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Australian Government Solicitor

 

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Legal Briefing

Number 47

(29 June 1999)

APPLICATION OF STATE LAWS TO THE COMMONWEALTH

Several recent High Court decisions have dealt with the issue of the application of state and territory laws to the Commonwealth or Commonwealth authorities. The recent decisions which are analysed in this Briefing are:

  • Commonwealth v WA (1999) 160 ALR 638
  • Telstra Corporation v Worthing; Attorney-General v Telstra Corporation (1999) 161 ALR 489
  • Bass v Permanent Trustee Co Ltd (1999) 161 ALR 399
  • Northern Territory v GPAO (1999) 161 ALR 318

(Case notes on the first three decisions are also contained in Litigation Notes No.3, and, hence, only a shortened summary of those cases is given here.)

The cases provide little clarification of the Henderson decision concerning the extent of Commonwealth immunity from state law (Re Residential Tenancies Tribunal of New South Wales; Ex parte Defence Housing Authority (1997) 190 CLR 410) [see Legal Briefing No 36]. That, therefore, remains a difficult area. However, what the relevant cases do highlight is the fact that often the issue of whether state or territory law applies to the Commonwealth, its servants and agencies can be determined as a matter of statutory interpretation or on the ground of inconsistency without resort to issues of immunity.
If at all possible, the courts will prefer to do this. The cases also point to a reluctance to give a broad operation to Commonwealth immunity from state laws.

Commonwealth v WA

This case concerned the application of the Mining Act 1978 (WA) to land at Lancelin in Western Australia that had been declared as a defence practice area under the Defence Force Regulations (Cth).

The Commonwealth applied to the High Court for declarations that Mining Wardens appointed under the Mining Act do not have jurisdiction to consider applications for mining tenements over land within the defence practice area, that the Mining Act is invalid to the extent that it purports to apply to the land within the defence practice area and that the Mining Act does not bind the Commonwealth.

The High Court based its decision on the construction of the Mining Act. Apart from the question of inconsistency, most of the justices did not find it necessary to deal with the constitutional issues. The Court held that:

  • the Mining Act does not, as a matter of construction, apply to freehold or leasehold land vested in the Commonwealth and therefore does not apply to land of this kind within the defence practice area
  • neither the Commonwealth Places (Application of Laws) Act 1970 (Cth) nor s.64 of the Judiciary Act 1903 (Cth) applies the Mining Act to that land
  • accordingly, no question of inconsistency or immunity or acquisition of property arises in relation to the application of the Mining Act to the freehold and leasehold land vested in the Commonwealth.

The parties agreed that the Mining Act applied, as a matter of construction, to land within the defence practice area that was not owned or leased by the Commonwealth (ie. to the State Crown land). It was therefore necessary for the Court to consider the question of inconsistency in relation to this land.

The Court held (by majority) that, in relation to the land within the defence practice area that was not vested in the Commonwealth, there is no 'covering the field' inconsistency between the Defence Force Regulations and the Mining Act such as would preclude the application of the Mining Act at all. They contemplated that 'operational inconsistency' could arise in some circumstances - eg. if a person were authorised to enter the land for exploration purposes at a time when a defence practice operation had been authorised.

Kirby and Callinan JJ, dissenting, held that there was inconsistency between the Mining Act and the Defence Force Regulations. Both judges said the restrictions on use of the Crown land amounted to an acquisition of property within the meaning of s.51(31) of the Constitution. Kirby J said 'just terms' were provided. Callinan J said 'just terms' had not been provided.

Telstra v Worthing; Attorney-General v Telstra

These appeals arose out of an application for workers' compensation made by an employee of Telstra (formerly Telecom) in respect of alleged injuries to his back sustained in 1986, 1988 and 1993. The employee made the application under the Workers Compensation Act 1987 (NSW) ('the NSW Act') rather than under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ('the Commonwealth Act') which contains a workers' compensation scheme for employees of the Commonwealth and of certain Commonwealth- owned corporations, including Telstra.

