Peter Spencer and Commonwealth of Australia – High Court of Australia

[2010] HCATrans 156


Office of the Registry

SydneyNo S87 of 2009

B e t w e e n –















Copyright in the High Court of Australia

MR P.E. KING:   If the Court pleases, I appear with MR D.H. GODWIN for the applicant.  (instructed by McKells)

MR S.J. GAGELER, SC, Solicitor‑General of the Commonwealth of Australia):   If the Court pleases, I appear with MR A. ROBERTSON, SC and MR C.L. LENEHAN for the respondent.  (instructed by Australian Government Solicitor)

MR R.J. MEADOWS, QC, Solicitor‑General for the State of Western Australia:   May it please the Court, I appear with my learned friend, MR R.M. MITCHELL, SC, on behalf of the Attorney‑General for Western Australia intervening.  (instructed by State Solicitor’s Office)

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

MR M.G. HINTON, QC, Solicitor‑General for the State of South Australia:   May it please the Court, I appear with my learned friend, MR S.A. McDONALD, on the instructions of the Attorney‑General for South Australia intervening.  (instructed by Crown Solicitor South Australia)

MR J.K. KIRK:   May it please the Court, I appear for the Attorney‑General of New South Wales intervening.  (instructed by Crown Solicitor (NSW))

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR L.T. LIVINGSTON, seeking leave to intervene, appearing for the New South Wales Farmers’ Association, moving on the summons supported by the affidavit of Justin Spence Crosby sworn on 26 May 2010.  (instructed by NSW Farmers’ Association)

FRENCH CJ:   Mr Walker, in relation to your application it would assist us if you could succinctly outline orally the points you would seek to make and how they supplement the applicant’s submissions.

MR WALKER:   The first way in which we seek to supplement is, in particular, to address the questions raised in the Commonwealth contentions, Mr King having indicated that he would be content for us to deal with those.  That is literally, as it were, a supplement by doing that which Mr King would otherwise would leave to us were we given leave.

GUMMOW J:   Sorry, could you say that again, Mr Walker.

MR WALKER:   Mr King has indicated that he would prefer that we dealt with the Commonwealth contention points which we have collected at the end of our written submissions.  The main point, however, that we wish to present were we granted leave, concerns the importance of the so‑called carbon sequestration rights and the question raised, as we see it, by the pleading, among other questions but this is the question that we seek leave to intervene on, whether legislation that has the effect of destroying the possibility of creating those rights in New South Wales by way of what is a profit à prendre, whether that amounts to an acquisition in circumstances where there is a corresponding measurable and valuable benefit bestowed on the Commonwealth by way of its avoided expense in meeting its land clearing reduction carbon credit under the Kyoto Protocol. 

So the points we wish to develop, if granted leave to intervene, have to do with, first, the nature of that right to exploit land which is contained by the expression “carbon sequestration right” and the relation that the potential to create those rights has to legislation which effectively utterly destroys that possibility by compelling to be done that which otherwise could be the subject of a price to refrain from doing, whether that amounts to acquisition, particularly when – and we say because – it provides a benefit to the Commonwealth in its discharge of obligations that otherwise are likely to cost it money.

Your Honours will appreciate that we also wish and need, if granted leave, to make good that there is a sequence connected for the purposes of section 51(xxxi) through from the Commonwealth statutes authorised in the agreement – an agreement – to the forms of the agreements, both the 1997 and 2003 agreements, under which explicitly in the first of those New South Wales is positively required to enact legislation by way of controlling land clearing – “controlling land clearing” meaning not as a matter of likelihood but as a matter of definition – that some landowner will be required not to clear land, will be prohibited from clearing land.  Some will be permitted; some will be prohibited.

It is our submission that that properly understood, according to the principles expounded in this Court, amounts to a requirement – illegitimate because of the lack of just terms provided – imposed by the agreement on the State.  Then we come to the point that I had earlier started with, namely, can we show it is an acquisition to enact legislation that destroys completely the possibility of exploiting carbon sequestration rights?  Can we identify property?  Can we show that that is an acquisition? 

GUMMOW J:   What do say provides the link from the federal to the State law?

MR WALKER:   The federal law authorises agreements to be made and on our argument were we permitted to elaborate it, nothing we have put would invalidate a Commonwealth law, I should say.  The Commonwealth law permits an agreement.  The agreement calls for the State to legislate and provides no provision for just terms – that is, does not require just terms – permits legislation without just terms, but requires there to be legislation to control land clearing.  So the link is provided by an agreement which requires, not merely contemplates or induces, but requires legislation to reduce land clearing and that is done in New South Wales without just terms.  That is my answer to Justice Gummow’s question, “Where is the link?”  The link is provided by the obligation on New South Wales under the agreement to legislate.

