce a right brought into existence and wholly regulated and all its contents supplied by relevantly section 104 and the called-up provisions of section 104 of the Victorian Act.

GUMMOW J: I am not sure that is right.

MR WALKER: Your Honour, that is the whole of their claim, section 104. Every remedy they claim and the pleading upon which that claim is based is directed to establishing a right under section 104. That right under section 104 involves, of course, reference both within the Victorian statute to provisions such as section 94 but not confined to section 94, and also involves reference to other systems of law – in this case New South Wales law – by reason of the reference to legal liability in section 104(1).

It is accepted in this Court, and it has been in any event retrospectively made sure in Victoria, that section 104’s reference to the possibility of accidents giving rise to liability includes a reference to accidents out of Victoria and thus within New South Wales as in this case.

GUMMOW J: I was referring to characterisation?

MR WALKER: I am sorry, your Honour?

GUMMOW J: You mentioned section 80?

MR WALKER: Yes.

GUMMOW J: And New South Wales and Victoria say there is a question of characterisation.

MR WALKER: They do.

GUMMOW J: They say it is characterised, it is a statutory action but the action brought in pleading terms is an action in debt, and in choice of law terms it is classified as a quasi-contract claim.

MR WALKER: None of which we are intent on contesting so far as that is simply seen as an abstract question of characterisation.

GUMMOW J: Then they say that the closest and most real connection is with Victoria.

MR WALKER: Yes, your Honour.

GUMMOW J: That is the choice of law?

MR WALKER: Yes, your Honour.

GUMMOW J: Now, is there any debate about that?

MR WALKER: We obviously contest the connection or nexus conclusion. We do not, of course, contest – indeed, we embrace the entirely statutory nature of the - - -

GUMMOW J: You keep saying “entirely”. It is not quite entirely.

MR WALKER: Your Honour, the fact that it may be characterised for the purposes of choice of law and other jurisprudential purposes - - -

GUMMOW J: It is not just choice of law.

MR WALKER: That is so, and other jurisprudential purposes that it - - -

GUMMOW J: In Bullen & Leake terms you would plead it in debt.

MR WALKER: Your Honour, I am not concerned - - -

GUMMOW J: That is what we said in SCI.

MR WALKER: And I am not concerned to contest any of that. That is a foundation from which we move, and whether one elliptically describes it as an action for a statutory debt or an action framed in debt by reason of a statutory obligation which is characterised as producing that kind of claim is not going to be material for our argument.

HAYNE J: But is not the consequence of that characterisation a consequence on choice of law, and if there is a consequence on choice of law does that not strike at the fundamental assumption underpinning the whole of your argument, namely, that the two laws somehow can speak to the action?

MR WALKER: Yes, the first part, no, the second part, and may I go immediately to elaborating the second part of my answer, and it will involve trying to state the appellant’s position in relation to this choice of law discourse and sections 80 and 79. Section 80 serves a purpose, if not the purpose, of selecting from among the statutes, which are in force – to use the expression in section 80 – by reason of the production of State or Territory legislatures.

Now, that may be a controversial proposition in this case, because as my learned friends for Western Australia and South Australia argue, one understanding of the expression “in force” in the State or Territory in which the jurisdiction is exercised is held, is that that will incorporate all products of legislatures which are to be described as statute law wherever they have been enacted, by whatever legislature they have been enacted, because whether pursuant to common law choice of law or some other constitutional method they are all the law having force, according to their tenor and effect, throughout the whole Commonwealth.

Now, in our submission, that is an important point that needs to be addressed at the outset of my attempt to answer the questions raised by Justices Gummow and Hayne and our position on that question of textual interpretation is entirely opposed to the Western Australian and South Australian position, that is, that whatever merit there may be – and with respect, there may be very considerable merit – in describing outside the context of section 80 all laws made by Australian legislatures as having force throughout Australia, whatever merit there may be in that, the text of section 80 is one which for the following reasons would seem to confine it to what appears thus far to have been the common understanding of what that expression means, namely, that it refers only to the product of the legislature of the place in which the court is being held.

Now, the reasons include, first, that it would be most peculiar if the expression “the statute law in force in the State or Territory” were to be regarded as not including that which is paramount statute law throughout the Commonwealth, namely, the product of the Commonwealth Parliament, but that cannot be right bearing in mind that there has been a specific reference to the laws of the Commonwealth in the proviso which describes the capacity of both the common law and the modifying statute law to be the law governing the exercise of the federal jurisdiction under section 80.

So textually, statute law in force in a State or Territory would not include laws of the Commonwealth which are specifically mentioned in the following proviso, and that indicates that there is not at work here a text that says “in force” describes anything which is a law made by an Australian legislature.

The second reason why the West Australian/South Australian approach to this phrase “in force” ought not to be accepted by the Court is that section 80 works a form of selection by something which is physical, namely, location of a hearing so that we have the court being held somewhere in a Territory, in a place, and in our submission, that is an indication that it is the product of the State or Territory legislature which is selected as the statute law in section 80 rather than all statutes – curiously leaving out Commonwealth statutes - - -

GUMMOW J: Yes, but 80 is talking about the common law.

MR WALKER: Quite so, with respect, your Honour.

GUMMOW J: What one needs to know is whether this common law choice of law rule they have identified has been modified by the statute law of Victoria. Answer, probably no.

MR WALKER: Modified here – quite so, your Honour.

GUMMOW J: You could have a statute law in Victoria which is a Kay’s Leasing v Fletcher situation which ousted it.

MR WALKER: Your Honour, I accept all of that. I am at the moment simply intent on answering the argument that says that the phrase “in force in the State or Territory in which the Court in which the jurisdiction is exercised is held” is something which picks up either all statute law by all Australian Parliaments or by all Australian Parliaments except the Commonwealth Parliament.

In our submission, it does not mean that. It is a selection by location, precisely as Justice Gummow, with respect, has just put. It raises in this case simply the question, has the common law been modified by the law of Victoria, the law of Victoria, because Victoria is the place in which the court is being held and one does not ask about, for example, New South Wales, let alone any other State or Territory law at that point.

However, in relation to section 80 and in relation to the cause of action depending entirely for its existence on section 104, however that then causes it to be characterised – and when I say - - -

GUMMOW J: You keep saying “depending entirely for its existence”, you see. All right.

MR WALKER: For its existence. Without 104, this cause of action, framed in debt, does not exist. Now, when I say depends entirely, that is, of course, exaggeration. In this country, one starts with sections 106 and 107 of the Constitution. Having observed that, one then sees the product of the Parliament which is given - - -

GUMMOW J: It is a cause of action in debt. The common law operates with the statute. Is that not what we said in SCI?

MR WALKER: Yes, your Honour.

GUMMOW J: With reference back to Mallinson and so on?

MR WALKER: Yes, your Honour.

GUMMOW J: Why do you keep saying “entirely depends”, other than as a flourish?

MR WALKER: Your Honour, I will drop “entirely”, it is a flourish. I should not have attempted it a second time. Our point about section 80 is that the law which is referred to there, the combination, the overlay of the common law and the Victorian statute drives one to precisely the same place one would be if you happened to start with section 79, namely, what is the effect of the Victorian statute?

Now, whether one asks the section 80 question, how does the Victorian statute affect the common law – all relevant aspects of the common law, or whether you ask the section 79 question, is it applicable, the same question results, what is the effect with these facts of the Victorian statute?

Now, choice of law is raised particularly by New South Wales - but not only by them, of course - as something which section 80 applied first as between it and section 79, will lead to a result by which the New South Wales statute has no effect of any kind, and having no effect of any kind is displaced from having any potential or current clash, inconsistency or conflict. In our submission, the fallacy is to treat section 80 as having any effect on the status of other laws of other States and Territories insofar as they themselves represent a government in and for the Territory of the Parliament which made them.

GUMMOW J: You have to get is something out of the Constitution which displaces section 80 and introduces the New South Wales law.

MR WALKER: I entirely accept that, your Honour.

GUMMOW J: I think that is where you differ.

MR WALKER: I entirely accept that, and the last formulation I proffered just now is obviously based upon sections 106 and 107, that what the Constitution posits is that there will be State government continuing transformed, continuing from the historical route in the colonial self-government that produced the Federation by becoming States and that that is government, primarily, territorially defined.

KIRBY J: The colonies did not produce the Commonwealth. The people of Australia produced the Commonwealth.

MR WALKER: I mean that the constitutional making transformed colonies into States, thus producing the Federation. The constitutional making, of course, as your Honour correctly points out, being a product of the people, yes, but the process had colonies transformed into States. The transformation into States is what produces Federation. People are not federated, States are federated.

KIRBY J: It postulates a geographical division of the Commonwealth, but with this strange post-imperial notion that there was a limited degree to which there could be extraterritorial laws, and those extraterritorial laws necessarily intrude into the lawmaking consequences of the neighbouring States.

MR WALKER: Yes. Now, may I make it clear in my attempt both to continue talking about choice of law and to respond to Justice Gummow’s comment, that the argument I am embarked on at the moment, though it may debouch into reference to section 118, does not depend on it for the steps I am taking at the moment.

HAYNE J: Let me understand the premise from which this argument is proceeding. The constitutional premise must be, with the creation of the States, the States may make legislation which is different?

MR WALKER: Yes.

HAYNE J: The next premise which seems to underlie your argument is that the Constitution addressed that issue, that question, that problem rather than simply taking as an accepted part of the field within which it was made that there were common law rules, choice of law rules that were presented to a court and determined what law governs the cause that is brought in a court, if you like, dividing it up according to substance, procedure or any other way you care to. But where in the Constitution do you root this premise that says the Constitution addresses the inevitable consequence of Federation if it is not 118, which I understand you to just tell me it was not?

MR WALKER: No, I am not going to flee from 118 but I am not going there first.

HAYNE J: You will embrace it lightly?

MR WALKER: I will sidle up to it, your Honour - - -

HAYNE J: That will get you nowhere, Mr Walker.

MR WALKER: But 118 is not part of my basic answer to the questions your Honours have been addressing to me. May I accept the challenge, as it were, to find an addressing of this problem in the Constitution and confess that if you give the word “address” any real content, no, it is not addressed, but it is adverted to and, in our submission, it is a very strong immanent or implicit aspect inevitably produced by what the Constitution produces.

HAYNE J: It is an inevitable consequence of Federation.

KIRBY J: It is addressed in section 74. It is not very detailed in its address, but it is there.

MR WALKER: Your Honour has heard my earlier reference to two pieces of text. I do not say they are the only pieces of text that are important. I have already mentioned sections 106 and 107 which we cannot overstate in the importance, we submit, that they have here, but there is, of course, first, section 74 which is not directly on point because the expression there is:

the limits inter se of the Constitutional powers of any two or more States –

However, it is very definitely germane, bearing in mind that extraterritorial legislative competence is a question of power. Now, we are not here - - -

HAYNE J: But the hypothesis for your debate must be that the two statutes are in power?

MR WALKER: Quite so, but as I say, we are not here to say that this was a case that produced that kind of test because the power of each Parliament was undoubted. However, that then drives you to the other possibility which was singled out for federal jurisdiction in the Constitution for reasons which would appear to be obscure. Mr Leslie Katz, as he then was, has written, we think, the only real survey of the material in the Public Law Review on 76(iv). Whatever the misleading or inadequate explanation of American analogues that were offered, the words we are left with are that the original jurisdiction that can be conferred on this Court – see the use of that reference in section 39 for conferral on State Supreme Courts is expressed thus:

any matter . . .

relating to the same subject-matter claimed under the laws of different States.

KIRBY J: By the way, have you a compilation of articles such as Mr Katz’s, and I would like Mr Mathieson’s article which is in footnote 67 of the Commonwealth’s submissions. I do not think we should be having to hunt around for these things.

MR WALKER: Your Honour, may I, I hope without - - -

KIRBY J: I think Dr Kirk also wrote something that is quoted by one of the opposing parties. If the parties can get a little compilation of some of these articles because I will be reading, and I am sure others will, too.

MR WALKER: May it please your Honour. Some has been supplied. I imagine the solicitors will be able to co-operate to ensure that deficiencies are fulfilled. Your Honours, I was about to mention that in answer to Justice Hayne’s question concerning where this aspect of Federation might be found addressed in the Constitution, 76(iv), whatever it means – and in the 1980s it was thought that whatever it meant was sufficiently obscure for that to be a reason to leave it for this Court one day to construe – it posits the notion that the same subject matter may fall in a court or in courts to be disputed under the laws of different States.

So that at the outset, once one puts aside historically driven non-textual limitations on 76(iv) suggesting it is only about boundary disputes and resultant obscurity of land grants, once one puts that to one side then there is an express recognition of different laws happening - obviously to come from different States; if they were not different laws then there would not be any problem – different laws of different States relating to the same subject matter and becoming an aspect of the need to determine a matter so that means law which is going to affect one way or the other, to some extent or other, the outcome of litigation.

That was seen as a quality just like the diversity jurisdiction in 75(iv) “between residents of different States” and the diversity jurisdiction presented by this case, namely a State and a resident of another State, that was seen as something which justified it being federal jurisdiction, the traditional explanation being to avoid the partisanship of local courts favouring local laws.

KIRBY J: Could you just for my sake concretise what you say is the federal oddity of this case? As I understand it, it is that you say that by the use of this Victorian law creeping into the State of New South Wales, an insured person in New South Wales can bring home to the New South Wales insurer an obligation which by reason of the statute of limitations of New South Wales and the content of the entitlements in New South Wales produces a net burden on the insurer in New South Wales which, had the proceedings been brought in the appropriate State, New South Wales, would not have fallen on that insurer, that that is a very odd thing that by this roundabout way the law of Victoria can so intrude into the State of New South Wales to burden your client. Is that the essence of the federal concrete complaint?

MR WALKER: Yes. Your Honours, I have the feeling of several balls in the air. I think I can keep them there. I would like to answer that immediately, if I may.

KIRBY J: At some stage I would like you to make concrete what you say is the federal offence, the offence to the federal scheme.

MR WALKER: I would like to answer that immediately. I therefore have to note, as it were, that I am going to come back, having answered that question, to resume a justification of there being a constitutional (a) need and (b) answer in relation to - - -

KIRBY J: Well, if you can make a concrete oddity then the Constitution would arguably by its implications present a solution.

MR WALKER: Yes, your Honour, yes.

KIRBY J: But it seems to me nowhere in your submissions do you grasp the nettle and say, “This is the oddity of this outcome”.

MR WALKER: I am sorry - - -

KIRBY J: Maybe you have assumed that one can see through it all, but the mind searches – at least mine does – for a concrete problem.

MR WALKER: First of all I do not want to go through the detail, but we have attempted to concretise the position as it applies in this case in our written submissions between paragraphs 26 and 38. I am not going to go to the detail of that.

KIRBY J: These are the little differences, are they?

MR WALKER: Yes, but if I may pick up that comment, with respect. These are not little differences - - -

KIRBY J: But I am thinking of your grand theory.

MR WALKER: These are not little differences.

KIRBY J: Well, the Commonwealth submissions say they are little trifles. You say nobody deals with it, but the Commonwealth submission definitely deals with it.

MR WALKER: Your Honour, the Commonwealth submission cannot surely be understood as saying that perceptions of difference in how to deal with the pressing social problem of motor vehicle accidents and the mayhem they cause, that differences perceived by different State and Territory legislatures – we may confine ourselves just to States at the moment – are differences which are not grand enough for the Commonwealth to perceive practical importance in the different policies reflected in different laws; that is, surely the Commonwealth will not present as intervenor to put an argument of that kind.

Having put to one side the notion that the Commonwealth does not care about the trifles of different details of different schemes, one then comes to, “Let’s look at the schemes themselves” and the schemes themselves present differences which are by no means trivial.

CALLINAN J: Well, the respondent’s action would be statute barred, would it not?

MR WALKER: Yes. Your Honour puts your finger on the first of the most important ones.

KIRBY J: Well out of time.

MR WALKER: And it is not statute barred for what might be called common or garden reasons of policy informing statutes of limitations for centuries since they were first enacted. Statute barred because, in order to deal with a perceived mischief, one of the - - -

GUMMOW J: It would not be statute barred.

MR WALKER: I am sorry, your Honour?

GUMMOW J: It would not be statute barred in a federal jurisdiction, would it, unless some federal law picks it up?

MR WALKER: If your Honour is asking about the cause of action under the Victorian action, of course that is not statute barred.

GUMMOW J: We are immediately slipping out of federal jurisdiction, you see.

MR WALKER: No, but, your Honour, I am responding to Justice Callinan’s point, and I am coming to the Telstra v Worthing answer, which is what Justice Kirby, with respect, has evoked. There is the fact that the legal liability, to use the expression in section 104, which provides both the occasion and as to certain quantum flowing from it, also the cap, on the section 104 Victorian claim, that is a liability which, in what I will call its direct form, the form it takes so as to give it content to 104, would be statute barred, and when I say barred, subject to a relaxation on terms which there can be no suggestion of any likelihood of satisfaction in this case, for example. That is the first thing.

GUMMOW J: It may be statute barred if 76(iv) does not mean what you say it means, it just deals with border disputes. There is no - - -

MR WALKER: I think I have been very careful not to say what it means, your Honour.

GUMMOW J: There is no question of federal jurisdiction on this hypothesis, and one sees a clash. But that is not this case.

KIRBY J: Well, federal jurisdiction - - -

MR WALKER: I do not want to stray from federal jurisdiction at all, your Honour, at all.

KIRBY J: But federal jurisdiction can only apply in a way that is compatible with the Constitution.

MR WALKER: Quite.

KIRBY J: And the Judiciary Act has to be read in such a way as it is compatible with the grand design of the Constitution, that the States - - -

MR WALKER: And the terms of section - - -

KIRBY J: - - - essentially stick to their own territory.

MR WALKER: We do not need to resort to canons of statutory interpretation for that. It is explicitly said in sections 79 and 80, as your Honour has put it.

KIRBY J: It is just a little odd that you invoke your position as, in essence, the State in order to get jurisdiction, but the State - - -

MR WALKER: I am not the State, your Honour.

KIRBY J: - - - of which you are part, or at least your insurer would be claiming to be part, is not supporting you, or am I - - -

MR WALKER: I am a licensed – I am actually a resident of New South Wales, a driver of a motor car, but she has statutory contractual - - -

KIRBY J: With an insurer under the State.

MR WALKER: - - - claims against a licensed private insurer.

KIRBY J: Yes.

MR WALKER: Which is very definitely not the State, not even – privatisation has not gone that far, your Honour.

KIRBY J: So you are all there on your own invoking this grand constitutional theory that none of the States embrace. They all disclaim it.

MR WALKER: But it is not quite right, with respect.

KIRBY J: They do not know what is good for them.

MR WALKER: I think most of the State intervenors accept that there may be an occasion which requires a territorial nexus resolution.

KIRBY J: Of course they want to have extraterritorial operation of their laws.

MR WALKER: Your Honour, I do not want – if I can try and answer the question about concretising, as your Honour puts it, the difficulties. Section 104(2), as your Honours all know, provides a cap – I call it a cap – by reference to the amount that might be paid under what I am going to call the New South Wales legal liability. That is a cap which is not produced by counting up to the amount of the legal liability for the purposes of a Victorian claim in the New South Wales manner. It produces a cap, but the Victorian claim is of course itself limited, if it be less than the claim, to the amount paid out by the Victorians.

Of course, the Victorians pay out periodically, thus the declaratory relief sought asking for a declaration which will have us hogtied into the future, an indefinite future. What is absolutely clear from the New South Wales statute is that by a combination of means, not just statute of limitations techniques but also what I will call dispute resolution experimentation – you cannot sue before and you must have done certain things in relation to suit, et cetera, et cetera – designed to produce as rapid and as certain a crystallisation of financial obligations in relation to a comprehensive scheme – now that is a tendentious word, “comprehensive” but it is one that we assert appears on the face of the New South Wales statute – a comprehensive scheme in which private insurers, subject to onerous obligations, are fixing annual – I stress annual – premiums, subject to the supervision of the New South Wales governmental authorities which are to be guarded explicitly by actuarial considerations.