The Compensation Court and, on appeal, the NSW Court of Appeal found that the NSW Act validly applied to give jurisdiction to the Compensation Court to determine the application for workers' compensation. The result of the Court of Appeal decision (if it had stood) would have been that, in respect of its employees, the Commonwealth would have been potentially subject to the workers' compensation schemes of each of the states and territories as well as its own scheme, including possible application to the Commonwealth of the provisions of the state and territory schemes in relation to licensing and insurance of employers. A Commonwealth employee could have chosen whether to make their claim for workers' compensation under the Commonwealth Act or under an otherwise applicable state or territory workers' compensation statute.

The High Court allowed the appeals. A Full Court of 7 Justices of the High Court (Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ) unanimously held that the Compensation Court did not have jurisdiction to determine the workers' compensation application.

In relation to the 1986 and 1988 injuries (which were sustained when the employer was Telecom) the High Court held that the NSW Act (and the 1926 predecessor Act which governed the 1986 injury) did not as a matter of construction apply to the Commonwealth. At that time, Telecom was not subject to any liability to which the Commonwealth was not subject (Telecommunications Act 1975 (Cth), s.21(3)) and the NSW Act therefore did not apply to render Telstra liable in relation the 1986 and 1988 injuries.

In relation to the 1993 injury (when Telstra was the employer and the NSW Act would otherwise have applied to it, as it fell within the ordinary definition of an employer) the High Court held that the NSW Act was inconsistent with the Commonwealth Act to the extent that it provided for the determination of a workers' compensation application of an employee to whom the Commonwealth Act applied.

Bass v Permanent Trustee Co Ltd

This appeal arose out of the NSW Home Fund low cost housing loan scheme. The appellants took out loans under the scheme. They claimed that the respondents (the State of NSW and others, such as building societies, who participated in the scheme) breached provisions in Parts IVA and V of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) in the course of effecting transactions under the scheme.

The Full Federal Court considered a number of preliminary questions. The Full Court decided that the State was not bound by the relevant provisions of the Trade Practices Act, and that the other respondents were not bound by the Trade Practices Act to the extent that they were acting at the direction or request of the State.

The appellants appealed to the High Court from the Full Federal Court's decision. All 7 Justices of the High Court held that the proceedings under the Trade Practices Act against the State of NSW could not be maintained. This was because the relevant provisions of the Trade Practices Act were not to be construed as applying to a state.

The High Court also rejected arguments that the relevant provisions of the Trade Practices Act were applied to the State of NSW by s.64 of the Judiciary Act 1903 (Cth) or s.5(2) of the Crown Proceedings Act 1988 (NSW) (provisions which seek to ensure that, in litigation to which the State is a party, the rights of the parties are as nearly as possible the same as in a suit between subject and subject).

The Court avoided deciding an issue considered by the Full Federal Court, namely the extent to which laws which do not apply to the Commonwealth or a state do not apply to persons who contract with or act as agents for the Commonwealth or a state.

NT v GPAO

This case concerned the application of s.97(3) of the Community Welfare Act 1983 (NT) to a subpoena issued for purposes of proceedings under the Family Law Act 1975 (Cth). The High Court held (Kirby J dissenting) that s.97(3) was not rendered inoperative by the provisions of the Family Law Act (dealing with the best interests of a child, introduced in their current form in 1995) or the Evidence Act 1995, and was binding on the Family Court by reason of the operation of s.79 of the Judiciary Act 1903.

Section 97(3) of the Community Welfare Act prevented a person from producing in court a document that had come into their earlier possession in performance of duties or functions under the Act. The Court took the view that the Evidence Act did not deal with obligations of a party to whom a subpoena is addressed. No conflict therefore arose with the NT law. In relation to the Family Law Act, the Court (Kirby J dissenting) took the view that the 'best interests of the child' principle in s.65E of the Family Law Act did not operate so as to override or prevent the operation of s.97(3) of the NT Act.

Section 79 of the Judiciary Act therefore applied the Territory law to the proceedings of the Family Court, which was held 5:2 to be exercising federal rather than territory jurisdiction. The issue of jurisdiction will not be further considered in this Briefing.