HEYDON J:   You said that you were not intending to have struck down any Commonwealth laws.


HEYDON J:   Paragraph 6 of your submissions says the question is whether the Commonwealth laws are to be characterised as laws with respect to the acquisition of property which fail to comply with section 51(xxxi).  If that is the case then they are void laws.

MR WALKER:   Your Honour, that is an unfortunate way of describing the combined effect of the statute and the agreement were the agreement to be seen as authorised by the law.  The statute cannot authorise such things.  It cannot go beyond power.  It has to be read down so as not to authorise that agreement.  If it were to authorise that agreement, it would have that character that we set out in our written submission.  Having that character, it would of course be invalid, but it would be read down so as not to have that character.

FRENCH CJ:   Thank you, Mr Walker.  Mr Solicitor, do you oppose the joinder?

MR GAGELER:   No, your Honour.

FRENCH CJ:   Yes, we will allow the joinder of the New South Wales Farmers Association as an intervenor in the leave application.  Mr King, the Court would be assisted if submissions initially, as between yourself and the Commonwealth, were confined to the question whether having regard to what this Court has said since the decision of the Full Court of the Federal Court, having regard to the pleading of a scheme or device in the statement of claim as before Justice Emmett and the reference to implied terms in the draft notice of appeal, this was a suitable case for the application of section 31A of the Federal Court of Australia Act.

MR KING:   If the Court pleases.  In the recent judgment of plurality led by your Honour Justice Hayne in ICM, your Honours referred to the importance of examining in a constitutional question, especially under section 51(xxxi), the practical and the legal operation of the effect of the laws that are impugned.  In order to address your Honour the Chief Justice’s question, what I propose to do, subject of course to direction, is to firstly review the relevant factual context and history and then to address the legal operation of the legislation.  It is our contention ‑ ‑ ‑

GUMMOW J:   But wait a minute, a first question is whether you should not have been cut off at the pass and whether you say that section 31A was not appropriate way of shutting you off.

MR KING:   We do say that.  It is not appropriate.  Can I just say this in response further to that point?  In the Full Court of the Federal Court their Honours did not really address the factual questions with any detail, except to assume, in favour of the applicant, the facts on which we brought the claim and which Justice Emmett had dealt with in quite a bit more detail, and then ‑ ‑ ‑

GUMMOW J:   But the facts as pleaded at the time asserted an arrangement or understanding.

MR KING:   Yes.  Then their Honours went on to hold that Pye v Renshaw was a complete answer to the claim.  Indeed, their Honours went further, I think, than any previous court in applying Pye v Renshaw in such a circumstance and since ICM when this Court reinvigorated, to use your Honour Justice Gummow’s term, the Magennis principle.  It is our initial contention that, with respect to the Full Court on that question of law alone, the leave to appeal should be granted and the appeal should be allowed and the matter at least referred back to the Federal Court for determination on the issues raised in the putative statement of claim, if not indeed on the existing statement of claim, as to which we had leave to file in this Court.

Your Honours, I appreciate and we are certainly alive to the very question your Honour raised with me about circuitous device.  It certainly is part of our case, but even if the other two ways in which we put the matter, that is that Chapter V, section 106, in particular, protect Mr Spencer’s property interest insofar as it impaired a constitutional guarantee and perhaps indirectly, to use a word adopted by Justice Crennan in her Honour’s recent judgment in Wurridjal, that is sufficient to engage that guarantee and to at least, we submit, render the State law invalid to the extent that it impairs the guarantee.  

Alternatively, we say that there is a suite of laws, a framework of measures that comprise the Commonwealth law, the State law and the intergovernmental agreements linking them which themselves are subject to the guarantee along the lines of Magennis itself.  Then there is the alternative argument of circuitous device, which your Honour raised with me, which does not depend, as I understand that argument, on either of those two foregoing propositions.

FRENCH CJ:   Now, just on that, the amended statement of claim which appears in volume 1 of the appeal book at page 1 filed on 3 June 2008, is that the statement of claim?  Am I correct in understanding that was the statement of claim that was before Justice Emmett when he gave his judgment?

MR KING:   That is correct.

FRENCH CJ:   That was the final version at that time?

MR KING:   Yes.

FRENCH CJ:   At that time, in paragraph 9.2 at page 11, you assert that the legislative provisions form part of a scheme or device, et cetera?

MR KING:   That is correct.

FRENCH CJ:   There was in that pleading, is it right, no assertion of implied terms or conditions in any of the intergovernmental agreements or arrangements?  That is something which appears in the proposed further amended statement of claim in paragraph 15, is that correct?

MR KING:   I think that is correct, your Honour, although it is fair to say that the matter was argued on that basis.

