Muldrock v The Queen [2011] HCA 39
Today the High Court allowed an appeal from the Court of Criminal Appeal of the Supreme Court of New South Wales which had increased the non-parole period imposed on a mentally retarded sex offender from 96 days to six years and eight months.
Mr Muldrock pleaded guilty before the District Court of New South Wales to the offence of sexual intercourse with a child aged under 10 years. Mr Muldrock is mentally retarded. He was sentenced to nine years’ imprisonment with a non-parole period of 96 days. The judge imposed a condition of parole that Mr Muldrock reside at a residential treatment facility with a program designed to assist intellectually handicapped individuals to moderate their sexually inappropriate behaviour until it was determined that he be discharged.
Mr Muldrock’s application for leave to appeal against the severity of sentence was refused by the Court of Criminal Appeal and the respondent’s appeal against the inadequacy of the length of the non-parole period was allowed. It was common ground that the sentencing judge’s discretion had miscarried because he did not have the power to impose conditions on a parole order for a sentence of nine years’ imprisonment. The Court of Criminal Appeal held that the non-parole period imposed upon Mr Muldrock was inappropriate and was critical of the sentencing judge’s failure to consider the “objective seriousness” of the offence and the part that the standard non-parole period should play in determining the appropriate sentence. In doing so, the Court applied its earlier decision in R v Way (2004) 60 NSWLR 168 (“Way“) on the application of Division 1A of Part 4 of the Crimes (Sentencing Procedure) Act 1999 (NSW), which prescribed standard non-parole periods for specified offences. Mr Muldrock was re-sentenced to a non-parole period of six years and eight months. Mr Muldrock appealed to the High Court by special leave.
The High Court held that the Court of Criminal Appeal erred in refusing Mr Muldrock leave to appeal his sentence and that Way was wrongly decided with respect to the operation of standard non-parole periods. The High Court held that in sentencing for an offence to which standard non-parole periods applied a court is not required or permitted to engage in a two-stage approach and that the standard non-parole period should not have been determinative in sentencing Mr Muldrock. The High Court also held that, in re-sentencing Mr Muldrock, the Court of Criminal Appeal made various errors. In particular, the Court of Criminal Appeal did not take sufficient account of Mr Muldrock’s mental retardation and erred in finding that Mr Muldrock would receive treatment in the prison system. The High Court held that the desirability of Mr Muldrock undergoing suitable rehabilitative treatment was capable of being a special circumstance justifying departure from the statutory proportion between the non-parole period and the term of the sentence and that the sentencing principles of punishment and denunciation did not require significant emphasis in light of Mr Muldrock’s limited moral culpability for his offence. The Court held that nine years’ imprisonment was manifestly excessive. The Court further held that the availability of orders under the Crimes (Serious Sex Offenders) Act 2006 (NSW) was not relevant to sentencing Mr Muldrock. Â
Queanbeyan City Council v ACTEW Corporation Ltd [2011] HCA 40
The High Court dismissed an appeal by the Queanbeyan City Council (“Queanbeyan”) against a decision of the Full Court of the Federal Court of Australia, which held that water licence fees and a utilities network tax imposed by the Australian Capital Territory (“the Territory”) upon ACTEW Corporation Ltd (“ACTEW”), and passed on to Queanbeyan, were not contrary to s 90 of the Constitution. Under s 90 of the Constitution, the power of the Commonwealth Parliament to impose duties of excise is exclusive.
Under power conferred upon it by s 24 of the Local Government Act 1993 (NSW), Queanbeyan provides goods, services and facilities to the City of Queanbeyan. Queanbeyan obtains water supplies from ACTEW which holds a licence to take water from certain areas under the control of the Territory under the Water Resources Act 2007 (ACT). ACTEW previously held a similar licence under the Water Resources Act 1998 (ACT). ACTEW charges Queanbeyan for supplying water to residents and businesses within the City of Queanbeyan. The charge includes costs imposed on ACTEW under Territory legislation.