This, in short, is a scheme which is intended, if your Honours will forgive the use of jargon, to avoid lengthening tails forever. In our submission, that is a perfectly legitimate, domestic, intrastate, local, New South Wales concern for a New South Wales legislature, and there is no question - - -

KIRBY J: But as against that, in our Commonwealth people travel interstate.

MR WALKER: If your Honour pleases. No question about the - - -

KIRBY J: And therefore they have to have insurance when they go interstate, and States have a legitimate reason to protect their residence when they go into another State and provide them with insurance and benefits.

MR WALKER: There is no contest with extraterritoriality in this case. Both the New South Wales statute and the Victorian statute, as your Honours will have observed, recognise the possibilities quite explicitly - Victorian statute in terms - of someone being registered and having insurance under a corresponding law in some other State. No one has been proceeding as if they were mythical early 19^th century independent European principalities. There is no flavour of that in this case at all.

GUMMOW J: What about your paragraph 39 in your submissions, the first sentence of it, Mr Walker. That seems to me to highlight curiosity. This is not a “Victorian court faced with this situation”. It is a Victorian court exercising federal jurisdiction. The problems you present to us have been solved through the Judiciary Act and federal jurisdiction. You are turning it the other way around.

MR WALKER: We submit not, for reasons that I will not be able to say immediately - - -

GUMMOW J: But is not the first sentence of 39 wrong?

MR WALKER: No, not at all because it is a Victorian court given section 39 jurisdiction to exercise the judicial power of the Commonwealth.

GUMMOW J: Exactly. We are talking about the - - -

MR WALKER: It is misleading if the epithet “Victorian” were thought to be some special quality of the court. We could have put - - -

GUMMOW J: New South Wales, and I think Victoria, say you would get the same result if this action was brought in the Supreme Court of New South Wales.

MR WALKER: Your Honour, we say you would get the same result. Whether that same result is the same as what they contend for, is what is at contest between the parties.

HAYNE J: Let us come back to making concrete the problem. The problem is one that arises because two States have different policies given effect to by two different forms of legislation. It is as simple as that.

MR WALKER: Yes, it is.

HAYNE J: That is an inevitable consequence that accompanied Federation.

MR WALKER: Yes, that is why I said earlier it was implicit or immanent in Federation.

HAYNE J: The solution to that problem presented by the Constitution is the solution found in Chapter III.

MR WALKER: Yes.

HAYNE J: Where then is the hook upon which your argument must hang that the Constitution does not recognise that these problems are solved through federal jurisdiction and through the development of common law choice of law rules.

MR WALKER: We do not contest the first part of that at all. We embrace it. The fact that it is federal jurisdiction indicates by the nature of the judicial power referred to in section 71 and by the special considerations shown in sections 74, 75(iv) and 76(iv) shows that the consistency of outcome unaffected by local partisanship, for example in the case of the latter two, is an express intention of the Constitution. As to the second part, the choice of law, of course the common law, being the same throughout the country, section 73, is going to produce choice of law rules which, conforming to the Constitution, will be apt again to produce certainty before the event rather than confusion in order to discover the outcome. We accept that.

We certainly do not say there is any constitutionalising of any element of choice of law. Interestingly, it may be that though never explicit, some of the arguments against us which concentrate on choice of law may be seen to place them, the common law choice of law rules, in a position that is more than merely statutory, but we need not deal with that because no one has expressly argued that. They are only relevantly given statutory force for the geographical solution adopted by sections 80 and 79 of the Judiciary Act. They are given the local solution as to where the court is being held, produces the identification or selection of the statute law which may putatively have altered the common law, including – we think this is accepted on all hands – the common law choice of law rules.

Now, the first thing to be said about the common law choice of law rules is that no one argues here, us least of all, that the Victorian statute has altered them. That is why the questions directed to me at the outset by Justice Gummow are, with respect, not the subject of contest between us and those who are intent on arguing the characterisation necessary in order to apply common law choice of law rules.

We simply observe – and I hope this is a summary answer to Justice Hayne’s most recent question – that the New South Wales statute does not cease to be a statute simply because of the operation of any particular choice of law rule, be it common law or statutory, applying in Victoria, in force in Victoria. It remains a New South Wales statute. As a New South Wales statute, unless the choice of law rule has the effect of removing “clash” – our preferred word – unless the choice of law removes “clash” then it remains a statute which needs to be taken into account. Now, this is where I come closest to using section 118 in my primary argument, but I simply flag that - - -

GUMMOW J: You say removes “clash” – as illegal proposition?

MR WALKER: Yes, your Honour. But choice of law rules, in our submission, cannot remove - - -

GUMMOW J: But that is the very question, is it not?

MR WALKER: They cannot remove “clash” when the clash is of the kind contemplated by the Court in Port MacDonnell, admittedly in the highly special facts of the line of equidistance going out beyond the respective territories, but contemplated in the abstract by this Court, namely where you have the undoubted powers of two bordering sister States, the one regulating the way in which money should be allocated or circulated around the community with respect to motor vehicle accidents, and the other doing the same for its territory but with understandable and perfectly proper, extraterritorial operation. Victoria is not the only statute that has some extraterritoriality to these statutes.

HAYNE J: What is the content of the expression “remove the clash”? What do you mean by it?

MR WALKER: I mean reaching the conclusion, that is, the judicial conclusion, that the New South Wales statute has no force or effect which affects – and this is the crux of it – the reach of the Victorian statute. In our submission, the reach of a Victorian statute extraterritorially is precisely the kind of problem, whether intended or not by those who wrote it, that for example 76(iv), or for that matter in an extreme case, 74, contemplated expressly that there will be an undoubted law concerning what has to be paid under New South Wales statute upon a claim being made under the New South Wales statute on the New South Wales statutory policy. That is domestic law.

That is what, after all, success for the Victorian plaintiff in this case would produce. It would produce an operation of New South Wales law by which New South Wales funds contributed, according to a system of calibration as a matter of policy and law, quite different from the Victorian approach, that fund will be depleted by reference to an amount which, according to the comprehensive scheme setting up that fund, ought to have been paid out, if at all, only pursuant to a claim made under all the conditions and on all the terms of the New South Wales Act.

KIRBY J: But, as I said, that is not really offensive to our Federation given that people move interstate - - -

MR WALKER: No, but what is offensive, with respect, your Honour, is the notion that the New South Wales statute creates a scheme of one kind, quite different in the respects that we have noted, particularly the fact that New South Wales has a regard for “once and for all” and for summary certain irrevocable knowing of the financial consequences, which is quite different from the Victorian approach.

KIRBY J: It does not sound much different in kind to the class action or other procedures that were considered in Mobil.

MR WALKER: Your Honour, the question still remains whether there is a clash of the kind for which we have argued both in written submission and by the comments I have made concerning limitation procedures for claiming to get it over and done with quickly and with a minimum of fight and, in particular, the favouring of “once and for all”.

Now, there are structured settlements which are possible in certain circumstances, but as we pointed out in writing they require a “once and for all” assessment of amount. What they do is structure the doling out of payment. These are quite antithetical to the approach taken in the Victorian statute, which has limits, it is true, but not limits imposed by any “once and for all” quasi-common law approach to the award of damages.

HAYNE J: The argument is one that proceeds from the premise that there can never be an intersection between the two. You refer to the fund being created and administered on the basis that the only claim on that fund can ever be a claim made under the New South Wales Act without any claim ever being made in consequence of interstate events. Now, that assumes the conclusion you urge.

MR WALKER: Quite so, your Honour, and I do not want to do that. I have to start, as we pointed out in written submission, as is crystal clear, as a matter of statute, the policy in question, that which the licensed insurers must issue, most clearly does answer to liabilities incurred outside New South Wales. There is no question about that and there is no question that if we are wrong in our basic argument, then the New South Wales fund will be depleted by whatever, and I do stress – because this could change with time – mode of recoupment or simple subsidy that a sister State, for its different purposes and its separate fisc, for whatever purposes or motives, they decide there should be a liability created by a statute enforceable by an action framed in debt and thus attracting the magic of the common law choice of law rules, somehow knocking the New South Wales scheme out of action as something that governs the way in which money is to be paid out on the statutory policies.

Now, Justice Hayne, with respect, has certainly raised the question, well may not the New South Wales statute, particularly the terms of the statutory policy, which is at its heart, may that not be construed as a scheme that welcomes all comers from sister States in relation to statutory liabilities that may fall to be determined from time to time, and if New South Wales does not like that then its resort is the politically unpalatable but no doubt spectacular device of removing certain sister State claims from the indemnity granted by the New South Wales policy.

In our submission, the political unpalatability of that is so large as to give rise to the question whether this is not a perverse effect said to be produced by Federation and common law choice of law rules on the section 106, section 107 power – not sovereignty, not untrammelled, but power – given primarily territorially to State governments.

KIRBY J: Yes, but the - - -

CALLINAN J: You might run into section 117, too, might you not, if you start discriminating - - -

MR WALKER: I am going to deal with it separately, but of course they are part of the same fabric, yes, your Honour.

KIRBY J: Another way to interpret what you have just said is that it is politically unpalatable because of the very character of our Federation, the fact that people move interstate, that they take their cars interstate, that that to some extent takes the law of their state of residence interstate and that actuaries just have to work out that for 0.5 per cent of cases there is going to be an interstate driver, an interstate car and you just have to make allowance for that.

MR WALKER: Your Honours, there are two ways in which we want to put what we submit is the concrete clash or inconsistency, the detract, impair, alter approach. The first is to refute the proposition that the Victorian statute, particularly section 104, is governing, creates, produces, concerns a different subject matter from that which is the subject of the various provisions, or even the whole scheme of the New South Wales Act.

In our submission, that is a quite wrong approach to the question of inconsistency. Because of the novelty of the position, we call in aid obviously only authorities in relation to section 109 inconsistency, with all the caution which, with respect, is appropriately expressed not only in our written submission in reply but also in those submissions to which we were replying in that part. We accept the cautions which are appropriate, but nonetheless - - -

HAYNE J: And there is central to that caution the fact that 109 is concerned with paramountcy.

MR WALKER: Absolutely.

HAYNE J: Well, how do you equate them? One is concerned with paramountcy. What useful - - -

MR WALKER: I am going to try an a fortiori proposition as follows. Direct inconsistency, as found in AMP v Goulden or Telstra v Worthing with the paramountcy provision is a fortiori when applied between sister States with no paramountcy between them. AMP v Goulden is the best illustration of the entire inappropriateness of resolving the question, “Is there any inconsistency?” by asking, “Are they directed to the same subject matter?” They intersected, and they intersected in a way which produced a direct inconsistency, the State anti-discrimination provisions and the actuarially responsible risk-rated life insurance provisions, and to suggest that they describe the same subject matter is a distortion of language, but they clearly intersect, as is common with many laws and not only laws, as with many other of the transactions and relationships that are produced by people operating in legal ways in the community.

So one can put to one side the fact that it is not the same subject matter means there cannot be a direct inconsistency of a kind which certainly is not the only kind of inconsistency which for paramountcy purposes under section 109 is important, but is certainly a kind of inconsistency which, if it matters at all, will matter between States and States.

The second point we make is that the inconsistency described by Justice Cole in the New South Wales Court of Appeal and endorsed and accepted in Telstra v Worthing [1999] HCA 12; 197 CLR 61 by this Court, is an inconsistency which is evocative to a startling degree of detail with the inconsistencies we have argued here. Your Honours are familiar with the passages which we have cited at pages 77 to 78, paragraphs 29 to 32 – I will not take you to them at all – but that is a passage which, in our submission, shows that for direct inconsistency differences of the kind which it might be suggested do not amount to a whole lot, certainly were seen as justifying the epithet “gross” in relation to the differences produced.

Now, in this case there is a question as to whether, first of all, on the face of the two statutes there would be any clash – I have accepted that as an obstacle that I either jump or the case crashes at. I have nothing further I want to put on the extent of the clash whereby what are called in the New South Wales State “damages”, may be paid out on statutory policies which have a statutory scheme for the setting of premiums only pursuant to certainly limitations, qualifications, procedures, timing and method of payment – ascertainment and payment, whereas under section 104, as a kind of reflection of those same damages, under the heading “Legal liability”, which is a category which will pick up content from time to time depending upon the particular case – one day it will be a Queensland case, the next day it will be a New South Wales case – you look to what the law of those places say – that is what section 104 says – find out what the legal liability of that person would be, the legal liability of that person would be what in New South Wales is called “damages” under the fault system regulated by the New South Wales statute.

Now, the irony is that at that point the Victorian statute proceeds because of the effect of a New South Wales statute and the common law in New South Wales. The legal liability referred to in section 104(1) exists, has content, providing the cause of action in this case only because New South Wales law did or does operate - a combination of common law and the statute. Furthermore, section 104(2) says that that legal liability, as you would expect, is a legal liability, the limits of which in financial terms – leaving aside the oddity of pecuniary loss referred to in subsection (1) – the limits of which are to be described from the New South Wales law.

So that at this point, far from knocking the New South Wales law out or saying that there is no difference, it is being looked to for differences, whether the liability exists, what cap does it apply compared with what the statutory claim in Victoria, under the Victorian Act, would produce and if there is a difference the New South Wales - - -

KIRBY J: The practical outcome is a cheque that is drawn by reference to the damage done to Mr Sutton.

MR WALKER: Well, no, your Honour, because they are cheques. They continue beyond the time that the legal liability enforced under the law between the parties posited by section 104(1) could ever permit. The cheques come in a wave – Victoria. They do not come in a wave except subject to the quite different and special structured settlement provisions in New South Wales. Now, that is a huge difference.

KIRBY J: My purpose is to understand what is at the heart of your contention is the offence to the federal arrangements of geographical States.

MR WALKER: That by the device in section 104 of providing for a claim for recoupment of Victorian payments, by the device in section 104 which embraces for its operation the content of aspects of the New South Wales law, in fact the Victorian law cuts across, subverts, overthrows cardinal inseverable aspects of the New South Wales scheme, which is there will not be a dribble of payments beyond certain times. There will be a once and for all determination.

HAYNE J: Now, underpinning that proposition seems to be the proposition you make at page 15, paragraph 47 where you proffer as a test for resolving inconsistency “which State has the stronger nexus, the closer connection.” To what, nexus with what, connection to what?

MR WALKER: Thank you. Territory and government of territory.

HAYNE J: Because you seem to then pitch the argument at the level of abstraction which says that your search for connection is with motor accident compensation, rather than the search for connection between the particular claim that is made in the litigation before the court and the way in which it is framed.

MR WALKER: There is no doubt that levels of specificity or levels of abstraction, take the opposite possibility, can affect or even determine certainly the intuitive, perhaps the scientific ascertainment of greater nexus. I accept what your Honour says about method.

HAYNE J: But can I show you where the argument seems to go so that you may deal with it?

MR WALKER: May it please, your Honour, yes.

HAYNE J: If you characterise it as the relevant subject matter is motor vehicle accident compensation, you seem to be tending towards an argument about power, namely, that each State has power to regulate what is to be done in connection with motor vehicle accident compensation in respect of accidents occurring within their territory and not otherwise. It is the “and not otherwise” which is the bite to the argument. Is that not where this argument ultimately runs?

MR WALKER: No, but we do not shrink from saying that there is a lesser power if power be defined as the capacity to make laws which will determine the outcome of disputes of legislatures whose law is operating extraterritorially and inconsistently so as to clash with a sister State’s Parliament whose law is operating intra-territorially. We do not shrink from that at all. In our submission, that is exactly what is required in a federation of polities whose existence is defined geographically.

KIRBY J: Now, that led to Justice Callinan’s dissent in Mobil and in my reasons in Mobil I expressed an understanding of that view, but what is the best case that you can rely on in a century of this Court where the Court has found such a clash and said it has to be resolved by reference to a constitutional principle?

MR WALKER: There is none. There is none.

KIRBY J: None. Well, as I think I observed in Mobil, that itself is a salutary fact. One day we are going to get to a case where there is such an intrusion of the extraterritorial law of one State into another that it has to be resolved by a constitutional principle.

MR WALKER: Can I posit, in order to test that, laws of the following kind. I hope this example will serve to show that the same subject matter test of inconsistency is silly and does not operate because it permits the most dreadful clashes without perceiving it. It also demonstrates that the choice of law solution will lead to a quite mysterious effect being worked upon a sister State’s law which is expressly referred to by the enacting State. The example is as follows.

KIRBY J: A choice of law solution can only be either a common law or a statutory solution. It cannot stand against the Constitution.

MR WALKER: No, your Honour, but what is said against us is, whatever source the choice of law rule may be, choice of law will remove or solve the problem of inconsistency.

GUMMOW J: No. Chapter III.

MR WALKER: Quite, but the choice of law rule - - -

GUMMOW J: Working with the common law.

MR WALKER: The Chapter III, which has the judicial power of the Commonwealth being exercised, including applying the common law and such statutes as called to be applied.

KIRBY J: Yes, but Chapter III is only part of the grand federal design. It is only a part of it.

GUMMOW J: I mean, you may get some traction from section 117. At the moment you are not seeking to do that.

MR WALKER: No, it is artificial to put the arguments separately but on the other hand, just as there is a limit to how many answers I can be embarked on, I think without being able to finish any, or not having finished any, there is also – as I observed to Justice Callinan, of course we accept that 117 is part of the one fabric. Now, as it happens, your Honours know that we call in aid in no particular order, perhaps numerical only, 71, 73, 75, 76, 74, 106, 107, 109, 117 and 118, and I am sure I have left something out, but they are all part of what might be called, grand or not, a scheme, and we accept they all..... – covering clause 5, 51(xxv).

GUMMOW J: What you seem to be getting out of that is constitutionalisation of lex loci delicti as a matter of State power.

MR WALKER: No, absolutely not. No.

GUMMOW J: Well, I wonder.

MR WALKER: No. There is no word in our written submission that says - - -

GUMMOW J: I realise that. It is artfully done at a higher level of abstraction.

MR WALKER: And so far I have only said no to the proposition, your Honour. My arguments, with respect, clearly are not special to tort generally as a category or any special tort, not least because we are talking about an action in debt, or perhaps if you want to talk about restitution, but if I can go back to the question in relation to conflicts and Justice Kirby’s question, where is the authority? If there were a law regulating the enforcement of common law remedy in New South Wales – and there are many such statutes – in ways which, for example, diminish some heads of claim but increase others so as to change a common law compensatory measure, thus, for example, removing perhaps, as in this case, aggravated or exemplary damages as a possibility, but perhaps providing for a conventional or arbitrary measure of certain heads of damage which will mean in some cases some people may be overcompensated by common law rights, and that is a liability which would, under the statutory policy which electoral politics requires to be unchanged in a sister State, be picked up and require indemnity in that sister State’s compulsory motor vehicle registration, motor accident amelioration scheme.

Now, that is not an unreal prospect. It is really very similar to this case, but with the figures being somewhat different, so that Victoria correctly understands that New South Wales is perhaps, having taken actuarial advice, Victoria sees this is a further drain on Victorian funds over and above that which we wish to go to the Victorian people next election about what in New South Wales are called green slips. Well, in our submission, a Victorian statute that said that a statutory cause of action is created enforceable by an action in debt by proceedings for which the Service and Execution of Process Act can be called in aid, whereby there will be a claim commensurate to the disapproved increment of damages awarded under the New South Wales scheme being refunded between the parties or, more importantly, between the insurers, then, in our submission, can it be doubted that whether with malign motive or not, whether as a splendid piece of competitive federalism or not, that would be a law not on the same subject matter, but with a direct intersection of a kind that one had, for example, in AMP v Goulden, whereby the intended operation of one scheme for compensation would be subverted by the law of another State acting in one sense extraterritorially.

