This paper has been drafted for the purposes of a seminar designed to assist administrative decision-makers to produce decisions that are fair, appropriate and clearly articulated with evidence. The focus of the seminar is on the decision making process.

Australian law and practice contain various measures that promote (whether by design or otherwise) open and accountable governance and decision-making. At a practical level, one of the implications of this is that the work of administrative decision-makers may be reviewed and (literally) judged by a Court through the process of judicial review.

This paper attempts to provide a conceptual outline of judicial review generally, as well as some of the judicial review principles that may be of interest to those who make the decisions that become the subject of review.

Judicial review generally

Administrative decisions made by government agencies and departments are generally subject to review by the Courts. This process of “judicial review” is limited to the legality of the decision, rather than its merits. As explained in Attorney-General (NSW) v Quin (1990) 170 CLR 1 by Brennan J:

The duty and jurisdiction of the court to review administrative action do not go beyond the declaration and enforcing of the law which determines the limits and governs the exercise of the repository’s power. If, in so doing, the court avoids administrative injustice or error, so be it; but the court has no jurisdiction simply to cure administrative injustice or error. The merits of administrative action, to the extent that they can be distinguished from legality, are for the repository of the relevant power and, subject to political control, for the repository alone.

Thus, in judicial review proceedings, errors of fact and matters of discretion are not (with few exceptions) allowable grounds of review. Judicial review is not concerned with the ‘merits’ of the decision, but is rather directed towards questions of law, or the various points of law and procedure appearing within the available grounds of review in the Queensland and Commonwealth judicial review Acts.[1]

Before an application for judicial review is made, it is almost always necessary to first pursue any available avenue of merits review (or other appeal). Under the Queensland legislation, if the applicant has not pursued an alternative review that is available the Court “must dismiss the application if it is satisfied, having regard to the interests of justice, that it should do so”.[2] The Commonwealth legislation provides that the Court “may, in its discretion, refuse to grant an application” if adequate provision is made for an alternative review.[3] Of course, in appropriate cases, there may be exceptions to this rule.[4]

In order to be reviewable under the judicial review legislation, a decision must generally be “of an administrative character made … under an enactment”.[5] The test for whether a decision is one that is made under an enactment was stated by the High Court as follows:[6]

The determination of whether a decision is “made … under an enactment” involves two criteria: first, the decision must be expressly or impliedly required or authorised by the enactment; and, secondly, the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment. A decision will only be “made … under an enactment” if both these criteria are met.

One of the examples cited by the High Court was a case involving a decision to issue a search warrant. That decision was said to affect legal rights or obligations because it provided the police officers executing the warrant with authority to do acts which would otherwise amount to trespass.

In Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, Mason CJ pointed out that a reviewable “decision” for the purposes of the judicial review legislation “is one for which provision is made by or under a statute” (at 337). His Honour explained (at 337):

That will generally, but not always, entail a decision which is final or operative and determinative, at least in a practical sense, of the issue of fact falling for consideration. A conclusion reached as a step along the way in a course of reasoning leading to an ultimate decision would not ordinarily amount to a reviewable decision, unless the statute provided for the making of a finding or ruling on that point so that the decision, though an intermediate decision, might accurately be described as a decision under an enactment.

The judicial review legislation sets out the grounds of review that are available when challenging an administrative decision. Some of the more commonly relied upon grounds include:[7]

(a) Breaches of the rules of natural justice or procedural fairness.

(b) Failure to observe necessary procedures.

(c) Taking into account irrelevant considerations, or overlooking relevant considerations.

(d) Legal unreasonableness.

(e) Errors of law.

By the time a party receives an adverse decision, it will often be the case that a significant volume of documentation will have accumulated. That might include evidence obtained by the party themselves, evidence obtained by other parties (or by the decision-maker), and the correspondence or submissions that have been put to the decision-maker. However, from the perspective of the party who receives an adverse decision, perhaps the most critical document is the decision-maker’s statement of reasons.

There is no general or common law duty for a decision-maker to give reasons for a decision.[8] However, many statutory schemes require the giving of a statement of reasons and, in any event, the judicial review legislation enables an aggrieved party to call upon the decision-maker to give a statement of reasons.[9] As will be discussed further, that statement of reasons will often become the ‘centrepiece’ of any judicial review proceedings.

Why and which decisions are challenged through judicial review

Which decisions are likely to be challenged through judicial review, and why? Perhaps the simple answer is: the decisions likely to be challenged are the ones that are adverse to the party involved. And, that is probably the reason why they are challenged as well!

A more complete answer to the question is that there are certain features of an administrative decision which tend to make it more or less likely that it will be subject to judicial review. Some of those features include:

(a) The availability of other avenues of review. As noted above, one of the general principles of judicial review is that, if there are other avenues of review available, those avenues should be pursued before applying to a Court for judicial review. So, where there are no (or limited) rights of ‘merits review’ or statutory appeal, a decision is more likely to be the subject of judicial review.[10]

(b) The nature of the decision. Judicial review proceedings can be expensive to litigate. Rationality would suggest that decisions with low financial stakes will tend to be the subject of judicial review to a lesser extent than decisions with significant financial stakes. Decisions that involve a person’s liberty[11] or right to reside in Australia[12] will tend to be subject to more judicial review, because the financial risks will often be less of a concern to the affected party.

(c) The issues involved in the decision. If the facts are largely uncontroversial, but there is a novel point of law or a disputed interpretation of the law, this will tend to make the decision more susceptible to judicial review. A party may have an interest in challenging the decision-maker’s interpretation of the law, even if the benefits of doing so are not immediate.[13]

(d) The ‘quality’ of the decision-making process, and the reasons for the decision. This is perhaps a more anecdotal suggestion, but experience suggests that parties who feel they were not treated fairly during the decision-making process or who are not satisfied with the stated reasons for the decision tend to be more inclined to seek review of the decision. On the other hand, a well-reasoned decision may dissuade a party from seeking judicial review because of the difficulty of establishing reviewable error.

Put simply, and perhaps unsurprisingly, decisions that are open to ‘merits’ review and that have modest financial stakes will not commonly be subjected to judicial review. On the other hand, decisions that represent the final decision on the ‘merits’ and which involve significant financial or other stakes will be more likely to be subject to judicial review.

Distinction between ‘decision’ and ‘reasons’

There is an important distinction between a decision, and the reasons for that decision.[14] The decision is essentially the ‘what’; whereas the reasons are essentially the ‘why’.

In Civil Aviation Safety Authority v Central Aviation Pty Ltd [2009] FCA 49, the Federal Court said (at [31]):[15]

… the reasons which attend an administrative decision are conceptually distinct from that decision and it is the decision, and not the reasons which accompany it, which is the subject of judicial review … The reasons have no legal consequences in themselves. Rather, they provide material from which arguments about the correctness of a decision may be crafted. Their legal relevance is, therefore, derivative from the decision to which they are appurtenant. …

As noted above, a “decision” is ordinarily some final or operative conclusion or finding that is provided for in the relevant legislation. It might be a conclusion that a licence, permit or benefit should or should not be granted. But it might also include some more “intermediate” finding, such as a finding that a person is not “fit and proper” for a statutory purpose.[16] It is important, of course, for a decision-maker to clearly identify what decision (or decisions) he or she is making.

The reasons for a decision are usually set out in the form of a formal statement. Section 27B of the Acts Interpretation Act 1954 (Qld) states:[17]

If an Act requires a tribunal, authority, body or person making a decision to give written reasons for the decision (whether the expression ‘reasons’, ‘grounds’ or another expression is used), the instrument giving the reasons must also—

(a) set out the findings on material questions of fact; and

(b) refer to the evidence or other material on which those findings were based.

In Ansett Transport v Wraith (1983) 48 ALR 500, Woodward J said (at 507):

… the Judicial Review Act requires the decision-maker to explain his decision in a way which will enable a person aggrieved to say, in effect: “Even though I may not agree with it, I now understand why the decision went against me. I am now in a position to decide whether that decision has involved an unwarranted finding of fact, or an error of law, which is worth challenging.”