Pursuant to determinations under the Water Acts, ACTEW was required to pay fees for extracting water from Territory catchments calculated by reference to the amount of water extracted. The determinations increased the water licence fees from 10 cents per kilolitre to 55 cents per kilolitre.
From 1 January 2007, the Territory also required ACTEW to pay a charge imposed by reference to the route length of the infrastructure network for the supply and delivery of water to its customers under the Utilities (Network Facilities Tax) Act 2006 (ACT).
ACTEW was a Territory-owned Corporation within the meaning of the Territory-owned Corporations Act 1990 (ACT). Amongst other things, that Act required the shares in ACTEW to be held on trust for the Territory, gave the Territory’s executive control over ACTEW’s corporate decision-making and regulated its borrowing.
Queanbeyan brought proceedings in the Federal Court of Australia alleging that the Territory had invalidly imposed on ACTEW duties of excise, namely, the water licence fees and the utilities network tax, within the meaning of s 90 of the Constitution, and that these charges were therefore wrongly passed on by ACTEW to Queanbeyan. The primary judge and the majority of the Full Court held that the water licence fees were not taxes. The primary judge also held that the utilities network tax was a duty of excise and therefore invalid. The Full Court disagreed and held that the utilities network tax was not a duty of excise. Queanbeyan appealed, by special leave, to the High Court of Australia. By a notice of contention, ACTEW contended that the water licence fees and utilities network tax were merely internal financial arrangements between ACTEW and the Territory and therefore could not be duties of excise.
The High Court held that the provisions of the Territory-owned Corporations Act indicated that the executive government of the Territory exercised extensive control over the conduct of the affairs of ACTEW. ACTEW was so closely identified with the Territory that it was not distinct from the polity itself. The water licence fees and the utilities network tax, being imposed upon a Territory agency, were merely internal financial arrangements; they could not be “taxes” and thus could not amount to “duties of excise” within the meaning of s 90 of the Constitution.Â
 Shoalhaven City Council v Firedam Civil Engineering Pty Limited [2011] HCA 38
Today the High Court held that an expert’s determination of issues in dispute between parties to a construction contract was made in accordance with the contract. The High Court allowed an appeal from the Court of Appeal of the Supreme Court of New South Wales which had held that the expert’s determination was not binding on the parties because it was internally inconsistent.
Firedam Civil Engineering Pty Ltd (“Firedam”) agreed to design and construct a waste water collection and transport system for Shoalhaven City Council (“Shoalhaven”). Under the contract, Firedam claimed an entitlement to variations and payment for additional works, extensions of time for those works and contractual compensation for the extended time. Shoalhaven claimed an entitlement to costs incurred from delayed completion. An expert was appointed under the contract to determine these issues. Under the contract, the parties were required to treat the expert determination as final and binding if the aggregate liability of one party to the other did not exceed $500,000. Where the aggregate liability exceeded $500,000, either party could commence proceedings.
In the determination, the expert refused to allow certain extensions of time claimed by Firedam arising from variations to works. Firedam argued that this was inconsistent with the expert’s use of a discretion conferred on Shoalhaven in the contract to extend the time for the works to be completed. The expert had used Shoalhaven’s discretion to assess Shoalhaven’s claim for compensation for Firedam’s delays to allocate responsibility for delays between Shoalhaven and Firedam.
The primary judge dismissed Firedam’s claim to a declaration in the Supreme Court of New South Wales that the expert’s determination did not bind the parties. The Court of Appeal disagreed. Shoalhaven appealed to the High Court by special leave.
The High Court held that the expert had adequately explained that he had used Shoalhaven’s discretion to extend time as a device to allocate responsibility for delay caused by Shoalhaven. The Court held that that was not inconsistent with the expert’s refusal to allow Firedam’s claimed extensions of time. The High Court therefore held that the Court of Appeal erred and reinstated the orders of the primary judge.
