Van Stokkum & Ors v The Finance Brokers Supervisory Board [2005] HCATrans 678 (5 September 2005)

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Van Stokkum & Ors v The Finance Brokers Supervisory Board [2005] HCATrans 678 (5 September 2005)

Last Updated: 6 September 2005

[2005] HCATrans 678

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P40 of 2005

B e t w e e n -

BERNARDUS HUBERTUS VAN STOKKUM (AND THE PEOPLE NAMED IN SCHEDULE A)

First Applicants

JOHN HENRY CARTLEDGE (AND THE PEOPLE NAMED IN SCHEDULE B)

Second Applicants

GEOFFREY HAROLD PALMER (AND THE PEOPLE NAMED IN SCHEDULE C)

Third Applicants

JOHN ROBERT LYNN (AND THE PEOPLE NAMED IN SCHEDULE D)

Fourth Applicants

MARTIN LEACH (AND THE PEOPLE NAMED IN SCHEDULE E)

Fifth Applicants

ARNOLD DOUGLAS FROST (AND THE PEOPLE NAMED IN SCHEDULE F)

Sixth Applicants

NEVILLE THOMAS HORN (AND THE PEOPLE NAMED IN SCHEDULE G)

Seventh Applicants

BRIAN PATRICK DEVERALL (AND THE PEOPLE NAMED IN SCHEDULE H)

Eighth Applicants

DONALD GEORGE FORBES (AND THE PEOPLE NAMED IN SCHEDULE I)

Ninth Applicants

ADELE EDNA McNALLY (AND THE PEOPLE NAMED IN SCHEDULE J)

Tenth Applicants

SECILE MILLIE BOLTON (AND THE PEOPLE NAMED IN SCHEDULE K)

Eleventh Applicants

CLARENCE ROBERT BENNIER (AND THE PEOPLE NAMED IN SCHEDULE L)

Twelfth Applicants

BRIAN HANLEY (AND THE PEOPLE NAMED IN SCHEDULE M)

Thirteenth Applicants

MALCOLM CARLYLE CROSBY (AND THE PEOPLE NAMED IN SCHEDULE N)

Fourteenth Applicants

and

THE FINANCE BROKERS SUPERVISORY BOARD

Respondent

Application for removal

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

FROM PERTH BY VIDEO LINK TO CANBERRA

ON MONDAY, 5 SEPTEMBER 2005, AT 2.35 PM

Copyright in the High Court of Australia

__________________

MR C.L. ZELESTIS, QC: May it please your Honour, with my learned friend, MR D.H. SOLOMON, I appear for the applicants. (instructed by Solomon Brothers)

MR R.J. MEADOWS, QC, Solicitor-General for the State of Western Australia: May it please the Court I appear with MS J.C. PRITCHARD appear for the respondent. (instructed by State Solicitor’s Office)

HIS HONOUR: Yes, Mr Zelestis.

MR ZELESTIS: Your Honour, with respect to the threshold question arising under the Constitution our submission, simply put, is that the Board performs a traditional government function, that is the licensing and regulation of an activity. No private corporation or private individuals are involved in that other than, of course, persons appointed to the Board by the Governor.

In our respectful submission, applying the approach in Crouch at the page we have given your Honour in the submissions it can readily be concluded that for the present purposes the Board is the State. Issues of the kind raised in the respondent’s submissions at paragraph 11 in our respectful submission are less significant when you have, as you do here, a traditional government function being performed by a board constituted in the usual way as a statutory corporation with members appointed by the Governor.

In our respectful submission, the wider inquiry that becomes necessary when there are other intrusions, such as the role of a private corporation or something similar are not apposite here.

HIS HONOUR: But reliance is placed on 75(iv), is it not:

between a State and a resident of another State - - -

MR ZELESTIS: Yes. We have 19 of the several thousand plaintiff applicants who reside interstate from Western Australia.

HIS HONOUR: I know, but you have a number who reside in Western Australia, do you not?

MR ZELESTIS: Yes, we do.