Although the decision and the reasons are “conceptually distinct”, there is clear link between a decision and the reason for that decision. In Civil Aviation Safety Authority v Central Aviation Pty Limited [2009] FCAFC 137, the Full Court referred to cases where the giving of reasons with a decision is required and said (at [41]):

Where there is an inadequacy in the reasons provided … a party has been denied a fundamental and important right. The decision-maker has not applied to his or her decision-making task the discipline imposed by the legislature to make those findings on material questions of fact relevant to the decision to be made and then to explain that decision by reference to those facts. The winning party may not be the first to complain — that party has the desired result, albeit for reasons that cannot be discerned. However the losing party does not know why he or she has lost. The reviewing Court is in no better position. A reviewing Court cannot properly discharge its functions if the reasons for the decision under review are not set forth.

It has been said that, at least in respect of public decisions, a “prime purpose” of the giving of reasons for a decision is to “inform the public and the parties” of the reasoning process.[18]

The status of reasons in judicial review

Ultimately, a statement of reasons for a decision may become evidence in judicial review proceedings. There have, however, been differing views on the admissibility of a statement of reasons. In Minister for Immigration and Ethnic Affairs v Taveli (1990) 23 FCR 162, a delegate of the Minister made a deportation order. A statement of reasons was subsequently prepared, although only after judicial review proceedings had been commenced. At the hearing of the judicial review application, the Minister’s counsel sought to tender the statement of reasons (without verification by affidavit). The applicant’s counsel objected, and the trial judge ruled the statement of reason was inadmissible; saying:

I think, in terms of principle, a self serving statement made not on oath outside Court is not normally regarded as admissible at the hands of the person who makes the statement. It comes into its own category in the absence of some statutory provision so I think I have to reject the tender.

On appeal, a majority of the Full Court upheld the trial judge’s conclusion that the statement of reasons was inadmissible. However, the Court held that:

(a) Where a statement of reasons is prepared as part of the decision-making process, then the statement of reasons will generally be admissible as part of the “record”.

(b) Where a statement of reason is prepared some time after the decision is made, the statement of reasons may be admissible under oath (by way of affidavit) but (absent consent of the other party) the reasons cannot simply be tendered without the author being (potentially) liable to cross-examination.

The decision in Taveli might suggest that, from a decision-maker’s perspective, it would be preferable to prepare and issue a statement of reasons contemporaneously with giving the decision (at least where judicial review is a real possibility).[19]

Once a statement of reasons is admitted into evidence, the question then arises as to what the statement of reason proves. That is: what is it evidence of?

Whilst there is no special limit to the potential use of a statement of reasons in evidence, it will normally be relevant in two main ways: showing what the decision-maker did, and showing what the decision-maker did not do. First, the statement of reasons is important evidence of what the decision-maker actually did. In Taveli, French J (as his Honour then was) said that when “properly authenticated, they can be treated as evidence of the reasons for which the decision was made”. His Honour explained:

… a properly authenticated statement of reasons [is] evidence of the truth of what it says, namely, that the findings made, the evidence referred to and the reasons set out were those actually made, referred to and relied upon in coming to the decision in question and that no finding, evidence or reason which was of any significance to the decision has been omitted. … The inferences which may be drawn about its accuracy as a true account of findings and reasons are derived from the facts implicit in its authentication and that it was prepared by the decision-maker in the exercise of a statutory duty to give such an account of his decision.

Secondly, the statement of reasons may be evidence of what the decision-maker failed to do. Thus, a “failure to include reference to a matter in a statement of reasons may justify the inference that, as a matter of fact, the matter was not taken into account”.[20] And the requirement that the statement of reasons must set out “findings on material questions of fact” means “that it is to be inferred from the absence of a reference to, or, a finding with respect to some particular matter that the [decision-maker] did not consider that matter to be material”.[21]

However, the things that are said (or not said) in a statement of reasons are not conclusive one way or the other.[22] As was pointed out in Taveli, the statement of reasons “is a piece of evidence to be weighed and assessed like any other”. In Turner v Minister for Immigration and Ethnic Affairs (1981) 55 FLR 180, the Court said (at 184):

In many cases it will be clear whether or not the decision maker has taken a relevant consideration into account. That is not to say that the mere assertion by the decision-maker that he has done so will conclude the matter. It may be possible to demonstrate from a consideration of all the reasons leading to the decision, or indeed from the decision itself, that a consideration has not been taken into account in any real sense.

There is no rule against a decision-maker being cross-examined about his or her reasons for decision.[23] Evidence can be led of the decision-making process, and what material was available to the decision-maker. This approach probably becomes more significant in cases where reasons for the decision are provided some time after the decision is made, or where the decision-maker seeks to supplement the record in terms of the reasons or matters taken into account.[24]

Finally, it should be noted that a statement of reasons will generally not be evidence of the underlying facts found by the decision-maker. That is, whilst the statement of reasons may be evidence that the decision-maker made the findings of fact set out in the statement, it is not evidence that those findings of fact are objectively true.[25]

Reading reasons: a fine-tooth comb?

As a general proposition, the Courts have held that an administrative decision-maker’s reasons for decision should be read fairly rather than pedantically. In the oft-cited case of Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, Kirby J said this:

The reasons under challenge must be read as a whole. They must be considered fairly. It is erroneous to adopt a narrow approach, combing through the words of the decision-maker with a fine appellate tooth-comb, against the prospect that a verbal slip will be found warranting the inference of an error of law …

The plurality in Wu Shan Liang cited, with approval, the Full Federal Court’s earlier statement that “The reasons for the decision under review are not to be construed minutely and finely with an eye keenly attuned to the perception of error”.

On the other hand, a party receiving an adverse decision — and that party’s lawyers — probably will comb through the words of the statement of reasons “with an eye keenly focussed … or an ear keenly attuned to the perception of error”.[26] And, of course, it will sometimes be the case that a legitimate error of law only becomes evident upon careful scrutiny of the reasons.

In the Courts, a “beneficial” reading of a statement of reasons can only go so far. In Soliman v University of Technology, Sydney [2012] FCAFC 146, the Full Court said that its “eyes should not be so blinkered as to avoid discerning an absence of reasons or reasons devoid of any consideration of a submission central to a party’s case” (at [57]). Earlier, in SZCBT v Minister for Immigration and Multicultural Affairs [2007] FCA 9, Stone J said that a “beneficial” construction of a decision-maker’s reasons “does not require this Court to assume that a vital issue was addressed when there is no evidence of this” (at [26]).

Whatever approach is taken, one thing is clear: there is no amount of formulaic recitation of principles and no standard form of words that will make a decision immune to review. Rather, the Courts encourage decision-makers to simply set out the reasons which led to the relevant conclusions “in clear and unambiguous language, not in vague generalities or the formal language of legislation”.[27]

It may also be noted that the Courts will generally (although not always) be understanding of the realities of administrative decision-making. In Powell v Evreniades (1989) 21 FCR 252, Hill J said (at 265):

Although it may be regrettable, statements [of reasons] are generally prepared by administrators and not lawyers and are often not prepared with the care or precision which the policy of the section contemplates. It clearly would not follow merely because a statement did not set out the findings on a particular material question of fact that no such finding was made. …

In Taveli, French J emphasised that what the Courts are looking for in a statement of reasons is “a statement of the real findings and the real reasons”. His Honour encouraged decision-makers, when giving a statement of reasons some time after making a decision, to be frank and to acknowledge any errors or omissions that come to light. He said:

The Court is sufficiently aware of the pressures associated with administrative responsibilities for high volume and urgent decision-making to accept that mistakes will occur which can and should be redressed without any personal reflection upon the competence or integrity of the officials whose decisions are under challenge.

Conclusion

In almost any case, there are contestable facts and legal principles. There will always be administrative decisions that are found to be vitiated by reviewable error, but that does not necessarily amount to criticism of the decision-maker. A decision-maker who has endeavoured to adopt a fair decision-making process, and who has explained how the disputed issues have been resolved one way or the other, will have contributed to an open and accountable process of administration whatever the eventual outcome.

