Hoxton Park Residents Action Group Inc v Liverpool City Council

The Pleaded Claim

1. The pleaded relief sought by the plaintiffs is as follows: 5. Declaration that the law of the Commonwealth and any declaration by and decision of the Minister thereof conferring power to approve funding of the project by payment of funds to or for the Second and/or Third Defendant for their purposes pursuant to any agreement or otherwise is void and of no effect. 6. Declaration that the Commonwealth law insofar as it provides for grants to the State of New South Wales on condition that the money so granted is paid by the State to Third Defendant to finance the project, including the erection of buildings therefore whether or not pursuant to agreement or otherwise between the Fifth and Fourth Defendants and between the said Defendants or either of them and the Second and Third Defendants is void and of no effect. Particulars of Statutes Schools Assistance Act 2008, Schools Assistance (Learning Together - Achievement Through Choice and Opportunity) Act 2004 as amended; Australian Education Act 2013 [Cth]; Appropriation Act 2008 to date. 7A. Declaration that Appendix F to the intergovernmental agreement on Federal Financial Relations and/or such informal agreement or arrangement between the Defendants and each of them with respect to the project is an unconstitutional agreement and is invalid and of no effect, or invalid and inoperative to the extent that it provides funds having the purpose or effect of a law prohibited in contravention of the Constitution section 116, and any part thereof.
2. The relevant laws of the Commonwealth referred to in prayers 5 and 6 of their pleading are the Schools Assistance Act 2008 (Cth) and the Australian Education Act 2013 (Cth). No relief is sought directly against the State. However by prayer 7A, the plaintiffs seek a declaration concerning an intergovernmental agreement 'between the Defendants'. The State is a necessary party to this claim.
3. Confusingly, the relief sought and the pleaded allegations of fact specify 'the project'. The 'project' was described as the construction and establishment of the 'faith based educational facility' and 'place of worship' at Hoxton Park, which was said to be part of a national network that included the other two campuses of the School at Greenacre and Beaumont Hills and a small number of other schools in South Australia, Western Australia, Victoria, Queensland and Australian Capital Territory. When the construction was completed, the Hoxton Park construction site became the Hoxton Park campus of the School.
4. In support of their claim that, by reason of the Commonwealth funding, there has been a breach of Section 116 of the Constitution, the plaintiffs allege that the 'project' has certain factual characteristics. There was an ongoing issue at the hearing as to whether the determination of the validity of the laws in question, or the relevant executive arrangements, acts and decisions pursuant to them, could possibly depend on the resolution of these questions of fact. I deal with this later.
5. Whether relevant or not however, the factual contentions in paragraph 28 (c), (d) and (e) of the amended statement of claim were justifiably disputed. Paragraph 28 of the amended statement of claim provides in full as follows: 28 The project provides by its terms expressly or impliedly: (a) For a place or building used in Australia for the purpose of religious worship whether or not it is also used for social events and instruction by a religious group; (b) A non-government faith based educational facility in New South Wales referred to in Education Act 1990 [NSW]; (c) For establishing any religion, in that the project establishes a religion namely Islamic religion in Hoxton Park which did not hitherto exist and which had the effect or purpose of recognizing together with other similar projects in Australia or alone a particular religion as a national institution; (d) For imposing any religious observance, in that the establishment imposes directly or indirectly on any child or person attending the facility of whatever background the regular religious observance of the said faith including he saying of prayers liturgy the wearing of clothes and livery of a particular kind associated with the religion; (e) For prohibiting the free exercise of religion, in that the project when operating will prohibit the free exercise of other religions and faiths and/or no religion at the said institution or facility within Hoxton Park. (emphasis added)