FRENCH CJ:   I notice that in your draft notice of appeal you make reference to implied terms and conditions.  I wonder whether that is proleptic. 

MR KING:   Well, perhaps, but we certainly raise those questions and would raise them were the matter referred back.

HEYDON J:   Mr King, on page 7 in paragraph 4 of that statement of claim you speak of an arrangement or partnership between the Commonwealth and the State of New South Wales.  The same language is used at the top of page 8.  The Chief Justice has referred to the scheme or device language.  Did you ever seek discovery before Justice Emmett – discovery before pleading – on these points?

MR KING:   We did, and that was refused.  What happened was this.  If your Honours have a look at the chronology which is attached to our additional material – there is a chronology attached to our submissions but we have given it some greater emphasis in the applicant’s bundle of materials which hopefully the Court officers have provided to your Honours at page 12.  At page 13, dealing with the procedural question your Honour just raised with me, your Honour will see that on 12 June 2007 the proceeding was filed in the Federal Court.  On 26 July the motion was filed.  It was never actually amended, although in fact the procedure was somewhat complex in this sense.  

In December, which is not mentioned here in this chronology, the current version of the statement of claim which your Honour the Chief Justice has just taken me to was filed.  His Honour then said that there was an arguable case for the applicant.  The respondent nonetheless sought to press its notice of motion on the basis that section 31A gave the Commonwealth a right to have the proceeding dismissed and precluded discovery.  Indeed, we sought notices to produce the national greenhouse accounts in relation to Mr Spencer’s farm because the pixels would have picked up the issues in that regard.  That was refused on the basis that it was unnecessary.  So we never got discovery or interrogatories and there was only minimal evidence filed.  

There was an affidavit filed by Ms Shayleen Thompson, who was a senior leader in the climate change team, for the Commonwealth.  That was the extent of that material, your Honour.  We certainly pressed, and pressed hard, the question of discovery but that never happened.  I am not criticising his Honour for that reason but I am just indicating that that was the course of events because it was said that, by reason of Pye v Renshaw, amongst other things, it was not necessary.

BELL J:   His Honour dealt with the question of discovery in the context of the pleading at 2.9 of the amended statement of claim in relation to – this is at volume 1, page 6 – it was the pleading of the assignment of the carbon sequestration rights.  At paragraph 176 of his Honour’s judgment at 597, his Honour dealt with the application for discovery which appears to have been specifically with respect to that aspect of the pleading – that is the assignment of the carbon sequestration rights.

MR KING:   I think that his Honour was there referring to notices to produce that we issued, your Honour.

BELL J:   I see.

MR KING:   The stage of discovery had not been reached.  One of the reasons that we argued against 31A applying was that that was, in fact, the case.  

BELL J:   Yes.

MR KING:   That dealt with, I think, production on notice.

BELL J:   I see.  It is just his Honour talks of the absence of the foundation being laid in relation to what he says is that question, which I must say I have read as a reference to that part of the claim.

MR KING:   It is our understanding that it was dealt with ‑ ‑ ‑

BELL J:   I see.

MR KING:   ‑ ‑ ‑ in the way that I have described them.

CRENNAN J:   Does his Honour otherwise make any reference to discovery?

MR KING:   No.  I will have that checked, but not to my recollection.

KIEFEL J:   On the basis of your proposed further amended statement of claim, what issues do you say would be relevant to the question of discovery?  That probably should be put the other way around.  What issues would the obligation of discovery, via the Commonwealth, have to address?

MR KING:   Certainly the issues were listed which raise those questions, which I think are in the judgment.  I will come back to it.

HAYNE J:   I would have thought that part of it may centre upon the issue identified in ICM, the joint reasons of the Chief Justice and Justices Gummow and Crennan in 240 CLR 140 at page 168, paragraphs 37 to 38, most particularly at paragraph 38 where there is identified an assumption underpinning the correspondence that followed after Magennis and the reservation in the last sentence of paragraph 38, consideration of whether that correspondent proceeded on a correct understanding of section 96 and its relationship with section 61.

MR KING:   With respect, we agree.

GUMMOW J:   But that could not have been known, as it were, to Justice Emmett or yourself.

MR KING:   No, but, your Honour, we, it is fair to say ‑ ‑ ‑

GUMMOW J:   I am not putting it against you, but it is a fact.

MR KING:   No, I understand that, your Honour, but it is fair to say, my opponent is here, we pressed very hard for production of that material, that is, the communication ‑ ‑ ‑

HAYNE J:   Well, maybe, but the primary judge’s job is difficult enough.

MR KING:   I am not criticising his Honour, your Honour.  Indeed, it is our case that if the appeal is allowed, it should go back to his Honour, but we are not suggesting that the point is easy, but without doubt, we pressed for that correspondence and the only material that we had access to is what we could find on the internet.