Now, in the example I have given one of the difficulties in resolving the question would be first to ascertain, is there any extraterritorial operation at all? It may be that such a law would simply be directed at having some effect on what I will call paying authorities in the enacting State. That, however, would give rise to the political problem that somebody may go uncompensated. So for those reasons, in our submission, it can easily be supposed that as States exercise power extraterritorially more than they had in the past, that the potential for the differences that the Constitution recognised textually and produces implicitly will also be increased. That States do not generally speaking tread on each other’s toes is a function of federalism and is the best, perhaps the only, justification for what we would call the despairing solution to the problem that says the law cannot help, politics will have to sort it out.

KIRBY J: Well, I just do not accept that. That is a negative of the rule of law. That was Professor Nye’s view and I think that that cannot be accepted in the Commonwealth.

MR WALKER: I have described it as a despairing solution. We do not put it of course and for the reasons your Honour has just pointed out. Nor could it be consistent with 76(iv) which plainly contemplates, for the reasons which apparently had to do with local partisanship borrowed from 100 years before in America, that where such possibilities arose there was going to be this neutral federal judicature to decide, of course, the very next section, 77(iii), rather suggests that, however, the Commonwealth may decide to trust such partisan sufficiently to invest the very jurisdiction in them.

However, what that indicates is that there will be an answer judicially arrived at by dint of law, thus what Justice Kirby says, with respect, must be right. This will be a legal, not merely political, solution. But that does not mean that there will not be huge political imperatives to avoid requiring legal solutions and co-operative, or at least non-combative, schemes, non-schemes or patchwork quilts of legislation around this country as testimony to the fact that that works. Now, that is one explanation for why there are not many authorities on this.

KIRBY J: Well, it is perhaps instructive that we have here the State of New South Wales and the State of Victoria and all the other States and polities and they all seem to think it can be sorted out in the way that the Victorian Court of Appeal has sorted it out.

MR WALKER: No, with respect, the submissions, I think, of all the polities you have named contain submissions concerning what, if it ever became necessary, ought to be the approach taken. The truth is that it is only verbal formulation that differentiates us from the positions they take in that regard. It is nexus to territory or to the government of territory, the 106, 107 matter or point, that we say is the resolving test.

Now, that does not mean there will not be cases where, as in this case, depending upon how specifically or abstractly you define the thing about which you asked that question, opposite results will be produced. If you ask, what territory does a law of Victoria creating a statutory debt have the closest nexus with, then it is a loaded question. There can be only one answer. But that, in our submission, is the wrong way to approach it because you are assuming a statute of the enacting – that is of the territorial enacting Parliament, and so it cannot be enough to say being a statute or a claim under a local statute it obviously has closer nexus. That cannot be right.

So one asks for in a practical sense, what is the governmental interest at the most specific level, most specific because one should be reticent in the application of constitutional principles, which can be described as the point of intersection of the two laws in question. In this case it has to do with the way in which money, called “damages” in New South Wales, called “amount of legal liability” in Victoria, but referring to the same consequence of the same accident – that is what 104(1) is talking about – an accident causing legal liability produces what New South Wales calls “damages”, common law calls “damages”, Victoria produces something which in this case is an amount of legal liability.

When one asks, which State has the greater governmental interest in providing for the compulsorily insured welfare model with adaptations of the consequences of the relationship between two people, which is a car accident, then, in our submission, it is a simple answer. That has to do with the consequences of conduct. Of course it has effects in lots of other places, perhaps, given that it is insurance, in London or Chicago. But, in our submission, the primary concern of government and of the governed focuses on how you may conduct yourself with what legal consequences in a particular place, when in Rome. So, in our submission, the nexus question here, once one gets the most specific description of that which is the point of intersection, clearly favours New South Wales and one cannot answer it by saying, “But this is a Victorian statute”.

GLEESON CJ: Your proposition, as I understand it, is that the State where a motor vehicle accident occurred has the greatest or greater governmental interest in providing for the legal consequences of the accident.

MR WALKER: Yes, and also providing for what the law says about the compelled financial consequences.

GLEESON CJ: I understand that, but in either case you seem to interpolate the word “all” before the legal consequences, has the greater governmental interest in providing for all the legal consequences of the motor vehicle accident.

MR WALKER: If the question ever arose, which, with respect, it could not, given the nature of the country, if the question ever arose as to who has an interest in governing all, then it would clearly be the place where it happened. But the question would never arise because, depending upon how broadly one takes legal consequences, there will be, if only because of welfare legislation throughout the country, both nationally and at State and Territory level, there will be consequences involving legal rights to pensions or assistance or whatever from injuries which will clearly always be inalienably the legitimate interest of local legislatures. So we would submit that you will never get the question raised, who has the greater governmental interest, to which territory is the closer nexus concerning all legal consequences or all consequences affected by law. That will never happen. If it ever arose, of course it would have to be the place where it happened.

The reason why it would never arise is because there are obviously closer connections later in, say, the life of a victim of a car accident, closer connections between that person and the conduct of people who may have liabilities or have duties in relation to that person, demonstrated by, for example, the place of residence of that person, which may alter and which may indeed never have been the place of the accident, as in this case. So we certainly do not, your Honour, interpolate “all” into the test.

What we do submit in this case is – and we accept it has to be case specific – what we do submit is that the point of intersection, or clash as I am describing it, arises because of the self-evident intention, as it happens, very clearly shown in section 2A of the New South Wales Act – I will not read it to your Honours – and also in section 8 of the Victorian Act, an understandable concern with the overall financial attributes of the scheme or methods by which what in New South Wales is a transformed common law, what in Victoria is a statutory regime for compensation with possibilities of common law in what is called, I think, the contingently extinguished cause of action at common law.

The concern of both statutes, but most importantly obviously concerned with the New South Wales statute, is one which is cut across, if we are correct in what I have finished arguing, by the Victorian statute which uses the New South Wales statute, if there were no legal liability in New South Wales at all, there would be no 104 claim, and if the legal liability in New South Wales was for $10, 104(2) would mean only $10 could be obtained. It uses the New South Wales law for that purpose, recognising, with respect, 104(1) is, as it were, an ironic piece of legislative courtesy. It says no more than you would be liable in the place where it happened. That so happens that with car accidents that is mostly going to be tort and that is going to be, as it happens at the moment, at least lex loci delicti. But that comes from, as this Court has explained in Pfeiffer, a constitutionally produced and common sense concern primarily with government of a territory.

The same thing which produces the constitutionally conformed but not mandated common law choice of law rule for tort is also recognised by 104’s reference of, in a sense deference to, what happens to be in this case New South Wales law, and then one simply asks the question, given that the legal liability which is the subject matter of the Victorian claim is produced by events governed in New South Wales by laws, common law and statute, that produce or not, according to the circumstances, legal liability, why would not one say that the manner of intersection, the terms of Victorian statute, the common law approach to territorial claims to govern conduct of tortious conduct, all amount to demonstrating not as a matter of intuition, but as a matter of legal science that the closer nexus concerning the point of intersection between these laws, how much and how money can be paid out for accidents, is New South Wales.

KIRBY J: You asked the question and I think you are entitled to have what I think is the answer, quite apart from the technical answers of the choice of law and the Judiciary Act, the constitutional answer is because in our Federation people do travel interstate and State Parliaments have an entitlement in their laws to make provisions that protect people when they go into another State to make sure that they have rights and interests and that they can then recover that. If that means they have a claim over against the party in that State, that is just a very small fraction and actuaries can work it out and it is no big deal and can be done quite easily.

MR WALKER: Yes, your Honour. I mean, there is a recognition of such matters, as I have generally referred to earlier, but section 107 of the Victorian Act means, and the statutory policy in New South Wales means, there is no difficulty or was no difficulty whatever in such a claim being made. It was not. That is why 104 is being availed of.

GUMMOW J: Can we just look at section 104. Can you explain in terms of the text what your objections to it are and how it has to be read.

MR WALKER: It is worth observing at the outset that there are three or perhaps four references to liability in subsections (1) and (2) and I think that there are at least three different meanings given to that. So one starts with a notion of:

an injury arising out of a transport accident –

and it is now a dead letter in relation to what is a transport accident, it includes one in New South Wales –

in respect of which the Commission has made payments –

so that there is the engagement of the Victorian scheme with all the provisions to which we have referred in our written submissions which involve relevantly being Victorian residents and being driver or passenger in a Victorian registered car.

GUMMOW J: But that in a way was a generosity on the part of the Victorian legislature.

MR WALKER: Yes. Their welfare policy decision legislated by a Parliament, voted for by their electors, et cetera, et cetera –

under circumstances which –

Now, the next phrase, “regardless of section 93”, does not have application in this case because section 93 – and this is common ground – does not purport to have abolished or detracted from the common law operating in New South Wales for car accidents in New South Wales. But that requires a reading, but there is a common ground reading. Now, there is a reason why, with respect, such a provision is read like that, section 93, and it is a reason which can be added to the list of scientific rather than intuitive grounds for placing closer nexus with New South Wales. Regardless of section 93, however, shows that section 104 has an operation wholly within Victoria as well as stretching out of Victoria. Then the language continues:

circumstances which, regardless of section 93, would have created a legal liability –

that is the expression I have been repeatedly referring to –

in a person (other than a person who is entitled to be indemnified under section 94) –

words which, for example, Justice Callaway says were redundant, slightly differently approached by Justice Nettle, but it may be assumed whether they be redundant or necessary that the interaction of sections 104 and 94 and the provisions requiring registration of a motor vehicle, et cetera, et cetera, are provisions which leave out my client –

to pay damages –

and so there it is, a liability to pay damages. There is no doubt about it. The word “damages” is not defined in the New South Wales Act. It is a common law term consistent with the political program announced in that statute of restoring common law rights. Then there is a rather difficult phrase “in respect of pecuniary loss”. If I could ask your Honours to note that for the purposes of section 93 itself section 93(17) define “damage” as pecuniary loss. Whether that should be read into 104 may or may not arise.

Then there is the statutory entitlement to be indemnified for a proportion that involves a peculiarly Victorian assessment which may produce either the whole or a fraction of an amount produced by New South Wales law. So your Honours have the legal liability which is the legal liability in New South Wales happens to be produced by the conjunction of common law and New South Wales statute, then you have the liability of the Commission being the total of which the Victorian decision as to proportion will be made. That is a liability under this statute, particularly under section 35 and the provisions which are activated by it:

to make payments . . . to which the injury was attributable to the act, default or negligence of the first-mentioned person.

“[A]ct, default or negligence” appear to be part, if not all, of the circumstances which are said to be those which would have created a legal liability.

HAYNE J: What weight do you give to the use of the expression “would have created a legal liability” as distinct from “does” or “did”? Is this the hypothesis one to be tested according to some hypothetical? You seem to slide off into, “Well, it’s the liability that exists in New South Wales”. Is that right?

MR WALKER: Yes, your Honour, because - - -

GUMMOW J: If sued, would have been liable.

MR WALKER: Yes, your Honour.

GUMMOW J: The ghost of that section is creeping through here.

MR WALKER: There is an obvious echo but interestingly not an exact reflection. If you take “would, if sued, be liable”, that is hypothetical in one obvious sense, not only linguistically, but it also involves an investigation of what the actual law would have done to the actual circumstances. So it is clearly hypothetical in that same sense in section 104. The language alone makes it impossible for me to contend otherwise. Notwithstanding the highly familiar nature of that phrase that Justice Gummow has noted, it does not posit the need for a suit to have been brought.

We do not have here reference to the problems carried in the train of such an idea, namely, how far down the hypothetical track do you go in relation to what has and has not been done. It is quite an important and difficult area, bearing in mind the hoops to be jumped through in New South Wales to which we have referred, of course.

We submit that notwithstanding the hypothetical quality in the sense I have just explained of the legal liability to which Justice Hayne has drawn my attention, there is still, in full blooded terms – one is tempted to say full faith and credit manner – there is the calling up of the New South Wales law to provide first the condition of that which is necessary for the Victorian liability. I said there were three or four uses of liability. At the beginning of subsection (2) there is a third use of the word “liability”. This is the liability of the person called “the first-mentioned person” in section 104(1). Then the fourth-mentioned returns to the first sense, namely “would be liable to pay to the injured person”. That is a reference back to New South Wales law.

So in our reading of section 104, subsections (1) and (2) in particular, justifies, we say, our characterisation of it as being a law which forces an intersection, which invites an intersection with a New South Wales law and invites then the question: by bringing about this intersection have you altered, detracted or impaired the intended operation of that New South Wales law which is part of a scheme? I do not want to repeat myself. We say it does. Others say it does not. One thing is clear, in our submission, one cannot simply say this is a Victorian statute which because it is a Victorian statute drives out the New South Wales statute altogether. That is impossible. It brings it in, as it happens.

Returning to a question from Justice Kirby, it is of course the two passages in Port MacDonnell Professional Fishermen’s Association v South Australia (1989) - - -

GUMMOW J: Just before you do that, Mr Walker, what happens to section 104? It is invalid, read down?

MR WALKER: No, your Honours have seen various - - -

HAYNE J: Or in Mr Ziegler’s expression, “not operative”.

MR WALKER: Yes. I was going to say your Honours have seen various expressions used. We, with respect, would submit that to use “invalid” would be unfortunate given its explicit role in section 109 and also because it would be, as a matter of ordinary English, an inappropriate word perhaps bearing in mind undoubted legislative power. However, inoperative, yes, that is – and this picks up the notion of operational inconsistency. In operation this Victorian law has an effect which is sufficiently inimical to the intended effect of the New South Wales law, both of them within power, that the inquiry goes out which legislature has the closer nexus to the subject matter of the intersection, the answer comes, for the reasons I have put, New South Wales, and so the Victorian law does not operate so as to produce that clash, which means, in this case, that the plaintiff loses.

KIRBY J: Does that have to be total or could it be as to certain provisions of the Victorian law which are incompatible?

MR WALKER: It is the whole scheme that we rely upon, your Honour, but we have drawn to attention those which are primary – section 70, for example – but it is the whole scheme. There is no severance needing to be effected here. We are not trying to rewrite by judicial determination the statute book of Victoria. We are simply observing that in a case the operation of two valid laws empowered by the respective Parliaments to have been enacted is such that one operates to the exclusion of the other.

GUMMOW J: Now, how does that - - -

MR WALKER: Which is one of the consequences, in effect, that Professor Laycock was contemplating in the SASB citation from his work in the reasons of Justices McHugh and Gummow at [1996] HCA 32; 189 CLR 253 at 286, footnote 131.

KIRBY J: What case is that?

MR WALKER: State Authorities Superannuation Board v Commissioner of State Taxation of Western Australia.

GUMMOW J: Your construction of 104 is inoperative relevantly. How does that then work with sections 79 and 80 of the Judiciary Act?

MR WALKER: I am very sorry, your Honour, I - - -

GUMMOW J: How do you operate 79 and 80 of the Judiciary Act?

MR WALKER: How do I?

GUMMOW J: Yes, with respect to section 104. We have to find an answer to the case.

MR WALKER: Yes, it is. That is why I started by reference to the federal jurisdiction. The whole of what I have been saying about the clash is to ascertain what is the effect, maybe application, of the Victorian statute when treated as modifying under section 80 or picked up under section 79 as surrogate federal law and is not given an effect different from what it would have, apart from the necessary mutatis mutandis readings.

GUMMOW J: I thought you might be saying there was no matter under 75(iv), there is just no content to it.

MR WALKER: There is a dispute between - - -

GUMMOW J: There is no content to it because there is no right of recovery.

MR WALKER: They lose, that means. There is still a matter.

GUMMOW J: Yes, I am just trying to pick out how you get to that result.

MR WALKER: Your Honour, the Victorian statute has to be understood according to its tenor. Its tenor is not just what it says on its face; it is how it operates, bearing in mind the Constitution, laws of the Commonwealth and laws of the States and Territories. A law of New South Wales has the effect for which we have contended. Leaving the Victorian statute, in our submission, section 80 does not much help because no Victorian statute modifies any common law choice of law rule and, in our submission, no other relevant common law matters in this case.

There is common law as to how you characterise the claim. That is useful for a choice of law common law exercise, but there is no statutory modification of that choice of law exercise. .....section 79, like section 80, subject to the Constitution, subject to the argument I have been putting which really is.....on 106 and 107 and 71 which produces the lack of operation of the Victorian statute because of the operation of the New South Wales statute to this case. That means that when considered for picking up by section 79 it is either not applicable or it has an effect which does not produce victory for the plaintiff. So that the case decided in federal jurisdiction is determined favourably to the defendant.

GUMMOW J: On what footing?

MR WALKER: On the footing that the Victorian statute does not provide the right to recover.

GUMMOW J: No. On what footing in terms of section 79 and 80? You are saying the Victorian Act is just not picked up.

MR WALKER: It is either not picked up because this is not a case to which it is applicable, to use the end words, or it is not picked up because the Constitution provides otherwise, namely, gives primacy, and a primacy of a kind which cannot let the Victorian statute operate, to the New South Wales statute. Now, that last phrase is intended to capture the possibility that Professor Laycock refers to that would exist in any event. It may not always be black and white. It may not be one driving out the other entirely. That remains for an appropriate case. In this case it is driven out entirely for the reasons we have tried to put.

Your Honours, if I could just spend a couple of minutes in deference to my friend - - -

GLEESON CJ: Just a moment, you were going to give us a reference to that Port MacDonnell Case, a couple of passages.

MR WALKER: Yes, thank you, your Honour. There are two passages. The first is at 168 CLR 373, point 4. In referring to a State provision which purported to have an effect on the extent of operation of the law the Court said – it being section 14:

Section 14 fails in its intended effect if it is inconsistent with a valid law of the Commonwealth –

we can pass over that for the time being –

or if the extra-territorial operation claimed by it for the Act –

that is the South Australian Act –

exceeds what –

and these are the words that we draw to attention –

might properly be claimed –

that is by the State –

having regard to the legislative powers which adjoining States might exercise over the same fishery.

Now, that point at that stage of the reasons did not need to go further for reasons which are explained on the next page. It is clear, however, that this Court has recognised as long ago as 1989, in words which bear real resemblance to 76(iv) of the Constitution, that there may come to be a question of power, as they put it. In our submission, the present one is a case that presents no difficulty of power; it is a question of the effectiveness in the particular circumstances of the exercise of power.

Page 374 is then the passage I think which your Honours have had cited by everyone left, right and centre in this case, and that explains why there is no authority. It did not arise - - -

GUMMOW J: Port MacDonnell approached the problem at the level of power; it does not approach the problem at the level of concurrent power.

MR WALKER: No, it did not but what it says here - - -

GUMMOW J: Hence, it did not really get into inconsistency notions.

MR WALKER: No, but what one does find, your Honour, is the passage starting at point 3 on 374. They are now talking about something which was counterfactual to their case, what would have been the case if this case had been different, and they say:

If the second arrangement had been construed as extending to waters on the Victorian side of the line of equidistance, there would obviously have been grounds for arguing that the Victorian nexus with activities in these waters was as strong as or stronger than the South Australian nexus.

That is language not of there being no sufficient nexus but of there being differences of degree. Then they go on, that did not happen:

Where, as here, there is no suggestion of the direct operation of the law of one State in the territory of another, the problem of –

and then they use the expression –

conflicting State laws arises only if there be laws of two or more States which, by their terms or in their operation –

an important word, we submit –

affect the same persons, transactions or relationships.

Which, in our submission, are the subject matters of governmental concern and the appropriate way to talk about governmental concern, why we say the car accident is an important, not a trivial, aspect of the characterisation of this case. For those reasons, what is talked about just above the next subheading as being “any relevant inconsistency” did not arise in that case. So they have used there the language of nexus, power on the previous page, conflicting and inconsistency and for the reasons pointed out it did not provide an authority.

Your Honours, in relation to section 117 I must be brief because my friends have arrangements with me. Before coming to it I will simply flag that I wish to add nothing in-chief to what I have said about 118. In relation to 117 I simply want to emphasise this. It is said against us and against Justice Nettle by some of our opponents that there was no discrimination within the meaning of section 117. Given the time and in-chief I will rely upon Justice Nettle’s reasoning for there being discrimination. In our submission, the question then comes down to what is called, perhaps unfortunately, justification. That really is, of course, artificially divided into two inquiries. It is only one inquiry, is 117 engaged or not, but because one cannot do everything at once it is focusing on that second aspect of the one question.

