Professional obligations are a fundamental part of practice at the Bar. Ethics are – as observed by Sir Gerard Brennan – ‘the hallmark of a profession, imposing obligations more exacting than any imposed by law and incapable of adequate enforcement by legal process’[1]. However, as Sir Gerard also observed, ethics are ‘not so much learnt as lived’ and are ‘not what a barrister knows he or she should do: ethics are what the barrister does’[2].
Barristers are, of course, acutely aware of the ‘exceptional privileges’ and the ‘exceptional obligations’ involved in the ‘high task of endeavouring to make successful the service of the law to the community’[3]. Much has been written and said on the topic[4].
This short article is not a further exposition of each of the ethical obligations and duties that apply to barristers or of the barristers’ conduct rules[5]. Rather, it is an attempt to demonstrate that not only are barristers, as members of a profession, expected to abide by the relevant ethical rules, but also that doing so is good advocacy. And good advocacy serves the interests of the administration of justice and, of course, of the barrister’s client.
Counsel’s ethical duties
To frame the brief discussion that follows, it is useful to recount Mason CJ’s description of counsel’s paramount duty to the court in Giannarelli v Wraith[6]:
The performance by counsel of his paramount duty to the court will require him to act in a variety of ways to the possible disadvantage of his client. Counsel must not mislead the court, cast unjustifiable aspersions on any party or witness or withhold documents and authorities which detract from his client’s case. And, if he notes an irregularity in the conduct of a criminal trial, he must take the point so that it can be remedied, instead of keeping the point up his sleeve and using it as a ground for appeal.
It is not that a barrister’s duty to the court creates such a conflict with his duty to his client that the dividing line between the two is unclear. The duty to the court is paramount and must be performed, even if the client gives instructions to the contrary. Rather it is that a barrister’s duty to the court epitomizes the fact that the course of litigation depends on the exercise by counsel of an independent discretion or judgment in the conduct and management of a case in which he has an eye, not only to his client’s success, but also to the speedy and efficient administration of justice. In selecting and limiting the number of witnesses to be called, in deciding what questions will be asked in cross-examination, what topics will be covered in address and what points of law will be raised, counsel exercises an independent judgment so that the time of the court is not taken up unnecessarily, notwithstanding that the client may wish to chase every rabbit down its burrow. The administration of justice in our adversarial system depends in very large measure on the faithful exercise by barristers of this independent judgment in the conduct and management of the case. In such an adversarial system the mode of presentation of each party’s case rests with counsel. The judge is in no position to rule in advance on what witnesses will be called, what evidence should be led, what questions should be asked in cross-examination. Decisions on matters such as these, which necessarily influence the course of a trial and its duration, are made by counsel, not by the judge. This is why our system of justice as administered by the courts has proceeded on the footing that, in general, the litigant will be represented by a lawyer who, not being a mere agent for the litigant, exercises an independent judgment in the interests of the court.
Despite being in a relationship of confidence with a lay client, the first duty of the barrister is not to the client but to the court in which the barrister appears. The duty to the instructing solicitor or the lay client is secondary. Where the respective duties conflict, the duty to the court is paramount. That duty to the court imposes obligations on the barrister with which the barrister must comply even though to do so is contrary to the interests or wishes of the client. Thus, the barrister can do nothing that would obstruct the administration of justice by:
deceiving the court;
withholding information or documents that are required to be disclosed or produced under the rules concerned with discovery, interrogatories and subpoenas;
abusing the process of the court by preparing or arguing unmeritorious applications;
wasting the court’s time by prolix or irrelevant arguments;
coaching clients or their witnesses as to the evidence they should give;
using dishonest or unfair means or tactics to hinder an opponent in the conduct of his or her case.
Moreover, the advocate owes a duty to the court to inform it of legal authorities that “bear one way or the other upon matters under debate”. The duty applies “quite irrespective of whether or not the particular authority assists the party which is so aware of it”.
The obligation of candour, as described by Sir Owen Dixon, is not merely an obligation but ‘in advocacy it is a weapon’[9].
Candour includes identifying the relevant legal principles, including the authorities that are against the case which counsel seeks to advance, and the relevant facts. Doing so concisely and accurately is more likely to demonstrate to the judge that counsel (a) has confidence in the probative value of the evidence, (b) is willing to face the challenges that may be presented by the evidence or the law and (c) can, despite those difficulties, provide the judge with a pathway through the evidence or the law to the result that counsel is seeking for their client. In other words, a solution that the judge can adopt and, at the same time, one that counsel advocated. In this way, identifying and dealing with the strengths of an opponent’s case is persuasive advocacy. Doing so upfront is desirable and may be more successful[10].
“…identifying and dealing with the strengths of an opponent’s case is persuasive advocacy.”