HAYNE J:   An immediate question is whether 31A of the Federal Court Act can, should, ought to have been engaged now that we know what the court has said in ICM.  Now, that was not known at the time.  Now we see what is said in ICM, does that reveal anything that is relevant to the question of whether 31A should have been engaged to stop you at that point of the proceeding?

MR KING:   We submit it does, your Honour.  Indeed, on that point we relied upon some observations of the learned Chief Justice in a case dealing with an equivalent provision under the Judiciary Act in this Court.  I think the case was Primrose, but I cannot remember its actual – I will need to refer to it – but we did raise that question.  The proposition we put to the learned judge was that not only were there questions of fact relating to the consequences, effect or impact of the laws, but also questions of law themselves which were of sufficient difficulty that ought not to be determined on a section 31A application, and substantial authority was cited to his Honour on that very point.  So we would respectfully adopt what has fallen from your Honour, Justice Hayne.

HAYNE J:   It was a question.  It was not a statement, Mr King, it was a question.

MR KING:   I thought I had answered it, but if there is an additional part to it, perhaps it is what are the precise factual issues in addition to the legal issues which we raise in this matter?

FRENCH CJ:   What does one make of the pleading part of a scheme or device?

MR KING:   Sorry, your Honour?

FRENCH CJ:   What does one make of the plea that the legislative…..were part of a scheme or device; that was not further particularised, was it?

MR KING:   No, there were no particulars sought of that.  It was based upon the observations of Sir John Latham in Burgess’ Case and in Magennis’ Case, your Honour.  It is really an argument about the abuse of power by the Government through the legislature and it was on that basis that we put that argument, but it depends upon proof of a circuitous device which requires production of correspondence, including emails, because a real question arises is, why did the State provide for the Native Vegetation Conservation Act which conferred such very substantial benefits upon the Commonwealth in relation to the satisfaction of its climate change convention obligations, both of a pecuniary and of a real kind, in circumstances where it was being suggested by the Commonwealth that there was no link between the two?  Now, we do not accept that there was that proposition, but it is part of our case that the use of the State to take Mr Spencer’s land instead of doing it itself to avoid paying him compensation was an indication of the device that we were referring to.

Your Honours, it is important in that context to look carefully at the set of accounts that we were able to find on the internet and which were produced and tendered and without objection by the Commonwealth and it did not produce any material itself to suggest the inferences to be drawn from it were in error which show that the Commonwealth had a very close understanding of precisely what was happening on the land and the benefits which accrued to it from that very process to such an extent that it knew, within the area of about 0.2 of a hectare to the size of vegetation growing two metres or more, what was happening on the property.

FRENCH CJ:   Does this go to the existence of a scheme or device as pleaded?  Is that why you referred to that material?

MR KING:   It is part of it, your Honour, yes.  The proof of the receipt of benefit by the Commonwealth is part of the case of ‑ ‑ ‑

FRENCH CJ:   There is a reasonably well‑established principle, I would have thought, that one is not entitled, for example, to discovery or interrogatory simply on the basis of assertions in pleadings unless some basis for those assertions may be disclosed, or not contested.  I am thinking WA Pines v Bannerman and that line of cases.

MR KING:   Yes.  Your Honour, we did point to material, but the way it was addressed by the respondent and by his Honour was that it was unnecessary to look at any of that material or to consider the matter because the point was foreclosed against us by the section 31A application and the arguments in relation to Pye v Renshaw.  As it turned out, the learned primary judge took a much more benign view of Pye v Renshaw than the Full Court.  The Full Court took the view that Pye v Renshaw was a complete answer, no matter what the applicant said about his case.  As I have submitted to your Honours, this Court, to a person, has taken a different view of ICM and reinvigorated the basic points that are taken up in Justice Heydon’s judgment and also in ICM and ‑ ‑ ‑

FRENCH CJ:   Was the scheme or device pleading expressly dealt with in either the Full Court or at first instance?  How was that disclosed?

MR KING:   In the reasons?


MR KING:   His Honour Justice Emmett dealt with the point perfunctorily, it is fair to say, at page 597 of the application book, paragraph 174.  

FRENCH CJ:   That seems to be a finding on the materials before him that no direct link was identified between the Commonwealth statutes and the State statutes.

MR KING:   Your Honour, that is ‑ ‑ ‑

FRENCH CJ:   That is the answer that is advanced there to that pleading.

MR KING:   We take issue with that.

FRENCH CJ:   I appreciate that.  I am just trying to identify how it was dealt with.