6. I should observe that the plaintiffs disclaim any intention to invalidate the relevant laws of the Commonwealth generally - across the whole field of their operation to all independent non-government religious schools that receive Commonwealth funding. They say that their claim is limited to a challenge 'only insofar as those laws permit or provide for funding to the School'. The distinction is elusive, and its practical application may be difficult, but the plaintiffs' focus of attention on the Hoxton Park campus of the School can be discerned in the following precise orders which were proposed during submissions: Declaration pursuant to Constitution section 75(v) and 77(iii) and Judiciary Act 1903 section 39 that the decisions of 6 July 2011 of the Fifth Defendant to vary the approved school determination of the Second Defendant extending same to a new campus at Hoxton Park and to fund the school so located was each invalid. Declaration that Part 4 of Schools Assistance Act 2008 [Cth] and Part 3 of Australian Education Act 2013 [Cth] is invalid pursuant to Constitution section 116 to the extent that it authorized the Fifth Defendant to grant financial assistance to the Fourth Defendant for the purpose of funding educational services at the Hoxton Park school conducted by the Second Defendant which includes: (emphasis added) Compulsory Prayers for all students in the form of 'Salaat' Washing ceremonies for all students in the form of 'Wudu' The compulsory wearing by all female students of the scarf or hajib The segregation of student men and women at school assemblies for prayer. Declare that Part 4 of Schools Assistance Act 2008 [Cth], and Part 3 of Australian Education Act 2013 is each invalid pursuant to the Constitution section 116 to the extent that it confers power on the Fifth Defendant to authorize payment of recurrent funding to the Second and Third Defendants through the Fourth Defendant to expend moneys on the purchase of land at 612 Hoxton Park Road Hoxton Park for the purposes of a school at Hoxton Park. (emphasis added) Declare that Australian Education Regulations 2013 [Cth] Regulation 29, Appendix F to the intergovernmental agreement on Federal Financial Relations and clause 66 of the Administrative Guidelines Commonwealth Programme for Non-Government Schools 2009 to 2013 is each invalid pursuant to Constitution section 116 to the extent it authorized payment to the Fourth Defendant to be paid to the Second Defendant by the Fifth Defendant. (emphasis added)
7. Underlying the plaintiffs' contentions are the following core legal issues: 1. whether the State of NSW has 'sole legislative power over matters of and concerning religion and education'. On the basis of this premise, the plaintiffs allege that the Schools Assistance Act and the Australian Education Act are invalid because, insofar as they relate to the School, they contravene sections 106 or 107 of the Constitution and exceed the constitutional power of the Commonwealth in that they override the power of the State of NSW or curtail the capacity of the State to function as a government in the State areas of power of religion and education; 2. whether the Commonwealth has funded, managed and directed the 'project' (or the School or its Hoxton Park campus) in contravention of Section 116 of the Constitution because the Commonwealth's decisions and payments are properly characterised as being: 1. for establishing a religion, in that the project (or the School or its Hoxton Park campus) establishes a religion or tends to establish the Islamic religion, which had previously not been established in the community at Hoxton Park and 'which had the effect or purpose of recognising a particular religion as a national institution'; 2. for imposing any religious observance, in that the School is a faith based educational facility that imposes on any child or person attending it, of whatever background, the religious observance of the Islamic religion; and 3. for prohibiting the free exercise of religion, in that the School prohibits the free exercise of other religions and faiths at the institution. 1. whether the Commonwealth has funded works on the Hoxton Park campus site since 2009, in circumstances where the use of the funds was unauthorised and contrary to law because the provision of such funding was contrary to the Schools Assistance Act or Section 116 of the Constitution.