We submit that it is wrong to say simply that adapting the method in Street it is wrong to say that one treats residency as immaterial because she had not paid the charge in Victoria and not paying the charge in Victoria, so the argument goes once granted that premise, wherever she was resident is what produces her vulnerability to the section 104 claim. The logic is impeccable once you confine the inquiry to the question of payment of the charge. But the necessary comparison, the hypothesis upon which one inquires about section 117’s application, is to suppose that residency was different. If you suppose her residency was different, then why on earth would one suppose that the lady who ensured that she drove a registered and insured motor car garaged at her residence in New South Wales would, when resident in Victoria, have taken no such care, acted unlawfully and driven a car not registered or insured in Victoria being garaged at her residence.

One takes over the real situation because this is the application of laws in real situations that 117 is seeking to regulate. Once one does that, of course, one has the fact that it is residency which meant that she garaged the car next to her, her son owns it, it is registered, she satisfies the New South Wales provisions that would in fact make it an offence without reasonable excuse to drive a car not registered. That is the sequence that your Honours have seen of sections 8, 9, 10, 11, 12 and ultimately 17 of the New South Wales statute.

Things had been done by or in relation to her in New South Wales obviously because of her residence. Why would that not be true in Victoria? If it were true in Victoria, 104 would not have been available. Hence, it can be said that it is residency which singles her out. May it please your Honours.

GLEESON CJ: We will adjourn for five minutes now. If it assists the parties in making their plans, when we resume we will continue sitting until 12.50 and then we will adjourn from 12.50 until 2.15 and we will resume at 2.15 and we will sit until 4.30.

AT 11.43 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.47 AM:

GLEESON CJ: Yes, Mr Jackson.

MR JACKSON: Thank you, your Honours. Your Honours, may I deal first with what we would apprehend, if I may put it that way, with respect, as being the structure of the argument upon which ultimately the appellant rely. If one starts from section 80 of the Judiciary Act – and your Honours will see that the approach to be taken in accordance with that provision is that one looks to see the laws of the Commonwealth, then one looks to see:

the common law in Australia as modified by the Constitution and by the statute law –

Pausing at that point, your Honours, if the appropriate test were the test of what is the law by choice of law rules to be applied, in our submission, the appropriate result in such a case as this would be the law of Victoria. If one looks to see is there a modification of the law of Victoria, there is a modification on at least one view of it by the terms of section 104 and the related provisions. The question then ultimately would become, your Honours – and this a matter to which reference was made shortly before the Court adjourned – whether the application of the Victorian law was something that was inconsistent with the Constitution.

Now, the Constitution does contemplate section 74.....does contemplate that there will be issues which are issues relating to the ambit of the constitutional powers of the States. If I could pause at that point. Now, whilst our learned friend’s argument would put the case in a sense as being one perhaps arising under section 75(iv), the position, in our submission, is that fundamentally when one gets down to it the argument that appears to be being advanced is that there either is always no power to legislate extraterritorially in respect of - - -

GUMMOW J: I am sorry, Mr Jackson?

MR JACKSON: I am sorry, your Honour – that either there is no power in a State to legislate extraterritorially in respect of motor accidents that occur outside that State or – and, your Honour, that is a very difficult proposition to sustain, of course, because of the decisions of the Court in relation to extraterritoriality, including the way in which it was put in Mobil Oil. The alternative view, or perhaps the qualification to that, appears to be that in relation to that legislative power that it abates or somehow ceases whenever there is legislation of another State and in relation to accidents or other events, no doubt, which occur in that State.

KIRBY J: I did not take Mr Walker to put the first. I think that is a false argument to knock down. He did not put the first one. He put the second one, or something like it.

MR JACKSON: No, I am sorry, your Honour. What I was seeking to say in relation to it was that the argument comes down to that. I am not saying he said it in those words.

KIRBY J: It is an odd result, is it not, though? It may well be what is required and how the Constitution is intended to work, but here is an accident on a New South Wales street of a New South Wales resident in a New South Wales car and she is responsible and she ends up, via the application of Victorian law, having to pay things which under New South Wales law she would not have to pay and being liable for a period and for a time and for an amount which under New South Wales law she would not be liable to pay. The New South Wales Parliament has enacted a comprehensive law for that State and the result of this case is that the burden on a person is greater than one would normally think in a geographically divided federation.

MR JACKSON: Your Honour, she or her insurer, because it is a registered vehicle – your Honour will have seen that – it has to be insured in New South Wales by the New South Wales law. I was going to come to this in a moment, but the New South Wales law requires - - -

KIRBY J: But that would not affect it, would it? If it were insured, it would be the same problem – it could be the same problem.

MR JACKSON: Your Honour, what I am seeking to say about it is that – and I will come to this in a little more detail – if one goes to the terms of the New South Wales statute, it does not have quite the effect to which your Honour is referring. What it does do is to refer to actions brought by the injured persons or persons who have a derivative claim because of that, such as a Lord Campbell’s Act type of claim. What it also recognises is that every vehicle such as the one in which Mrs Sweedman was driving, that if registered in New South Wales has to have insurance covering, amongst other things, claims of this kind. In relation to the amounts that have to be obtained by insurers, as your Honour was saying earlier this morning, there are circumstances where they have to make just estimates of the liabilities that may be incurred.

Your Honour, could I also say it does not seem a very odd thing, with respect, to have a circumstance where residents of Victoria are driving or being a passenger in a vehicle travelling, as people do, throughout Australia, drive in New South Wales, are injured by the negligence of someone in New South Wales. In consequence of that they are entitled to recover from us in Victoria sums of money paid in respect of their injuries and we seek to say the person who caused those injuries should reimburse us for the amount we have had to pay out to people in Victoria.

GLEESON CJ: And it may seem even less odd if you bear in mind the position of people who live in Albury and Wodonga.

MR JACKSON: Indeed, your Honour, yes, and whichever of the border towns or cities one chooses.

KIRBY J: Once they have got up to Coonabarabran and getting up closer to Queensland, that is beginning to look a little bit strange that your law with its different provisions is by this side wind imposed upon people who are resident in New South Wales and contrary to the scheme of the New South Wales Parliament.

MR JACKSON: Well, your Honour, people resident anywhere who negligently drive a vehicle which causes death or injury to persons who are in Victoria and in consequence of that negligence we have to pay, and we seek to get the money back from the person who is responsible for it.

HAYNE J: Does the allegation of contrariety depend upon sliding between liability to the injured person and liability to someone who has compensated the injured person?

MR JACKSON: It does, your Honour, and what it does do is – and this is a point to which I wish to come now – to look to a conception of what the Acts seek to do instead of looking to what the Acts actually do.

HAYNE J: Well, it is putting it at the level of motor accident compensation rather than the particular operation of the particular pieces of legislation.

MR JACKSON: Your Honours, may I answer that by - - -

CALLINAN J: Mr Jackson, I am sorry I cannot hear you.

MR JACKSON: I am sorry, your Honours, it is difficult both ways, with respect.

CALLINAN J: I am not asking any questions. I am just listening or trying to.

MR JACKSON: I am not giving any answers either, if I might say in relation to that. Coming back to what your Honour Justice Hayne said to me, may I say that one can of course look at these matters with various levels of abstraction. If one is talking about motor accident compensation schemes, then one is speaking about schemes one would expect would deal with the position of injured plaintiffs or persons who have died. If one is speaking about the recovery from those schemes, then it is possible to say that it is dealing with a different subject matter. The point I seek to make about it, your Honours, is that one does need to look to see what the particular legislation is doing.

Your Honours, may I move to that question now. At the heart of the appellant’s case is that there is some inconsistency between the enactments of the two States and, your Honours, there are difficulties of course in identifying how inconsistency is to be recognised as such and, if it exists, how it is to be resolved. But, in our submission, whatever test be adopted for the purpose of identifying inconsistency, this is not a case where the application of any potentially relevant test would result in it. Your Honours, I appreciate that avoids the question a little but one does have to look at the particular statutes. Your Honours, may I go very briefly to the Victorian statute first.

The central provision of it relevant is, for present purposes, section 104. Your Honours, it works on the assumption that the Commission has made payments under that Act and that the payments are in respect of an injury arising out of the transport accident and that the transport accident – and, your Honours, it is speaking about these transport accidents which may have occurred anywhere in Australia – and the transport accident arose in circumstances which would have created a legal liability in a person to pay damages in respect of pecuniary loss, whatever that may particularly mean, suffered by reason of the injury.

Now, your Honours, in those circumstances the effect of the provision is that the respondent is entitled to be indemnified in respect of its liability to make payments under the Act. Your Honours, payments under the Act are required to be made by the Commission under Part 3 and Part 3 – and I will take your Honours to the provisions now – makes it plain that the liability to pay compensation may arise in relation to accidents outside the Victoria.

Could I go to section 35 and your Honours will see - - -

KIRBY J: What is the provision in the Victorian Acts Interpretation Act about applying to the incidents in Victoria. At some stage if you could refer us to that.

MR JACKSON: I will get your Honour a reference to it. Your Honour means, I take it, the provision that gives statutory effect to cases such as Meyer Heine.

KIRBY J: Yes, it is just, for example, the word “injury”. If an injury occurs, normally one would read that as an injury in Victoria.

MR JACKSON: Could I say two things, your Honour. The first is if one goes to the provisions to which I am about to go, that makes it plain that that is not the case in the - - -

GLEESON CJ: Well, it refers to a transport accident that occurred in another State.

MR JACKSON: Yes. The second thing, your Honour, is that that is an issue on which, I may be corrected if I am wrong, special leave was not granted. So, in other words, 104 does apply to cases of this kind. Section 35, your Honours will see, refers in subsection (1) both to accidents in Victoria and accidents outside Victoria. Your Honours will see section 36, references to transport accidents in other States or Territories, and section 39(1)(a) refers to circumstances in which there is not a liability but what is apparent, your Honours, if I could put it shortly - - -

KIRBY J: I am not saying that this is the case where we will get to it but with more and more extraterritorial legislation a day will come when one has to ask the question, why have territorial States? Why have States which are defined by reference to a territory if they are going to enact laws which have operation outside the territory and their Parliaments are going to make laws which affects citizens of Australia in other parts of the Commonwealth? Is that compatible with the constitutional scheme of having States? I know there are people who would get rid of States but whilst we have them under the Constitution normally one would think they have to operate within their own territory, otherwise it is chaos.

MR JACKSON: May I say two things about that. The first is that it would be a little difficult to unbundle the States from the Constitution without a referendum and it would have effects upon such things as the Senate and, amongst other things, your Honours, section 105 and section 106 would seem to require some modification. The second point I would make, your Honours, is in relation to that that there is a large number of cases, including things relating to the ability of the States to legislate extraterritorially in relation to revenue matters and a number of other subjects, including some fisheries and other matters, where the ability to legislate extraterritorially is of some importance, the relative importance of all those issues not really being thrown up by this case. So, your Honours, I do not know if I could say more than that in response to what your Honour put to me.

Your Honours, what I was going to say that Part 3 – and I referred to some of the provisions – makes it plain that the liability to pay compensation may arise in relation to accidents outside Victoria. Could I refer also to what Justice Nettle said about that at paragraph 32 of his reasons. Now, your Honours, that is the first feature about section 104. The second feature, your Honours, concerns the nature of the right created by section 104. Whilst the quantum of it in terms of the maximum may relate to what might be obtained by way of damages by a plaintiff, the right conferred by section 104 is not a right to damages; it is a right to be indemnified in respect of other payments made.

Could I refer in that regard to the passage from Justice Winneke which was approved by the Court in Victorian WorkCover Authority v Esso Australia Ltd [2001] HCA 53; (2001) 207 CLR 520. The particular passage is at page 527. Your Honours will see that that case was dealing with section 138 of the Compensation Act and your Honours will see the provision set out in paragraph 12 on page 526 and also on page 527. Your Honours, it is a provision similar to section 104. Your Honours will see that in paragraph 13 it was said in the joint reasons that:

Section 138 has a lineage which commenced with s 6 of the Workmen's Compensation Act 1906 (UK) –

There is a reference to Tickle Industries v Hann and then in paragraph 14 your Honours will see in the third line it was said that:

His Honour said, with respect, correctly, that it was abundantly clear that:

“the statutory right of indemnity . . . is not to be equated to the cause of action which the worker would, but for the [Compensation] Act, have had against the person liable to pay damages to him. This is so notwithstanding the fact that it is an ingredient of the statutory right, sought to be enforced, that the person from whom the indemnity is sought was liable to pay damages to the worker. The claim to enforce entitlement to indemnity is not a claim in tort. It is a cause of action –

and your Honours will see the remainder of that quotation.

KIRBY J: For every passage like that there are many in the books that say in great matters of constitutional principle you look at the substance not at the form.

MR JACKSON: Quite, your Honour, but could I say that one is looking in the present case to see whether in substance, let us assume, there is a conflict of any kind between the two enactments, but one does have to go to the enactments to see what they say in order to determine that because, your Honours, one is speaking about, in the case of section 104, a right which is a right to claim an amount limited by the amount of damages from a person who would have been liable but because someone else has had to make payments.

Now, your Honours, could I go then to the New South Wales enactment to see what it does. Your Honours, may I say something a little more generally about its operation before going more precisely to its terms. The Motor Accidents Act performs a number of different functions. Some of the functions – your Honours should have a copy of that I think in the appellant’s materials. It is in a form - - -

GLEESON CJ: Behind tab 4.

MR JACKSON: Yes, your Honour, I think that is right – compiled as at 20 July 1996. Now, your Honours, some of the functions performed by that Act relate to claims for damages for death or personal injuries by or on behalf of the injured party or their estate and so on, but the Act also contains provisions relating to the requirement for third party insurance for vehicles such as that driven by the appellant and makes it apparent that liability in addition to those dealt with in the claims parts of the statute – and the claims parts are the ones that set out how much a plaintiff might recover – are to be covered by the required third party insurance.

Your Honours, it is not correct, in our submission, to treat the Act as if it had only one focus. The objects of the Act are referred to in sections 2A and 2B, on which reference is placed in our learned friend’s arguments, have to be read in a context where the Act is dealing with more than just litigation brought by plaintiffs in respect of injuries to them.

Your Honours, could I go first to the particular provisions of the Act to see whether there is anything in it which states expressly or which implies that the existence of the indemnity under the Victorian Act is in some way inconsistent with the New South Wales Act. Your Honours, the first group of important provisions – I will come back to some others shortly – is found in Part 5 of the Act commencing at section 40.

KIRBY J: Is this the table that you are said not to have responded to?

MR JACKSON: Well, your Honour, I think, if I may say so with respect, that is not quite right that we did not respond to that.

KIRBY J: I did not see very much in yours. I saw it in the Commonwealth’s but passed over it lightly, but anyway now is the moment.

MR JACKSON: Your Honour, what we responded by saying was, I think, what I am about to perhaps expand on a little, perhaps......, I am not quite sure which it is. What I was going to say is this, your Honour, is that the first of the important provisions is found in Part 5 and if one goes to Part 5 what it is concerned with is the concept referred to in section 40(1) as a claim – and may I pause to say, your Honours, that the part is concerned with that is absolutely clear from section 41 which says:

This Part applies to and in respect of a claim –

Now, what is a claim, your Honours, one sees is defined by of section 40(1) to mean:

a claim for damages in respect of the death of or injury to a person caused by the fault of the owner or driver of the motor vehicle in the use or operation of the vehicle.

KIRBY J: Now, it is accepted for the purpose of this case that that includes Mrs Sweedman because she accepts that she is liable.

MR JACKSON: Yes, your Honour.

KIRBY J: So there she is, she is in New South Wales, she is a citizen living in New South Wales, she would be normally entitled to think “Well, this is it. This is what is going to deal with my liability.”

MR JACKSON: One does have to look at things from the point of view of people who are looking at the situation not with an a priori view of it but looking at the statute that is said to give..... Certainly she could say that in respect of the subject matter dealt with by Part 5 and the subject matter dealt with by Part 5, as section 41 makes clear beyond measure, is not a claim of our kind; it is claims against her by the injured party. Your Honours, that that is so is really quite apparent when one goes to any of the provisions of Part 5. If one goes to any of the provisions of Part 5, your Honours, what one sees is that the whole part is dealing with, to put it shortly, is the injured party’s claims.

Now, your Honours, similarly when one comes to the other part which has all these significant effects that it is said to, Part 6 - - -

GUMMOW J: Now, “motor vehicle” by the way is defined, not by reference to place of registration in section - - -

MR JACKSON: Yes, your Honour. I think it is section 3(1). It is page 11 of the copy your Honours have. Now, your Honours, could I say also when one goes to Part 6 of the Act, and if I could go particularly to section 69 which deals with the application of Part 6, headed “AWARDING OF DAMAGES”, it says:

This Part applies to and in respect of an award of damages which relates to the death of or injury –

and your Honours will see the remainder of that paragraph and your Honours will see that the subject matter of this part is the same as the subject matter of Part 5. That is apparent, your Honours, also from section 70 which says:

A court shall not award damages to a person in respect of a motor accident contrary to this Part.

Again, your Honours, if one goes through the terms of Part 6 of the Act, Part 6 of the Act is relating to claims for damages by injured parties or those claiming through them.

KIRBY J: Can I just ask you, is the point you are making that the part is concerned with the award of damages and not with the entitlement to an indemnity?

MR JACKSON: Exactly, your Honour.

KIRBY J: But it does say:

applies to and in respect of an award of damages –

So “in respect of” is a phrase that would normally be given a wide construction. Why is it not in respect of an award of damages that there is a claim for indemnity to a person who claims to have been damaged by another who has been driving a motor vehicle covered by this New South Wales Act in New South Wales, resident there, parking it there, paying the third party policy there?

MR JACKSON: What your Honour has put to me may have some relevance in the operation, in practical terms, of the limitation provided for by section 104(2) of the Victorian Act which limits the amount of the indemnity. Perhaps that is some operation of it but, your Honours, if one looks at the expression “applies to and in respect of”, whilst the term “in respect of” is one which has a meaning which is sometimes, but of course as the decisions of the Courts say, not always wide. One has to determine what is the thing to which the connection or the “in respect of” is to be made. One sees in the particular case that the terms of section 69(1) speak of “in respect of an award of damages”. Now, when one goes to the remainder of Part 6 of the Act, it is pretty apparent, in our submission, that it is speaking of the award of damages to injured plaintiffs and the other - - -

GUMMOW J: Well, 68A talks about damages awarded to plaintiffs.

MR JACKSON: Yes, your Honour, I am sorry I missed that:

to control the amount of damages that may be awarded to a claimant –

Now, your Honours, the point I would seek to make about Parts 5 and 6 is that they relate to claims for damages, the very thing which the entitlement to an indemnity is not.

Your Honours, could I come then to the second set of purposes of the Act. It contains, we would submit, a strong indication that the possible existence of claims not falling within Part 5 or Part 6 may exist. Your Honours, this can be seen from the provisions of the Act relating to third party insurance. Could I go to section 8. Now, your Honours, section 8(1) provides that:

A person who uses, or causes or permits another person to use, a motor vehicle that is not an insured motor vehicle on a public street is guilty of an offence.

So there is a requirement for a motor vehicle to be insured. The ambit of the policy of third party insurance is required is dealt with by two provisions, section 9 and by the terms of the statutory policy in Schedule 1. Your Honours, will see that section 9(a) says that:

A third-party policy under this Act is a policy that:

(a) insures the owner of the motor vehicle to which the policy relates and any other person who at any time drives the vehicle . . . against liability in respect of the death of or injury to a person caused by the fault of the owner or driver of the vehicle:

(i) . . . in the use or operation of the vehicle in any part of the Commonwealth –

Now, I will come back to that phrase in a moment, but your Honours will see that section 9(b) says that the statutory policy also has to be in the form of Schedule 1. If your Honours go to Schedule 1, which should be at page 77, what your Honours will see is that the third party policy is in the terms to which I referred earlier. We would refer particularly, your Honours, to two aspects of it – I am sorry, I should have said there are three points to make. First of all, the ambit of the insurance under the policy is not limited to liability for damages. It is “liability in respect of” – this is the point, your Honours, at which one can give an enlarged meaning to the term “in respect of” – “ in respect of . . . death or injury”. That is the first point, your Honours. There is no reason, in our submission, and there does not seem to be any contest from the other side, why it would not provide an indemnity to the insured in respect of the liability to indemnify under section 104 of the Victorian Act. That is the first point.