Tasty Chicks Pty Limited & Ors v Chief Commissioner of State Revenue [2011] HCA 41
Today the High Court held that a review by a judge of the Supreme Court of New South Wales from a decision of the Chief Commissioner of State Revenue (“the Commissioner”) disallowing an objection to an assessment for pay-roll tax, was not limited to considering whether the Commissioner had erred on the materials before him and failed to make the objection decision according to law. The High Court allowed an appeal from a decision of the Court of Appeal of the Supreme Court of New South Wales, which had held that the right of review was so limited.
The fourth and fifth appellants, Mr and Mrs Souris, conducted in partnership a chicken meat processing business (“the Firm”). The third appellant (“Souris Holdings”) owned premises, portions of which were separately let to the Firm, the first appellant (“Tasty Chicks”) and the second appellant (“Angelo Transport”).
The Pay-roll Tax Act 1971 (NSW) (“the Pay-roll Tax Act “) and the Taxation Administration Act 1996 (NSW) (“the Administration Act”) contain “grouping” provisions. These are designed to counter tax avoidance effected by using additional entities to split business activities so that each entity attracts the benefit of pay-roll tax thresholds. The grouping provisions allow the Commissioner to treat separate entities as a single entity for pay-roll tax purposes. The “de-grouping” provisions could be applied by the Commissioner if it were unreasonable to apply the “grouping” provisions. The appellants objected to assessments under the Pay-roll Tax Act and the Administration Act which related to three periods: 1 July 2001 — 30 June 2003 (“the first period”); 1 July 2003 — 30 June 2005 (“the second period”); and 1 July 2005 — 30 June 2007 (“the third period”). The assessments were based upon the Commissioner’s grouping of the appellants. In effect, the appellants challenged the Commissioner’s refusal to “de-group” Tasty Chicks, Angelo Transport and the Firm.
Section 97 of the Administration Act provided that a taxpayer could apply to the Supreme Court of New South Wales for a “review” if dissatisfied with the Commissioner’s determination of an objection made under Div 1 of Pt 10.
Section 100(2) of the Administration Act provided that, on an application for review before the Supreme Court, “the applicant’s and respondent’s cases … are not limited to the grounds of the objection” that were before the Commissioner. Section 101(1)(b) of the Administration Act relevantly provided that the court or tribunal dealing with the application for review could make an assessment or other decision in place of the assessment or other decision to which the application related.
Section 19(2) of the Supreme Court Act 1970 (NSW) had the effect that proceedings in the Supreme Court under s 97 of the Administration Act were an “appeal” for the purposes of the Supreme Court Act if so described in the Administration Act. Section 97(4) of the Administration Act provided that a review by the Supreme Court was taken to be an appeal for the purposes of the Supreme Court Act and the regulations and rules made under that Act, except as otherwise provided by that Act or those regulations or rules.
The primary judge set aside the Commissioner’s disallowance of the appellants’ objections. The primary judge held that the Commissioner was not entitled to apply the “grouping” provisions in relation to the first period. In relation to the second and third periods, the primary judge applied the de-grouping provisions. In applying the de-grouping provisions, the primary judge held that the Court was entitled to re-exercise the Commissioner’s powers. The Court of Appeal allowed the Commissioner’s appeal, holding that an applicant for review of a decision not to de-group had to establish that the Commissioner erred on the materials before him.
The High Court unanimously held that, when all the above provisions were read together, the primary judge’s view of the Supreme Court’s jurisdiction and powers was correct. The High Court held that the Court of Appeal erred in considering that the jurisdiction and powers conferred upon the Supreme Court required the taxpayers to show that the Commissioner had erred on the materials before him and that the exercise of discretion by the Commissioner was vitiated by error.
Westport Insurance Corporation & Ors v Gordian Runoff Limited [2011] HCA 37
Today the High Court allowed an appeal from the Court of Appeal of the Supreme Court of New South Wales and reinstated orders of the primary judge setting aside an arbitral award.