The Facts

1. I should preface my findings of fact by making clear that, in my view, the constitutional validity of the relevant laws is to be resolved by reference to the statutory language and syntax, read in conjunction with the discernible statutory object and purpose. It is not capable of resolution by reference to the effect of the laws on the School, or by reference to the intentions, actions and purposes of those who control the School, or by reference to the opportunities to which the relevant laws and executive acts and decisions give rise, or by reference to whether there has been any abuse or misconduct in relation to the funding provided to the School. Nor was it useful or necessary to consider the minutiae of the departmental administration of the relevant laws insofar as they related to the provision of funding to the School.
2. For that reason, I resisted during the hearing the repeated attempts of counsel for the plaintiffs to unreasonably broaden the forensic factual enquiry. On 25 February 2015 I disallowed certain questions and rejected an application by the plaintiffs to re-open their case to call evidence from a Mr Refaat El-Hajje. And with great reluctance, I received certain documents 'subject to relevance'. Having subsequently reviewed those documents more fully, I am quite satisfied that Exhibits 'V', 'W', 'X' and 'Y' are bereft of any sufficiently relevant, probative and cogent material that could justify their admission. I now formally reject them.
3. The only significant factual witness was Dr Barrett, a former executive principal of the School, who was cross-examined at length and without effect. I have no hesitation in saying that Dr Barrett was an impressive witness whose evidence I accept. I was grateful for his assistance. No criticism was justified of the second and third defendants for not calling more witnesses. In reality, the relevant facts were hardly contentious. My findings of fact are set out in the following paragraphs [18] - [25].
4. The third defendant (AFIC) is an incorporated association of Australian Islamic organisations founded in 1963. Its objects include the following: 'to establish and maintain schools and kindergartens with an Islamic atmosphere, and assist State Council and Societies to establish and maintain mosques and Islamic libraries'. Over a number of years AFIC has acquired land around Australia and made that land available for the construction of Islamic schools. Currently, there are at least six such schools: Malek Fahd Islamic School; Islamic College of South Australia; Islamic School of Canberra; Langford Islamic College (Western Australia); Islamic College of Brisbane; and Islamic College of Melbourne.
5. AFIC seeks to create a network or 'system' of Islamic schools. It has held discussions with the Commonwealth about setting up a 'system' of schools. This is relevant to funding. For funding purposes, non-government schools are classified as either systemic or non-systemic. Apparently, the minimum number of schools for this purpose is twenty.
6. The School commenced operation in October 1989 with 87 students in Kindergarten to Year 3. At that time it operated only at a campus at Greenacre. Campuses have since opened at Beaumont Hills in April 2011 and Hoxton Park in 2011. Most of the land on which the Hoxton Park campus is located was bought by AFIC in April 2008. It leases the land to the second defendant.
7. The 2013 annual report of the School stated that: 1. across the three campuses there were 2444 students taught by 151 teaching staff; 2. of those students 1188 were girls and 1256 were boys; 3. 292 students attended the Beaumont Hills campus; and 4. 87 students attended the Hoxton Park campus (all of whom were primary students).
8. The School publishes it policies, including its enrolment policy, on its website. Although the enrolment policy specifies that one of the criteria that is taken into account is 'A commitment from the family to support the School's Islamic ethos and values', there is no formal requirement for admission that pupils be Muslims. And the Constitution of the second defendant provides that one of its objects is to establish the School to provide 'a balanced general education in an Islamic environment to Muslim and other children'. It is pertinent to note that one of the traditions of the School is the hosting of a School Interfaith and Cultural Exchange with a school of a different faith. In 2013 that event lasted three days and involved students from Brigidine Christian College. The School 'welcomes students from other religious organisations and schools for a cultural exchange'.
9. Understandably however, all current pupils of the School are Muslims. And the enrolment process includes an interview with, among others, 'the Sheik'. I should add that the evidence was unclear as to precisely what was meant by 'the Sheik'. It was suggested that it is a reference to Sheik Farwaz, the School Chaplain. The routine of daily life at the School follows a recognisable pattern. A form of prayer known as Salaat is compulsory (and takes about 15 minutes a day, though longer on Fridays). A cleansing ritual known as Wudu is performed prior to prayer. Halal food is provided at the tuckshops. Children are required to wear the school uniform, including for females a head-cloth as a mark of female distinction and modesty. Religious studies in the Islamic faith are compulsory in primary school. And at the Mosque on the Greenacre campus and in the prayer hall of the primary school, females are segregated from males.
10. Undoubtedly, there is a close financial and governance relationship between the School and AFIC. The Constitution of the second defendant provides: 1. the members of the School Board will be not less than four but not more than eight persons appointed by AFIC plus the Principal; 2. the assets of the School will vest in AFIC (or some similar organisation if AFIC no longer exists) in the event the School is wound up; and 3. certain decisions of the Board (relevantly relating to finance and hiring the Principal) require approval by AFIC.
11. The evidence did not indicate that the School has an affiliation with any particular branch of Islam. It did indicate that the religious beliefs of all staff are respected. The School obviously requires religious observance by pupils during their hours of attendance, which is presumably one of the reasons why parents enrol their children there. I deal later with the issues of Constitutional validity but it is difficult to see how the School in fact 'establishes' the Islamic religion at Hoxton Park in the ordinary sense in which that word is understood. I do not know whether the Islamic religion is practised elsewhere in Hoxton Park but I would be surprised if it were not. The evidence did not assist me.
12. Finally, I should observe that there are separate proceedings on foot brought by the State involving the School. The central allegation in those proceedings is that between 2010 and 2012 the School was operating for profit, contrary to the second defendant's Constitution. That allegation is denied by the second defendant. The issue was the subject of a report known as the First Oakton Report. A Second Oakton report found that any concerns noted in the First Oakton Report had been resolved and State funding to the School was re-instated. The issues raised in the Oakton reports and in the separate proceedings do not assist the resolution of the issues for determination in these proceedings.