HIS HONOUR: That is a problem, is it not?

MR ZELESTIS: It is to the extent that only a portion of the issues can be removed but that is sufficient to raise, in a way which would end up being with a binding decision, the critical issues.

HIS HONOUR: No, what is the nature of the joinder of these – are they plaintiffs?

MR ZELESTIS: Yes, they are plaintiffs but they each have their own causes of action. There are some where there might be a husband and wife who have a similar or a related or a joint cause of action but otherwise they are people whose claims give rise to common questions.

HIS HONOUR: Is there any representative plaintiff? How are so many managed to be joined as plaintiffs?

MR ZELESTIS: By leave of the Supreme Court of Western Australia. There is no representative order.

HIS HONOUR: No representative order?

MR ZELESTIS: No. It is one proceeding with a very large number of plaintiffs.

HIS HONOUR: A very large number of plaintiffs, yes.

MR ZELESTIS: It has its difficulties but they are beside the point with respect, in our respectful submission, at this stage, given that there are 19 who fulfil the constitutional requirement.

HIS HONOUR: Yes, I see, thank you.

MR ZELESTIS: Moving on to the reasons for removal, your Honour will recall the leave that was granted in Bell recently in the August video link-up with Perth.

HIS HONOUR: Yes, that is presently set down for Monday, 10 October in Perth.

MR ZELESTIS: Yes, 24 October, I think.

HIS HONOUR: Monday, 24 October, yes.

MR ZELESTIS: Yes. In our respectful submission, your Honour, the removal issue, as it has been described in the papers here, would assist in the resolution of the questions raised by Bell in two ways. Really, there are two aspects to the Bell question, if I can put it that way, which would be assisted. Firstly, in Bell there is a question of the jurisprudential basis and rationale for the doctrine of vicarious liability and consequentially there is the question of the operation of that concept in the context of the statutory immunity provisions, one of which is directly involved in Bell, which confer immunity on individuals but do not refer expressly to the employer or principal of the individuals.

In Bell, of course, the party sued is the State. There was an official whose conduct was in question. Now, what is added? The dimensions that are added in the present case, in our respectful submission, are that section 87 of the Finance Brokers Control Act refers both to acts and omissions whereas section 124 of the statute involved in the Bell Case does not refer expressly to omissions. There may be a question of construction about that statute but at least it is clear that it does not refer expressly to omissions.

So the question of omissions would be directly raised in the present matter and, secondly, the present matter raises a question of direct liability of the employer or principal, the Board. In many ways, in our respectful submission, the question of the jurisprudential basis for vicarious liability is best resolved in a context where omissions are considered because there is something to be said for the proposition that that raises more sharply the precise nature of the master or principal’s liability, whether it is liability for a liability of the servant or agent or whether it is liability for the acts or omissions.

In our respectful submission, the jurisprudence is thrown into sharper focus. When one examines omissions it raises more acutely the question whether the vicarious liability depends upon a duty owed by the principal or the master. The case, of course, that this application relates to is only at the pleading stage and usually that will represent a fatal impediment to an application of this kind.

In our submission, in this context, it adds to the simplicity because it reduces the scope of factual controversy without reducing the ultimate force and utility of the decision that is made. The case would be decided upon the basis of the pleaded acts and omissions and they would be sufficient to raise the questions of legal principle and the relationship between the legal principle and the proper construction of the statutory provisions.

Finally, in our submission, from the point of view of case management, it is unlikely that the removal would delay the Supreme Court action. Indeed, it would enhance the earlier resolution of that by bringing about a definitive resolution of this critical issue and if the issue is resolved in favour of the applicant it would avoid the need for investigation of other factual questions such as the good faith qualification to the immunity of the individuals who can claim the benefit from section 87.

So, recognising that there is a certain novelty about this, recognising that there are difficulties associated with the fact that the Court of Appeal has not yet opined and that this is based upon pleadings, our submissions is that it does add a very valuable dimension to the resolution of the question in Bell which, it has to be said, has been around for some years.