 

The Legal Issues

The four cases raise issues concerning construction of statutes to determine their scope of operation in relation to governments or government bodies. All the cases also raise issues of inconsistency. This issue will be discussed first.

Inconsistency

Where as a matter of statutory construction a state law is held to apply to the Commonwealth, or an authority or servant of the Commonwealth, the issue arises whether s.109 of the Constitution has the effect that a law of the Commonwealth prevails over the state law. As the Telstra case illustrates, where a Commonwealth law directly regulates the same issue as a state law, it may be easier to establish inconsistency. In that case the Court pointed to two situations where inconsistency might arise:

  1. where a state law would alter, impair or detract from the operation of a law of the Commonwealth
  2. where it appears from the terms, nature or subject matter of a federal law that it was intended as a complete statement of the law governing a particular matter (covering the field).

The Court emphasised that situation (a) might operate to invalidate the operation of a state law regardless of whether situation (b) also applied. By providing an alternative right of compensation to that available under Commonwealth law, the state law altered or impaired the rights provided for under federal law, and it was therefore inconsistent with that law.

The mistake of the Court below was that, having decided the state law did qualify and impair the Commonwealth law, it went on to consider whether the Commonwealth law covered the field. The second issue did not arise once the first issue was answered the way it was.

'Operational' Inconsistency

By contrast, where the Commonwealth law does not comprehensively cover a particular field, and it confers a power on the executive to regulate an activity, the Court may conclude that there is only potential inconsistency - only when the executive takes action under its statutory powers of control or regulation will the operation of s.109 be enlivened. This is known as 'operational' inconsistency.

Thus, in Commonwealth v WA, the Court said by majority that there was no inconsistency between a law allowing the establishment of defence practice areas, and providing power to preclude the presence of unauthorised persons in such areas during notified periods, and the State Mining Act. The State law may give certain rights of access to land for purposes of mineral exploration, including to defence practice areas, but unless and until a permit was issued under the State law authorising access and a notice was given restricting access during a defence practice period no actual inconsistency would arise.

This conclusion was, no doubt, influenced by a view that the relevant Defence Force Regulations did not purport to immunise defence practice areas from all non-defence access at all times. Rather, the regulations created a system to control access by conferring powers on relevant persons to notify practice periods, and in those periods, to exclude persons. Once that system of control was exercised, there may well be inconsistency. The fact that a state law might confer a general right of access to the area in question did not impair the ability to exercise the powers under the Defence Force Regulations to restrict access when and if that was necessary.

Repugnancy

This reluctance by the Courts to find actual inconsistency is also evident in NT v GPAO. This involved a conflict between a Northern Territory law and two Commonwealth Acts, the Family Law Act and the Evidence Act. The issue was not s.109 inconsistency as such but an issue of repugnancy.

What was involved was a conflict between two Commonwealth laws and a territory law enacted under powers conferred by a Commonwealth law. Were the provisions inserted in the Family Law Act in 1995 and the Evidence Act repugnant to the earlier 1978 Commonwealth Act conferring certain legislative powers on the Northern Territory Legislative Assembly, such that the law making power so conferred had to be qualified by reference to the later laws?

The Court held that the Territory law could operate concurrently with the Family Law and Evidence Acts. In relation to the Evidence Act, six judges concluded that it did not enter the same field as that dealt with by the relevant Territory law. In relation to the Family Law Act, the Court (Kirby J dissenting) concluded there was no relevant repugnancy.

Relevant to this conclusion was the fact that the Family Law Act did not deal comprehensively with the circumstances in which a person could be compelled to produce specific documents. There was, thus, no 'impairment' by the Territory law of provisions in the Commonwealth law. In particular, the restrictions on production of documents did not prevent the Family Court applying the 'best interests' of the child principle in deciding what parenting order to make.

That principle did not apply to alter the rules governing the admissibility of evidence. The Family Law Act, for instance, also contemplated that a 'reasonable excuse' might exist for not producing a document and this indicated that it did not make comprehensive provision covering the broader field dealing with evidence admissible in cases concerning children. In these circumstances, there was no impediment to the Territory law restricting the use of certain documents from applying to the Family Court's exercise of federal jurisdiction, the law being picked up for this purpose by s.79 of the Judiciary Act 1903.