On 10 October 2008, in an arbitration conducted under the Commercial Arbitration Act 1984 (NSW) (“the Arbitration Act”), arbitrators delivered the arbitral award in favour of Gordian Runoff Ltd (“Gordian”). The award determined the rights of the parties to treaties for reinsurance (“the treaties”) and the effect of s 18B(1) of the Insurance Act 1902 (NSW) (“Insurance Act”) upon the obligation of Westport Insurance Corporation and four other reinsurers (“the reinsurers”) under the treaties to indemnify Gordian.
Gordian was an underwriter of professional indemnity insurance and directors and officers liability (“D&O”) insurance. One D&O insurance policy was written for FAI Insurance Ltd (“FAI”), insuring for claims for prior wrongful acts occurring before 31 May 1999 and allowing claims to be made and notified for seven years thereafter (“the FAI policy”).
In the arbitration, the dispute between the parties turned upon whether the liabilities of Gordian for claims under the FAI policy were reinsured under the treaties between Gordian and the reinsurers. The central issue was whether the reinsurance treaties covered the FAI policy, given that it covered claims made and notified to Gordian within an extended period of seven years, rather than three years which was said to be the usual period for making claims under the reinsurance treaties. The reinsurers had not been aware of the existence of the FAI policy until 23 February 2001.
The treaties required the dispute to be decided by arbitration in accordance with, and subject to, the Arbitration Act.
Section 18B(1) relevantly provides that the insured shall not be disentitled to be indemnified by the insurer only by reason of any exclusion clause if, on the balance of probability, “the loss in respect of which the insured seeks to be indemnified was not caused or contributed to by the happening of those events or the existence of those circumstances, unless in all the circumstances it is not reasonable for the insurer to be bound to indemnify the insured”. The loss in respect of which Gordian sought to be indemnified was its liability on the three year claims. The “particular circumstance” was that the FAI policy covered claims which were made and notified to Gordian in a seven, not three, year period.
Section 29(1) of the Arbitration Act required the arbitrators, relevantly, to make the award in writing and state the reasons for making the award. Under s 38(2), a proceeding described as “an appeal” lay to the Supreme Court “on any question of law arising out of an award”.
In their reasons for the award, the arbitrators were not persuaded that the reinsurance treaties covered the FAI policy. However, they found that s 18B(1) of the Insurance Act applied to contracts of reinsurance at the time of the arbitration and, as a result, the reinsurance treaties covered Gordian’s liability under the FAI policy in relation to the three year claims.
The reinsurers appealed to the Supreme Court of New South Wales. The primary judge set aside the arbitral award on the basis that the arbitrators had failed to recognise that the agreement by the reinsurers to extend cover under one of the reinsurance treaties was not a limitation or exclusion in the sense contemplated by s 18B(1) of the Insurance Act. The Court of Appeal allowed Gordian’s appeal from the decision of the primary judge and refused leave to the reinsurers to “appeal” against the award. The reinsurers appealed by special leave to the High Court.
A majority of the High Court held that the arbitrators, in relying on s 18B of the Insurance Act, were obliged to explain why the steps in that provision were satisfied. The Court held that there was no indication of factual findings in the reasons for the award supporting the inapplicability of the proviso nor supporting its application. The result of the inadequacy of reasons was that the award was set aside. Their Honours also held that s 18B did not apply because the treaties did not exclude or limit the reinsurers liability to indemnify Gordian because the FAI policy was for seven years.
Roy Morgan Research Pty Ltd v Commissioner of Taxation & Anor [2011] HCA 35
Today the High Court dismissed an appeal by Roy Morgan Research Pty Ltd against the decision of the Full Court of the Federal Court of Australia which had upheld the constitutional validity of the Superannuation Guarantee (Administration) Act 1992 (Cth) (“the Administration Act”) and the Superannuation Guarantee Charge Act 1992 (Cth) (“the Charge Act”).
The challenged legislation imposes the superannuation guarantee charge (“the Charge”) on an employer who fails to provide to all employees a prescribed minimum level of superannuation, specified in the Administration Act. Any shortfall created by the employer’s failure to meet the minimum level in full becomes the Charge, which is levied on the employer by the Charge Act. The Charge Act does no more than impose the Charge and fix its rate. The Administration Act deals with the incidence, assessment and collection of the Charge.