A seminar paper prepared for Legalwise: The Decision Making and Reason Writing Process

Paper by:

Matt Black

Barrister-at-Law

Presented by:

Matthew Taylor

Barrister-at-Law

Footnotes

1. Judicial Review Act 1991 (Qld) (the JR Act) and Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act).
2. JR Act, s 13. Compare Freier v Jordan and State of Queensland [2002] QSC 385.
3. ADJR Act, s 10(2)(b). Compare Heslop v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs [2010] FCA 1345.
4. See Hagedorn v Department of Social Security (1996) 44 ALD 274, 281. Judicial review prior to the completion of merits review might, for example, be appropriate where the decision-maker is intending to apply a particular legal test which the applicant contends is erroneous.
5. JR Act, s 4; ADJR Act, s 3. Other decisions may nevertheless be reviewable in the Courts’ inherent jurisdiction, or (in the Commonwealth sphere) under the Judiciary Act 1903.
6. Griffith University v Tang (2005) 221 CLR 99, [89].
7. See JR Act, ss 20, 23; ADJR Act, s 5.
8. See Minister for Immigration and Ethnic Affairs v Taveli (1990) 23 FCR 162.
9. JR Act, s 33; ADJR Act, s 13.
10. A few examples from the Queensland jurisdiction include parole and corrections decisions, police management decisions, and various public service decisions.
11. At the time of writing, all 5 of the Supreme Court’s published judicial review judgments for 2016 were brought by prisoners (2 of the 5 were successful).
12. There are continuing high numbers of judicial review cases in the migration area, as revealed by a glance at the published decisions of the Federal Circuit Court to date for 2016.
13. Eg, Calanca v The Queensland Parole Board [2016] QSC 3.
14. Although, of course, “the making of a decision and the preparation of a written statement setting out that decision often constitute a single process”: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, [30].
15. An appeal against that judgment was allowed, but on other grounds: Civil Aviation Safety Authority v Central Aviation Pty Limited [2009] FCAFC 137.
16. As was one of the decisions in Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321.
17. See also Acts Interpretation Act 1901 (Cth), s 25D.
18. Comcare v Levett (1995) 131 ALR 645, 654-655.
19. See also Phosphate Resources Ltd v Minister for the Environment, Heritage and the Arts (No 2) [2008] FCA 1521, [169].
20. Bat Advocacy NSW Inc v Minister for Environment Protection, Heritage and the Arts [2011] FCAFC 59, [46].
21. Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, [35].
22. Eg, Phosphate Resources Ltd v Minister for the Environment, Heritage and the Arts (No 2) [2008] FCA 1521, [172]; Friends of Hinchinbrook Society Inc v Minister for Environment (No 2) (1996) 69 FCR 28, 77.
23. Eg, Minister for Immigration and Ethnic Affairs v Taveli (1990) 23 FCR 162; Phosphate Resources Ltd v Minister for the Environment, Heritage and the Arts (No 2) [2008] FCA 1521, [166].
24. Eg, Garland v Chief Executive, Department of Corrective Services [2004] QSC 450.
25. Eg, Minister for Immigration and Ethnic Affairs v Taveli (1990) 23 FCR 162.
26. See Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611, footnote 60.
27. Ansett Transport v Wraith (1983) 48 ALR 500, 507.

The Honourable Justice Philippides

Chief Justices, your Honours, distinguished guests, ladies and gentlemen —

In closing this evening’s seminar, I wish to acknowledge and pay my respects to elders past and present, and the community today.

W

There is a public expectation that the great institutions of our society will inevitably reflect the diverse composition of our society, because there is an expectation that they are open to all persons of merit. And, so too, there is an expectation that our legal system — our judiciary in particular — will reflect our diversity. Our system of justice is premised on the concept of equality before the law, but also, in the law.

The notion of appointment on merit has a long history. It was, albeit in an imperfect form, held up as an important feature of Ancient Athenian society, distinguishing it starkly from communities elsewhere. But, unlike in Athenian times, we understand that the notion of merit is inherently flawed if the pool from which those of merit are chosen is artificially restricted, whether by gender or cultural diversity or other differences.

I am delighted to have witnessed, when I have sat on admission ceremonies over the past 15 years that I have been a judge of the Supreme Court, the growing numbers of female lawyers being admitted to the profession and I have also witnessed the increasingly diverse cultural composition of the admittees.

But, there is much to be done to achieve diversity in the law. This is especially so in relation to the unacceptably low numbers of Indigenous lawyers in the profession and their virtual absence at the highest echelons. There is only one Indigenous silk in Australia, Tony McAvoy SC. He will speak at a seminar on diversity in this Court in a fortnight and I encourage you to come and hear him.

The outcomes that result from embracing diversity have been well documented over a sustained period in both legal and other professions. However, the importance of diversity is self-evident, one does not need to make a case for it.

What is required to achieve diversity, is not only examining why so few at the upper echelons come from diverse backgrounds, but what can be done to improve the pathways of those coming from diverse backgrounds to reaching high achievement.

That the need to promote diversity is understood as an imperative is reflected in the determined efforts of many in the legal profession, academia, and the judiciary. Such efforts include the work of the Judicial Council on Diversity and the important initiatives of the Law Societies and Bar Associations of the various states and territories and their national counterparts. Our universities promote diversity by the establishment of scholarships. And many law firms and legal organisations now state as an objective the achievement of diversity.

What underscores these efforts is the realisation that embracing diversity is not about conferring some special advantage on a particular group, but rather recognising and promoting to the fullest extent possible the pool of talent that exists in our society.

Recently, the Law Council developed and adopted a Diversity and Equality Charter. The Charter is a statement of principles to acknowledge publicly a commitment to diversity and equality by the Australian legal profession. It is based on the principles of justice, integrity, equality and the pursuit of excellence upon which the legal profession is founded. It recognises that “diverse and inclusive workplaces help to bring about a strong and respected legal profession”. It emphasises that diversity “benefits the legal profession and the community as a whole”.

The Charter has been adopted by very many, including the Hellenic Australian Lawyers Association. The public commitment involved in adopting the Charter is a very significant step towards the goal of achieving diversity and equality in the law. Public commitment is an essential step. And inspiring words have an important place, but they not enough.

It is also essential that, we not only publicly promote diversity, but that that goal is reflected in our individual actions. When combined, and directed collectively in a purposeful manner, there can be great force in individual action.

By your presence this evening, you join those who wish to be a part of embracing diversity in the law, and finding solutions to achieving that outcome. In respect of our goal of promoting and embracing diversity and equality, I close by saying — in one of the indigenous languages that has been spoken for tens of thousands of years in this very location, and now here in this Banco Court:

Kunnar mallera ngalingi meaning “let us be one”.

Preserving the independence of the judiciary

The Hon Catherine Holmes Chief Justice

Thank you for inviting me to speak tonight. I know that Justice Keane spoke here a couple of years ago on the topic of the separation of powers, and I am hoping that what I say will be tangential to, rather than duplicating, his speech. I suspect my talk may be pitched at a more prosaic level. Let me explain the impetus for my choosing the subject of the independence of the judiciary and the need to preserve it.

Lawyers tend to take as a given the importance of judicial independence as essential to democratic government and the rule of law.  But that understanding is not as deeply ingrained in the wider community.  A recent case in which I was involved attracted a good deal of public attention.  That there should be some controversy and some criticism was not in the least unexpected or perturbing, but what did trouble me were some comments I read in that context about what should be the role of judges in general.  One sentiment expressed was that the judges sitting on the case had forgotten that they were public servants; clearly, from the context, not in some larger sense of being at the service of society but as being employees of a government department. And there were suggestions that it would be better if judges were elected, rather than appointed, because then they would respond promptly to public opinion.