In the context of a trial, properly identifying the factual findings sought at the end of the trial supported by accurate and complete references to the evidence may sound like a basic proposition of trial advocacy (and one that accords with the ethical rules) but doing it well will serve the client’s interests. It is unlikely to be particularly persuasive for a judge to be simply given large extracts of evidence or summaries without identification of the findings that are sought and the precise evidence that supports them. Counsel should avoid imprecise or ambit submissions especially when they are so extreme that if accepted an appeal would inevitably succeed[11].
“Counsel should avoid imprecise or ambit submissions especially when they are so extreme that if accepted an appeal would inevitably succeed.”
If the sought-after findings and evidence are presented properly and with care, the judge will be able to identify precisely the pathway to the desired result and will have confidence that the facts and legal principles – both favourable and unfavourable – have been identified and considered. Of course, the judge may not accept counsel’s submissions as to the law or the evidence and counsel ought not abdicate their essential role of attempting to persuade the judge, but at least the judge will have the confidence of knowing that counsel has not left out anything critical. Additionally, an appeal court, with some well-known exceptions, is not likely to be particularly receptive to an appeal ground that relies upon an argument that was not put, or a finding that was not sought, at trial.
Thus, candour on the part of counsel as to the legal principles and the relevant facts is not only required by the ethical rules but results in better advocacy and is more likely to be rewarded.
Justice Bond recently observed[12] that advocacy is likely to be more effective if the proposition or submission advanced by counsel is framed as part of a ‘solution’ rather than part of a ‘problem’ for the judge. That approach is, in my view, supported by counsel adhering to their ethical duties.
“…advocacy is likely to be more effective if the proposition or submission advanced by counsel is framed as part of a ‘solution’ rather than part of a ‘problem’ for the judge.”
For example, in the context of modern case management principles, a fight about the adequacy of a pleading can be presented as either pedantic quibbling over form[13] or a necessary part of ensuring procedural fairness for the parties and a proper delineation of the boundaries of the dispute (and the necessary findings that the judge will be asked to make)[14]. The former is a problem with which a judge may be reluctant to deal while the latter presents as a solution which is much more likely to result in a favourable outcome for the party seeking relief.
It may be an obvious matter to observe, but in my view, proper preparation and the persuasive framing of the case (such as the example above concerning the pleadings fight) and disclosure of the law (consistently with the duty to the court) increases the chances that counsel’s submissions will be, and will be seen by the judge as, part of the solution rather than as an impediment or problem.
Duty to the client and independence
Counsel’s duty to their client is to promote and protect fearlessly the client’s interest to the best of the barrister’s skill and diligence[15]. Counsel is not to act as a mere mouthpiece of the client and is to exercise appropriate forensic judgments. Justice Ipp has observed[16]:
Whilst lawyers, in fulfilling their duties to their clients, are allowed, even expected, to be committed to their cause and to act zealously; nevertheless as officers of the court they must be rigorously dispassionate. Even in the most hostile litigation, lawyers must be scrupulously fair and not take unfair advantage of obvious mistakes by the other side.
Counsel’s independence means that it is for counsel to exercise their forensic judgment to[17]:
confine or limit a hearing to what the barrister believes are the real issues in the case;
present the case as succinctly as robust advancement of the client’s interests permit;
inform the court of persuasive authority against the client’s case.
It is the duty of counsel to assist the judge by simplification and concentration and not to advance a multitude of ingenious arguments in the hope that out of ten bad points the judge will be capable of fashioning a winner. [It is not right to] make every point conceivable and inconceivable without judgment or discrimination.
Doing those things will give the judge confidence that counsel (a) has properly thought through the issues in the case, (b) has distilled the points to those that counsel considers have the best prospect of success, and (c) can be trusted to have identified the correct legal principles to be applied.
There can be little doubt that a judge would prefer to hear an argument about the real points in issue rather than a complete excursus on all points regardless of whether they are good points or ones that are only barely arguable. Brevity, in accordance with counsel’s duties, is good advocacy[19].
A lawyer is often in a difficult position when a client wishes to pursue what he may regard as a hopeless case. If the lawyer is of the view that the client’s case is certainly hopeless, he would be obliged to advise the client of that conclusion and urge that the case not be brought. A lawyer who proceeds with a case in such circumstances in order to make costs for himself would be guilty of a breach of his duty. …
But if the lawyer could not come to the certain opinion that the case is hopeless, and informs the client of the risk involved, and advises the client most strongly not to proceed, and the client still insists on going on (without having any ulterior motive), the lawyer would commit no breach in taking those instructions. As Sir Thomas Bingham MR said in Ridehalgh v Horsefield [[1994] Ch 205 at 233-234]:
A legal representative is not to be held to acted improperly, unreasonably or negligently, simply because he acts for a party who pursues a claim or defence which is plainly doomed to fail…Legal representatives will, of course, whether barristers or solicitors, advise the clients of the perceived weakness of their case and of the risk of failure. But clients are free to reject advice and insist that cases be litigated. [It is rarely if ever safe for a court to assume that a hopeless case is being litigated on the advice of the lawyers involved…[and that it is] one thing for a legal representative to present, on instructions, a case which he regards as bound to fail; it is quite another to lend his assistance to proceedings which are an abuse of process of the court.]