Your Honours, the second point is that section 9 and the terms of Schedule 1 refer to liability arising by the use or operation of the vehicle in any part of the Commonwealth. That has two relevant aspects. First, any part of the Commonwealth, your Honours, even these days, includes New South Wales. The second is that because the laws of different States may give rise to different liabilities it is very difficult to treat the scheme under the Act as having quite the all-embracing focus which the appellant’s argument would seek to give to it.

The third feature, your Honours, is that section 17, if I could go back to that provision - - -

KIRBY J: Could I just ask have you done an analysis of the other States as to similar provisions applying in third party policies to other States. I assume they all - - -

MR JACKSON: Your Honour, I am going to refer, particularly when dealing with section 117, to the Victorian provision. I cannot give your Honour more but - - -

KIRBY J: I think it would be a common feature of all the third party provisions in Australian legislation, simply because we all move, drivers do go interstate.

GLEESON CJ: And because compulsory third party insurance is the essence of dealing with what Mr Walker referred to as the social problem caused by use of motor vehicles. It is very difficult to imagine how you could have a rational requirement for compulsory third party insurance that did not cover liability arising out of use in other parts of the Commonwealth.

MR JACKSON: Indeed, your Honour, and liabilities and, as to the ambit of cover in Schedule 1 and section 9(a) refer to, liabilities in respect of death and so on. Now, liabilities do not necessarily arise only under the laws of the State in which the accident occurred.

KIRBY J: That seems to answer in a sense the grand theory, but it still leaves what are said to be operational incompatibilities of the different State provisions, as in this case between the Victorian provisions and the provisions under this Act.

MR JACKSON: Your Honour, I am going to come to that in just a moment, and may I do that – before I do that, could I go to section 17. What your Honours will see that section 17 says:

A licensed insurer is, despite any other law, liable to indemnify the insured persons under a third-party policy of the insurer in respect of any liability which the policy purports to cover.

Could I just note, your Honours, in passing that section 16 is careful to exclude certain liabilities which otherwise might have been covered by the broad terms of the policy.

The first point we would seek to make is that it is not right to say that the Act, in effect, if I could use the expression from another context, entirely covers the field. There are a number of fields with which it deals. One concerns claims by plaintiffs, one concerns other liabilities under other laws.

Your Honours, if I can come then to the point that your Honour Justice Kirby just mentioned. The appellants referred to a number of provisions of the New South Wales Act in support of the view that the Act has a larger purpose, and I am referring particularly to paragraphs 28 and following of their written submissions. May I just say a number of things about it and endeavour to do so quite quickly.

First of all, reference is made in paragraph 28b to section 2A(2) and to section 68A. I have referred your Honours in passing to section 2A. It deals with the objects of the Act, but the objects of the Act have to be read in the light of the other provisions to which I have referred. The second provision to which reference is made is section 68A, but when you look at section 68A – and this is the one to which your Honour Justice Gummow referred a moment ago - what section 68A is speaking of is to control the amount of damages that may be awarded to a claimant. It is part of Part 6, and Parts 5 and 6 are dealing with claimants’ actions.

Your Honours, similar observations apply when one goes to section 79A(2). Section 79A(2) says:

The object of this section is to limit the amount of damages for non-economic loss in cases of claims relating to relatively minor injuries . . .

(3) No damages are to be awarded . . .

(4) No damages may be awarded . . .

(5) The maximum amount –

It relates plainly enough to the cases to which that part of the Act is applicable. Your Honours, reference is made also to the procedures set out in section 40 - - -

KIRBY J: Could I just ask you to explain to me how your theory of 68A operates in the context that here is Mr Sutton on a road in New South Wales who ends up recovering an amount of damages which at least arguably or possibly in particular circumstances could conflict with the will of the New South Wales Parliament in 68A by the reason of the fact that he can make the claim under the Victorian law and burden the coffers of New South Wales insurers for the consequent damages that he recovers in a way that is contrary to the will of the New South Wales Parliament expressed there.

MR JACKSON: Your Honour, if one looks at section 68A it is saying, “This is what you can get if you’re a claimant” and “claimant” means someone who is a person injured. So let us assume that is Mr Sutton. Now, in fact Mr Sutton of course is in a position where, under the Victorian Act, he receives payments of compensation. In relation to those payments of compensation the position is, and this does not seem to be contested, that there cannot be, in the case of the appellant, a liability to pay more than the amount that Sutton could have recovered against the appellant in an action in New South Wales. The payments that he is getting are payments made under the Victorian statute entitling him to payments from, in effect, a fund to which the owners of Victorian vehicles contribute, and - - -

KIRBY J: I know that, but it is a payment which, at least arguably, clashes with 68A(b), that there is a “deliberate strategy” to limit the amount of damages that will be awarded to a claimant. That is the will of the New South Wales Parliament, which normally speaks to its own territory.

MR JACKSON: Your Honour, the New South Wales Parliament is speaking with a voice directed to more than one subject matter. One subject matter - the matters dealt with consist of the matters in Parts 5 and 6, that is, claims by plaintiffs. The other aspect in relation to which the New South Wales Act speaks is the fact that it requires people who have registered vehicles in New South Wales to have motor vehicle third party insurance which will cover other claims or claims brought in other ways.

So, your Honour, it is not just the voice of the New South Wales Parliament expressing itself in a rather Olympian and universal way for New South Wales accidents. It recognises that there will be other circumstances occurring in the Federation, other causes of action which may be brought about by Acts of New South Wales.

GLEESON CJ: Mr Jackson, can I just clear something up? Is the Transport Accident Commission’s entitlement to recover against the New South Wales third party insurer via the appellant limited by the amount of damages that Mr Sutton could have recovered if he had sued in New South Wales?

MR JACKSON: Yes, 104(2).

GUMMOW J: What is the section, 104(2)?

MR JACKSON: Yes, your Honour.

GLEESON CJ: Right. I am just trying to understand what the problem is. If Mr Sutton had sued in New South Wales for damages, the third party insurer of the appellant would have been liable for X dollars, correct?

MR JACKSON: Yes, your Honour, yes.

GLEESON CJ: But instead Mr Sutton exercised his rights under section 35 of the Victorian compensation legislation, and the Transport Accident Commission of Victoria seeks to recover from the third party insurer via Mr Sweedman an amount which is limited to X dollars. Is that right?

MR JACKSON: Yes, that is so.

GLEESON CJ: How is the New South Wales third party insurer worse off as a result of the decision to exercise rights under the Victorian legislation than would have been the case if rights had been exercised under the New South Wales legislation?

MR JACKSON: It is put, your Honours, as we understand it, in this way. In dealing with claims made by Mr Sutton the position would be that they have to be made in a certain order – steps have to be taken, I am sorry, in a certain order.

GLEESON CJ: The dispute resolution aspect?

MR JACKSON: Dispute resolution. There - - -

CALLINAN J: What about the limitations defence? Is that lost?

MR JACKSON: And that there are particular limitation periods which might be applicable in a case brought by such a plaintiff, and that there are different, in some respects, ways of assessing what damages he would obtain, what amounts he would obtain. Your Honour, one accepts there are some - - -

GLEESON CJ: So the litigious regime is different.

MR JACKSON: Yes.

GLEESON CJ: But the ultimate amount of money for which the third party insurer is liable is the same either way.

MR JACKSON: Well, it cannot be higher.

GLEESON CJ: It cannot be higher.

MR JACKSON: The Victorian one cannot be higher than the New South Wales one. Your Honour, could I just - - -

KIRBY J: But in this case it would be zero in New South Wales because of the fact that the clam is brought outside the three years.

MR JACKSON: Your Honour, if one assumes for the - - -

KIRBY J: So it is a whole lot higher.

MR JACKSON: Your Honour, if one assumes that a limitation period is applicable, but bear in mind, if I could just say this, that all those provisions to which reference is made are provisions which are related to claims as defined under the New South Wales Act. Your Honours, could we just say in relation to that, if one looks at the various provisions – I will not go through them one by one, but if one looks at the various provisions to which our learned friend’s observation – on which they are based, what one sees is that they relate to claims by the injured person. They do not relate to claims of this kind. The point we seek to make is that the New South Wales Act deals with a number of subjects. One is those claims, it has a regime for those. The other is that it recognises that there has to be insurance for other types of liabilities.

GUMMOW J: The phrase “would be liable” in 104(2) accommodates the limitation point because it is not asking “would now be liable”, there now being a limitation for its run I suppose, but it is a hypothesis and that is enough. If one looks at 104(2).

MR JACKSON: Your Honour, I am sorry, it is very difficult. I did not quite catch the point that your Honour was making about it. I saw the provision.

GUMMOW J: It asks what the person would be liable to pay – liable when, or liable as a hypothesis? Where there has been a supervening limitation that is cut in?

MR JACKSON: That may in a sense be a question for another day in this or another case perhaps but the position, we would submit, is that it really relates back to subsection (1). Subsection (1) speaks of payments – sorry, an injury which arose under circumstances which would have created a legal liability to pay damages. That is the circumstance. Your Honour, the limitation in subsection (2) is one which we would submit would relate to the position as at the time when that - - -

GUMMOW J: The occurrence of the circumstances.

MR JACKSON: Could I say - - -

HAYNE J: Because (2) is in amplification of “would have created a legal liability”.

MR JACKSON: Yes.

HAYNE J: And further defines it.

MR JACKSON: Yes, your Honour. Could I just also say, your Honour, the last words, or the last part of 104(1) is in effect a provision which says that the person is only liable to the extent to which the injury was attributable to the act, default or negligence of that person. That would seem to be also looking at the situation as at the time when the damage was suffered by the person who was injured. That does not take it very far, your Honours, but it really seems to be putting in a short form concepts of the extent of liability and the amount of damages of which a person would then have been liable.

GLEESON CJ: A possible point of view may be that the conclusion to which the Victorian Supreme Court came in this case is in aid of federalism because it facilitates the various States having their own schemes of accident compensation applicable to their residence, being of course residents who travel.

MR JACKSON: Yes, your Honour, yes.

KIRBY J: That is not how Mrs Sweedman would look on it. She is there busily living her life out in New South Wales and suddenly the law of Victoria is applied to her and to her liability.

MR JACKSON: Your Honour, even where Mrs Sweedman lives, vehicles registered elsewhere do come and do - - -

GLEESON CJ: Has Mrs Sweedman any financial interest in the outcome of this case?

MR JACKSON: One assumes not, your Honour.

KIRBY J: I hope we are not introducing the reality of insurance into this case.

GLEESON CJ: No, it is in the statute. It is compulsory.

MR JACKSON: Yes, compulsory. One does not live in a cocoon. One would only have to walk outside the Court here and there would be cars from all parts of Australia go past in the course of half an hour, and if people do not look there will be collisions. Your Honours, could I say also that the appellant’s submissions in paragraphs 31 and 32 contend that the “potential liability to a s 104 claim” would impair the ability of third party insurers to provision.....claims and would prevent further contribution claims being made.

Your Honours, could I just say this in relation to that. As to the first of those matters there is no doubt, in our submission, that if this collision had occurred in Victoria rather than in New South Wales the first of those results would follow in the sense that there would be the liability in question without any doubt, one would think. It is clear that the policy would cover the liability. In New South Wales third party insurers have to cope with liabilities arising under the laws of all parts of the Commonwealth. Sometimes, your Honours, they are insurers themselves in both parts of it and they have to cope whether the accident happens in New South Wales or not. The scheme does not have, we would submit, the pristine symmetry for which contention has been made.

Your Honours, the second aspect of paragraph 32 of their written submissions is that if a separate indemnity suggests, in effect, that after some judgment for contribution there might be a separate indemnity cause of action arising, but if one arises every time a payment is made then why would there not be a right to claim contribution arising when that payment was made? There is a limit no doubt on the table, but it does not follow there is any particular difficulty with it. Your Honours, could I say finally in relation to this aspect - - -

KIRBY J: Do you understand that to be common ground with Mr Walker that 104(2), leave aside procedural and limitation questions, but as to quantum is fixed by the New South Wales Act?

MR JACKSON: Quite, your Honour. Yes, quite. I accept that, your Honour, yes. The true position, in our submission, if one looks at the New South Wales Act, is that the Parliament has recognised that negligent driving in New South Wales registered vehicles in New South Wales or elsewhere may give rise to liabilities under the laws of a number of jurisdictions, and the third party insurance required by the legislature of New South Wales is in respect of all those liabilities but, thirdly, to the extent to which claims for damages are brought in New South Wales in respect of New South Wales accidents it is sought to limit the damages under those heads.

The two enactments, we would submit, the Victorian and New South Wales, work perfectly well together and there was no suggested inconsistency. The New South Wales law recognises that if a plaintiff is injured in a New South Wales motor accident -.....recognises that if a plaintiff injured in a New South Wales motor accident sues in New South Wales for damages, the procedures of the Act apply to that claim.

Because of John Pfeiffer, that – to a very large extent at least – will be the case if that action is instituted elsewhere in Australia but, as we submitted elsewhere, the New South Wales legislature in the Act also recognises that the activities of owners and persons driving New South Wales registered vehicles may give rise to other liabilities and requires that they be covered by third party insurance. Your Honours, our submission is that there is not any inconsistency between the two enactments on any relevant test, any potential - - -

KIRBY J: Well, you accept that there are some little inconsistencies, but you say, as with the Commonwealth, that they are really trifles.

MR JACKSON: No, no, your Honour, I do not say there is any inconsistency.

KIRBY J: What about the tail end of the way Mr Walker portrays the New South Wales Act as having the usual sense of urgency of New South Wales, everything has to be all wrapped up quickly, whereas the more languid and easygoing pace of Victoria allows it to be done just as it pleases.

MR JACKSON: Your Honour, with respect - - -

KIRBY J: That is what he said, Mr Jackson.

MR JACKSON: That is not what he said, your Honour.

KIRBY J: Well, I mean - - -

MR JACKSON: May I try to answer it by saying that is, with respect, bereft of substance and it is bereft of substance because one is looking at really two different things. That is the point I would be seeking to make. The sense of urgency that is generated is a specific sense of urgency in respect of claims. The provisions of the Motor Accidents Act to which reference is made in relation to making provision and so on have to deal not just with the ones that they can control, in effect, in New South Wales but also with ones that arise elsewhere.

Your Honours, leaving aside this case altogether, if you had a situation where a New South Wales registered vehicle was involved in a collision in any of the other States in Australia through the negligence of the driver, then whether the proceedings be brought in New South Wales or the proceedings be brought in another State, the law of the State where the accident happened would prevail. Assuming the provisions were in the court of another State, then the insurer might dance up and down as much as it would wish to – and, your Honours, I know you will forgive me for saying so, insurers do not always want to pay out quickly. They go with the pace; maybe faster, maybe slower.

Your Honours, if one makes the assumption, a large assumption, in our submission, that there is some kind of inconsistency, one then has to seek to resolve it. Your Honours, this is the aspect to which we have referred in our written submissions in paragraphs 42 to 46, and your Honours will see that in deciding how one might resolve such an inconsistency the first thing is there is not any section 109 indicating which law is to abate. The second thing is the legislatures are of equal status. The third thing is that there may well be cases where a person – the resolution is that a person has to comply with both laws.

Now, if there is in some way a direct conflict then no doubt the Gordian knot has to be cut. That is why we would propose – and I put it in that way. That is why we would submit, as we do at paragraph 44, that the preference should be for - your Honours, I put it this way - the law of the State which has the greater connection with events.

Now, your Honours, the hypothesis upon which one is operating is that in cases of such conflict the laws of the two polities have application to the circumstances. The question one would have to ask is with which of those polities and those laws – because it is the laws that I am concerned – do the circumstances have the greater connection? The circumstances are not simply the facts, but also the laws that are involved.

We have set out in our written submissions why we would submit that the cause of action in the present case is one created by Victorian law, and that the circumstances would lead to its preference in that case. Your Honours, I propose to move on now to section 117 - - -

GLEESON CJ: Is that a convenient time, Mr Jackson?

MR JACKSON: Yes it is, your Honour. I expect to be about 15, perhaps 20 minutes.

GLEESON CJ: We will adjourn until 2.15.

AT 12.47 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

GLEESON CJ: Yes, Mr Jackson.

MR JACKSON: Your Honours, as I indicated earlier, may I move now to argument concerning section 117 of the Constitution. That provision, of course, is to the effect that:

A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination –

“disability or discrimination” being the important words –

which would not be equally applicable to –

that person if he or she were a resident of another State. Now, your Honours, it is obvious of course and it has been said in a number of decisions that not every difference in the legal treatment of a resident of one State by the laws of another is a “disability or discrimination” for the purposes of section 117. In that regard may I give your Honours a reference to Goryl v Greyhound Australia Limited [1994] HCA 18; (1994) 179 CLR 463 at 478 in the reasons for judgment of Justices Deane and Gaudron, the last paragraph on page 478 where it was said by their Honours:

It was acknowledged by all members of the Court in Street v Queensland Bar Association that not every instance of different treatment in a State of a resident of another State involves a disability or discrimination for the purposes of s 117 of the Constitution.

Your Honours, in substance, a concept of that nature appears to have been adopted by what was said by Justice Gaudron and by your Honours, Justices Gummow and Hayne in Austin v The Commonwealth 215 CLR 185 at 247, paragraph 118, where the statement there made has underlying it the notion that not every difference is something which is a “disability or discrimination” in terms of section 117.

One has to identify the nature of and manner in which the difference operates and, your Honours, could I say finally, in general terms, ultimately that has been described as a question of substance rather than form. May I give your Honours a reference to that without going to it, per Justice Brennan in Street v Queensland Bar Association [1989] HCA 53; 168 CLR 461 at 507 to 508.

Your Honours, the difference, disability or discrimination in the present case is said to come from the operation of the Victorian Act and one needs to go back to that Act to identify the nature of that disability or discrimination if there be one. May I take your Honours now back to that Act, if I could go to section 109 of it first and I am going to section 109, your Honours, because it is the provision which creates the requirement for payment of a transport accident charge and the provisions to which I am about to go will, in our submission, demonstrate that the persons in relation to whom section 104 would not operate are ones who have not paid a transport accident charge and paying the transport accident charge brings about the circumstance in which section 94 operates. Your Honours will see section 109(1) provides that:

The owner of a registered motor vehicle must . . . pay to the Commission the transport accident charge applicable to that motor vehicle for that period.

Your Honours will see subsection (3) says that registration is not to be made or renewed, to put it shortly, unless that has been paid.

Now, your Honours, one has to then identify who are the persons liable to pay the transport accident charge and your Honours will see that section 109(1) identifies those persons as being people who possess two characteristics, one being the owner of a motor vehicle and the other being that the motor vehicle is to be a registered motor vehicle and the two terms are defined by section 3(1) of the Transport Accident Act.

Your Honour, “owner”, is at page 6 of the pamphlet copy really means, to put shortly, what one would expect, I will not go through it in detail, the owner of the vehicle. Your Honours will see then the definition of “registered motor vehicle” and it is paragraphs (a) and (b) of that definition which have relevance for present purposes. Paragraph (a) refers to:

a motor vehicle that is registered in accordance with the Road Safety Act 1986 -

I will take your Honours to the provisions of that, if I may, in just a moment. Your Honours will also see that paragraph (b) refers to:

a motor vehicle that is not so registered but is usually kept in Victoria –

So, those are the two categories of vehicle. I appreciate, your Honours, they need some further explanation. Your Honours, registration, if one goes to the terms of the Road Safety Act and we have given your Honours some copies, I think, of the Road Safety Act 1986 (Vic), some relevant provisions, registration in accordance with that Act appears clearly enough to be registration in respect of vehicles intended to be used on roads in Victoria and could I take your Honours in that regard - - -

KIRBY J: Interestingly, (e) of the definition is registered under the Interstate Road Transport Act (Cth) which, in a sense, makes the point that part of the Federation and of the free market which it creates is the movement of vehicles from one part of the country to another.