There were a number of comments along those lines and they did bother me because they suggested a lack of awareness of the existence of a principle of judicial independence, let alone an appreciation of its significance and value. And it made me think about how widespread that might be. I hope that I am preaching to the converted with this audience when I say that judicial independence is not a state of affairs which exists for the benefit of judges. It is a safeguard of democracy, because, critically, it means independence in judgments. But to not have it more widely understood and valued puts it at risk, because the conditions necessary to it can be diminished or removed.

I want to talk about the foundations of, and vulnerabilities of, judicial independence in the Australian context; and the misconceptions I’ve referred to about it, with some cautionary tales drawn from the American experience.

Let’s start with a definition.  By judicial independence, I mean the ability of a judge to make decisions in accordance with the law, free from direction by the executive and free from concern about ramifications which may flow to him or her or the judiciary generally if the decision given is not pleasing to government or other powerful interest groups. And I like this statement by former US Supreme Court justice Sandra Day O’Connor:

“The reason why judicial independence is so important is because there has to be a place where being right is more important than being popular, and where fairness trumps strength”.1

That place, she says, is the courtroom.

So to return to why the first of those particular comments caught my eye. The idea of judges as public servants, or servants of the executive is the antithesis of an independent judiciary. It has echoes of the circumstances in which the need to afford statutory protection to the judges was first recognised.   You will probably know that courts began to emerge in England in the 12th century, but it was at the very beginning of the 18th century that the foundations of modern judicial independence were laid, with the Act of Settlement in 1701.  The Stuart kings had felt at liberty to dismiss judges who displeased them, including Sir Edward Coke, and generally to treat judges as within the control of the Crown; not dissimilar to the idea which distressed me, of regarding them as public servants, at the direction of the executive. Parliament, as a check on the powers of the throne, passed the Act of Settlement, which gave judges tenure and established salaries to be paid out of public revenue; both widely recognised to this day as essential conditions for the maintenance of independence.

Later in the 18th century, Montesquieu and Blackstone wrote on the importance of separating the judicial function from the exercise of legislative and executive power, to safeguard an independence which would ensure the liberty of the citizenry. That thinking inspired the American founding fathers to vest separate judicial power in the Supreme Court and other Courts to be established by congress and entrenched the rights of judges to hold their office during good behaviour and to receive compensation which should not be diminished. Having started well, the Americans diverged to election of judges for most state courts, which has in my view resulted in placing judicial independence at considerable risk, in ways I’ll talk about later.

I think the individual who was under the misapprehension that judges were civil servants might on reflection see the benefit of the judges not being employees of the Government.  Courts have frequently to decide civil disputes between the Government and the citizen; judges preside over the trials of those accused by the Crown; on occasion it falls to courts to consider the validity of legislation; and increasingly, particularly over the last 30 years, the courts have been called upon to review administrative action.  One could hardly have much confidence in the performance of those functions if they were to be carried out by servants of one party to the litigation, that being the Government; or indeed were amenable to any form of pressure from that party.

In Australia, the independence of the judiciary depends on a mix of sources: legislation, convention and common law. The Commonwealth Constitution from its inception in 1901 entrenched both the separation of powers as between executive, the legislature and the Federal judiciary and the position of Federal Judges.  Over the twentieth century Australia subscribed to international standards such as the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, accepting its obligation to maintain the independence and impartiality of the judiciary.

There is no shortage of statements, international and domestic, of the critical importance of judicial independence to the rule of law. In 1995, the Chief Justices of Asia and the Pacific region, including Australia’s, accepted the Beijing statement of principles of the independence of the judiciary. Not surprisingly, those principles proclaim the fundamental right of all to a fair hearing by an independent and impartial tribunal to which an independent judiciary is essential. They emphasise matters such as the importance of appointment on merit, security of tenure and immunity from suit, not altering remuneration and conditions of service to the disadvantage of judges, the need for the chief judicial officer to have control of assignment of cases and the avoidance of use of executive powers affecting judges in any way which may influence the performance of their functions. They have given rise to a declaration of similar principles issued in 1997 by the Chief Justices of the Australian States and Territories, with some additions to meet particular situations which might be of concern for independence, such as the appointment of acting judges.

Many of those stipulations are met by legislative provision in Queensland. The Constitution of Queensland Act 2001 provides for judges to hold office during good behaviour and precludes their removal other than for proved misbehaviour or incapacity upon a prescribed procedure. Of course, there is provision elsewhere for what we like to call statutory senility, the setting of the compulsory retirement age at 70. The Constitution also provides that a judge’s salary may not be decreased in amount and that if a judge’s office is abolished directly or by abolition of the courts he or she is entitled to hold another office of equivalent or higher status.  

Interestingly, though, the Queensland Constitutional Review Commission, whose recommendations for reform underpinned the 2001 Constitution, recommended that it should expressly recognise the principle of judicial independence.  The Government, however, thought it unnecessary; there was a concern that express recognition of the principle might have the effect of formalising the doctrine of the separation of powers, which Queensland, of course, does not strictly observe. Nonetheless, maintenance of a high degree of separation of functions is critical to judicial independence.

Other important conditions for judicial independence are contained in the Supreme Court of Queensland Act 1991. The Act extends the common law immunity from civil suit of judges in the exercise of their judicial functions to the exercise of administrative functions. It gives me as Chief Justice responsibility for the administration of the court and its divisions and the orderly and expeditious exercise of the court’s jurisdiction and power,2 and gives me the power to decide the Court’s sittings.3 The Chief Judge is similarly responsible under the District Court of Queensland Act 1967 for the administration of his court.4 Control over the Court’s business is obviously a critical feature of independence.  It takes little consideration to see that nothing could be more destructive to independence than the capacity for any external agency to influence what judge should sit on what matter. I have too, the power to do whatever is necessary to manage the Supreme Court precincts round the State, so that, for example, neither State nor Commonwealth office-holders can introduce any other occupant into a courthouse occupied by the Supreme Court without my approval.

All of those provisions recognise and support the institutional independence of the judiciary but none of them is entrenched; that is to say, none requires a referendum or any particular form of parliamentary majority to remove it.  They could be removed in whole or in part at any time by a legislature which chose to do so.  The fact of some of them being in the Constitution perhaps provides a little more protection, because of the perception of the significance of constitutional change; but it is none the less readily achieved by Parliamentary vote, particularly if there is some popular impetus for it.

And notwithstanding those statutory protections, inevitably, of course, the courts cannot be quarantined from involvement with the executive.  An obvious example is in relation to the appointment of judges. Plainly, appointments should be based on merit, by reference to the competence, integrity and experience of the individual chosen. No appointment should be made or refused, for example, because of the political leanings of the individual involved. The older among you will recall that in 1982, Mr Justice Douglas,  the senior judge on the bench was recommended by the Attorney-General for the position of Chief Justice, but rejected by the Bjelke-Petersen cabinet. That was because, according to what Sir Edward Lyons said at the Fitzgerald Inquiry, he was believed to have voted Labour. Of course, seniority gave Mr Justice Douglas no claim beyond consideration for the position, but if it is true that he was rejected because it was perceived that his view were not aligned with those of the Government, that was an insidious form of attack on judicial independence.

Then there are the allied questions of tenure and removal of judges. I’ve already mentioned that the Constitution of Queensland provides for removal of judges. The relevant procedure is firstly that a Tribunal made up of three former judges of superior courts makes a finding of misbehaviour or incapacity, as the case may be. If that is accepted by the legislative assembly, the Governor-in-Council may remove the judge on an address of the assembly.  But the question of what to do about a judge whose failings fall short of misbehaviour is always fraught because of the importance of a judge being able to perform his or her role without fear of reprisal.  It is essential that the executive not be able to impose sanctions on them; hence the very limited statutory grounds for removal.

The balance is between accountability and independence, and it is a delicate one. Which brings me to the second of the areas of comment that caused me concern. One can see why from time to time the election of judges is advocated, or at least the system adopted in many American States, of appointing judges and then requiring them to face an election at the end of a set term to determine whether they will be retained.  In theory, those measures are a fine way to ensure independence: if judicial office is the subject of a vote, the executive is not involved in appointment, and with a retention election, neither the executive nor the legislature plays any role in removal. Appointment and removal by election have the potential to ensure only those who do meet with public approval become judges and those who disappoint are moved on. The idea sounds appealing, and that is why I want to talk about some of the American case law. America is the only country of which I am aware which has judicial elections.