Statutory Scheme - Recurrent Expenditure

1. The Schools Assistance Act was in operation between 2009 and 2013. It authorised the Commonwealth to provide financial assistance to States for or in connection with non-government schools for recurrent expenditure, capital expenditure and targeted expenditure: Section 3. The relevant categories for present purposes are funding for recurrent expenditure (under Part 4) and funding for capital expenditure (under Part 5). Recurrent expenditure is expenditure relating to the ongoing operating costs of a school.
2. The operative scheme under the Schools Assistance Act was as follows: 1. funding by the Commonwealth for recurrent expenditure was paid to the State for provision to 'Approved Authorities' of non-government schools. The Approved Authority was required to administer the grant of recurrent expenditure; 2. a funding agreement with the Commonwealth governed the way in which the recurrent funding was to be administered by the Approved Authority. A payment could not be authorised for a school unless the Approved Authority for the school had made a funding agreement with the Commonwealth that complied with Part 3 Division 3 of the Act: Section 12(1); 3. the funding agreement required the Approved Authority to ensure that amounts received were spent for the purposes that were determined by the Minister and set out in the agreement: Section 16(1). The amount of funding that could be provided for recurrent expenditure was capped in accordance with the limits set in Part 4 of the Act.
3. The School is a 'non-systemic school'. Its Approved Authority under the Schools Assistance Act was the second defendant. For the period 2009-2013, the Commonwealth and the second defendant entered into a funding agreement under the Schools Assistance Act for the purpose of funding recurrent expenditure (Funding Agreement). The Funding Agreement incorporated by reference the Administrative Guidelines and stipulated that funding provided by the Commonwealth (via the State) may be spent by the School only for the purposes set out in the Act, the Administrative Guidelines and the Funding Agreement. Funding for recurrent expenditure could be applied to teaching and ancillary staff salaries, professional development of teachers, curriculum development and maintenance and general operation.
4. On 6 July 2011 the Minister's delegate approved the Hoxton Park campus of the School as a new location of the School with effect from 27 April 2011. That was the date on which the Hoxton Park campus commenced providing education services and the date from which funding was requested. Such a determination was a prerequisite to funding. From 1 January 2014 any new funding arrangements were governed by the Australian Education Act.
5. The grants that were provided under the Schools Assistance Act were in furtherance of the objectives set out in the National Education Agreement that was then in place between the Commonwealth, States and Territories. The Commonwealth's priorities for schooling, as described in the National Education Agreement, did not include the promotion of religion or religious education. Through the National Education Agreement, the Commonwealth, the States and the Territories committed to the objective 'that all Australian school students acquire the knowledge and skills to participate effectively in society and employment in a globalised economy'. In relation to non-government schools and systemic schools, the Commonwealth undertook responsibility in the National Education Agreement to ensure that funding arrangements are 'consistent with, and support the responsibilities of the States and Territories in respect of regulation, educational quality, performance and reporting on educational outcomes'.

Statutory Scheme - Capital Expenditure

1. Funding was also available under the Schools Assistance Act for capital expenditure. The scheme was as follows: 1. funding by the Commonwealth in respect of capital expenditure was paid to the States for provision to 'Block Grant Authorities'(BGAs), which then administered such funding by providing it to non-government schools; 2. BGAs received yearly capital grant allocations which they administered under an agreement with the Commonwealth. Capital works funded under the capital grants program were governed by agreements between the BGA and the schools which were to receive funds from the BGA; 3. in order for a non-government school to apply for a grant for capital expenditure, it was required to apply to the respective BGA with a capital grant proposal, which if recommended, was forwarded to the Department of Education for approval; and 4. no funding under the Schools Assistance Act was provided by the Commonwealth to New South Wales for provision to a BGA for capital expenditure in respect of the Hoxton Park campus.