MR JACKSON: Yes, your Honour, may I say in relation to that, that legislation relates, I think, to the types of vehicles one sees hauliers using and there is of course constitutionally in relation to that one does have the trade, commerce and intercourse part of section 92 which may be engaged and may give rise to somewhat different considerations.

GUMMOW J: There is a Charge Act too. There is an Interstate Road Transport Charge Act which goes with the other Act and imposes a levy, I think.

MR JACKSON: Yes, because of course there has to be some maintenance of the roads and considerable damage can be done to roads by heavy vehicles. Your Honours, could I just say going to the Road Safety Act (Vic) for a moment, the point I am seeking to make about it initially, your Honours, is really, in a sense, definitional. It seems to make it clear enough that registration is required if a vehicle is to be used on roads in Victoria. If one goes to section 6 of that Act you will see that it applies, it says, “This Part” - which is “Part 2 – Registration”:

applies only to motor vehicles and trailers which are used or intended for use on a highway.

Section 7 says:

(1) A person must not-

(a) use on a highway and motor vehicle . . .

unless that motor vehicle or trailer is registered under this Part or exempted from registration under the regulations –

And, if one goes, your Honours - to section 6, one goes to section 7 - if one goes to a provision such as section 15, in particular 15(1) and 15(2), those provisions seem to confirm what one would expect to be the ordinary meaning of sections 6 and 7, that it relates, although it does not use the words “in Victoria”, it is intending to refer to use of vehicles on roads in Victoria.

Your Honours, could I also say there is no requirement that the owner or user of a vehicle registered in Victoria be a Victorian resident, indeed, it is not required that that be so. That your Honours will see from the regulations that your Honours will also have or parts of them. It is the Road Safety (Vehicles) Regulations 1988 and regulation 203(4). Now, your Honours will see that regulation 203(1) says that:

An application for registration of a vehicle must be made by an owner of the vehicle . . .

(4) A vehicle may be registered in Victoria under these Regulations although its owner or user [or] both of them ordinarily reside outside Victoria.

Your Honour, may I just say one thing about the copy of the regulations I have given your Honours before one of your Honours says something to me and that is that you will see that on the front page it is a version incorporating the amendments as at 22 July 1998 which is a few years after the events in question here and there were three amendments made to the regulations in the intervening period. They relate to the position of some heavy vehicles. None of them, as I understand the position, affects the provisions to which I am referring.

Your Honours, there is also no requirement to be registered if the vehicle is temporarily visiting Victoria - you will see that in Regulation 507 and that is, your Honour at a page numbered 82 at the bottom of the page of those regulations.

Now, if I could go back to the Transport Accident Act, section 111 of that Act provides - it is page 141 - that:

(1) Section 109 does not apply to the owner of a motor vehicle –

(a) which is temporarily in Victoria; and

(b) which is registered –

(i) in another State or in a Territory . . .

if, while the motor vehicle is in Victoria, the owner and any driver of the motor vehicle are insured under a contract of insurance in accordance with the law of that State or Territory –

That means that no transport accident charge is payable by that person.

Your Honours, could I then endeavour to summarise what I have said by reference to those provisions and that is that the charge is payable first, by the owners of vehicles being used on Victorian roads whether they are Victorian residents or not. Secondly, it is payable by the owners of vehicles ordinarily kept in Victoria whether they are Victorian residents or not. It is not payable by the owners of vehicles not being used on Victorian roads whether they are residents of Victoria or not. Take an obvious and not infrequent example, a Victorian resident may keep a car at a holiday house somewhere else, at Noosa or another State. It is not payable by the owners of vehicles temporarily in Victoria and otherwise insured, insured under other Acts, whether their owners are Victorian residents or not.

Now, your Honours, it may no doubt be right to say that many owners of vehicles registered in Victoria will be residents of Victoria for the purposes of section 117, but it is much more difficult, in our submission, to say that the test for the requirement to register involves being a subject of the Queen resident in Victoria. It is the use or usual keeping of a vehicle in Victoria which gives rise to the provisions which follow and, your Honours, if I could take one example, vast numbers of vehicles are owned by companies and other corporate bodies for a start, bodies to whose position section 117 does not speak at all and the requirement to pay the transport accident fee turns on the requirement to be registered.

Could I then go, your Honours, back to the Transport Accident Act and to section 94. Now, your Honours will see that section 94(1) says that:

The Commission is liable to indemnify –

(a) the owner or driver of a registered motor vehicle in respect of any liability in respect of an injury or death of a person caused by or arising out of the use of the motor vehicle in Victoria or in another State or in a Territory . . .

(2) Sub-section (1) does not apply –

(a) in respect of any period in respect of which the transport accident charge applicable to the motor vehicle for that period has not been paid –

Now, your Honours, I do not think I need to go through the remainder of the section, but the essence of it is that there was a liability on the part of the Commission to indemnify persons where the transport accident fee has been paid and, your Honours, if one goes then to section 104(1) you will see that the words in brackets, perhaps simply as an emphatic, perhaps making obvious what otherwise would be....anyway, exclude as the subject of a claim for indemnity “a person who is entitled to be indemnified under section 94”.

Your Honours, the entitlement to be indemnified under section 94 is, in a sense, the pro quo for which the payment of the transport accident fee has been the quid and, your Honours, one asks where does the difference then become discrimination. The interstate resident is liable to a claim under section 104 but does not have to pay the transport accident charge and is, in any event, because this relates to the obligation to pay, insured against the liability under another scheme.

So, in our submission, there is not any relevant disability or discrimination. Your Honours, a question arises about whether one subdivides section 117 into two parts and looks for some justification in relation to the second part. If that is the position, your Honours, we would rely on what was said by Justice Nettle on that aspect at paragraphs 83 to 102 of his reasons. Your Honours, those are our submissions.

GLEESON CJ: Thank you, Mr Jackson. Yes, Mr Solicitor for the Commonwealth.

MR BENNETT: If the Court pleases. Your Honours, the starting point of this.....whatever test one applies there is simply no inconsistency and there is no inconsistency for two reasons. We would submit the first is that the operation of the two Acts is to create an election. An injured plaintiff may sue in accordance with the rights conferred by the New South Wales legislation or may claim in accordance with the rights created by the Victorian statute. These are simply alternative rights.

Both schemes contain, either expressly or by common law implication, provisions which prevent double recovery. Victoria.....by various provisions in the Act which your Honours have been taken to and in New South Wales one would get the same result either by the rule against double recovery being applied before or after the Victorian Act or one might get it by saying that damages would be reduced by whatever one has recovered from the tortfeasor aliunde.

So, there is no suggestion of double recovery. It is a question of election between two schemes with certain consequences that, as in the case of most elections, apply when one has that.

KIRBY J: It is a providential election given that the plaintiff got out of time for one of the schemes.

MR BENNETT: One of his rights has been lost, that is what is consistent with the basic - - -

KIRBY J: Lost to him but brought home to the pool.

MR BENNETT: Yes, that brings me to the second aspect, which is that the test for inconsistency between State laws - inconsistency that may arise when a State law has extraterritorial operation, bears no analogy, we would submit, no helpful analogy to section 109 inconsistency. We are not dealing with a situation where two legislatures both have power over the same geographical area and one has a paramountcy over the other, we are dealing with a situation where two legislatures each have powers and are equal in the extent of those powers and an element of overlap may occur because of the State ability to legislate extraterritorially.

In that situation, there is no room for tests like cover the field or even alter, detract or impair. The test, we would submit, is necessarily much more limited and it is hard to see how one can have inconsistency in a real sense unless one is at the extreme end of inconsistency where it is impossible to obey both.

Now, this Court does not need to consider, in this case, what happens when you have that sort of inconsistency. There is an interesting discussion of it in an article in the Melbourne University Law Review by my learned junior. It is called “Resolving a True Conflict between State Laws: a Minimalist Approach” and it is in volume [2005] MelbULawRw 2; 29 Melbourne University Law Review 39, it is 2004.

KIRBY J: Does he conjure up in his imagination something that has never actually happened in a hundred years?

MR BENNETT: Quite a few. He also actually, your Honour, anticipates this case and expresses a view favourable to the position we are now taking as to what should occur but the - - -

KIRBY J: It is curious, is it not, in 100 years, especially given that in recent years there has been a pushing of the envelope in respect of extraterritorial operation of State laws, that there has never been a single case where this Court has held that you cannot have both.

MR BENNETT: We got close to it in the Fishermen’s Case in the - - -

KIRBY J: Justice Callinan got there and I almost did in Mobil. I mean - - -

MR BENNETT: There are some wonderful examples - - -

KIRBY J: I wonder if we have not seen clearly the constitutional implication of territorialism of the States?

MR BENNETT: Your Honour, some of the examples which are put in the article are quite interesting. One was the example of a law of Victoria, a hypothetical law of Victoria, which said a Victorian doctor was prohibited anywhere in Australia from giving treatment to a Victorian patient other than with the permission of that patient. A New South Wales law saying that a doctor present in New South Wales must administer treatment to save life if that is possible and available and you have a Jehovah’s Witness in Victoria and a Victorian doctor both living in Wodonga who are in Albury Hospital and the doctor is in breach of one law if he administers a blood transfusion and in breach of the other law if he does not. That is an extreme and unlikely example and there are some other examples which Mr Hill has been able to conjure up - - -

KIRBY J: But given that section 109 inconsistency, which is a clash of two polities within the Federation, is sort of bread and butter stuff and has been going on for a hundred years it still is curious that not a single case has succeeded where it is a clash between two other polities within the Federation given that section 74 expressly contemplated that such clashes would occur and would be sorted out by their Lordships.

MR BENNETT: Yes, section 74, yes. Section 76(iv) is arguably concerned with a narrower problem and that is a different question which again does not have to be gone into. The point is, of course, that where one has the polity which is able to impose its will on the other, as the Commonwealth can under section 109, there is room for the various tests which this Court has applied, but those just do not apply when one has this sort of conflict and we would submit it is appropriate to find a much narrower test when.....

Returning to this case, this is a case where there just is not inconsistency, (a) for the reason I have given about election. A second reason is that the New South Wales Act, as my learned friend, Mr Jackson, has demonstrated, in all its provisions which are designed to achieve the objective my learned friend, Mr Walker, has referred to, the objectives of reducing burdens on insurance companies in various ways, all those provisions are applicable on their true construction to actions in tort for personal injury, not for actions for indemnity of this type.

On the other hand, the provisions, as Mr Jackson has pointed out, dealing with the obligation of the New South Wales insurer to indemnify the New South Wales insured by using much wider language apply to indemnities such as the indemnity in this case and the inference is irresistible that the New South Wales legislature has accepted that there will be situations where its insurers are subjected to claims arising out of matters connected with other States, whether accidents occurring in them or accidents occurring to which their law properly applies, where there may be a different measure of recovery.

Once one accepts that, on the true construction of the New South Wales Act there is simply no room left for any actual inconsistency. The most my learned friend, Mr Walker, is able to say is, “But the whole objective of the New South Wales Act was to achieve certain things” and that objective is frustrated by the one accident in a thousand which involves an interstate vehicle. It is a little difficult to see why the objective is frustrated by the occasional case like this one. Even ignoring that, we would submit that is just not inconsistency of the relevant type. It probably would not even be inconsistency of the relevant type in the section 109 context.

Reference has been made to the decision in Goulden where your Honours recall it was said that there was an inconsistency between a federal law which regulated life insurance business and a State law about disability discrimination, but the point there was that although there is one sentence in the judgment of the court which is obiter and which goes much further than is necessary, the ratio of that case was a very simple one. The ratio was that when one looked at the Life Insurance Act it required that life insurance business be regulated actuarially and that premiums be set on the basis of actuarial advice taking into account the usual actuarial considerations.

That was clearly, on any view of it, inconsistent with the application of disability discrimination legislation to life insurance. There was a clear inconsistency on the face of the legislation itself. One does not need to say, as was said in the one sentence dictum, which could really be regarded as a flourish in any event, that the fixing of premiums by reference to disability discrimination legislation would be inconsistent with the policy or intent or whatever the phrase was of the Life Insurance Act. That was not, we would submit, the ratio of that case and we would submit section 109 does not go that far. One does not look at the policy of the Commonwealth Act and say this State legislation might conflict with that policy, therefore it is invalid.

That is really what my learned friend, Mr Walker, has to say. He has to say this legislation is designed to ease the burden on insurers such as his ultimate client in certain ways to protect them from certain types of legislative effect in personal injury cases and that is frustrated if the Victorian scheme is able to be applied. That, we would submit, is simply not the sort of inconsistency which is being discussed.

We would also, on this aspect of the case, remind your Honours of the decision of this Court in Brownlie v State Pollution Control Commission, where there was New South Wales legislation – the Clean Waters Act – which prohibited someone polluting a river. On its true construction it covered polluting a river in Queensland before it flowed into New South Wales.

GLEESON CJ: I think that was a decision of the Court of Appeal of New South Wales.

MR BENNETT: I am sorry, your Honour. Your Honour is correct. I notice that your Honour presided and I simply read that quite a little quickly. Your Honour is correct, it was. It is reported in (1992) 27 NSWLR 78 and there is a passage in your Honour’s judgment at page 85B where your Honour deals with the argument that there was an inconsistency because if Queensland law did not forbid the particular type of pollution, it permitted it, because what is not prohibited is permitted, and therefore there was a conflict or an inconsistency between a New South Wales law saying you cannot pollute the river in Queensland and the Queensland absence of prohibition, which amounted to permission. That argument was firmly rejected.

The judgment also refers to the familiar passage in the judgment of Justice Deane in Breavington v Godleman about a national unitary law and points out, as has been pointed out I think in this Court, that those views have not commanded a general acceptance in the High Court. So when one puts those things together, this is simply not a case in which one can find any relevant inconsistency. That in a sense is the answer to the whole first part of the case.

Now, one matter which was said by my learned friend, Mr Walker, which I should take issue with, was that he referred to the various places in section 104 of the Victorian legislation where direct or indirect reference is made to the provisions of the interstate law and he then said that those references demonstrate that the Victorian law alters, detracts from or impairs those provisions. We simply point out that that is a non sequitur. The mere fact that section 104 may assume the existence of certain provisions in the interstate law does not necessarily have the consequence that it alters, detracts from or impairs them. In any event, for the reasons I have given, that, we would submit, is not the appropriate test.

I should also mention in this area, so far as the test is concerned, that there is a reference by your Honour the Chief Justice in Mobil Oil v State of Victoria [2002] HCA 27; (2002) 211 CLR 1 at 25 to 26 – I will not take your Honours to it –where your Honour applied in effect the Melbourne Corporation test to State/State inconsistency by saying that a State could not take a step which interfered with the capacity of the other State to operate as a State and picked up the general Melbourne Corporation test. That sort of inconsistency is clearly not involved here. So if that is the whole of the test, again, there is clearly no problem.

Now, in relation to section 117 – I can be very brief – we have referred in our submissions to the passages in Street’s Case which indicates that where some social benefit is conferred by a State on its residents, particularly where it is a benefit that they pay for, that is an exception to section 117. That is of course exactly what the Victorian legislation does here.

Now, in relation to the recovery from the tortfeasor, the provision that the Victorian insured vehicle, or the person entitled to make a claim against the Victorian Commission, is excluded from section 104 is simply an application of the rule against security of action. It does not really add anything. If one did not have it, there would be a complete defence of security of action. If there had been a negligent Victorian driver in this case rather than a negligent New South Wales driver and if the Transport Accident Commission had sought to claim the amount paid in this case from that tortfeasor, there would have been an immediate right of indemnity back against the Commission itself. There would, therefore, have been classic security of action. All that the words and parentheses which are attacked in section 104 do is recognise that.

One could hardly imagine a clearer case where it is an example of treating unequals unequally rather than treating equals unequally. Why should one be entitled to indemnity from a person who one would thereupon immediately be bound to indemnify? It would be a meaningless consequence and one which clearly cannot involve discrimination at the relevant time to ignore.

So for that reason we say once one gets past the first step, once the benefit scheme in Victoria, which applies of course to cars based in Victoria and maybe on the extension of discrimination principles one gets from Street’s Case, one treats that as Victorian residents, let us assume for the moment, contrary to what my learned friend, Mr Jackson, says that that is so, once one gets that that falls within an exception in Street’s Case, the words in parentheses in section 104 merely follow from the working through of that scheme.

We have suggested in our written submissions – and I will not go through them in argument, it may go further than is necessary for the purposes of this case – there may well be a wider exception to section 117 in cases where it can be demonstrated that the purpose of the discrimination is something other than the relevant form of discrimination. As your Honours know, if one looks at various forms of anti-discrimination legislation where it is set out in detail rather than in a single sentence, as in the Constitution, one generally has provisions operating by way of exception in cases where most people would regard the discrimination as being justified.

One example was in Qantas Airways Limited v Christie a few years ago, where your Honours will recall that this Court upheld a provision requiring Qantas 747 pilots to retire at 60, not for any medical reason but because most countries where Qantas 747s landed would not allow people to land planes if they were over 60. That was within of course a specific exception in the age discrimination legislation, but it is an example of the sort of provision we are familiar with really in all discrimination legislation where there are necessary exceptions. We submit that in construing an instrument such as the Constitution, discrimination should be construed widely. In Street’s Case it was construed widely and the Court – they may not have used the word – basically overruled the cases of Henry v Boehm and Davies and Jones v Western Australia where section 117 had been construed very narrowly and very strictly.

In the former case your Honours will recall it was said that South Australia did not discriminate against persons not resident in South Australia where it said you had to reside in South Australia for six months before being admitted as a lawyer. The argument that was upheld in that case was that the six months residence requirement applied equally to residents and non-residents. Now, that sort of thinking about discrimination has a distinctly old-fashioned ring. It was rejected in Street’s Case where the Court was quite happy to equate having one’s principal chambers in Queensland with residence in Queensland for the purpose of bringing.....test within section 117.

KIRBY J: It has not been a very fruitful section, except for lawyers.

MR BENNETT: Well, your Honour, this is my brief in relation to it, but it has not been, no.

KIRBY J: It seems that on that issue of discrimination against lawyers the Court has been quite sensitive.

MR BENNETT: Your Honour, there are no doubt good reasons for that in the natural selection of litigants in certain types of case. The point I make is this, that in the same way as one interprets discrimination broadly so as to cover discrimination against people who do not reside for six months or discrimination against people who do not have their principal place of business in a State at the other end one can construe it so as to accommodate the situation where one treats, to use the cliché, unequals unequally. The essence of discrimination of course is in treating equals unequally and it has been said in some circumstances to constitute a form of discrimination to treat unequals equally.

The test that we have suggested in our submissions involving justifications other than mere discrimination is one which recognises that treating unequals unequally is not necessarily discrimination. One example that is given in one of the cases in relation to section 117 is a law that requires a publican to reside on licensed premises. Now, that certainly in a border town might well have the effect of discriminating against a resident of another State, but there are justifications for it which, in my respectful submission, would mean that one was not in any real sense treating equals unequally by having a provision of that sort and it would not be in breach of section 117. So for those reasons we submit that in this case there is no breach of section 117.

Now, I should just say a very little about the Judiciary Act. The point here is not that it is not the starting point and is not where one needs to move from, but that it does not have the result of solving the problem in favour of the appellant. We have explained that in the last paragraphs of our submissions, paragraphs 63 to 66. Each section contains provisions which are clearly caught up by the Victorian Act. Section 79 provides:

The laws of each State or Territory . . . shall . . . be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable.