As we know, the office of Federal judge in the United States was from the beginning, and has remained, by appointment, and originally that was also the model for the individual States. But election become increasingly common for State courts through the 19th century; currently 39 States have some form of judicial elections for their appellate or trial Courts or both, some partisan, that is with the endorsement of a political party, but most not.  Because of concern about the political nature of judicial elections many States moved to the system of retention election.  Thirty-one States, however, still use popular election to select judges who then have to run for re-election thereafter.  Almost 90 percent of State appellate Court judges have to be regularly re-elected.

Minnesota has chosen its judges through contested popular elections since the State was admitted to the Union in the mid-19th century.  In Republican Party of Minnesota v White5 the United States Supreme Court had to consider a clause in the Supreme Court of Minnesota’s canon of judicial conduct which prohibited candidates for election from announcing their views on disputed legal or political issues. A candidate for election to the Court had distributed campaign literature criticising decisions of the Court on issues such as crime, welfare and abortion.  That was not a problem, although it does not seem a very good recipe for collegiality. But the candidate wanted to go further and indicate which way he would rule on things if elected, with a view to procuring votes.  He was joined in his litigation, as the title of the case shows, by the Republican Party.

Essentially, the dispute between the minority and the majority in the US Supreme Court turned on whether there was on strict scrutiny a compelling State interest to be served by the clause. The argument was as to what was necessary to the State’s interest so far as preserving the impartiality and independence of the Court and the appearance of it was concerned.  The majority, led by Justice Scalia, considered that the essential form of impartiality was equal application of the law as   between parties.  This clause though did not restrict speech as between parties but as between particular issues.  Judges’ minds were not a complete blank; it was unrealistic to avoid judicial preconceptions on legal issues; and to try to preserve the appearance of that type of impartiality was not a compelling State interest. The clause which prevented the candidate from saying how he would decide things violated the First Amendment freedom of speech.  

The minority said that issues of law or fact in litigation should not be determined by public vote and it was the business of judges to be indifferent to unpopularity.  Even if impartiality were limited to a lack of bias for or against either party, a stance on a particular issue was likely to indicate a view as between particular classes of litigants. So, for example, for a candidate for re-election to rely on a history of affirming rape convictions, implied a bias in favour of the prosecutor against defendants in those cases.  

What is most interesting in the case for my purposes is the judgment of Justice Sandra Day O’Connor. She joined the majority to conclude that the clause was unconstitutional but wrote a judgment expressing her concern about judicial elections.  She pointed out that a judge subject to regular elections was likely to feel that he or she had some personal stake in the outcome of every publicised case, being aware that if the public wasn’t satisfied with the outcome it could hurt their re-election prospects.  Statistics demonstrated that judges facing election were much more likely to override jury sentences of life without parole and substitute the death penalty than those who did not run for election. Even if judges refrained from acting on their awareness of the electoral consequences of their decisions public confidence in the judiciary was liable to be undermined by the possibility.  Campaigning for a judicial post could require substantial fundraising and reliance on campaign donations was likely to leave judges feeling indebted to parties and interest groups; again that possibility was likely to undermine public confidence in the judiciary.  Minnesota’s problem with judicial impartiality was one which was inherent in the use of the election system and was not to be solved by restricting freedom of speech.

Justice O’Connor’s concern about fundraising came home to roost in Caperton v AT Massey Coal Co Inc.6  A jury awarded $50 million against the Massey coal company.  The coal company, knowing that its appeal would be heard by the Supreme Court of Appeals of West Virginia, decided to campaign against an existing member of the Court who sought re-election and instead to support an attorney called Benjamin.  The coal company donated $3million to Benjamin’s campaign and he won narrowly.  He then refused repeated applications for his recusal from the appeal. And he ended up in the 3/2 majority which reversed the jury verdict against the coal company.  

By a 5/4 majority, the US Supreme Court concluded that the campaign contributions relative to the total amount spent in the election had a significant and disproportionate influence on the election; it was entirely foreseeable when the contributions were received that the newly elected justice would be hearing the contributor’s case; the result was a serious objective risk of actual bias requiring recusal. It was an extraordinary situation warranting the conclusion that there was a breach of the due process requirement of the 14th amendment. The minority including the Chief Justice acknowledged the concern to maintain a fair, independent and impartial judiciary. But, they said, allowing the appeal would do more to erode public confidence in judicial impartiality than an isolated failure to recuse in a particular case.  That approach is unsettling for an Australian lawyer, what is also unsettling is that it is clear from the majority judgment that most cases involving parties who had donated to a judge’s campaign would not be seen as involving a significant interference with due process.

In an address in 20107, Sandra Day O’Connor described the flood of money coming into Courtrooms by way of expensive and volatile judicial election campaigns as the single greatest threat to judicial independence in the United States.  There was, she said, an arm’s race in funding. That situation has not improved any. The Brennan Centre for Justice at New York University School of Law maintains a watching brief on judicial campaigning and fundraising. Its website is daunting and illuminating.  Average spending in retention elections between 2009 and 2014 reflected a tenfold increase from the average of the previous eight years.  You might say in response to the Minnesota v White case that the solution is not to allow candidates to campaign and to the Caperton case that the answer is clearly not to allow candidates for election to fundraise. But the American experience is that if the candidates don’t do those things, someone else will.

The Brennan Centre’s report for the 2013/14 year notes that special interests were increasingly doing their own advertising in judicial races and spending freely to support candidates rather than actually donating to them.  The top ten spenders accounted for nearly 40 per cent of total spending nationwide.  Ominously, some of the campaigns focused on criminal justice issues, for example with an ad suggesting that a sitting Supreme Court justice was not tough on child molesters. But they were funded by groups with no demonstrable interest in criminal justice issues, suggesting that that was simply used as a convenient device, a stalking horse, to influence judicial races and by that means, influence judicial decision making on other matters, involving for example competing interests of resource use and environmental protection.  There was also significant spending from the political right, including the Republican State Leadership Committee, the mission of which is to elect State-level Republican office holders, including judges.  

I recommend a visit to the Brennan Centre site to illustrate exactly why the Australian system of appointment and tenure of judges is to be cherished. Apart from fundraising issues, the instances of wildly inappropriate campaigning that can be seen on the website are jaw-dropping.  There is plainly a likelihood of diminishing public confidence in the judiciary as a result; indeed it has been pointed out the more the election of judges looks like contest for political office the more people are apt to regard judges in the same light as politicians.  It is hard to believe that this state of affairs advances the interests of judicial accountability and it seems inimical to judicial independence.  

That’s not to say that our appointment system wouldn’t bear improvement. Ideally appointments should be made in consultation with the judiciary, and by that I mean not just the form of consultation but the seeking of views which are actually taken into account and on criteria which although perhaps broadly stated are nonetheless available for public information.  Currently the Attorney-General, as you may know, has in hand the preparation of a protocol for judicial appointments, which we can expect to provide some guidance.

As to removal, of course there can be a difficulty with a judge who does not meet the criteria for removal but is nonetheless what you might call under-performing. Fortunately the sorts of people who join the bench tend to be rather driven individuals, highly susceptible to peer and professional disapproval. And of course error can be corrected on appeal. But the fact that there is not at the end of the day much to be done if someone is not entirely satisfactory in the judicial role is the price we pay for not having judges who fear the outcome should they make an unpopular decision.