The Charge is a debt due to the Commonwealth and payable to the respondent, the Commissioner of Taxation. It includes a component for interest and an administration cost. The revenue raised by the Charge is to be paid into the Consolidated Revenue Fund. The lesser of the employee’s entitlement and the amount of the Charge actually paid by the employer is then to be paid out to a superannuation fund for the benefit of the relevant employee. The result is to supply an incentive to employers to make contributions to superannuation for their employees without incurring the Charge.
The appeal to the High Court concerned the power of the Parliament to make laws with respect to taxation under s 51(ii) of the Constitution. The appellant challenged the validity of the provisions in the Administration Act and the Charge Act dealing with the Charge. The appellant argued that the Charge was not a “tax” because it was not imposed for “public purposes”. This was said to be because the Charge conferred “a private and direct benefit” on the relevant employees. It followed, the appellant argued, that neither the Charge Act nor the Administration Act was a law with respect to taxation within the meaning of s 51(ii), and that the legislation establishing the Charge and providing for its administration was invalid.
The High Court held unanimously that the Charge was a tax, and that the appellant’s constitutional challenge to the Administration Act and the Charge Act failed. The receipt of funds into the Consolidated Revenue Fund established that the Charge was imposed for “public purposes”. Once the Charge is paid into the Consolidated Revenue Fund its identity is lost. The funds raised by the Charge are thereafter available under s 83 of the Constitution for an appropriation to be spent on any purpose for which the Commonwealth may lawfully spend money. Where other necessary constitutional criteria of a tax are met, as they were in this case, the receipt of funds into the Consolidated Revenue Fund establishes the character of the Charge as a valid tax.
Lithgow City Council v Jackson [2011] HCA 36
Today the High Court allowed an appeal against the decision of the Court of Appeal of the Supreme Court of New South Wales which had upheld a claim in negligence by Mr Craig William Jackson against Lithgow City Council.
On 18 July 2002, Mr Jackson was found unconscious and badly injured in a concrete drain in an area of parkland in Lithgow, New South Wales. The western end of the drain had a 1.41m vertical face topped by a small retaining wall partially concealed by foliage. Mr Jackson brought proceedings in negligence against Lithgow City Council, arguing that his injuries were caused by tripping from the small retaining wall. Mr Jackson’s injuries prevented him from recalling how he came to be injured, and he sought to rely on a statement contained in a record made by the ambulance officer or officers summoned to assist him, which was: “? Fall from 1.5 metres onto concrete” (“the Statement”).
The trial judge relevantly found that Mr Jackson had not established whether his injuries were caused by Lithgow City Council’s breach of duty, because he had not established that he had fallen over the western vertical face after walking over it, as distinct from stumbling down one of the sloping sides, or standing on the top of the northern face and losing his balance. Her Honour did not refer to the Statement in her reasons.
On appeal to the New South Wales Court of Appeal, the appeal books before the Court truncated the question mark in the Statement, and the Court considered the truncated statement to be an opinion, admissible under s 78 of the Evidence Act 1995 (NSW) (“the Act”), that Mr Jackson had fallen down the vertical western face of the drain. The Statement was crucial to their Honours’ conclusion that Mr Jackson had established causation.
Following a grant of special leave by the High Court, an appeal by the Council was heard instanter and allowed, and the matter was remitted to the Court of Appeal for a rehearing in light of the accurate trial record. On the rehearing, the Statement, including the question mark, was held to be an admissible opinion, and the Court adhered to its original conclusion that Mr Jackson had proved causation. Basten JA concluded that the evidence established causation even without the Statement.
Two issues were presented in the High Court. The first was whether the Court of Appeal in its second decision was correct to hold that the Statement was admissible. The second was whether, even if the Statement was not admissible, the conclusion that causation was established could be supported by other evidence.