That applies here – this is a case in the Victorian court – to make the Victorian statute applicable. Once one, as a matter of construction, finds that the law is applicable, it is squarely within section 79. If one starts with section 80:

the common law in Australia as modified by the Constitution and by the statute law in force in the State or Territory in which the Court . . . is held shall . . . govern all Courts exercising federal jurisdiction –

Here again, if there were any common law principle of the type relied on by my learned friend, Mr Walker, it would be modified by that Victorian statute, but of course there is not.

There are private international law rules which this Court has developed in relation to the law applicable to torts arising out of motor vehicle accidents that occur with interstate elements, but this is not such a case. This is a case on an indemnity, on a statutory indemnity. While it may be difficult to find the relevant private international law rule, one does not, whatever else one does do, apply the tort rule to this sort of recovery.

Now, there are arguments which I will not go into, fairly obscure arguments, which one could construct based on the fact that there are chapters in books on private international law about how it applies to quasi-contractual liabilities or restitutionary liabilities and then the question as to whether one can characterise this sort of liability in that way and then say it is a restitutionary liability so one applies the Victorian Act. One could get there by that sort of route. That is a fairly convoluted route but it may be a way one reaches the same result.

For my purposes, all I need to submit is that what one does not do is say this is an action in tort so let us apply the rules of lex loci delicti which this Court has developed. This just is not an action in tort of that type. It is an action of a totally different kind. Now, your Honours, we have prepared a one-page document which your Honours may find of assistance setting out the comparable provisions of legislation in other States and Territories.

KIRBY J: Are any of them different in kind from what we have seen?

MR BENNETT: Not substantially, your Honour, no. Some of them do not have an express indemnity provision like section 104; some of them do. Those which do not would simply rely on subrogation which would yield the same result no doubt in practice. In one sense the whole of section 104 is not necessary because one could get that result by subrogation. Several of them do have provisions of that nature, including New South Wales – I am sorry, Northern Territory. New South Wales certainly used to have one for the nominal defendant, but I am not sure if it still does or not. Those are my submissions.

GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for New South Wales.

MR SEXTON: My learned friend from Victoria is going to go first, your Honour.

GLEESON CJ: Very well.

MS TATE: We do not seek to make any oral submissions, may it please the Court.

GLEESON CJ: Thank you, Solicitor.

MR SEXTON: If the Court pleases. Your Honours, our primary interest in this case is or was to say that sections 117 and 118 of the Constitution do not operate to prevent the respondent’s reliance on section 104 of the Victorian Transport Accident Act.

KIRBY J: You do not seem to be very jealous of the powers of the Parliament of New South Wales to enact special laws for motor vehicle accidents in its jurisdiction.

MR SEXTON: Well, inevitably, your Honour, in a federal system where people drive across State boundaries one will have cases like this. The system of compulsory third party insurance that exists in every State and Territory is not completely seamless. There are some questions of overlap and underlap, of which this is one example. But we would say that it does not impinge on the sovereignty of the State of New South Wales.

KIRBY J: Sovereignty is not really well used in our constitutional context, but it may well be as a result of analysis and doctrine that there is no problem but it is, on the face of things, an odd result, I am sure, for citizens that suddenly they end up with a very different legal regime attaching to them in respect of an accident entirely within New South Wales from a person living there with a car there and taking out insurance there and yet the insurer picks up a Victorian liability.

MR SEXTON: Your Honour, the same would be true in reverse or converse if you had an accident in another jurisdiction where there was a New South Wales driver involved. In other words, that will always be a problem within the Australian federal system, if “problem” is the right way to put it. It simply means that the normal situation in relation to a New South Wales accident involving New South Wales drivers and vehicles will not apply in those abnormal cases.

KIRBY J: Anyway, you were going to help us with 117.

MR SEXTON: Well, what I was going to say, that as to 118 firstly, your Honours, that that argument appears to have largely fallen away as far as we can see. At any rate, we have made our written submissions on that question. As to 117, about which we have also made written submissions, we would say perhaps more generally than in those submissions that there is no disability or discrimination involved in the context of a system where all the States and Territories have compulsory third party insurance with substantially similar consequences for the insured and for the insurers.

If I could quote your Honours a brief passage from Goryl [1994] HCA 18; 179 CLR 463. The passage is at 485 from the judgment of Justices Dawson and Toohey where their Honours said:

In Street v Queensland Bar Association all members of the Court were of the view that not every kind of differential treatment by a State of a resident of another State amounts to the imposition of a disability or to discrimination within the meaning of s 117. Whether this is because the very nature of the federation, predicated as it is upon government State by State with the inevitable consequence that laws will differ from State to State, requires limits to be placed upon s 117 or whether it is because some kinds of differential treatment, properly viewed, cannot be described as imposing a disability or a discrimination, is probably a difference in approach rather than in principle.

We would say that in the context of this case that the second of those approaches is the preferable one, that there is not a disability or discrimination in the context of this system of insurance that exists across all of the jurisdictions in this country.

Now, your Honours, one further and final point, that if this were considered to be a problem for the New South Wales scheme of compulsory third party insurance, the State of New South Wales could legislate, or try to legislate, to prevent the operation of section 104 of the Transport Accident Act (Vic). It has not done so of course. That might give rise to difficult questions that do not of course occur in this case - - -

KIRBY J: But that is saying that the constitutional principle is limited to express clash, express incompatibility, and that has not been the way issues of inconsistency have been dealt with between federal and State laws.

MR SEXTON: But that is a different concept we would say, your Honour. We have a paramount legislature - - -

KIRBY J: Well, it is two polities within the one federal polity. I agree it is different, but there has to be some similarity. They both have to find their place within the federal compact.

MR SEXTON: Your Honour, what I have said is that that kind of direct collision could give rise to difficult questions, although in a case in federal jurisdiction, which this case is, and any case involving the Transport Accident Corporation presumably would be, the question would still be whether section 80 of the Judiciary Act picked up the relevant Victorian or New South Wales laws. It would have to in a sense, as a choice of law exercise, to make the choice between them. If the case was not in federal jurisdiction, however, a different factual situation from this case, then there could be some kind of direct collision. That would require an exercise of choice of law that would not be obvious in terms of its result.

We say the solution to that is not found in section 118 of the Constitution, but would still be found in some kind of essentially common law choice of law rule, but we would agree that at that time that particular choice of law might be a difficult one in terms of choosing between the directly conflicting provisions of two States, both of them with some interest in the particular events and the subject matter of the proceedings.

GLEESON CJ: The decisions of this Court about extraterritorial legislative capacity of State Parliaments have for a long time emphasised that the connection need not be more than a real connection. Was there ever a time during the history of Federation when the prevailing view in this Court has been that you take a strict approach to the extraterritorial capacity of State legislatures?

MR SEXTON: I do not think so, your Honour, certainly not, as your Honour points out, in recent times. I do not think that there is - - -

GLEESON CJ: But the recent case refer to some quite old cases of this Court, do they not?

MR SEXTON: Yes. As your Honour says, the connection does not have to be particularly substantial. It is perhaps interesting in that context that there seems to be no single recorded case of such a direct collision that there has had to be a choice of law rule devised to deal with that kind of situation as between the States.

KIRBY J: Well, it is so interesting that it makes you stop and wonder whether or not we have been sufficiently sensitive to the interrelationship of these States inter se. I think in colonial times there was a distinction, was there not, between the Imperial Parliament’s powers to enact laws of an extraterritorial operation and the Colonial Parliament’s powers in that respect? I think they were much more limited. Then when the Commonwealth was established and the States created somehow they took upon themselves some of the attributes of the Imperial Parliament.

MR SEXTON: But there would have to be, you would think, that power in a federal system, your Honour, because there would be instances where – and this is one of them – people driving State borders where there needs to be that - - -

GLEESON CJ: Exactly. It is difficult to understand why the concept of federalism requires strictly limiting the capacity of States to legislate to their own territories. On the contrary, the kind of problems addressed by the Parliaments in this case would seem to indicate that for federalism to work properly and to permit States to have different regimes of accident compensation you would need to permit this sort of result to occur. If you could not have that, there would be enormous political and practical pressure on States all to have the same scheme of accident compensation otherwise the most extraordinary anomalies would result.

MR SEXTON: As we have said, one might imagine a case of some kind of genuine collision, but my learned friend says that this is such a case. We would say it is nothing like such a case and that is why - - -

KIRBY J: The imaginings have been fairly limited, have they not? We have not yet been able to imagine it once in a century. I mean, at least with discrimination we could imagine it with barristers.

MR SEXTON: It may indicate, your Honour, that most of the extraterritorial applications of laws have been quite sensible and practical ones and that is why there has not been this kind of collision.

KIRBY J: Answering the Chief Justice’s question, one of the comments in one of the submissions suggested that the appellant’s approach is a hankering for the pre-Engineer’s notion of reserve State powers. Was there anything in those early days that asserted that there was, as it were, a
territorial limit on the jurisdiction of the State Parliament, powers of the State Parliaments?

MR SEXTON: Well, only, as your Honour points out, the difference between the notion of the Imperial Parliament and all of the Australian Parliaments at one time, including perhaps the Federal Parliament. But in a modern context those limitations, we would say, would not have any substance to them. Unless there are any other matters, your Honours, those are our submissions.

GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for South Australia.

MR KOURAKIS: Your Honours, just on the last question as to the view taken of the power to legislate extraterritorially, the change in approach is reflected more in Privy Council decisions and the decision of the Privy Council in Macleod.

GUMMOW J: Croft v Dunphy.

MR KOURAKIS: Yes. Well, that reflected the change, if the Court pleases, when in Croft v Dunphy the Privy Council considered Canadian hovering legislation to prevent - - -

KIRBY J: I am not hearing you, Mr Solicitor. I cannot hear you.

MR KOURAKIS: Your Honours, the question of extraterritorial powers considered a line of Privy Council decisions. In Macleod they took a restrictive view of the extraterritorial legislative power of colonies. That was reversed in Croft v Dunphy. That case considered Canadian legislation which prohibited crafts hovering offshore in an attempt to stop smuggling. But from that time at least the wider view of extraterritorial power has certainly been accepted and applied.

GLEESON CJ: When was Croft v Dunphy - - -

MR KOURAKIS: 1933 I think it was, if your Honour please. It is in Macleod, the last decade of the 19th century.

KIRBY J: What was the constitutional rationale for Croft v Dunphy for the powers of the States? Do you remember how - - -

MR KOURAKIS: Yes, to effectively allow for the effective regulation of something that was clearly within power. The customs and excise restrictions and - - -

KIRBY J: But that is what I would call the dribble over effect, but now we have moved from dribble over into positive application in a highway in New South Wales of effectively the law of Victoria.

MR KOURAKIS: Yes, and that is traced in more recent judgments like the Port MacDonnell Case - - -

KIRBY J: Upon New South Wales residents who have no vote for the Parliament of Victoria and the way they dispose of their money. I mean, this is the sort of constitutional objection that you cannot, as a New South Wales resident, have any real say and you do not have any political redress, and money can be extracted from you.

HAYNE J: Well, some of the history of it is dealt with in King, of course, 166, particularly at pages 11 and following, but it is also necessary of course to take account of such statements as Justice Dixon in Broken Hill South that the relationship of a person to the territory may consist in many forms other than residence or domicile, and once that is recognised, to focus on residence to the exclusion of all other connecting factors between legislation, a subject matter of legislation, and an individual is a problem that recedes.

MR KOURAKIS: Your Honour, that connection has become all the more obvious as social and economic conditions change and the possibility and ways in which matters outside the State can affect internal matters becomes all the more obvious. Your Honours, in paragraph 5 of Western Australia’s submissions and paragraph 7 of South Australia’s submissions we contend that there is a presumption that State statutes apply and operate harmoniously with common law choice of law rules. If that presumption is applied in statutory construction, then the occasions on which there will be a conflict will be much minimised. Of course, that construction applied in this case would support the contentions of the respondent on how the Motor Accidents Act (NSW) should be construed, those arguments that Mr Jackson made of course being based on their text.

We say that a construction of the Motor Accidents Act that would not interfere with the application of the Transport Accident Act by operation of choice of law rules is one to be preferred as a matter of general approach to construction and it would minimise the occasion on which there was conflict.

Your Honours, on the question of the operation of section 80, if on a proper construction the State law does apply and operate consistently with choice of law rules, then section 80 will yield the same result no matter where the court exercising federal jurisdiction happens to sit and, indeed, will yield the same result as that which a court would arrive at - - -

GUMMOW J: You are talking of the New South Wales Act? You said applying choice of law rules to a statute. The New South Wales statute, was it?

MR KOURAKIS: In the construction of that, yes. It ought not be given a construction that would interfere with the operation of the common law choice of law rules that would apply section 104 of the Victorian Act to this situation. Your Honours, to elaborate a little on that, my learned friend, Mr Sexton, raised what might be the situation if New South Wales expressly attempted to exclude section 104. What my submission is that New South Wales statutes should not be given that construction unless they very clearly so provide. General words alone would not be sufficient. There is no express indication or clear indication in the New South Wales statute under consideration here, the Motor Accidents Act, that it intends to change the operation of the choice of law rule and one would not easily infer it. There is no reason why the common law choice of law rule should not simply apply section 104.

KIRBY J: Would you answer my concern about the fundamental democratic character of our Commonwealth and of the States within the Commonwealth? Now, how does Mrs Sweedman, where she is discontented with this, exercise her rights as a citizen and as a resident of New South Wales and an elector in New South Wales to say, “Well, I don’t think I should be subject to this Victorian law”? On your theory and the theory of the States and everyone propounding here, it really eats away at that notion, not at the dribble over effect, but frontally.

MR KOURAKIS: Your Honour, at the level of construction of which I have just spoken, there is no difficulty with it at all. The government that represents Mrs Sweedman has enacted legislation that does not interfere with common law choice of law rules that would apply section 104. So there is no difficulty in terms of those concepts in accepting that position.

KIRBY J: But this is based on the notion that to have this incompatibility as between State laws you have to have express incompatibility, it has to be express, but that has never been the case in other forms of incompatibility.

MR KOURAKIS: It may arise by necessary implication. My submission as to the rule of construction is simply that where there are general words, nothing else to indicate that intention to exclude the ordinary operation of common law choice of law rules, then one would read the statute as excluding it.

GLEESON CJ: The New South Wales Parliament for which Mrs Sweedman votes has an enacted a law compelling her to take out a policy of insurance to cover herself against this kind of liability.

MR KOURAKIS: Yes, and that leads then precisely to the section - - -

GLEESON CJ: It will not let her driver her car on the road unless and until she does that.

MR KOURAKIS: Yes, and I think that ties in with the point made by Mr Jackson as to section 9 and that is that the New South Wales Parliament requires a policy of insurance that covered against any liability arising anywhere in the Commonwealth, not just under the parts of the Motor Accidents Act that govern claims for damages.

KIRBY J: Yes, but the New South Wales Parliament has also enacted an awful lot of provisions with caps, limitations and statute of limitations provisions which appear with some particularity to be dealing with this particular wrong.

MR KOURAKIS: Yes, and, your Honour, if we were discussing the common law choice of law rule for torts, then those rules would direct us to those very provisions, but that is not the issue here.

KIRBY J: They are own common law or statutory provisions. I am thinking of the Constitution, how territorial States are expected within the framework of the Constitution to live together. It just is astonishing that in 100 years we have never been able to have the imagination to find a single case where there has been an inconsistency, but there have been hundreds of inconsistencies of federal and State legislation.

MR KOURAKIS: Yes. I think my predecessor has said that that is a testimony to the good sense of the States, but the constitutional question would only arise - - -

HAYNE J: Others may say it is a test of the consequences of federal jurisdiction and what follows from it.

KIRBY J: Or it is a consequence of tit for tat, that well known legal rule.

MR KOURAKIS: Your Honours, before leaving this part of the case can I just say as to the operation of federal jurisdiction that difficulties would arise even in the application of section 80 if New South Wales expressly provided for an alteration of the common law choice of law rule governing claims like this in the nature of an indemnity. If that was the case, there is the possibility of a different result depending on whether the court is sitting
in Victoria or New South Wales, depending on how one construed the phrase “statute law in force in the State”. But that is not a question that arises here both because of the construction of the Motor Accidents Act for which the respondent contends and that we support and because the court happens to have sat in Victoria. If it were otherwise, a question might arise, but it need not be decided, in our submission, here.

Your Honours, turning to the question of 117, in my submission, there is no relevant discrimination or disability within the terms of section 117 where the different, more beneficial treatment of one State’s residents over those of another is dependent on the imposition of a significant burden or obligation on that same resident and where that obligation or burden is directly related to the enjoyment of the benefit. That, of course, is simply a specific application of the general submissions Mr Bennett made about the unequal treatment of equals and the like. But in this case where the benefit of a Victorian insured, the benefit being that the Transport Accident Commission cannot recover against them, is a benefit they enjoy only because of the impost of the premium they pay. There is, in my submission, no relevant disability or discrimination suffered by the New South Wales insured driver in those circumstances. If the Court pleases.

GLEESON CJ: Thank you, Mr Solicitor. Yes, Mr Walker.

MR WALKER: Your Honours, one small point about Goulden. My learned friend the Solicitor for the Commonwealth invites your Honours not to treat as ratio a passage which, in our submission, is very plainly just that[1986] HCA 24; , 160 CLR 330 at 339 about point 7 or so on the page. In the conclusion significantly and in a paragraph commencing with the words “The overall result is that”, their Honours said, and I quote:

the provisions of s 49K(1) of the State Act would qualify, impair and, in a significant respect, negate the essential legislative scheme –

That was the phrase that my learned friend the Solicitor-General for the Commonwealth was seeking to persuade your Honours ought to be treated in the nature of a rhetorical flourish and not ratio. There it appears, and it goes on:

for ensuring the financial stability . . . That being so, s 49K(1) is inconsistent –

It is difficult to think of a plainer, more transparent utterance of ratio than that reasoning. There is nothing rhetorical about divining what is described in that passage as “the essential legislative scheme”.

GLEESON CJ: There is a passage in Goulden in which they say the essence of life insurance is discrimination.

MR WALKER: Yes.

GLEESON CJ: Not only the capacity, but the obligation, according to actuarial sound principles, to discriminate between people according to their physical condition.

MR WALKER: Quite so, yes.

GLEESON CJ: It was of the essence of the life insurance system that the Commonwealth was supervising.

MR WALKER: Yes. In our submission, and one knows that Goulden’s Case was argued by reference to, among other things, the regulatory scheme on the one hand of the State Act and the purpose and effect of the relevant provision of the Commonwealth Act on the other hand.

GLEESON CJ: Yes. It is at 336, about a third of the way down the page, Mr Walker.

MR WALKER: Yes, your Honour. In particular, at the end of that paragraph there is a reference to the Commonwealth Act proceeding “on the underlying legislative assumption” about things which involve discrimination, informed relevant discrimination. In our submission, that is language which is entirely consistent with arguments of the kind which included phrases from us such as the comprehensive scheme applied for declared purposes of the New South Wales statute in question in this case.

In relation to section 118, I thought we had made it clear that we of course rely upon what we have put in our written submissions about that. Time meant that the address could not extend so far. Contrary to what my friend the Solicitor for New South Wales may have suggested, there is no abandonment of it at all. It is of course significant that it is part of a concatenation of provisions and considerations put together by Justices Gaudron, Gummow and Hayne in Lipohar v The Queen (1999) 200 CLR 485 at 516, paragraph 76. It plays a very similar role in the argument that we put in our written submissions and in our address. Section 118 obviously plays a part in relation to the questions raised about the exercise of federal jurisdiction, including the sections 80 and 79 of the Judiciary Act as to the role of the New South Wales statute.

My learned friend, Mr Jackson, correctly, with respect, noted that the machine-room provisions of the New South Wales statute were concerned with claims for damages by injured persons or dependants of dead persons in the particular respects that he drew to attention. We are not concerned to contest those clear matters. There are two forms of our argument. That which I devoted the address to and that which is our main argument does not require identification of the Victorian claim as a claim for damages of the kind referred to in the New South Wales Act. There is an alternative argument which happens in writing to be put first. In the written submissions there is an alternative argument that as a matter of interpretation, given the questions of substance which we seek to capture in writing, that the court below was wrong in so finding.