Australian Education Act

1. Funding of a similar kind is now provided, and has been provided since January 2014, under the Australian Education Act 2013. A National Education Reform Agreement has been entered into. The machinery of the Act is broadly equivalent to that under the Schools Assistance Act, but with some important differences. Under the former, recurrent funding was provided under 'Funding Agreements'. Under the 2013 Act there are no longer funding agreements and instead the conditions of funding are set out in legislative instruments.
2. As with the Schools Assistance Act, financial assistance is provided for 'approved authorities' for one or more schools. In the case of non-government schools, the approved authority is the body corporate which is approved by the Minister in respect of that school. A school is a 'participating school' if there is an approved authority in relation to one or more locations and the requisite level of education and the school is a non-government school. In the case of participating schools that are government schools, the approved authority is the relevant State or Territory.
3. Part 6 Div 2 of the Australian Education Act contains the provisions governing the approval of approved authorities. Section 75 contains the basic requirements for approval. The authority must be a body corporate or body politic, not-for-profit, financially viable, a fit and proper person and permitted under the law of the relevant State or Territory to provide that level of education at that location.
4. To maintain approval as an approved authority, an authority must satisfy the requirements set out in ss. 75, 77 and 78. This is because under s. 81(1)(a) the Minister may revoke approval if the Minister is satisfied that the approved authority does not comply with ss. 75, 77 and 78. Section 77 contains ongoing policy requirements for schools relating to educational and curriculum requirements.
5. The Australian Education Act contains a transitional process. A body that was an approved authority for a non-government school under the Schools Assistance Act on 31 December 2013 is taken to be the approved authority for that school under the 2013 Act: Item 2(3) of Schedule 2 of the Australian Education (Consequential and Transitional Provisions) Act 2013. As at 31 December 2013 there were 828 approved authorities representing 2,727 non-government schools in Australia, of which 88.7% were considered to be affiliated with a religion.
6. Recurrent funding is provided under the Australian Education Act via the States and Territories: ss. 21, 23(2) and subject to a condition that the State or Territory must implement national policy initiatives for school education in accordance with the regulations: s. 22(1). All participating schools (ie including non-government schools with an approved authority) are entitled to receive recurrent funding as calculated in accordance with the Act. Part 3 of the 2013 Act contains provisions for calculating the amount of recurrent funding.
7. The conditions on which recurrent funding is provided stem from the 2013 Act itself. Section 78 contains 'ongoing funding requirements'. An approved authority must deal with financial assistance in accordance with the regulations: s. 78(2)(a). The approved authority must spend, or commit to spend, any payable recurrent funding for its participating schools 'for the purpose of providing school education': s. 29(1) of the Australian Education Regulation. There is a non-exhaustive list in s. 29(2) of the matters which are encompassed in the purpose of providing school education.
8. An approved authority must comply with the prescribed requirements for monitoring the authority's compliance with the Act and with any implementation plan required by Part 7 of the Act. Sections 32-40 of the Australian Education Regulation contain financial reporting requirements. Additional discretionary funding is available under Part 5 in the form of 'capital funding' (Part 5 Div 2), 'special circumstances funding' (Part 5 Div 3) and 'funding for non-government representative bodies' (Part 5 Div 4).

2014 Funding for the School

1. By virtue of the transitional process that I have described, the second defendant became an Approved Authority under the Australian Education Act from 1 January 2014. It was taken to be approved, as it was at the end of 2013, for Greenacre (K to 12), Hoxton Park (K to 4) and Beaumont Hills (K to 7). The approval for Hoxton Park was later varied to cover K to Year 6.
2. The provision of Commonwealth funding to the School under the Australian Education Act has been made according to the following steps: 1. In late 2013 the system generated an estimate for the annual entitlement to recurrent funding for the second defendant of $17,663,122 (excl of GST). That is taken to be a decision of the Minister by virtue of s. 124(2). 2. On 7 January 2014 an amount was paid to the State for the second defendant comprising 50% of the estimated annual entitlement (ie $8,831,561 ex GST). 3. In June 2014 revisions were made to the estimate based on updated socio economic advantage data and language background data. A determination was made by the delegate of the Minister to vary the amount of the next two instalments. The Determination was made on 16 June 2014 under s. 25(1) of the AE Act . 4. On 7 July 2014 a further amount of $4,380,345 (ex GST) was paid to the State for the second defendant, bringing the amount paid to 75%. 5. In August 2014 the second defendant provided details of the number of students at each location on 'census day'. The information showed 11 teachers and 186 students at the Hoxton Park campus. 6. On 16 September 2014 there was a further revision of the annual estimate and change to planned payments using the new census data. The new annual estimate was $17,343,521 (ex GST). 7. On 7 October 2014 a third instalment of $4,109,341 was paid to the State. 8. On 16 October 2014 there was a final annual entitlement calculation, showing the final entitlement to be $17,589,958. That identified a shortfall in payment of $246,437. 9. On 7 November 2014 a final payment of $246,437 was made for 2014.
3. There have been no applications for additional discretionary funding by the second defendant under the Australian Education Act and no such funding assistance has been provided.