MR KING:   I understand that.  It appears to be a factual assumption on the limited material before his Honour which we respectfully contest.  Then the Full Court dealt with it, I think, in the context of looking at Arnold, although their Honours ending up saying that Arnold was simply not distinguishable from Spencer.  Paragraph 21 at page 638, line 29.  Line 24 in the small numbering, and 29 in the large numbering:

The submission that the arrangements are a mere device to circumvent s 51(xxxi) on the basis that the Commonwealth cannot do indirectly ‑ ‑ ‑

FRENCH CJ:   That was not the pleading, was it?  The pleading was they are a part of a scheme or device.

MR KING:   I do not think that their Honours otherwise dealt with it.  I will check that.  In Magennis’ Case Justice Williams referred to the joint venture between the Commonwealth and the State in that matter as evidenced by the intergovernmental agreement and the implications that his Honour drew from it to engage the principle of circuitous device to which your Honour the Chief Justice has referred.  That is part of the way we put the case here too, but it is not the only consideration.

GUMMOW J:   Mr King, if one looks at page 651, one sees your application for special leave.  Is that the relevant document, or is there a later document?  Then at 655, one sees a revised draft notice of appeal.  Then you see ground 2 at 651 and ground 2 at 655, both focus on a complaint as to the utilisation of the section 31A procedure against you.  One way of approaching this case is to ask oneself if – and understandably perhaps, but perhaps not correctly, knowing what we now know after ICM, the primary judge was persuaded to embark on section 31A by the Commonwealth, he should not have done so because you had this allegation, whether it is called “security” or “understanding” or “implied term”, as it later became, which would require discovery in circumstances where you had some material which you had off the net, which you say gets you sufficiently off the ground to get you into an application for discovery territory?

MR KING:   We would respectfully adopt that, your Honour.  It was a live question.  Those issues were put to his Honour in some depth.  In this case the Commonwealth has conceded want of just terms, at least for the purposes of the application, but other issues which arise may touch upon the question as to whether or not an acquisition within the meaning of the authorities had occurred.  I am thinking of the importance of correspondence of benefit and extinguishment and such issues.  Our respectful submission is that certainly 31A ought not to have been engaged.  Indeed, Justice Rares and Justice Finkelstein in Ford Motor Corporation Case – Jefferson Ford which seems to us, at least, to be the relevant leading authority in the Federal Court on the operation of section 31A makes observations to the effect that it is not merely a question of fact but also a substantial question of law which may ‑ ‑ ‑

GUMMOW J:   What is the citation, Mr King?

MR KING:   I am sorry.  I will get it for your Honour.  There is an even more recent decision which I was bringing down and going to mention in reply.

FRENCH CJ:   It is (2008) 167 FCR 372.

MR KING:   If the Court pleases, I am obliged to your Honour.  Justice Gordon in that case also had some important things to say about the procedure.

FRENCH CJ:   The provision seems to have been borrowed from the Civil Procedure Rules (UK) 24.2.  I think Justice Lindgren wrote something about it in a case called White Industries.  

MR KING:   I see.  We also will dig out some observations of your Honour the Chief Justice in the single judgment case that I mentioned to your Honour earlier.  It is our respectful submission that in those circumstances at least the issues that were identified in the learned primary judge’s judgment – the page numbering, I am afraid, does not seem to be recorded in the index to his Honour’s judgment.

FRENCH CJ:   What is the proposition you are taking us to relevant to the question we are now addressing?

MR KING:   It is at page 575 of the application book where general questions in the round were raised with his Honour.  At paragraph 104 it was said that none of those were questions of law simpliciter and the fact that it formed part of a scheme or device to avoid or overreach the restrictions was itself a question which deserved to go to trial.

GUMMOW J:   I think it may be said, with reference to ICM in the paragraphs to which Justice Hayne referred you ‑ ‑ ‑

MR KING:   At page 168, your Honour, paragraphs 37 and 38?

GUMMOW J:   Yes, where the judges were saying in ICM that it was unnecessary to consider whether there was correct understanding of section 96 and its relation to section 61.  It may be invidious to, as it were, thrash that out in a section 31A application in the Federal Court.

MR KING:   That was one of the observations that was made, I think by Justice Finkelstein, in Jefferson Ford, or words to that effect.  I am not sure that his Honour quite expressed it that way.  Our respectful submission is that having regard to the Court’s enlivenment of the Magennis principle in ICM and the Full Court’s complete reliance upon Pye v Renshaw, is a total answer to the case that at least the application for special leave ought be granted.  We submit it follows that the appeal should be granted and the matter referred back to that court.

It is fair to say, your Honours, that we have taken a slightly more bold approach in this Court as the consequence of the filing of submissions by the State which invites its joinder as a party to the proceeding here.  We say that the legal realities are that the State laws on the evidence and the material before the Court are themselves invalid to the extent that they impair the constitutional guarantee by reason of the operation of either section 106 or ‑ ‑ ‑

GUMMOW J:   I would have thought you might want to join the State if you wanted some discovery.