In Queensland, the Court of Appeal has suggested a different view. Justice Davies has said that it is counsel’s duty to exercise his or her own independent judgment including as to whether there is any point that can be argued and ‘if the case [either as to fact or law] is plainly unarguable it is improper to argue it’[21]. As Justice Fraser has noted extra-judicially[22], the issue is not without controversy. The Full Federal Court in Dyczynski v Gibson[23], after referring to the above statement by Justice Davies in Steindl Nominees, said[24]:
“…if the case [either as to fact or law] is plainly unarguable it is improper to argue it”
But, it is important to understand what is meant by that obligation. Where the merits of the client’s position depend upon the credibility of witnesses or an arguable point of law, it is not for the lawyer to judge the merits: Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 at [92(c)] (McColl JA, with whom Hodgson and Ipp JJA agreed)[25]. For that reason, a client who is advised about problems with the merits of the case is free to reject that advice and insist that the case be litigated: Ridehalgh v Horsefield [1994] Ch 205 at 234; [1994] 3 All ER 848. The client can persist in asking the lawyer to perform the retainer by conducting the claim or defence. However, that right has its limits. It does not extend to allowing a client to instruct a lawyer to present an unarguable affirmative case or to provide instructions that constrain the exercise of the independent forensic judgment that all lawyers must bring to the conduct of a case.
“But, it is important to understand what is meant by that obligation. Where the merits of the client’s position depend upon the credibility of witnesses or an arguable point of law, it is not for the lawyer to judge the merits”
As Justice Fraser has rhetorically asked, if counsel is obliged[26] to seek to ensure that the case is confined to identified ‘issues which are genuinely in dispute’, how can an issue be ‘genuinely’ in dispute if counsel has formed the view that it is unarguable? As Justice Ipp has pointed out (emphasis added)[27]:
This does not mean that counsel must determine which points are likely to succeed and refrain from presenting or arguing any others (although that might be excellent advocacy); on the other hand, it does mean that counsel must determine which points are reasonably arguable, and must jettison the rest.
In exercising independent forensic judgment so as to confine issues, selecting and limiting the number of witnesses to be called and deciding what questions will be asked in cross-examination, topics will be covered in address and points of law will be raised[28], counsel is not only complying with their ethical duties but is maximising the chances that the case as presented will be accepted by the judge. As Justice Ipp said, doing so can be excellent advocacy.
On a more prosaic level, exercising that judgment to limit the documents that are put before the court – whether in trial bundles or in interlocutory application bundles, to appropriately limit the objections to evidence that require judicial resolution (including during oral evidence[29]) and to limit (or modify) the evidence[30] including for example, where the fact to which it is relevant is not seriously in dispute[31] – is also a means by which counsel not only complies with their ethical obligations but is also likely to improve the persuasiveness of their advocacy.
Justice Kenneth Martin observed that it is appropriately within the duties of counsel – and I would add, good advocacy – for a barrister to robustly ‘flex their muscles’ as ‘true quality controllers in relation to the issues, documents and evidence brought before the court’ while remaining appropriately cognisant of a litigant’s interests[32].
Conclusion
Judges are aiming to achieve a result which is just according to law. But it is not for the advocates to leave it to the judges to do so. As Justice Heydon has pointed out, justice depends on the interplay between bench and bar. Barristers are there as a ‘helper in the administration of justice’[33]. Complying with their duties to the court and the administration of justice – particularly where to do so coincides with persuasive presentation of the case – advances that purpose.