 

Statutory Construction

The traditional approach in relation to determining the application of state/territory statutes to the Commonwealth has been to ask whether the statute in question is intended to bind the Crown in right of the Commonwealth. Bropho v Western Australia (1990) 171 CLR 1 confirmed that there is a presumption against a statute binding the Crown, although it is not inflexible and depends ultimately on a determination of legislative intent. This same principle applies to the application of statutes to the Crown in right of the other polities in the federation: Jacobsen v Rogers (1995) 182 CLR 572.

The Old Approach

In Bass, six judges in a joint judgment referred to the fact that the executive government activities often reach into aspects of commercial, industrial and developmental endeavour. They went on to say that these considerations and the nature of the federal structure:

'make expressions such as "shield of the Crown", "binding the Crown" and, more particularly, "binding the Crown in right of the Commonwealth" and "binding the Crown in right of the States" inappropriate and potentially misleading when the issue is whether the legislation of one polity in the federation applies to another.' (para 17; 161 ALR at 407)

The New Approach

The judges continued:

'Where the legislative provisions in question are concerned with the regulation of the conduct of persons or individuals, it will often be more appropriate to ask whether it was intended that they should regulate the conduct of the members, servants and agents of the executive government of the polity concerned, rather than whether they bind the Crown in one or other of its capacities. In other legislative contexts, slightly different questions may emerge. Thus, for example, where legislation regulates the use of land or other property, it will usually be more pertinent to ask whether the legislation was intended to apply to land or property owned by or on behalf of the polity in question.' (para 18; 161 ALR at 407)

These same propositions had been stated earlier in the joint judgment of Gleeson CJ and Gaudron J in Commonwealth v Western Australia as presumptions which should normally apply in the construction of legislation (paras 33-36; 160 ALR at 647-648). In that case the Court considered the second presumption, referred to above, namely that 'a statute does not divest the Crown of its property, rights, interests or prerogatives unless that is clearly stated or necessarily intended' (para 34; 160 ALR at 648).

The Mining Act contained no statement about whether it was intended to bind the Crown. However, it dealt with mining on certain Crown land as well as private land. The freehold and leasehold land held by the Commonwealth did not fall within the relevant definition of Crown land. That definition also excluded state Crown land set aside for state public purposes from the scope of the Mining Act. There was, however, no similar exception for land set aside for Commonwealth public purposes. This fact was important in the Court's reasoning. Gleeson CJ and Gaudron J said:

'... if it has been recognised by the legislature that it would be inappropriate for legislation to apply to government property or personnel in the same way as it applies to individuals, it may be inferred from its silence with respect to other polities in the federation that it was not intended that it should apply to their property or personnel. That is because, if the legislature has recognised that a statute will or may have a different impact on government property or personnel, it ought not be assumed that it intended to subject the property and personnel of the other polities in the federation to a regime which it recognised was inappropriate in its own case.' (para 40; 160 ALR at 649)

Differential Treatment

The fact that the State had established a special regime for state Crown land was legislative recognition that it was not appropriate for land owned by the Commonwealth to be dealt with in the same way as private land. 'It is not to be assumed that the legislature considered that land acquired by the Commonwealth for a public purpose was to be subject to a regime considered inappropriate for land owned or held by the State of Western Australia' (para 43; 160 ALR at 650). Gummow J pointed to another consequence which supported the conclusion that the Mining Act did not apply to Commonwealth land:

'If the submissions for the State be accepted, land or interests therein which are vested in the Commonwealth would fall within Div 3 as "private land". The differential treatment then apparent between State and Commonwealth public purposes would raise a serious constitutional issue. It should be accepted that a State may not legislate in a way that discriminates against the Commonwealth by placing upon it a special burden or disability. The phrase "public purposes" of the Commonwealth expresses "a large and general idea". This comprehends the defence purposes in pursuance of which the Commonwealth acquired the Melbourne Locations and took the Special Lease.