MR KING:   There is another point.

FRENCH CJ:   That falls outside the framework of the 31A question.

MR KING:   Of the question you are asking?


MR KING:   Yes.  I understand.

FRENCH CJ:   Now, is that everything you have to say on the 31A question?

MR KING:   Can I just answer that in limine by saying that I had proposed to address that issue in more detail in reply, having heard the arguments of my learned friends but, in substance, the answer is yes.  

FRENCH CJ:   All right, thank you.  We will hear from the Solicitor for the Commonwealth.

MR GAGELER:   Whether one looks at the pleading that was before the learned primary judge at page 1 of volume 1 of the appeal book, or the proposed further amended pleading that one finds in volume 2 of the appeal book at pages 699 and following, the substance of the case, as we understand it has always been put on behalf of Mr Spencer is that the scheme or device to wrap up the entirety of his complaint about non‑compliance with section 51(xxxi), lay in the combination of two Commonwealth statutes, four Commonwealth agreements and two State statutes said to involve the implementation of those agreements.  

The link between the invalid Commonwealth statute and the acquisition of property was said to lie in the terms of those four intergovernmental agreements.  That emerges, perhaps, most clearly in the text of the proposed further amended statement of claim which begins at page 699 in paragraph 36 in the text of that paragraph, but also in the particularisation of that paragraph.

At no stage in submissions to Justice Emmett, in submissions to the Full Court of the Federal Court or, indeed, as we could pick up in any written submissions to this Court, has it been suggested that Mr Spencer seeks to rely either on implied terms in those four agreements or on any side agreement or further agreement between the parties.  If one looks at the way in which Justice Emmett approached the pleadings he summarised the pleading, as he understood it, at the bottom of pages 539 through to 543.

KIEFEL J:   Just before you turn to his Honour’s dealing with the then pleading, what do you say about the reference in paragraph 34 of the revised proposed amended statement of claim, third line?  There appears to be an allegation that, pursuant to the agreement, there is an express or implied agreement “to make and adopt measures”.

MR GAGELER:   We read that, your Honour, in the light of two things.  One, in the light of the course of the argument at two earlier stages when the entire focus was on the express terms of these agreements and in the light of the particularisation in paragraph 36 ‑ ‑ ‑

KIEFEL J:   But the particularisation is more to do with the effects of the agreement, rather than their terms, is it not?

MR GAGELER:   Yes, I accept that, your Honour, more the former than the latter.

HAYNE J:   We have this reference in paragraph 35 to “joint venture” coupled with the introductory words of 36 which, I would have suspected, have been where the real sting in the pleading is buried:

Pursuant to the said agreements and/or induced by the First Respondent and/or in furtherance of –

You may advance, I would have thought, some criticisms, perhaps quite legitimate criticisms, about the pleading, but the intent of the pleader is evident, is it not?

MR GAGELER:   The intent of the pleader ought be, and as we take it is, to plead the material facts upon which the claim is based.  We are not talking about the original pleading here.  We are talking about the best shot after this has been through many iterations, your Honour.  I will be repetitive, but there is and has been simply no suggestion of a side agreement of the kind that was perhaps left open by the Court in ICM.  At every stage this case has proceeded on the basis that the applicant’s case has been based on the four agreements which were pleaded and fully analysed by his Honour Justice Emmett.

HAYNE J:   But you began this branch of your argument by a proposition that was, as best I remember it, that the plaintiff’s case was founded on the terms of the agreements and Acts which you listed, is that right?


HAYNE J:   What I want to put to you is that an available reading of the pleadings in each of the iterations we see, which are not all of them I think, is that ‑ ‑ ‑

MR GAGELER:   Yes, you are correct.

HAYNE J:   Which is that, yes, one looks at the terms of those agreements and the Acts, but also it is necessary to take account of what links them and that the sting of the pleading, as I have earlier put it, lies in this allegation of linkage variously expressed, joint venture, circuitous device, arrangement, implied agreement, but those words march across the pleadings and that is where the sting lies.

MR GAGELER:   What one does not find, your Honour, is a suggestion that what links them lies in further material facts not articulated in the pleadings.  That is essentially the point.  His Honour noted the scheme or device pleading, your Honours will note, at page 542 in paragraph (9.2), which of course links back to paragraph 9.2 of the original pleading that your Honour the Chief Justice has already drawn attention to.  His Honour noted the scheme or device reference.  It is linked in his Honour’s summary and also in paragraph 9.2 of the pleading itself to the Commonwealth statutes.  The Commonwealth statues being linked ultimately to the State statutes through those four agreements.  I am perhaps being repetitive, your Honours, but there is no pleading of any relevant implied term.