The High Court held unanimously that the Court of Appeal erred in treating the Statement as an admissible opinion under s 78 of the Act. The Statement was so ambiguous as to be irrelevant.
In any event, the nature of the Statement was such that it was not possible to find positively that it stated an opinion. Moreover, even if it was assumed that the Statement did express an opinion, it was not one which satisfied s 78 of the Act. The Court held by majority that Mr Jackson had not established causation because the conclusion that a fall from the vertical western face of the drain caused his injuries could not be drawn on the balance of probabilities.
Momcilovic v The Queen & Ors [2011] HCA 34
Today the High Court allowed an appeal by Ms Vera Momcilovic against her conviction for drug trafficking contrary to s 71AC of the Drugs, Poisons and Controlled Substances Act 1981 (Vic) (“the Drugs Act”), but held that s 71AC is not invalid under s 109 of the Constitution for inconsistency with the trafficking offence provision of the Criminal Code (Cth).
In 2008, Ms Momcilovic was convicted, following trial by jury in the County Court of Victoria, of trafficking in methylamphetamine contrary to s 71AC of the Drugs Act. The prosecution case was that drugs were found in an apartment that Ms Momcilovic owned and lived in. However, Ms Momcilovic lived in the apartment with her partner, Mr Velimir Markovski, who had been convicted in a separate trial of trafficking in methylamphetamine and cocaine. At her trial, Ms Momcilovic and Mr Markovski gave evidence that she had no knowledge of the presence of drugs in the apartment. In order to establish possession of the drugs by Ms Momcilovic, the prosecution relied upon s 5 of the Drugs Act, which provided that “any substance shall be deemed for the purposes of this Act to be in the possession of a person so long as it is upon any land or premises occupied by him … unless the person satisfies the court to the contrary”. The jury was directed that, once it was proved that Ms Momcilovic was in occupation of the apartment, she was deemed to be in possession of the drugs unless she satisfied the jury that she did not know of their presence.
On appeal to the Court of Appeal of the Supreme Court of Victoria, Ms Momcilovic submitted that on its ordinary construction or, alternatively, pursuant to the interpretive rule created by s 32(1) of the Charter, s 5 of the Drugs Act did not impose on her any onus of proof. Alternatively, she submitted that the provision should be interpreted as imposing an evidential onus rather than a legal onus. Section 32(1) of the Charter provides that “[s]o far as it is possible to do so consistently with their purpose, all statutory provisions must be interpreted in a way that is compatible with human rights”. The Court of Appeal refused Ms Momcilovic leave to appeal against her conviction. The Court of Appeal also made a declaration of inconsistent interpretation pursuant to s 36(2) of the Charter, on the basis that s 5 of the Drugs Act could not “be interpreted consistently with the presumption of innocence under s 25(1) of the Charter”.
On appeal to the High Court, Ms Momcilovic raised several issues of constitutional importance in seeking to have her conviction quashed, including:
- the validity of the Charter, in particular s 32(1) which conferred a statutory interpretation function upon courts, and s 36 which conferred on the Supreme Court the power to make a declaration of inconsistent interpretation where the Court was of the opinion that a statutory provision could not be interpreted consistently with a human right;
- whether the offence of trafficking contrary to s 71AC of the Drugs Act is invalid under s 109 of the Constitution for inconsistency with the offence of trafficking contrary to s 302.4 of the Criminal Code (Cth);
- the construction of s 71AC of the Drugs Act, and whether s 5 is applicable to the offence.
The High Court, by majority, allowed Ms Momcilovic’s appeal against her conviction. French CJ, Gummow, Hayne, Crennan and Kiefel JJ held that s 5 did not apply to the offence of trafficking contrary to s 71AC of the Drugs Act. Their Honours held that, as a result, Ms Momcilovic’s trial had miscarried because the jury had been misdirected. Bell J held that s 5 did apply to s 71AC, but nevertheless that the jury had been misdirected. Further, French CJ, Gummow, Heydon, Crennan, Kiefel and Bell JJ held that s 71AC of the Drugs Act was not invalid for inconsistency with the trafficking offence provision of the Criminal Code (Cth). The Court quashed Ms Momcilovic’s conviction, set aside her sentence, and ordered that a new trial be had.