[1] Quoted in Thomas and Manson, Professional Responsibility and Legal Ethics in Queensland, (3rd edition, Thomson Reuters, 2024) at [12.05]
[3]Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279, 298 (Kitto J)
[4] See, for example, the seminal article by Justice David Ipp, Lawyers’ Duties to the Court (1998) 114 LQR 63, Justice Heydon’s article Reciprocal duties of Bench and Bar (2007) 81 ALJ 23, Justice Kenneth Martin’s article Between the devil and the deep blue sea: Conflict between the duty to the client and duty to the court (2011) 35 Australian Bar Review 252 and Justice Hugh Fraser’s speech The Ethics of the Advocate delivered on 17 February 2012 at the Queensland Bar Practice Course Final Address
[9] Quoted by DJS Jackson KC in Evidence, Practice and Procedure: Persuasion, Hearsay Issue 28: June 2008 (from Jesting Pilate, Law Book Co, 1965, p253-354)
[11] Heydon, Reciprocal duties of Bench and Bar (2007) 81 ALJ 23 at 30
[12]‘Sam and Ralph’ – The Role and Practice of Counsel in the System of Justice, Hearsay Issue 98: December 2024 (speech given at the Closing Address to the Queensland Bar Practice Course, October 2024)
[13] See e.g. Pigozzo v Mineral Resources Limited [2022] FCA 1166 at [19]-[24] (Feutrill J)
[14]Forrest v ASIC (2012) 247 CLR 486 at [25] (French CJ, Gummow, Hayne and Kiefel JJ)
[18]Ashmore v Corporation of Lloyd’s [1992] 2 All ER 486 at 493; cited in Heydon, Reciprocal duties of Bench and Bar (2007) 81 ALJ 23 at 30
[19] DJS Jackson KC in Evidence, Practice and Procedure: Persuasion, Hearsay Issue 28: June 2008 recounting a speech by one of the English Law Lords, likely Lord Diplock, as told by two Supreme Court judges
[20] Ipp, Lawyers’ Duties to the Court (1998) 114 LQR 63 at 86 (citations omitted) (part of the quote in brackets added in]
[21]Steindl Nominees Pty Ltd v Laghaifar [2003] 2 Qd R 683 at [27] (Davies JA) (Williams JA agreed with Davies JA and Philippides J agreed with both Davies and Williams JJA)
[22]The Ethics of the Advocate – speech delivered on 17 February 2012 at the Queensland Bar Practice Course Final Address, [43]-[54]
[23] (2020) 280 FCR 583; [2020] FCAFC 120 (Murphy, Lee and Colvin JJ)
[25] See also the views of Lord Denning expressed in Tombling v Universal Bulb Co Ltd [1961] 2 TLR 289 at 297 quoted in Ipp, Lawyers’ Duties to the Court (1998) 114 LQR 63 at 98-99
[27] Ipp, Lawyers’ Duties to the Court (1998) 114 LQR 63 at 100
[28]Giannarelli v Wraith (1988) 165 CLR 543, 556-7 (Mason CJ)
[29] Heydon, Reciprocal duties of Bench and Bar (2007) 81 ALJ 23 at 27-28
[30]Rondel v Worsley [1969] 1 AC 191, 283 (Lord Upjohn)
[31] For example, by utilising s 129A of the Evidence Act 1977 (Qld)
[32] Kenneth Martin, Between the devil and the deep blue sea: Conflict between the duty to the client and duty to the court (2011) 35 Australian Bar Review 252 at 269; see also Heydon, Reciprocal duties of Bench and Bar (2007) 81 ALJ 23 at 28-29
[33]Beevis v Dawson [1957] 1 QB 195 at 201 (Singleton LJ with whom Parker LJ concurred), cited in Heydon, Reciprocal duties of Bench and Bar (2007) 81 ALJ 23 at 25
The Full Court of the Federal Court in SunshineLoans Pty Ltd v Australian Securities and Investments Commission [2025] FCAFC 34, comprised of Perram, Bromwich and Colvin JJ, recently succinctly summarised the principles concerning the proper preparation of a notice of appeal and subsequent conduct of the appeal.
The Court said:
Difficulties that arose from the manner in which Sunshine conducted the appeal
[129] The Federal Court Rules 2011 (Cth) require that the notice of appeal ‘must state…briefly but specifically, the grounds relied on in support of the appeal’: r 36.01. Difficulties may arise when litigants in person are called upon to meet the requirement: Arifin v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2014] FCAFC 61 at [30]. …
[130] The appeal brought by Sunshine advanced more than 30 grounds. It is not possible to say precisely how many grounds were advanced because of the use of sub-paragraphs to articulate separate grounds and the way in which some of the grounds were expressed.
[131] Many of the grounds were unfocussed in the sense that they alleged error at a high level of generality. In most instances they did no more than identify a contention that had been rejected by the primary judge. Universally, the ‘grounds’ failed to identify the paragraphs in the reasons of the primary judge where the alleged error in reasoning was said to have occurred. In almost all cases, the grounds failed to articulate what it was said the primary judge should have found. In consequence, the grounds of appeal were little more than a list of many of the arguments that had been advanced unsuccessfully before the primary judge. They failed to engage in any real sense with the reasons for decision of the primary judge. They manifested a fundamental misunderstanding of the nature of the right of appeal from a single judge of the Court conferred by the Federal Court of Australia Act. They provided no focus for the appeal.
[132] Appeal grounds should not include argument. Nor should they take the form of broad statements of the contentions that will be advanced on appeal. They must identify the nature of the error in the reasoning of the primary judge (pointing to where the error occurred) and state what should have been done by the primary judge, noting that the error may take the form of a failure to address a point of significance (see, for example, Cush v Dillon [2011] HCA 30; (2011) 243 CLR 298).