FRENCH CJ:   I am sorry, would you not be entitled, if pleading a defence to 9.2 as it was pleaded before his Honour, to say, “Look, before I can plead to that I need particulars of this scheme or device.  You are not confining it to the legislation and the agreements.  You are saying they part of the scheme or device”?

MR GAGELER:   Your Honour is right.  We would have been entitled to seek those particulars if we thought that we did not understand the case against us.  However, we thought we did understand the case against us sufficiently to put on the motion for dismissal under section 31A of the Federal Court of Australia Act and in the argument on the plaintiff’s substantive case, as best articulated at that stage in the pleading, no suggestion was made that the case turned on further facts not fully articulated or particularised in the pleading.

So far as discovery is concerned I confess that I am not in a position particularly to assist your Honours on the detail of the discovery applications, if any, that may have been made.  I would, unfortunately, need a moment to check the position.  I can say that no part of the grounds of appeal before the Full Court of the Federal Court turned on any perceived procedural difficulty in the court proceeding with the application under section 31A in the absence of discovery.  There was no complaint about that in the Full Court of the Federal Court and no complaint sought to be raised to this Court.

Your Honours, in essence, we say this, that the plaintiff put his best case forward before Justice Emmett, has rearticulated his case as he would wish to put it before the Federal Court if the appeal were allowed in the present proceedings.  In it he has not sought to rely on any factual material relevantly going beyond the four express agreements.  In seeking to meet the application that is made under section 31A, I think I am correct in submitting that the plaintiff did not seek to lead further evidence or seek, by notice to produce, to put more material before the court in relation to the agreements between the parties than is already before the court.

If your Honours would allow me to just check.  Your Honours, on that precise question I would need to check the course of notices to produce.  I am told this was done by a series of notices to produce before Justice Emmett.  There was no application for general discovery, I am told.  Your Honours, that, I think, is as much as I can usefully say on that point.

FRENCH CJ:   Thank you, Mr Solicitor.  Mr King, in reply?

GUMMOW J:   Can you lay your hands on those notices to produce?

MR KING:   Sorry, your Honour.

GUMMOW J:   Those notices to produce the Solicitor just referred to?

MR KING:   Yes.

GUMMOW J:   Are they in Court?

MR KING:   I am not sure, your Honour.  I think not but the – so far as my learned friend – they are not in Court, I am afraid, your Honour, but there were to my recollection ‑ ‑ ‑

GUMMOW J:   Are there transcripts of the directions hearings at which this was happening?

MR KING:   Yes, we can obtain those.  So far as an application for general discovery was concerned, that was simply foreclosed because of the bringing or the enlivening of the previous application to strike out.  Interestingly enough, that application or that notice of motion made no specific reference to 31A that was treated as a 31A application.  So there was simply no opportunity for the applicant to seek discovery and in the course of dealing with the respondent’s motion to dismiss, our only available response to it was to issue notices to produce so the normal procedural opportunities which would attend upon the preparation of a matter for hearing simply did not occur, but not through any want of trying by the applicant.

Your Honour, just on the question of circuitous device can I just indicate to your Honour – but before I do so I just need to ask my friend something ‑ in the bundle of material to which I referred earlier which contains the chronology at page 28 there is reference to ‑ ‑ ‑

GUMMOW J:   I am sorry, where are you Mr King?

MR KING:   Page 28 in our bundle of material – to indicate the fact that the Commonwealth appeared to be pushing for, in different ways, the State to pass the vegetation legislation to confer the benefits.  We have claimed upon it.  At page 28 in this appendix to the 2003 annual report of the Natural Heritage Trust it refers to the bilateral agreements in line 1: 

The Australian Government and the states and territories have entered into bilateral agreements for delivery of the National Heritage Trust.  Separate bilateral agreements for the delivery of the National Action Plan for Salinity and Water Quality have also been signed for all jurisdictions except the Australian Capital Territory.

Just pausing there, your Honour, in the proposed pleading we have raised the question as to whether or not the copy agreements that we were able to procure from the internet which we say makes the link were in fact complete or, indeed, all of the relevant agreements, and that appears from the proposed amended pleading.  The passage, which I regret to say, I am now not immediately able to put my hands on.  

In addition, in relation to the issue of inducement, the applicant would seek to rely upon the question of payment of moneys to the State by the Commonwealth and the basis upon which those payments were made, because it does not appear at least from the 1997 agreement which specifically makes reference to the Native Vegetation Conservation Act the way in which that payment was to occur.  So those are additional facts which, we respectfully submit, illustrate that there are substantial questions to be tried and that the matter ought not to have been dealt with on a section 31A basis. 