If the construction advanced by the State as to the scope of Div 3 of Pt III of the Mining Act were correct, the Part would operate by reference to a distinction which some overriding law, namely the Constitution, decrees to be impermissible. A construction which avoids that result is to be preferred.' (paras 122-3; 160 ALR at 668-669).

A similar reluctance to construe a statue so it has a differential operation on the enacting polity and other components of the Australian federal polity is also evident in the Bass case. The Court was required to determine whether the State was a 'person' in certain sections. The fact that the Commonwealth was expressly treated as a 'corporation' for certain limited purposes led the Court to conclude that it could not be bound by references to 'person'. Given that, the Court concluded that Parliament cannot have intended that a State was to be 'person' and bound by provisions which did not bind the Commonwealth.

Criminal Laws

The Telstra case confirms that where criminal provisions are involved 'It will require the clearest indication of a legislative purpose to demonstrate that...penal provisions attach' to the Commonwealth or States (para 22; 161 ALR at 496).

Judiciary Act s.64

Section 64 of the Judiciary Act 1903 provides that in a suit to which the Commonwealth or a State is a party, 'the rights of the parties shall as nearly as possible be the same...as in a suit between subject and subject'. Although the operation of s.64 remains a matter of some uncertainty, in Bass the Court made clear that it cannot operate so as to defeat a clear statutory intention contained in a later Commonwealth law. Thus, once it was determined that the provisions of the Trade Practices Act in question did not bind the State, those provisions being provisions of a later Commonwealth law impliedly repealed s.64. Thus, s.64 did not operate to apply the provisions to New South Wales.

In Commonwealth v Western Australia, consideration was also given to s.64. For various reasons, the Court in that case did not consider s.64 could operate to subject the Commonwealth to the State Mining Act and to proceedings before the State Mining Wardens. While Commonwealth v Evans Deakin Industries Ltd (1986) 161 CLR 254 has not been overruled, the Bass and Western Australia decisions indicate that various principles of statutory interpretation may limit the application of s.64.

 

Immunity

The approach to statutory construction, and in particular, the two presumptions outlined earlier, are attempts by the courts to avoid the difficult area of immunities. The presumptions are valuable interpretative tools, but will not always provide an answer that avoids immunity issues. For instance, increasingly statutes are expressed to apply to the Crown in all its capacities. Where this is the case, there may be little scope to apply the presumptions. The fact that a statutory body may enjoy the shield of the Crown for some purposes connected with application of a statute, does not necessarily mean that if the statute deals expressly with the 'Crown', that that expression will be taken to extend to statutory bodies. In Henderson, McHugh and Gummow JJ said that the Defence Housing Authority as a creature of statute could not enjoy immunities of the Crown that arose in relation to the exercise of executive or prerogative powers.

This position now appears to have some support from other members of the Court in the Telstra case. In that case, all seven members said that the Australian Telecommunications Commission (ATC) 'whose powers and duties were founded in statute, did not exercise the executive power of the Commonwealth' (para 15; 161 ALR at 495). This led the court to say that it may not be 'the Crown' in s.6 of the NSW Act which purported to bind the Crown in all its capacities. Rather, ATC as an incorporated body fell clearly within the definition of 'employer'. If the Commonwealth itself was the relevant employer it may have been able to argue that, even though the Act bound the Crown, because the Act contained special provision for NSW government employers, similar government employers in other bodies politic were not to be classed as 'employers' for purposes of the Act.

The treatment of this issue in Telstra suggests that once a state statute is found to apply to the Commonwealth Crown and its emanations, this may not be sufficient to extend to a statutory body created by the Commonwealth the same rights as the Commonwealth itself might have to support an argument that particular provisions of the state statute do not apply to it.

There is certainly no sympathy evident in Telstra for excluding state laws from applying to Commonwealth statutory bodies, if reliance cannot be placed on inconsistency.

ISSN 1448-4803 (Print)
ISSN 2204-6283 (Online)

The material in this briefing is provided for general information only and should not be relied upon for the purpose of a particular matter. Please contact AGS before any action or decision is taken on the basis of any of the material in this briefing.

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