[133] When it comes to factual findings, the appeal grounds should reflect the well-established principles for challenging factual findings: see the recent summary in Frigger v Trenfield (No 3) [2023] FCAFC 49 at [134]-[147], especially at [141] concerning findings based upon a conclusion as to a lack of credibility of particular witnesses. Further, if findings are not challenged on appeal, they must be accepted. It is never appropriate to proceed, as Sunshine did in the present instance, as if there had been no factual findings by the primary judge and simply seek to argue the case by reference to the evidence before the primary judge (or worse still, some aspects of that evidence).
[134] Well drafted grounds of appeal are informed by an understanding of the reasoning pathway adopted by the primary judge. This is so for a number of reasons. It is an approach that ensures that consideration is given to whether the appeal grounds, if upheld, will provide a basis upon which the judgment or orders under appeal should be overturned. It will expose whether it is necessary for the appellant to succeed on all grounds or whether some grounds if upheld provide alternative bases upon which the appeal should be upheld. It will also expose whether the complaint goes nowhere in the overall scheme of things. Most importantly, it will inform what should be the subject of a separate appeal ground. Usually, there should be a separate appeal ground directed to each alleged error in the reasoning pathway, rather than rolling up issues in the same ground. It will also expose whether the ground is expressed with too much generality to enable the appeal court to understand the flaw in the logic of reasoning that is alleged, or to specifically direct attention to the point in the reasoning that is said to be infected with error.
[135] The formulation of an appeal ground is not like the formulation of a pleading. Grounds of appeal should not be elaborate nor should they set out matters at great length: Sansom v Sansom [1956] 1 WLR 945. The aim should be greater clarity rather than greater particularity: Maddren v Bell [1998] WASCA 215. Not every grievance will constitute a ground of appeal and findings as to subordinate or basic facts will rarely found a ground of appeal: Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157; (2002) 234 FCR 549 at [4]. Instead, it is necessary to focus upon intermediate findings or conclusions that are said to be in error (including references in the grounds to all the paragraphs that are challenged by the ground) and then, subsequently, make submissions in support of the ground by reference to the underlying facts and findings.
[136] Appeal grounds should also be prepared with a keen eye to conformance with the duty to exercise an independent judgment in regard to the arguments to be presented: Thiess Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd [2000] WASCA 102 at [13]; and Dyczynski v Gibson [2020] FCAFC 120; (2020) 280 FCR 583 at [215]-[218].
[137] Sometimes, well prepared submissions in support of an appeal will remedy the burdens of a deficient notice of appeal by exposing the matters that should have been expressed in the grounds (but were not). Such a course is not to be encouraged because it poses difficulties for understanding whether there should be case management directions as to the conduct of the appeal. It is also likely to result in unfairness to any party opposing the appeal.
[138] In the present case, many of the matters alluded to in the appeal grounds were not addressed at all in the submissions or received only cursory mention in written submissions without being developed orally. Other aspects of the submissions bore no connection to any of the grounds. Difficulties were posed for the conduct of the appeal and the preparation of these reasons by the defective manner in which the appeal grounds were prepared. Those difficulties were most manifest when it came to those aspects of the appeal which sought to challenge the factual findings made by the primary judge and even more so the findings as to credibility. Those findings by the primary judge rested upon the consideration of documents, inferences drawn from those documents as well as, in certain respects, conclusions to the effect that witnesses for Sunshine were not credible because they gave a ‘schooled’ account which did not reflect the actual practices of Sunshine in dealing with its customers. As has been mentioned, impugned findings of that kind need to be challenged in accordance with established principles for challenging factual findings. Otherwise, as has been mentioned, the appeal must be conducted on the basis of the findings that have been made by the primary judge.
[139] The primary judge also found that there had been admissions by Sunshine that were consistent with his findings on certain key aspects.
[140] The appeal took the form of re-arguing the points that had been put to the primary judge in a road brush way without regard to any real analysis of the merits of the reasoning of the primary judge, the pathway by which conclusions adverse to Sunshine had been reached, the precise findings it was alleged that the primary judge should have made or the evidence that was relevant to those findings.
The Federal Government is proposing a new tax affecting the statutory pension entitlements of Commonwealth and Territory judges, which has triggered resounding objections from the Australian Judicial Officers Association, the Law Council of Australia, the Australian Bar Association and retired and active judges.
The financial impact of the new tax will significantly affect judges’ financial security post-retirement and has the potential to seriously undermine the independence of the judiciary.
As the High Court has said[1] (footnotes omitted):
“…if attempting to state comprehensively the measures that have been taken to support judicial independence, it would be necessary to take account of not only the arrangements for remuneration of judges while in office but also the provision made for payment of pensions on retirement. The “remuneration”, which s 72(iii) of the Constitution states shall not be diminished during continuance in office, includes non-contributory pension plan entitlements which accrue under the federal judicial pensions statute.