HIS HONOUR: Yes.

MR ZELESTIS: As your Honour will recall, Justice Mason back in 1995 foreshadowed this as a question worthy of special leave at some point. In our submission, it would be inappropriate if Bell was unduly narrowed because of the narrowness of the factual background. Those are our submissions, unless I can help your Honour in any way.

HIS HONOUR: Yes, thank you, Mr Zelestis. Yes, Mr Solicitor.

MR MEADOWS: May it please the Court. One thing that has to be appreciated at the outset is that all that could be removed is the issue which is on appeal to the Court of Appeal, that is, whether there is an arguable case that the immunity provided by section 87 of the Finance Brokers Control Act and whether the pleading which had been struck out in paragraphs 269 and 270 should be reinstated or not.

HIS HONOUR: Yes. What is the numbering system in the Supreme Court in Perth, Mr Solicitor? FUL165 – that means Full Court, does it?

MR MEADOWS: It does, your Honour, but of course that has been replaced by a Court of Appeal. I am not sure what the designation is these days.

HIS HONOUR: Yes. When was the order made by Master Sanderson? It was some time ago, was it not, 2003?

MR MEADOWS: The precise date is 30 October 2003.

HIS HONOUR: And there has been a pending legal application since then, since a few weeks after that?

MR MEADOWS: Yes, there has, your Honour.

HIS HONOUR: And it is that for which removal is sought, that pending leave application to the Full – well now the Court of Appeal?

MR MEADOWS: Well, an aspect of it, not the whole of the appeal, the remainder of the - - -

HIS HONOUR: Yes, paragraphs 269 and 270 of the pleading.

MR MEADOWS: Of the defence.

HIS HONOUR: Yes.

MR MEADOWS: But that would be the only issue that could be removed.

HIS HONOUR: Yes, thank you.

MR MEADOWS: And I have no need for me to take your Honour to the authorities dealing with the reluctance of the Court to entertain appeals against interlocutory decisions and particularly ones which will not be determinative of the proceedings. So even if the substantive issue raised by paragraphs 269 and 270 were to be resolved, it still would not be determinative of the proceedings.

So, in other words, even if the Court were to deal with the issue which my learned friend would like the Court to deal with, it would not be determinative and, in our submission, it would not materially shorten the case, whichever way it was resolved as the plaintiffs would still have to prove their case, whether it be the case that is brought in negligence where, amongst other things, the issues of duty of care, standard of care, breach, causation, contributory negligence, voluntary assumption of risk and loss and damage would still be at large, let alone the claim which is based on misfeasance in public office. In our appreciation of the way in which the case would proceed, there would be little difference in the evidence that would have to be adduced at the trial.

Another important factor is that, in our submission, nothing new in the way of argument will be presented in relation to the issues in Bell by allowing this matter to be removed. As my learned friend has conceded, the main thrust of the application is a desire to ventilate additional issues. This would obviously protract the hearing of the appeal and, if anything, muddy the waters in terms of the issues in the Bell matter.

My learned friend has briefly addressed your Honour on the issue of whether this matter is in federal jurisdiction and I do not propose to go to that in any great detail but simply to - - -

HIS HONOUR: There is quite a bit on it in your written submissions which I have looked at.

MR MEADOWS: Yes, I do not want to add anything to that. The only thing I would alert the Court to is that whatever your Honour might decide in that connection this morning, that could still remain an issue if the matter was to be removed and heard by the Full Court.

HIS HONOUR: Indeed.

MR MEADOWS: And that would raise the additional complication that if the matter is in federal jurisdiction of the possible application of section 64 of the Judiciary Act in these proceedings in a way which would exclude the
operation of the immunity provision, similar to what happened in the British American Tobacco Case and in that connection, obviously that would be quite a significant issue for argument if the matter were to be removed and if the outcome was to be that section 64 did apply and section 87 of the Finance Brokers Control Act did not have any application, the very questions which my learned friend would be seeking to ventilate would not be determined.