I can’t do better here than quote from former Chief Justice Gleeson:

“What is called the law and order debate sometimes involves opportunistic demands, not merely for the reduction of judicial discretion, but also for sanctions for unpopular decision making.  If judges could be penalised, or publicly censured, because their decisions displease the Government, or some powerful person or interest group, or, for that matter, most of the community, then the right of citizens to an independent judiciary would be worthless.”8

Another obvious issue for judicial independence is the funding of the Court’s operations.  Most of the State Courts, including Queensland’s, depend for their resources on their provision by a State Government department.  That means that although judicial remuneration cannot be altered without legislative change, the services necessary for a judge to exercise his or her functions can be. So, registry staff may be stripped away, funding for IT may be denied, courthouses may be allowed to run down. It is to be hoped that no Government ever contemplates that a court should move to an entirely user pays system funding itself from court fees; to do so would be inimical to access to justice. The prioritising of expenditure is a matter for the executive and as with appointment the judiciary can only hope for consultation. It’s an aspect of relations between the judiciary and the executive which needs careful handling.

I pause here to mention another American example. In Arizona last week the Republican Governor signed an Act passed by the House of Representatives to increase the Supreme Court from five to seven justices.  All good you might say; but the Chief Justice had asked the Governor to veto the legislation.  The Court’s caseload did not justify the extra judges and an expansion of the Court was not warranted when there were other Court related needs unmet. Why the decision to expand the Court? It was widely seen as an exercise in Court packing by the Republican administration of the State.  But in the context of discussing executive powers over budget, this aspect is particularly concerning. The Chief Justice had earlier said that he would go along with the expansion if the legislature provided enough funding to cover the Court’s past budget cuts and to pay for current needs. Now that is a double example of the way judicial independence can be interfered with, through alteration of court composition and through control of the purse strings.

And of course it is not unknown in Australia for the legislature to impinge on judicial independence. Given the absence of any strict separation of judicial power in the State sphere, the High Court’s decision in Kable9 was a large advance in the declaration of constitutional protections for the independence of State Courts. The lawyers among you will know legislation is invalid if it is incompatible with the independence and integrity of a State Court necessary to its constitutional status as a repository of Federal jurisdiction.  To put it more simply, the decision sets a limit on the legislature’s ability to make legislation which controls judicial power; it must not require of a judge functions which conflict with judicial independence or integrity.  Kable, though, is a blunt instrument.  There are certainly many instances in which procedural requirements which are cause for concern have been imposed on Courts but have been regarded by the High Court as not so compromising decisional independence as to offend the Kable principle.

Forge’s Case10, which concerned the validity of the appointment of an acting judge shed some further light on the Kable principle. It was beyond the legislative power of a State to alter the constitutional character of its Supreme Court so that it no longer met the description in Chapter 3 of the Constitution of “the Supreme Court of a State”11.  In Kable, the legislation was incompatible with the institutional integrity of the relevant Supreme Court because, in effect, it required the Court to act as an instrument of the executive. Forge recognised that the institutional integrity of the Court might also be distorted by altering it so that it no longer exhibited the defining characteristics which marked a Court. In the event, legislation allowing for the appointment of an acting judge was upheld; but it was not ruled out that such appointments could conceivably have an effect on the institutional integrity of a Court, depending on a number of factors — how many had been appointed, for how long, to do what and why.

But while Kable operates to defend institutional integrity, it is unlikely to offer any protection against the Arizona situation I referred to earlier, where a government decides to alter by expansion the make-up of a court in order to form a politically desired bench, provided it is smart enough not to articulate those intentions. That comes back, really, to the importance of appointment on proper criteria after good faith consultation.

Just which courts have the status of independence can change over time.  Queensland magistrates were not formally recognised as members of the judiciary until the passing of the Magistrates Act 1991, which separated the Magistracy from the Public Service.  The Act described itself as relating to “the judicial independence of the Magistracy”.  The Magistracy has yet, however, to receive any constitutional recognition. As Gleeson CJ pointed out in North Australian Aboriginal Legal Aid Service v Bradley12 there are differences in arrangements concerning the appointment and tenure of judges and magistrates, their conditions of service and procedures for dealing with complaints against them and Court administration, all of which bear on independence.  That is, he says, because “there is no single ideal model of judicial independence”. But the magistrates have moved increasingly close to the position of judges both in their practices and the expectations of them, and as is often remarked, the majority of people who encounter the justice system will do so in the Magistrates Court. At least in theory it is difficult to see why there should be different levels of independence for different courts. At any rate, the Bradley case puts it beyond doubt that the Kable principle applies to the Magistrates Court as a Court exercising Federal judicial power.

And the ways in which the Kable principle can operate to protect the independence of State courts have by no means been exhausted. Thus in Attorney-General v Lawrence13, a Court of Appeal of which I was a member decided that amendments to the Dangerous Prisoners (Sexual Offenders) Act 2003 were invalid as repugnant to the institutional integrity of the Supreme Court of Queensland.  The amendments permitted the Attorney-General to recommend that the Governor-in-Council make a “public interest declaration” that a person should be detained.  What it meant in effect was that if the Court at first instance or on appeal gave a prisoner previously detained under the Act a supervised release, the executive could immediately nullify the order by making a declaration.  The Court’s orders then would be provisional, in effect dependent on the executive Government’s decision about whether to make a declaration or not, and if the result was unsatisfactory to the Attorney-General could immediately set it at nought by effectively making his own detention order.  It does not take a great deal of thought to see why the Court held that the amending legislation was repugnant to the Court’s institutional integrity. It is noteworthy that the Attorney-General did not invite the High Court to add its view on the matter.

I will just mention here that in 2014 the Council of Chief Justices of Australia and New Zealand issued guidelines for communications and the relationship between the judiciary and the legislative and executive branches to ensure that those branches recognise the institutional and decisional independence of the Courts.  Firstly, so far as legislative actions are concerned, there should be consultation with the Courts on laws affecting the jurisdiction and powers of the Courts, appointment and removal of judges, laws affecting the judicial function such as those which mandate procedural requirements or prescribe matters to which judicial officers must have regard in making decisions, laws affecting the administration of the Courts and laws affecting the character of the Courts. The guidelines also point out that some forms of Parliamentary and executive action not involving legislation can nonetheless affect the independence of the judges, two particular categories being criticism of the Courts and funding of the Courts. Communication between the Courts and the executive in relation to those matters is advocated.

I’ve dealt with the incursions which can be made into judicial independence by the legislature and the executive, and some safeguards.  In my view, though, the media also have some responsibility in this area.  Criticism of judicial decisions is something which should be encouraged in a democracy, and it’s something courts have long been inured to.  I can’t resist at this point stealing an example from a paper by Chief Justice Bathurst of criticism in the 19th Century: Malins V-C had an egg thrown at him as he presided in court. He said, quick as a flash, “That must have been intended for my brother Bacon”.  One can only envy his aplomb.  But while criticism, preferably informed and not involving projectiles, is entirely appropriate, sustained attacks on individual decision makers are not.  From time to time we see in our press or hear on talkback radio denunciations of particular judicial officers, usually magistrates, which are personal and intrusive on their privacy.  Over-dramatic headlines are often accompanied by an unflattering picture of the judicial officer going about his or her ordinary affairs and startled to be accosted by a photographer. 

I know most of the magistrates who have been the subject of that kind of attention and I am happy to say that they are individuals of great robustness and integrity and are unlikely to have their decisions affected by what they have been through.  But they should not be tested in that way. And I am concerned for less hardy souls who may see this experience and be aware that in making an unpopular decision, say about bail, they may well expose themselves to similar opprobrium.  I don’t say there are not effects on judges of higher courts too, but the magistrates operate at closer quarters than any other section of the judiciary to the community at large. 

And you also risk,  though obviously to a lesser extent, some of the double effect Sandra Day O’Connor talked about as resulting from the election process: not only that a judicial officer subject to regular attention of that kind may feel anxious about the outcome of every publicised case because of the prospect of further personal attack, but that even if they refrain from acting on that awareness, public confidence in the judiciary may be diminished by a perception that decisions are made with a wariness about resulting publicity. 