Provision is made for judicial pensions for a number of reasons. One not insignificant reason is to reduce, if not eliminate, the financial incentive for a judge to seek to establish some new career after retirement from office. As was pointed out in argument, it may otherwise be possible to construe what a judge does while in office as being affected by later employment prospects.
No doubt the provisions that have been made to govern the security of both the tenure and remuneration of judges are important in securing judicial independence and impartiality. But those provisions take their place in a much wider setting of principles that have been established or enacted and which also contribute to the maintenance of both the fact and the appearance of judicial independence and impartiality…the courts, and in particular the Supreme Court, of a State must be, and be seen to be, institutionally independent and impartial. Indeed, this statement of the relevant premise is no more than the particular application of a more general premise identified in Bradley: “that a court capable of exercising the judicial power of the Commonwealth [must] be and appear to be an independent and impartial tribunal”.
The proposed new Division 296 legislation[2], which the Senate Economics Legislation Committee has endorsed[3], imposes additional tax on total superannuation balances exceeding $3 million, said to be consistent with the Government’s proposed objective of superannuation to “preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”[4].
The Senate Report noted that the Explanatory Memorandum for the bills provided that the “changes would improve the equity and sustainability of the superannuation system while maintaining the concessions which assist Australians to save for retirement through their superannuation”[5].
While these may be laudable objectives, the desire that the changes “apply equally to all taxpayers”[6] has led to undesirable effects when it comes to the pensions of Commonwealth and Territory judicial officers, as to which “special rules” will apply[7], involving calculations of a notional superannuation balance.
The proposed legislation imposes an additional 15% tax (on top of the existing 15%) on investment earnings of a super account where the “total superannuation balance” exceeds $3 million at the end of the financial year. The additional 15% is only applied to the amount that exceeds $3 million. To calculate the tax, it seems that there will be calculation of a “notional” capital amount sufficient to produce the pension.
As was pointed out in submissions to the Senate Committee, judicial pensions do not involve a “superannuation balance” and recipients do not have any right to a “notional” capital amount, they cannot elect to receive any of that “notional” capital amount and are not set to receive any discount in the calculation of that notional amount[8]. In other words, judicial pensions, which are unfunded, non-contributory and cannot be commuted, do not involve the mischief which the bills seek to address, namely, the ability afforded by Commonwealth tax laws for some people to set aside capital well in excess of $3 million in a superannuation fund to produce income at a concessional rate. Those pensioners have access to the capital in that fund; a judicial pensioner does not[9].
Nevertheless, the proposed tax will be applicable to the pension entitlements of Commonwealth and Territory judges payable to retired judges and their surviving partners, which can be significant. For example, Commonwealth judges who reach at least 60 years of age and retire after 10 years of service receive a pension of 60 per cent of the salary of sitting members.
According to a representative committee of retired Federal Court judges, the effect of the bills is that the judicial pension, which is already taxed in the hands of pensioners at the top marginal tax rate, will be subjected to an additional tax, causing “retired judges to be more highly taxed on their judicial pensions than any of the superannuants who fall within the mischief for whom the laws are directed”[10].
“As a result of the way the new tax discriminates between Commonwealth, Territory, and State judges, of particular concern is the impact upon the calibre of persons applying to be appointed a judge in the Commonwealth and Territory spheres.”
The Australian Judicial Officers Association (“AJOA”) summarised the effect of the legislation on State, Commonwealth and Territory judges in its submission to the Senate Economics Legislation Committee dated 23 February 2024, as follows[11]:
“For all such judges, the notional capital value of their Statutory Pension Entitlements would be aggregated with their private superannuation entitlements in determining their “total superannuation balance” to determine if the balance exceeds the $3 million threshold; and, if it does, Div 296 tax would be imposed on “earnings” in respect of any private superannuation interests.
For State judges, Div 296 tax would not be imposed on “earnings” in respect of superannuation interests in constitutionally protected funds.
For Commonwealth judges:
Div 296 tax would not apply to “earnings” in respect of accruing pension entitlements under the Judges’ Pension Act (Cth) of currently serving Commonwealth judges who were appointed prior to 1 July 2025;
Div 296 tax would apply to “earnings” in respect of pension entitlements of currently serving Commonwealth judges who were appointed prior to 1 July 2025, once they retire;
Div 296 tax would apply to “earnings” in respect of accruing pension entitlements of Commonwealth judges appointed from 1 July 2025 while they are serving (but will not be payable until they retire) and will also apply to “earnings” in respect of pension entitlements after they retire; and
Div 296 tax would apply to “earnings” in respect of pension entitlements of already retired Commonwealth judges.