But our main argument is one which accepts that of course the Victorian action is not an action for damages in the New South Wales sense. We rely, rather, on the intersection between two different kinds of provisions about different kinds of activity. On the one hand the regulation of an amalgamation of common law and New South Wales statute law in New South Wales by a system funded through private insurance under governmental regulation, supervision, and on the other hand the activities in Victoria which happened in this case to result in the Victorian hand, as it were, in the New South Wales pocket in the working out of the consequences of the entirely mundane crossing of borders in motor vehicles of residents of neighbouring States.

We are certainly not saying, contrary to one of the possibilities raised by my learned friend, Mr Jackson, that there is in general or was in particular any lack of power for Victoria to legislate in what is called an extraterritorial fashion. What it means to legislate in an extraterritorial fashion of course will depend upon particular cases and contexts. A law which has an operation, say, fiscally only within the enacting State but by reference to events that may have occurred overseas or elsewhere in Australia might be thought in one sense to be extraterritorial, but in many senses, particularly in relation to so-called clashes or inconsistency, it will not present any such guise.

On the other hand, a law of an enacting State which seeks to reach literally across a physical line so as to work different legal consequences of conduct across that line in a sister State’s territory, for example, does have an extraterritorial effect. We do not doubt the power. We question whether there is legal operation when there has been a clash of the kind we have addressed upon in-chief. In Port MacDonnell that is precisely what was in question in the hypothesis that their Honours considered, it not having arisen actually in that case, namely, two States each enacting laws which would affect, that is, regulate, the conduct of a fishery in one place, that is, in one of the State’s territory or by extension on the facts of that case on that State’s side of the equidistant line.

Your Honour Justice Hayne asked my learned friend, Mr Jackson, whether the inconsistency clash or relevant difference between the New South Wales and Victorian statutes upon which our argument was founded was an argument which was sliding between the concept of the liability to the injured person on the one hand and on the other hand the liability to a person who has compensated that injured person, the very difference which distinguishes between an action in damages and an action, for example, for a statutory or other indemnity, or for a restitutionary claim.

It is certainly the case – and this is why our main argument does not characterise the Victorian claim as a claim in damages within the meaning of the New South Wales statute – that we say that the Victorian statute creating and giving rise to the liability of the latter kind is one which happens to collide in the respects that we have sought to develop with the New South Wales law which recognises and modifies and, to a large degree, regulates the existence, content and enforcement of a liability to the injured person.

We submit, however, that it is very clear that the fact that they are different conceptually does not make them a non-intersection and the fact that they can obviously be seen to have different subject matter at a number of different levels of abstraction – different funds are in question, different compensatory schemes are in question, different governmental territory, et cetera – that fact does not prevent them from posing, depending upon particular circumstances, the position which we have characterised as clash.

In particular, and for present purposes, we submit that where one can see New South Wales, one of the two States in question, as having imposed by its legislative choices what might be called clamps or procedures for claims by injured persons that have been drawn to attention with an evident purpose, explicit as it happens, of controlling an outflow of funds, those funds being raised by governmentally supervised actuarially informed premiums, in a scheme which includes devices or procedures calculated to produce early, timely and complete provision of information about claims in order to be fed into the premium setting which produces, as it were, the pool of funds, we submit that that legislative choice would be evaded in terms of the essential legislative scheme or purpose of controlling the outflow of funds from the pool of funds produced in that fashion by another State, Victoria’s legislation, which would give to Victoria, in order to recoup it for what it has given that very injured person, money in such a way as completely evades those procedures, timeliness, limits, provision of information for feeding into the governmentally supervised premium actuarial considerations of the New South Wales scheme.

KIRBY J: But do you accept that in terms of quantum all that can be recovered is what would have been recoverable under the New South Wales law?

MR WALKER: Yes. As we put in-chief, section 104(2) has the effect, maybe more simply stated than would work in practice, but that is not to the point at the moment, that there is a cap imposed on the Victorian claim. Now, your Honours will appreciate there are three amounts referred to in the combinations of subsections (1) and (2) of section 104. First, there is the amount of damages arising from the legal liability, then there is the amount of payout by the Victorian Commission, and finally, there is the amount produced by the proportioning exercise that the court is required to do by section 104.

Now, they may have different relations with each other depending upon different cases, particularly, as your Honours have seen, the various limits under various heads, collectable under Victoria, assessable in New South Wales, differ one from the other. There are differences not only in caps, but there are also differences in thresholds, that is, small claims. In our submission, when one sees the way that operates, one thing is clear, that the Victorian matter, the Victorian calculation proceeds simply by looking at how the Victorian payout has been going, the aggregate of Victorian payout, from time to time. Cause of action accrues with every fresh payment out.

On the other hand, the New South Wales payment proceeds in an entirely different fashion, but the Victorian statute returns to or uses as a point of reference for its cap in subsection (2) the limit imposed. So my answer to Justice Kirby is, yes, there is a monetary limit supplied by the extent of damages under New South Wales law and that leads to a reply to matters raised by the Chief Justice with my learned friend, Mr Jackson.

Now, this comes to a matter that we accept by way of concession is a relevant matter concerning clashes, conflicts and the like, that is practicality. In particular, we accept, arising from some later observations by the Chief Justice, that there can be quite obviously a degree of equanimity about differences among the States, as one would have thought 106 and 107 contemplates ought to happen from time to time, except by uncanny coincidence, and that this is a case where the two statutes show express adamant aversion to each others statutory schemes for compensation.

If the dovetailing or butting up of the two statutory schemes is of such a kind, then there would not be clash or conflict of a kind about which we would complain. It is not that there are different schemes which produces clash or conflict. That would be fundamentally wrong as a proposition. So the Chief Justice’s question to my friend, Mr Jackson, was, how is New South Wales – that is the New South Wales fund, the aggregate of insurers’ funds – worse off, given section 104(2)?

Our answer is that instead of a monetary limit totally known and paid and taken into account in claims experience in a very short time indeed pursuant to procedures assigned to produce that as well as to reflect the inhibitions on amounts one has here an ongoing, without any time limit, an indefinite exercise up unto a maximum that only becomes known by litigation which is parasitical on Victorian litigation, that is, a case within a case. So that in the Victorian litigation, presumably once only – whether the first time around or the second time around or the fourth time around is not yet known – there has to be a ceiling fixed, a ceiling fixed by having a phantom New South Wales case run to produce the maximum payable under section 104 by the aggregate of collections under the Victorian statute.

That, in our submission, is a dire contrast with the evident purpose of those who enacted the New South Wales statute. It explicitly runs up against the objects in section 2A and the provisions to which we have drawn attention in our written submissions.

GLEESON CJ: Mr Walker, I think there has been some discussion already about the construction of section 104(2) and the words “would be liable”, but is it the words “but for this Act” that mean that you disregard the limitation period?

MR WALKER: No.

GLEESON CJ: What is it that produces the consequence that in doing the subsection (2) exercise you, as it were, ignore the fact that somebody is out of time?

MR WALKER: Your Honour anticipates the very next point I was going to come to. In answering your Honour’s present question we are also answering the matter raised with our friends by Justice Gummow asking the question, at what point does one answer the question raised by “would be liable”, and, in particular, do those words themselves accommodate what we have put in relation to the limitations and other like proceedings and clamps imposed by the New South Wales Act?

One thing to note is that in section 104(3) some thought has clearly been given to what may actually have happened – not hypothetically but actually. Judgment against a third party – my client appears to be the relevant third party – so judgment against a third party does not eliminate or diminish the right of indemnity nor does settlement. It is very difficult to know whether those are provisions which contemplate that you must always run a phantom case.

Now I come to the question the Chief Justice and Justice Gummow have raised: in the running of the phantom case what does one suppose as, for example, the phantom commencement of proceedings for the legal liability in subsection (1) which is the legal liability owed to the victim, as we have been using that word? It is not the liability under 104 owed to the Victorian Commission; it is the liability to the victim. Hence the expression in section 104(2):

the person would be liable to pay to the injured person –

Now, the inquiry invoked by the Victorian statute in the circumstances of this case does drive you to the regime, to adopt the word used by the Chief Justice, not merely litigious but also substantive in relation to what you can get and how you can get it. It may be that we have been straining at a gnat in the sense that even if 104 operates, as has been argued against us, that what it will in fact entitle the plaintiff to is, as Justice Kirby pointed out, zero.

GLEESON CJ: I wondered, is this still a live issue in the litigation or - - -

MR WALKER: That is a live issue, as my learned friend, Mr Jackson, pointed out to your Honours when the inquiry was made of him. Your Honours will see that the last paragraph of the agreed facts is not a fact but an assumption but it only goes to the point of negligence.

GLEESON CJ: We are just dealing with a case stated here, are we not?

MR WALKER: Yes. If I were to win in my main argument, nothing further happens but, as my friend points out, there is yet to be determined by this phantom exercise I have referred to what is the monetary limit imposed by 104(2) or, indeed, whether there is any liability at all under 104(1).

GLEESON CJ: Because it says “which, but for this Act”, not “which, but for the New South Wales Act”.

MR WALKER: Quite. What that shows is, like the expression in subsection (1) “regardless of section 93”, that shows that section 104 has to serve the purpose of totally internal Victorian matters as well as those which look outside Victoria. So “regardless of section 93” in subsection (1) and “but for this Act” in subsection (2) are playing a very important part in relation to the Victorian indemnity because under section 93 and related provisions of the Victorian statute the liability to an injured person is very greatly cut down.

For example, section 93, which has been described as a contingent extinguishing, revives the common law cause of action in negligence only for so-called serious cases. So that that phrase was necessary in section 104 if Victorian non-payers of charges, for example, people who were delinquent, acting unlawfully – unlike my client – if they are pursued under section 104. Because 104 does apply to transport accidents and injuries arising out of Victoria and in New South Wales, the references to section 93, which does not apply to out-of-State accidents, and the references to “this Act” in subsection (2), which does not purport of course to control the entirety of motor vehicle accident jurisprudence in New South Wales, can be seen as surplusage and they do not work the effect textually, and they cannot work the effect in any other way, of removing all the criteria and requirements or attributes of liability that the New South Wales statute has.

HAYNE J: But having made that analysis, extended as it is, is not the bottom line of the analysis that the maximum amount of exposure in this case of New South Wales, and the New South Wales insurer, is the amount that that insurer would have been liable to pay to the injured person?

MR WALKER: Yes, but that then raises the question, assuming litigation when, for example.

HAYNE J: Yes, and you say there is a series of questions that are posed by that.

MR WALKER: Yes, your Honour.

HAYNE J: To that the repost is, yes, there may be a series of questions which will receive answers and there will be a single result arrived at eventually, after perhaps many hours of innocent amusement by many members of the Bar debating those subsidiary questions, but there will be a single answer.

MR WALKER: Yes, your Honour, we accept and adopt, with respect, all of that, even that which is against us for part of our arguments. Could I return to what I said in introducing this matter of reply in relation to the Chief Justice’s question. Yes, we accept that there has to be a practical understanding and a practical reality to anything that we call inconsistency or clash before the constitutional principle that we call in aid is engaged and a Victorian statute which on its true interpretation deferred to the New South Wales position so as to deprive of any practical content their intersection would not cease to operate obviously in the sense that we have put it.

However, it is clear by those arguing against us, including of course the plaintiff – the respondent here – it is clear that they argue that they are not restricted by anything such as a limitation provision or procedural requirements, that they may come years and years and years after the event and run a phantom case in Victoria without any of the safeguards that one might suppose correctly were tradeoffs to the very monetary limits, discount rates, thresholds and ceilings that apply in the New South Wales case.

GUMMOW J: Yes, we are seized of that, Mr Walker. What do you say these words in 104(1) mean “under circumstances which . . . would have created a legal liability”? They speak without attachment to any particular legal system on the face of it.

MR WALKER: That is right.

GUMMOW J: What attaches it to New South Wales here? Is it because, as South Australia urges, you say this a tort and created, you would say, according to the lex loci delicti? Is that how you get into it?

MR WALKER: No. That happens to be so because the common law at the moment reigns in relation to motor vehicle accidents in New South Wales.

GUMMOW J: Yes.

MR WALKER: But that is happenstance in the sense that is the common law and no statute has interfered with that. It arises in the following way. There is a transport accident which is relied upon – it is alleged in the statement of claim – and there is an injury arising out of it which is also alleged. There are payments in respect of that by the Commission. They are alleged. Then it is said – and we have an assumption of that - - -

GUMMOW J: I know. That is in the statement of claim. I am trying to construe the section. I am not worried about some statement of claim.

MR WALKER: Yes, but your Honour has asked me how New South Wales arises in this case.

GUMMOW J: No, in the words of the section. What is the legal system to the creation – you look at what is the act of creation.

MR WALKER: In this case the statute, because of its extraterritorial reference – that is 104.

GUMMOW J: On the face of it, it could be Botswana in 104(1).

MR WALKER: Yes, I was going to say that, because on the face of it it does not limit other legal systems, apart from Victoria, which might be referred to in it and you then, therefore, have to look at the alleged facts in a l04 claim to find out what system of law creates the liability. It may be, as in this case, the locus delicti because of the common law choice of law rule in New South Wales where the transport accident took place and that will be the end of it, and for that matter in Victoria where the action has taken place. That is just coincidence, as it happens, though.

HAYNE J: Is it more than coincidence or is it – we find the expression “would have created” because the Act is concerned to deal with, among other cases, cases that have no ex-Victorian connection. It is therefore necessary to pose a hypothetical for the purely Victorian cases.

MR WALKER: Yes. I think I suggested that is a possibility to explain the language in-chief and it is a possibility, your Honour.

HAYNE J: Yes, but where, as here, we have a case having other than Victorian connections and there is in fact a liability that could have been sued on, do you look to that liability and is it that liability that is then dealt with in (2)?

MR WALKER: Yes, it is. That still raises the question as to whether in order to show that a liability exists in any sum that by the phantom claim process I have referred to you run a case in which the first answer by the defendant is, “But you did not sue in time” – or, I am sorry, “The injured person did not sue in time”.

HAYNE J: Yes, but that leads you to a fork in the road.

MR WALKER: Yes.

HAYNE J: One road leads to a path where there is complete identity of outcome and, yes, there may be some scope for, as you would have it, clash but in fact there is none.

MR WALKER: I am suggesting if there is practically none, there is none that is constitutionally significant.

HAYNE J: Just so. The problem goes away. The other fork of the road is there is a difference in outcome.

MR WALKER: Yes.

HAYNE J: Now, if there is a difference in outcome, then why do you not enter it through the recognition here of federal jurisdiction, et cetera?

MR WALKER: You do. Your Honours, the Chief Justice asked about whether there had ever been, as it were, a more strict or strict view of extraterritorial or legislative power than the current doctrine. Justice Hayne has drawn to attention of course the 1937 statement by Sir Owen Dixon in Broken Hill South. In our submission, there is not a lot of difference, with respect, between that and the present doctrine. No doubt that is made all the more obvious by its citation in Union Steamship v King [1988] HCA 55; (1988) 166 CLR 1 at 13.

GLEESON CJ: My memory might be playing tricks on me but I thought that one of the broader statements of the capacity for extraterritorial legislation was of Justice Gibbs in Pearce v Florenca.

MR WALKER: Certainly, one could go back to 1937 with Sir Owen Dixon and not find anything like a pale between Dublin and the Irish. Your Honours, that leaves only the matter that Justice Hayne has just most recently raised and in particular in response to my learned friend, the Solicitor for South Australia. In our submission, the way in which section 80, and, if it be necessary, section 79, operates is not to produce by a common law choice of law rule, there being no modification of any common law choice of law rule in this case, something which could reduce the legal effect of a New South Wales statute.

To put it another way, the Victorian statute used, through section 80, or, better, picked up under section 79, is not given more effect or operation by that process under the Judiciary Act in federal jurisdiction as surrogate federal law than it has of its own force and effect, except for the changes of reference that are always necessary by reason of that process. In particular, it is not given more incursive force into New South Wales or against the New South Wales legislative schemes than it would otherwise have had. It is for that reason that one is still left with the constitutional question of how far does the Victorian statute operate, it having this effect of intersection, which we characterise as a clash, with the New South Wales statute. May it please your Honours.

MR JACKSON: Your Honours, may I have leave to say one thing arising from your Honour Justice Gummow’s Botswana question to our learned friend?

GUMMOW J: Yes.

MR JACKSON: It is this, if one goes to section 104, your Honours will see that one of the conditions of operation of the section is that there be payments made by the Commission under the Act. Now, the circumstances in which payments are to be made - - -

GUMMOW J: You have to get back to the registered vehicle.

MR JACKSON: That is so, but your Honours have also have to get back to section 35 because section 35 refers to the cases where compensation is payable and where the accident occurs in Victoria or in another State or Territory. Maybe the driver of the car came from Botswana, but the accident has to happen within the Commonwealth.

GUMMOW J: What is the force of the words in subsection (2) “but for this Act”? It does refer to the New South Wales Act, so to speak, in the capping provision. How does the capping provision work?

MR JACKSON: The New South Wales capping provision?

GUMMOW J: Yes.

MR JACKSON: Your Honour, it simply works by saying what is the maximum amount which the person who was the tortfeasor, as it were, would have to pay according to the law applicable at the place where the accident happened.

GUMMOW J: What is the work of the words “but for this Act”?

MR JACKSON: Your Honour, “but for this Act” takes account of the fact that the provision refers both to claims against people in Victoria, people outside Victoria.

GLEESON CJ: The ordinary case for the operation of 104 is a purely intra-Victorian case presumably.

MR JACKSON: Yes. Section 93, of course, would otherwise place caps in relation to Victorian actions.

GUMMOW J: Looking at the opening words of subsection (1), “under circumstances which . . . would have created a legal liability”, what is the sense of saying “would have” rather than “did”?

MR JACKSON: Your Honour, “would have” covers the fact that there may no longer by the law of the place where the accident happened be a subsisting legal liability. It looks at the situation at the time the accident happened and in relation to that makes that the trigger and assuming, of
course, as it says, that there have to be payments made by the Commission, it says in relation to the payments made by the Commission, that those circumstances give rise to a right. That is supported by subsection (3).

HAYNE J: But also “would have created” takes account of the serious injury regime created by section 93, does it not?

MR JACKSON: Yes.

HAYNE J: So that section 93 limits the circumstances in which you can bring a common law action to cases of serious injury.

MR JACKSON: Yes.

HAYNE J: Section 104 goes beyond those cases, does it not, and drags in those cases, not serious injury cases, but for the Act, or “regardless of section 93, would have created a legal liability”.

MR JACKSON: Yes, that is so, your Honour.

MR WALKER: Your Honours, I wonder if I could just respond by drawing to attention this other wording, 107?

GUMMOW J: This is what we should have heard at quarter to 10. Yes, 107.

MR WALKER: Section 107, to which we have made reference extensively in our written submissions as being the means by which the, to adapt Justice Kirby’s language, federal offence could have been avoided. Under section 107 you will see in paragraph (1)(b) the following language appears:

a person . . . who appears to be liable or who it appears would have been liable, but for section 93 –

so there has been a more elaborate spelling out of matters –

to pay damages –

et cetera. You will see that the word “and” appears at paragraph (b) and paragraph (c) then talks about actual proceedings, a state of affairs of actual proceedings, an actual state of affairs, not hypothetical, and it all results in actually taking over the actual conduct of actual proceedings. This is not a statute in which the conditional mood should be given too much weight in interpretation.

GLEESON CJ: Does 104 produce the result that if you get knocked down by an unregistered motor vehicle in Victoria the Commission can seek indemnity from the owner or the driver of the vehicle?

MR WALKER: Yes.

GLEESON CJ: Thank you. We will reserve our decision in this matter and we will adjourn until 9.30 tomorrow morning.

AT 4.13 PM THE MATTER WAS ADJOURNED