It behoves our media to think a little beyond the headlines and consider the bigger picture of judicial independence and its importance to social stability.  Politicians similarly should observe some restraint in speaking of the justice system and they should not seek to exert pressure for particular results for example in sentencing.  I am happy to say that restraint of that kind has been my recent experience at least so far as the politicians of this State are concerned. There should be no factors in decision making other than case law and legislation, no wild cards of influence from pressure groups or the Press.  The defendant in the most sensational of cases should be confident of receiving precisely the same treatment as the defendant whose case goes entirely unremarked by the wider community.  The equal treatment of citizens before the law is fundamental to our system of justice. I think most people assume that will be the case without necessarily considering what creates the conditions for it.

Well, what can one do?  Ideally we could see bipartisan restraint on the part of politicians at all levels and the resumption by the Attorneys-General of the role of defending the courts because judges cannot enter the public arena.  Education is important. I think there would something to be said for better education at both primary and secondary school level about the roles and functions of these democratic institutions, the executive the legislature and the judiciary.  I fear that if you asked most people in the community what the different arms of Government were, you would draw a complete blank. The Queensland courts are about to see the appointment of an information officer for a trial period; that may go some way towards public education about the judicial role.  We are also in the higher courts looking towards a pilot programme of filming and broadcasting sentencing remarks and appeal proceedings.  Those trials will have to be assessed at their end to determine whether there has been any adverse effect on the delivery of justice, which is entirely possible; or whether they have actually served a purpose of helping to inform the community.  A cynic might fear that the media will be more attracted to the sensational than the informative, but I try hard not to be cynical. 

It seems to me that ignorance and complacency are threats to the preservation of democratic rights.  One of those democratic rights is the expectation of equal treatment before the law, which depends utterly on judicial independence. A good way of preserving it is to try to ensure that everyone in the community understands it and sees its worth.

University of Southern Queensland Public Lecture USQ, Toowoomba Thursday, 26 May 2016, 5:30 pm

Footnotes

1. 33 Seattle U.L. Rev. 559 2009-2010 at 565. 
2. s 15. 
3. s 16. 
4. District Court of Queensland Act 1967 s 28A. 
5. 122 S. Ct. 2528 (2002). 
6. [129 S. Ct. 2252 (2009). 
7. “The Right to an Independent Judiciary” 14th Commonwealth Law Conference, London September 2005. 
8. (1996) 189 CLR 51. 
9. [2006] 228 CLR 45. 
10. At 76. 
11. (2004) 218 CLR 146 at 152. 
12. [2013] 306 ALR 281. 

The use of extrinsic evidence in aid of construction: a plea for pragmatism[1]

By the Honourable Justice Bond 

Under the objective theory of contract the meaning of a contract is to be decided in accordance with what the terms of the contract would convey to a reasonable person in the position of the parties, rather than by reference to the subjective intentions of one, or even both, parties to the contract.[2]

The process of deciding the meaning of a written contractual term ordinarily involves objective consideration of — 

(a) the text of the contractual term;

(b) the context within which the term exists (namely, the entire text of the contract and any other contract, document or statutory provision referred to in the text); and

(c) the commercial purpose or objects evidently intended to be secured by the contract.[3]

This process ordinarily occurs by reference to the contract alone, namely to the contractual text and contextual matters to which it has referred. Notably, there is no ambiguity threshold which must be crossed before it is legitimate to look to context in this way.[4]

But, in the process of deciding the meaning of a contractual term, the question often arises whether a party should be permitted to refer to contextual matters which are extrinsic to the language of the parties’ agreement or what might be evident from it.

Traditionally the starting point to answering that question has been a statement of the operation of the parol evidence rule[5] and a consideration of the exceptions to it.[6] It is more common now simply to say that the ordinary course is that the process of construction occurs by reference to the contract alone (in the sense described above), but that sometimes recourse to events, circumstances and things external to the contract is necessary.

Of course, that begs the question as to how one can determine when recourse to events, circumstances and things external to the contract has become necessary. The famous Codelfa “true rule”,[7] suggests that an ambiguity threshold must first be passed. The first task essayed by this paper is the identification of the current state of Australian appellate authorities on this question. It will become apparent that the law is not yet in a satisfactory state and that there is still a division of approach between intermediate courts of appeal.

The second task essayed by this paper is a brief summary of the law concerning the use to which extrinsic evidence may be put once any ambiguity threshold is met (if there is one). Although the law seeks to draw a clear line between the legitimate and illegitimate uses of such evidence, it is readily apparent that the line is sometimes difficult to draw. And there are still some areas in which an approach is taken which seems anomalous.

In view of these difficulties, one might speculate whether the law is in need of reform.

Indeed, serious suggestions have been made that there should be no exclusionary rules at all. Rather the law should simply let everything in. For example, in a 2014 working paper entitled “A Draft Australian Law of Contract” prepared in response to the Commonwealth Attorney General’s discussion paper concerning reform to Australian contract law, Ellinghaus, Kelly and Wright recommended the abolition of the parol evidence rule. The learned authors would reform the law so that “[a]ll evidence that is relevant to identifying and interpreting the terms of a contract is admissible, including evidence of each party’s actual intention”.[8] The meaning of a contractual term would be that “intended by the parties, having regard to”, amongst other things, “the parties’ statements and other conduct before and after the contract was made”.[9] If a party intends a term to have a particular meaning, and the other party is or should reasonably be aware of that intention, that is its meaning.[10]

I recoil with horror from the breadth of these suggested reforms of the law and reject the notion that they reflect a proper policy setting for the law of contract in this country. The plea for pragmatism made in the title of this paper reflects a concern that the pursuit of theoretical purity can sometimes occur with insufficient attention to feasibility and practical consequences.

The third task essayed by this paper is the development of an explanation of why, in circumstances in which the parol evidence rule would have applied, the proper policy setting of the law must continue to be one in which admissibility in aid of construction of events, circumstances and things external to the contract is exceptional rather than usual.

My hypothesis is that one way or the other, and whether by developments in substantive or procedural law, or both, our system of justice must manage the question of admissibility of extrinsic evidence in aid of construction in such a way as will permit of its occurrence only where it is of real utility and must hold the evidence out if it is not.

The final task essayed by this paper is to suggest some procedural strategies which may improve the efficient management of the reception and use of such evidence in cases in which its use is proposed. I will leave the task of development of the substantive law to others.

The substantive law

Is there still an ambiguity threshold? 

The standard articulation of the objective theory of contract bears repetition. The meaning of a contract is to be decided in accordance with what the terms of the contract would convey to a reasonable person in the position of the parties, rather than by reference to the subjective intentions of one, or even both, parties to the contract.

Where the revealed contractual intention is that the whole of the parties’ agreement is contained in a written contract document, the parol evidence rule applies to exclude the use of extrinsic evidence in determining the meaning of the words used in the contract document.[11] Usually such an intention is sufficiently revealed by the production of a signed written instrument which appears on its face to be the final written expression of the full consensus of the parties.[12]

Of course, the Courts have long since recognised that there is more to the task of construction than simply working out the plain and ordinary meaning of the words used in the contractual text. The strict operation of the parol evidence rule has been the subject of a number of exceptions, the principal amongst which was Sir Anthony Mason’s famous statement in Codelfa Construction Pty Ltd v State Rail Authority (NSW)[13] of the true rule. He wrote:

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning.

This statement of the rule had been widely regarded as authority for the proposition that “ambiguity” (in the sense that the language is ambiguous or susceptible of more than one meaning) was a threshold issue on which the admissibility of extrinsic evidence turned. (The threshold is fairly low: the Western Australian Court of Appeal has recently treated the concept as encompassing not only where a term is open to more than one meaning but also where it is merely difficult to understand; [14] and also any situation in which the scope or applicability of a contract to the circumstances concerned is doubtful and not merely cases involving lexical, grammatical or syntactical ambiguity. [15])

However, it was not too long after the articulation of the “true rule” that suggestions emerged that it was inappropriate to think of an “ambiguity threshold” to the admissibility of extrinsic evidence because language always needs to be interpreted in context. In Investors Compensation Scheme Ltd v West Bromwich Building Society,[16] Lord Hoffman famously summarised relevant principles in a way which rejected any notion of an ambiguity threshold, stating, amongst other things, that:

… Subject to the requirement that it should have been reasonably available to the parties and to the exception [that previous negotiations and declarations of subjective intent are excluded], [the background knowledge which the reasonable person is assumed to have had] includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

In Bank of Credit and Commerce International SA v Ali,[17] Lord Hoffman clarified that in making that statement he was suggesting that there was “no conceptual limit to what can be regarded as background”.