For all Territory judges, current, future and retired, Div 296 tax would apply in respect of all of their pension entitlements as per (c) and (d) above, regardless of the dates of their appointment.”
The differential application of the proposed tax disadvantages both Commonwealth and Territory judges, but Territory judges will be the most disadvantaged by the changes. It was put this way by the AJOA[12]:
“The effect of Div 296 tax is harsh in its effect on Territory judges (both ACT and NT) because, unlike for State and Commonwealth judges, it will apply to judges who are currently serving.
In respect of Territory judges, the imposition of Div 296 tax would be particularly egregious. The accruing Statutory Pension Entitlements of Territory judges are already subject to tax under Div 293 and their pensions are subject to income tax.
Div 296 tax would be the third form of tax imposed on their Statutory Pension Entitlements. In contrast, State and Commonwealth judges are not subject to Div 293 tax.
The Bills would override s 73(3A) of the Australian Capital Territory (Self- Government) Act 1998 (Cth) and s 41(3) of the Supreme Court Act (NT) which make provision to the effect that the remuneration and allowances to which a judge is entitled, shall not be diminished while the judge holds office.”
The tax may also disadvantage female judicial officers. The AJOA canvassed three reasons why[13]:
“First, female barristers appointed to judicial office (past, present and future) are likely to have accumulated less in assets than their male counterparts, thereby amplifying the impact of a substantial tax payment at retirement based on their notional pension earnings. This is a consequence of the historical discrepancy between the earnings of male and female barristers in Australia, which continues to the present day. This is demonstrated in, for example, the Law Council of Australia, Equitable Briefing Policy Annual Report: 2022-2023 Financial Year. The Law Council further notes that, “the data about the remuneration of barristers that is publicly available, such as that published by the ATO, suggests a gender pay gap at the Australian Bar that is significantly higher than Australia’s total remuneration gender pay gap of 22.8%.” Additionally, women tend to take longer periods of unpaid parental leave.
Secondly, an actuarial assessment of the total superannuation balance value for the purposes of Div 296 tax for women judges will likely exceed that of their male counterparts because of the greater life expectancy rates for women in Australia.
Thirdly, there is a tendency to offer appointments to outstanding female candidates at an earlier age than male candidates, as one means by which to address the historical gender disparity on superior courts. However, this means that women appointed after 1 July 2025 or on Territory courts would, if they accept early appointment, accrue Div 296 tax for a longer period of time resulting in a greater tax liability on retirement.”
As a result of the way the new tax discriminates between Commonwealth, Territory, and State judges, of particular concern is the impact upon the calibre of persons applying to be appointed a judge in the Commonwealth and Territory spheres. Talented candidates could be deterred from pursuing or remaining in judicial roles, ultimately affecting the quality and diversity of the (federal) judiciary[14].
“Most importantly, echoed in all of the objections from the legal community, was that subjecting judges’ superannuation balances to higher taxation would compromise judicial independence, an essential principle of the rule of law.”
“This will have the unintended effect of making an appointment to a State Supreme Court a financially more attractive proposition than appointment to the Federal Court or Territory courts, with the following consequences:
First, many experienced, skilled, and talented lawyers will choose appointment to State courts over Commonwealth and Territory courts.
Secondly, some persons in private practice are likely to decline judicial appointment, even to the High Court.
Thirdly, some judges of Commonwealth and Territory courts are likely to move to State courts, causing a drain of talent.
Consequences of this kind are not merely speculative but are demonstrated by history. The legislation considered in Austin & Anor v Commonwealth, which introduced a superannuation contributions surcharge for judges’ pensions, continued to apply to Commonwealth judges. There are well-known examples of talented judges who left Federal courts for State courts as a result. Division 296 tax would operate to dilute the quality of Commonwealth and Territory courts in favour of State courts when it is desirable to maintain parity of quality between the courts.
This will adversely affect Commonwealth and Territory courts and, indeed, the Commonwealth and the Territories themselves. It would be contrary to the public interest for the courts responsible for administering Commonwealth and Territory laws to become regarded as second-rate in comparison to State Courts.”
Most importantly, echoed in all of the objections from the legal community, was that subjecting judges’ superannuation balances to higher taxation would compromise judicial independence, an essential principle of the rule of law. For this very reason, subsection 72(iii) of the Australian Constitution provides that Parliament may not diminish the remuneration of a federal judge during their continuance in office. Such ‘remuneration’ includes non-contributory pension plan entitlements which accrue under federal judicial pensions statutes[16].
Peter Dunning KC wrote to the relevant Government ministers on behalf of the Australian Bar Association[17]:
“Judges — Commonwealth, State and Territory — stand between the State and the citizen and also quieten controversies between citizens. Judicial officers embody the third and indispensable arm of government in a civil society.