In relation to the validity of the Charter, French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ held that s 32(1) operated as a valid rule of statutory interpretation, which is a function that may be conferred upon courts. With respect to the declaration of inconsistent interpretation made by the Court of Appeal, French CJ and Bell J held that s 36 of the Charter was valid but that there could be no appeal to the High Court from a declaration made under that section. Crennan and Kiefel JJ held that s 36 of the Charter was valid but that a declaration of inconsistent interpretation should not have been made by the Court of Appeal in this proceeding. Gummow, Hayne and Heydon JJ held that s 36 was invalid for impermissibly impairing the institutional integrity of the Supreme Court. As a majority of the Court was of the view that the declaration of inconsistent interpretation made pursuant to s 36 either was invalid or ought not to have been made by the Court of Appeal in this proceeding, the Court ordered that the declaration be set aside.
The Attorney-General for Victoria was ordered to pay two-thirds of Ms Momcilovic’s costs.
Jemena Asset Management (3) Pty Ltd & Ors v Coinvest Limited [2011] HCA 33
Today the High Court dismissed an appeal from a decision of the Full Court of the Federal Court which held that the Construction Industry Long Service Leave Act 1997 (Vic) (“the State Act”) was not inconsistent with federal industrial instruments made under the Workplace Relations Act 1996 (Cth) (“the Commonwealth Act”) in relation to long service leave (“the federal instruments”) within the meaning of s 109 of the Constitution.
The appellant companies carried on businesses in the operation of electricity infrastructure assets. In the course of business, the appellants employed persons to perform construction work and were bound by the federal instruments. The federal instruments imposed obligations on employers to grant, and pay for, long service leave in relation to their qualifying employees and governed the circumstances in which such entitlements would accrue. The Commonwealth Act provided for the paramountcy of industrial instruments made under federal legislation over State laws.
The State Act provided for a scheme for portable long service leave benefits in the construction industry. The respondent was the trustee of the Construction Industry Long Service Leave Fund established by the State Act under a trust deed (“the trust deed”). The State Act obliged the appellants to register with the respondent and pay the respondent a long service leave charge in respect of every worker employed by them to perform construction work. Fund Rules made by the respondent under the trust deed provided that every worker was entitled to a long service leave benefit in respect of continuous service performing construction work for an employer.
On 24 February 2006 the respondent requested the appellants to provide relevant details of their workers and to make payments pursuant to the State Act. Between May 2006 and July 2007, the respondent issued the appellants with notices requesting information regarding certain of the appellants’ employees. On 3 October 2007, the respondent advised the second appellant that it would commence proceedings against the second appellant in relation to its failure to comply with one of the notices.
On 5 October 2007 the appellants brought proceedings against the respondent in the Federal Court because they feared imminent prosecution under the State Act. The issue was whether the State Act, including the scheme established under it, was inconsistent with certain provisions of the Commonwealth Act embodied in the federal instruments and therefore invalid by reason of s 109 of the Constitution. The primary judge and the Full Court of the Federal Court held that the State Act was not inconsistent with the federal instruments within the meaning of s 109 of the Constitution. The appellants appealed, by special leave, to the High Court.
The High Court held that the State Act was not inconsistent with the federal instruments within the meaning of s 109 of the Constitution. The Court held that employees’ entitlements to long service leave benefits under the State Act could only be in the form of payment from the Fund. There was no provision for the grant of any long service leave, a subject which was covered by the federal instruments. While the federal instruments dealt with all the obligations and entitlements of employers and employees in respect of the grant of, and payment for, long service leave arising in the employment relationship, they did not deal with, or even mention, portable long service leave benefits for workers in continuous service within the construction industry. The Court also held that the State Act did not undermine an employer’s obligations under the federal instruments to grant, and pay for, long service leave or an employee’s entitlement to receive such leave.