If I could just say by way of addition that the trial of this action is many months away and will obviously take a considerable period of time and the determination of the immunity issue is not one which would occupy a great deal of the hearing time at the trial. Obviously as well, the hearing will not take place until after the appeal to the Court of Appeal has been determined. By that time there will be an adjudication on whether or not the defendant’s pleading should stand in relation to this issue and certainly by the time the trial comes around one would expect a decision from this Court in the Bell matter which could well illuminate the way in which that issue could be resolved at trial if not within the Court of Appeal.

So our submission is that the removal of the immunity issue will not in any way expedite the overall outcome of the proceedings to any appreciable degree. Our reason for opposing this application is that we can see no material advantage in the matter being removed and, indeed, we can see many disadvantages.

One point that my learned friend made was that in relation to the issue of direct liability, the point is that he acknowledged that there could be facts in contention which could have a bearing on the way in which the section, that is section 87, should be construed in the case and effectively, my learned friend is asking you to remove the matter so that the matter can proceed, not against a background of facts that have been found by a Court, but rather in a hypothetical environment.

HIS HONOUR: Yes.

MR MEADOWS: May it please the Court.

HIS HONOUR: Thank you. Yes, Mr Zelestis.

MR ZELESTIS: There is only one point I wish to add, your Honour, and that is that we would accept the application of the immunity provision in the federal jurisdiction as a condition of any removal order. We would not seek to agitate to the contrary. We are happy to accept that position. May it please, your Honour.

HIS HONOUR: Yes, thank you. I will take a short adjournment.

AT 2.53 PM SHORT ADJOURNMENT

UPON RESUMING AT 2.57 PM:

HIS HONOUR: By application filed 24 August 2005, the applicants, who are some but by no means all of the plaintiffs in proceedings in the Supreme Court of Western Australia, seek an order under section 40(2)(b) of the Judiciary Act 1903 (Cth). That provision states that this Court may, upon application of a party to a cause pending in a court of a State, which involves the exercise of federal jurisdiction by that court, order:

that the cause or a part of the cause be removed into the High Court on such terms as the Court thinks fit.

The order sought is that there be removed into this Court that part of the application for leave to appeal by the respondent in the action, and to appeal, in proceedings FUL165 of 2003, which is brought from the decision of Master Sanderson, delivered 30 October 2003, to strike out paragraphs 269 and 270 of the respondent’s defence in the pending action. Removal is sought on terms including a provision that the removed issue be heard by this Court at the same time as the appeal in the case of Bell v State of Western Australia. That case is presently set down for hearing on Monday, 24 October 2005 in Perth.

The first question that arises is whether the requirement of section 40(2) that the Supreme Court of Western Australia be exercising federal jurisdiction is made out. There is a dispute as to whether that is so. What follows is said on the assumption in favour of the applicants for removal that the Supreme Court is invested with federal jurisdiction by a combination of section 75(iv), section 77(iii) of the Constitution and section 39 of the Judiciary Act. I express no view as to the correctness of that assumption.

The power conferred by section 40 should, however, not be exercised, and the application should be dismissed with costs. There are three related grounds for reaching that conclusion. The first is that the matter is still at the pleading stage. I have referred to the decision of Master Sanderson as being one to strike out paragraphs 269 and 270 of the defence. Secondly, it is not clear that any decision of this Court on the removed issue would be determinative of the action at trial in the Supreme Court of Western Australia and, thirdly, the Court presently does not have the assistance of the views of the Court of Appeal of Western Australia as to the substantive issues that would be argued. I should add in that regard that as the counsel for the respondent pointed out, the decision in Bell will be given well in advance of any trial and no doubt will be of assistance in the formulation of arguments to be put at trial.

However, as indicated, it is sufficient now to say that the application for removal, filed 24 August 2005, is dismissed with costs. Is there anything else?

MR ZELESTIS: No, your Honour.

MR MEADOWS: No, your Honour.

HIS HONOUR: Thank you. I will now adjourn.

AT 3.03 PM THE MATTER WAS CONCLUDED