The attributes of independence, integrity, skill and experience are required to fulfil that difficult task. The Australian judiciary overwhelmingly has those attributes. The acceptance of judicial office nearly always involves material financial sacrifice by the judge from the career the judge leaves behind.
For a very long time, and for obvious reasons, those qualities, most particularly independence, have been secured by ensuring that the remuneration of judges, and necessarily former judges, cannot be imperilled by the State.
Under Australia’s constitutional arrangements, that is not just an article of faith, but an article of our ultimate governing document: Australian Constitution, s 72(iii). The prospect that the Draft Bills, if enacted, provoke a constitutional challenge would produce invidious circumstances at many levels.”
The President of the AJOA, the Honourable Justice Michael Walton, in a further submission on 2 May 2024, urged the Senate Economics Legislation Committee to exclude Federal and Territory judiciaries from the tax[18]:
“With respect to those involved in the design of the Div 296 tax, and giving full recognition to the objectives of the division of that tax, the amendments must give way in the case of the Federal and Territory judiciaries because of the substantial adverse implementations of the tax for Federal and Territory courts. This is particularly so where there is no adequate justification for the tax extending to that group in the first place. The Federal and Territory judiciaries should be treated in this light as a legitimate exception.”
That urging fell on deaf ears, as the majority of the Committee considered that it would be “inequitable” and “inconsistent with the policy intent” to exempt “former judges and their spouses”, giving no real attention to the issues discussed above. As to the likely challenge to the constitutionality of the bills, the Committee accepted Treasury advice that the bill was “drafted according to and consistent with legal advice provided by the Australian Government Solicitor”. That advice was not part of the Committee report.
“A constitutional challenge also raises the likely scenario where the High Court is asked to rule on the constitutionality of the legislation where each High Court justice has a pecuniary interest in the outcome.”
The very real possibility of a constitutional challenge to the legislation, should it be passed, was raised by a number of parties in their submissions to the Senate Committee. In particular, the AJOA has identified that a proposed exemption in the bills to sever and nullify the imposition of taxation, if that imposition would exceed the legislative power of the Commonwealth, reveals ‘substantial doubt’ about the accuracy of the proposition that the constitutional restrictions in s 72(iii) do not apply to retired justices and judges[19]. Relying on advice from Nicholas Owens SC, the AOJA asserted that the Government should, at the least, seek the advice of the Solicitor-General as to all of the constitutional points raised by the bills, including additional concerns as to whether they are within the Commonwealths’ taxing power (s 51(ii)) and whether it amounts to acquisition of property otherwise than on just terms contrary to s 51(xxxi) of the Constitution[20].
A constitutional challenge also raises the likely scenario where the High Court is asked to rule on the constitutionality of the legislation where each High Court justice has a pecuniary interest in the outcome[21]. Undesirable as that might be, there is unlikely to be any constitutionally valid way out of that difficulty and necessity would require the High Court to rule.
[1]Forge v Australian Securities and Investments Commission (2006) 228 CLR 45 at [76]-[78] (Gummow, Hayne and Crennan JJ)
[2] The Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 andthe Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023
[3] Report by the Senate Economics Legislation Committee dated May 2024 (Senate Report), [2.144]
[4] The Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, House of Representatives Hansard, 30 November 2023, p 8930; Senate Report, [1.7]
[7] Senate Report, [1.26]; Submission of a representative committee of retired Federal Court judge to the Senate Committee, dated 19 February 2024
[8] Submission of a representative committee of retired Federal Court judge to the Senate Committee, dated 19 February 2024, paragraph 9
[9] Submission of a representative committee of retired Federal Court judge to the Senate Committee, dated 19 February 2024, paragraph 6; Submission of Susan Crennan KC, dated 18 April 2024, paragraph 7
[10] Submission of a representative committee of retired Federal Court judge to the Senate Committee, dated 19 February 2024, paragraph 10
[11] AOJA submissions dated 23 February 2024, paragraph 9
[12] AOJA submissions dated 23 February 2024, paragraph 68
[13] AOJA submissions dated 23 February 2024, paragraph 30
[14]Austin v Commonwealth (2003) 215 CLR 185 at [159]-[160] (Gaudron, Gummow and Hayne JJ)
[15] AOJA submissions dated 23 February 2024, paragraph 20
[16]Austin v Commonwealth (2003) 215 CLR 185 at [72] (Gaudron, Gummow and Hayne JJ)
[17] Letter from the Australian Bar Association to the Attorney-General, the Treasurer and the Assistant Treasurer, dated 10 May 2024
[18] AOJA submissions dated 2 May 2024, paragraph 9
[19] AOJA submissions dated 23 February 2024, paragraph 58
[20] AOJA submissions dated 23 February 2024, paragraphs 60-67
[21] Senate Report, [1.80] citing oral submissions from the former Chief Justice of the Federal Court, the Hon Michael Black AC KC