In a paper delivered in 2009, Sir Anthony Mason himself retreated from the notion of an ambiguity threshold.[18] Relevantly:

(a) He thought that the favoured approach was that ambiguity should not be regarded as a necessary threshold. In this regard he observed (emphasis added):

It was that idea that I was endeavouring to express in Codelfa, albeit imperfectly, because I recognised that ambiguity may not be a sufficient gateway; the gateway should be wide enough to admit extrinsic material which is capable of influencing the meaning of the words of the contract. The modern point of criticism is that one should not have been thinking in terms of gateway. At the time, however, it was natural to do so because it stressed the importance of the natural and ordinary meaning of the words used by the parties in their written instrument and it respected the difference between interpretation and rectification.

(b) He generally supported Lord Hoffmann’s restatement of principles or guidelines and thought that the High Court of Australia had endorsed them in Pacific Carriers Ltd v BNP Paribas,[19] and in Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd.[20]

(c) He did sound one word of caution, namely that he doubted that the Hoffmann restatement promoted cost-efficient litigation and thought it might lead to attempts to achieve rectification through interpretation.

Nevertheless, by early 2011 it seemed clear that it was a corollary of the objective theory of contract itself that identification of ambiguity in the terms of an agreement was not a necessary precursor to the examination of surrounding circumstances. This proposition had the support of multiple intermediate appellate courts:

(a) New South Wales:

(i) Franklins Pty Ltd v Metcash Trading Ltd;[21]

(ii) Synergy Protection Agency Pty Ltd v North Sydney Leagues’ Club Ltd;[22]

(iii) Masterton Homes Pty Ltd v Palm Assets Pty Ltd;[23] and

(iv) Movie Network Channels Pty Ltd v Optus Vision Pty Ltd.[24]

(b) Federal Court:

(i) Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd;[25] and

(ii) Ralph v Diakyne Pty Ltd.[26]

(c) Victoria: MBF Investments Pty Ltd v Nolan.[27]

The judges in these cases had discerned in the High Court decisions which established the orthodoxy of the objective theory of contract[28] departure from the Codelfa rule which required ambiguity as a prerequisite for admissibility. They had noted that in stating the objective theory of contract, the High Court had done so in absolute terms and with no reference to any qualifications concerning the need to discern ambiguity. That proposition was certainly true and it was at least arguable that by so doing the High Court was favouring Lord Hoffman’s approach. Even Sir Anthony Mason thought that was the position. It suffices merely to refer to the following passage from Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (citations omitted, emphasis added):[29]

This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.

In 2011, however, the notion that intermediate courts of appeal had correctly identified that the High Court intended to depart from the Codelfa rule was the subject of trenchant criticism by the High Court. The following observations may be made:

(a) In Byrnes v Kendle,[30] Heydon and Crennan JJ emphasised that the observations in relevant intermediate courts of appeal which suggested a relaxation of the Codelfa approach must be read in the light of the fact that in Royal Botanic Gardens and Domain Trust v South Sydney City Council[31] a plurality comprising Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ had said[32] that until the High Court had decided on whether there were differences between the arguably more liberal British approach and the approach authorised by Codelfa, and if so which should be preferred, Codelfa should be followed in Australia.

(b) Royal Botanic Gardens was a case in which the Court was construing a deed between the “Trustees of the Domain” called “the Lessors” and, on the other part, the Council of the City of Sydney called “the Lessee”, which governed the construction by the latter of the parking station beneath the Domain in Sydney. The Royal Botanic Gardens was the statutory successor of the Lessors. At issue was a clause concerning the determination of rent and whether the Lessors were bound by the words “in making any such determination the Trustees may have regard to additional costs and expenses which they may incur in regard to the surface of the Domain above or in the vicinity of the parking station” to take into account only such additional costs or could take wider considerations into account. Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ found —

(i) the relevant clause was ambiguous;

(ii) it was appropriate to take into account the following surrounding circumstances:

A. the parties to the transaction were two public authorities;

B. the primary purpose of the transaction was to provide a public facility, not a profit;

C. the lessee was responsible for the substantial cost of construction of the facility;

D. the facility was to be constructed under the lessors’ land and would not interfere with the continued public enjoyment of that land for its primary object, recreation;

E. the parties’ concern was to protect the lessor from financial disadvantage from the transaction; and

F. the only financial disadvantage to the lessor which the parties identified related to additional expense which it would or might incur immediately or in the future; and

(iii) the clause was to be interpreted as exhaustively stating the considerations which could be taken into account in making a rental determination.

(c) Given that the clause had been found to be ambiguous, the observation made about Codelfa was necessarily obiter, but it was made in a joint judgment of five High Court justices and then re-emphasised by two further High Court justices in Byrnes v Kendle. Without more, the two cases would be a powerful reminder to courts below to keep following Codelfa until the High Court said the contrary.

(d) The point was then re-made in robust observations made in a decision made on a special leave application by Gummow, Heydon and Bell JJ in Western Export Services Inc v Jireh International Pty Ltd.[33] Although decisions on special leave applications do not carry the weight of precedent, they may nevertheless be thought to be a strong indication of the approach of the High Court. Their Honours wrote:

[2] The primary judge had referred to what he described as “the summary of principles” in Franklins Pty Ltd v Metcash Trading Ltd. The applicant in this court refers to that decision and to MBF Investments Pty Ltd v Nolan as authority rejecting the requirement that it is essential to identify ambiguity in the language of the contract before the court may have regard to the surrounding circumstances and object of the transaction. The applicant also refers to statements in England said to be to the same effect, including that by Lord Steyn in R (Westminster City Council) v National Asylum Support Service.

[3] Acceptance of the applicant’s submission, clearly would require reconsideration by this court of what was said in Codelfa Construction Pty Ltd v State Rail Authority (NSW) by Mason J, with the concurrence of Stephen and Wilson JJ, to be the “true rule” as to the admission of evidence of surrounding circumstances. Until this court embarks upon that exercise and disapproves or revises what was said in Codelfa, intermediate appellate courts are bound to follow that precedent. The same is true of primary judges, notwithstanding what may appear to have been said by intermediate appellate courts.

[4] The position of Codelfa, as a binding authority, was made clear in the joint reasons of five justices in Royal Botanic Gardens and Domain Trust v South Sydney City Council and it should not have been necessary to reiterate the point here.

In light of that trilogy of High Court reminders that overruling Codelfa was a matter for the High Court, and not intermediate courts of appeal, one would have expected to find a degree of circumspection in subsequent cases in those Courts when dealing with the question whether the law required an ambiguity threshold to be met. It seemed that the High Court had deliberately pressed the brake on the developments which had been occurring in the Courts below.

To an extent, that is what happened and some decisions in intermediate courts of appeal appeared to retreat from the full flourish of the “ambiguity is unnecessary” proposition (or at least to treat the proposition with some reserve):

(a) In New South Wales: see Rinehart v Welker,[34] Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd,[35] and Moorebank Recyclers Pty Ltd v Tanlane Pty Ltd.[36]

(b) In Victoria: see Reading Properties Pty Ltd v Mackie Group Pty Ltd,[37]and Retirement Services Australia (RSA) Pty Ltd v 3143 Victoria St Doncaster Pty Ltd.[38]

(c) In Queensland, the Court of Appeal seemed still to adhere to the [1] [2] [3] [4] [5]15] below. [6]16] and [47] to [48] below. [7]16] below. [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21] [22] [23] [24] [25] [26] [27] [28]2 above. [29] [30] [31] [32] [33] [34] [35] [36] [37] [38] [39] [40] [41] [42] [43] [44] [45] [46]