There is a further authority in the Federal Court which I would seek to draw to your Honours’ attention, if I may, through your Honours’ associate, which I do not have handy at the moment, but which I think in substance says no more than what I have previously said about the importance of the court allowing an applicant who has raised serious questions to have those questions determined.  If I may, I will provide that to your Honours’ associates.

I am just reminded that I did not take your Honours to the whole of page 28 of our additional material.  It does refer to, under New South Wales, the bilateral agreement of 17 May 2002.  That is a pleaded agreement, the third IGA which we have pleaded.  Then the 14 August 2000 agreement which is referred to in the next subparagraph is also pleaded.  But then your Honours will see in the second dot point under “Key components of the reforms to improve the management of native vegetation”, et cetera:

an end to broadscale land clearing of remnant vegetation and protected regrowth through the introduction of the Native Vegetation Act 2003 which underpins the native vegetation reforms.  

Those broad scale provisions, it is part of our case, confer very substantial pecuniary and other benefits upon the Commonwealth and ultimately led to the complete loss of the commercial viability of the applicant’s farm, a matter which the State of New South Wales has indeed conceded, as evidenced by exhibit M3.

GUMMOW J:   Mr King, would you just look at page 656 in volume 2 for a moment?  I see you are seeking costs if you are successful in getting leave and then on an appeal in this Court and costs in the Full Court and the Federal Court at first instance.  That is against the background of an interlocutory appeal structure.

MR KING:   Yes.  We would press those orders, your Honour.  As I indicated, Justice Emmett informed the parties and the Commonwealth in December 2007 that he thought that there was an arguable case for the applicant.  The Commonwealth pressed its 31A application.  His Honour ultimately agreed with that application, but Mr Spencer has had to fight that interlocutory application, in effect, since that time.

GUMMOW J:   There is a big debate about whether section 31A is interlocutory, is there not?

MR KING:   That is true.  There is a recent decision of the Federal Court called Kowalski which raises that question.

GUMMOW J:   What is the current state of authority in the Full Court, do you know?

MR KING:   I think it is mixed, your Honour.  It is fair to say ‑ ‑ ‑

FRENCH CJ:   I think it is three, one.

MR KING:   I think I can speak with some authority on that point because I did a matter before Justice Jagot the other day – not this case but another case – which your Honours referred to the Full Court on that very question involving a 31A application and the Federal Parliament, interestingly enough, has passed a law saying that deeming such applications to be interlocutory and subject to a seven-day application for leave right – and it is our case that the federal law is invalid because it is an unjust or improper interference in the processes of the court.

FRENCH CJ:   I think Justice Bennett cited a case on that question, did she not, at first instance?

MR KING:   It could be, your Honour.

FRENCH CJ:   I think there was a 31A case and challenging its validity as an impermissible interference with judicial power.

MR KING:   Yes.  In any event, I think it is fair to say it is a live issue.  But our respectful submission is, whatever the true nature of the 31A application, it seems to go past the usual basis for dismissal or strikeout, which is whether or not there is an arguable case, and confer some sort of discretion on the court to dismiss in limine, notwithstanding the existence of reasonable arguments.  That is where Justice Finkelstein, I think, in Jefferson Ford took exception with that approach.

But our respectful submission is, bearing in mind the way the Commonwealth has run the matter and run it hard against Mr Spencer, he has suffered a lot personally since.  I do not need to go into that, your Honour.  It is mentioned in the application book.  Had the matter gone to trial it would have been dealt with by now.  We have lost that opportunity and Mr Spencer still seeks that opportunity.  He believes he has a strong case, even on the limited materials before this Court, for declarations that the State laws are invalid to the extent that they impair the constitutional guarantee.  Apart from the circuitous device point ‑ ‑ ‑

FRENCH CJ:   I think we are getting a bit beyond the limits of the reply now, Mr King.

MR KING:   I see.

FRENCH CJ:   Thank you.  The Court will adjourn briefly to consider what course it should take.



FRENCH CJ:   The Court will take time to consider the application on the argument it has heard today.  It will either decide the application and make orders or list the matter for further hearing at a date in the future.  Mr King, reference was made to notices to produce and parts of the transcript before the primary judge.  Would you be able to provide copies of those to the Court within seven days?

MR KING:   Certainly, your Honour.

FRENCH CJ:   Thank you.  

MR GAGELER:   Would your Honour give us an opportunity to perhaps supplement those materials?

FRENCH CJ:   Yes, indeed.

MR KING:   What we will do, your Honour, is try and do it co‑operatively so that we produce one bundle.

FRENCH CJ:   Yes, all right.  Thank you.  The Court will adjourn until 9.15 tomorrow morning for pronouncement of orders.