Religion and Education - State's Exclusive Power

1. The plaintiffs contend that the provision of Commonwealth funding for the School or its Hoxton Park campus is constitutionally invalid because the States have exclusive power over matters of religion and education: see Hoxton Park Residents' Action Group Inc v Liverpool City Council [2014] NSWSC 322 at [23] per Young AJA. They disavow any argument that the funding provided by the Commonwealth is invalid because it infringes the implied doctrine of intergovernmental immunity considered in Melbourne Corporation v Commonwealth (1947) 74 CLR 31 and Austin v Commonwealth (2003) 215 CLR 185.
2. The Schools Assistance Act and the Australian Education Act are laws within the scope of the Commonwealth's power to provide grants to the State under Section 96 of the Constitution. The Court of Appeal assumed so in relation to the 2008 Act in Hoxton Park Residents Action Group Inc v Liverpool City Council (No 2) [2011] NSWCA 363; (2011) 256 FLR 156 at [26]. At its most bald and basic core, the substance of the plaintiffs' contention appears to be that the Commonwealth lacks the power to provide grants to a State if the grants in question (or the conditions imposed on the grants) relate to the subject matters of religion or education. There is no support in the Constitution or the authorities for such a radical proposition. The plaintiffs' contention is contrary to well established authority about the scope of the Commonwealth's power under Section 96 of the Constitution: Attorney-General for the State of Victoria; Ex rel Black v Commonwealth (1981) 146 CLR 559 ('Black') at 659, 660.
3. The absence of a head of power in Section 51 of the Constitution relating to religion or education is beside the point. Both Acts are valid laws of the Commonwealth, supported by Sections 96, 51(xxxvi) and 51(xxxix) of the Constitution. Pursuant to those provisions, the Commonwealth may enact a law that provides for the payment of grants to States on specified conditions. Provided that the conditions do not contravene another express or implied limitation on Commonwealth power, there is no limit on the subject matter or type of conditions that may be imposed: ICM Agriculture v The Commonwealth (2009) 240 CLR 140. In ICM Agriculture French CJ, Gummow and Crennan JJ at [35], [46] and Heydon J (dissenting) at [174] and [222] held that Section 51(xxxvi) is a relevant source of legislative power in association with Section 96 grants. See also Spencer v Commonwealth (2010) 241 CLR 118, [30] per French CJ and Gummow J and [61] per Heydon J; Pape v Commissioner of Taxation (2009) 238 CLR 1 at [289] per Hayne and Kiefel JJ and [606] per Heydon J.
4. In ICM Agriculture French CJ, Gummow and Crennan JJ noted at [167] that it has been established since at least Victoria v The Commonwealth (1926) 38 CLR 399 at 405, that the Commonwealth may impose conditions on a grant to a State even if that means in substance that the grant affects a matter (such as religion, education or road construction) in respect of which the Commonwealth has no legislative power under Section 51. It is thus not a valid objection that the legislative power conferred by Section 96 is exercised by the Commonwealth for the purpose of persuading a State to do something that the Commonwealth itself could not do: Black at 592 per Gibbs J, 619 per Mason J and 649-650, 660 per Wilson J.
5. Nor is there any constitutional defect in the Commonwealth making a grant to a State in circumstances where the State is required as a condition of the grant to distribute the grant to another party: Second Uniform Tax Case (1957) 99 CLR 575 at 605, 607. The Commonwealth is entitled pursuant to Section 96 of the Constitution, read with Section 51(xxxvi) and Section 51(xxxix), to make a law that provides a grant to a State on the condition that the State immediately pays all of the money to third parties: Black at 584 per Barwick CJ, 592 per Gibbs J, 611 per Stephen J, 619 per Mason J, 659-660 per Wilson J.
6. To the extent that the plaintiffs contend that the conditions on State grants imposed under the Schools Assistance Act and the Australian Education Act infringe the prohibition on Commonwealth legislative power in Section 116 of the Constitution and therefore fall outside the scope of Section 96 pursuant to the principles considered in ICM Agriculture, the argument must fail for the same reasons as the plaintiffs' direct challenge to the Acts and the funding under those Acts, also fails.

Breach of Section 116 of the Constitution

1. Section 116 of the Constitution provides as follows: 116 Commonwealth not to legislate in respect of religion The Commonwealth shall not make any law for establishing any religion, or for imposing any religious observance, or for prohibiting the free exercise of any religion, and no religious test shall be required as a qualification for any office or public trust under the Commonwealth.
2. The plaintiffs invoke the first three limbs of Section 116. I will deal with each limb in turn. It is also necessary to consider the two distinct ways in which the plaintiffs allege contravention of Section 116 by the Commonwealth - impugning the Schools Assistance Act and the Australian Education Act as legislative acts, and impugning the executive decisions and actions made pursuant to them.
3. The first limb of Section 116 precludes the Commonwealth from making 'any law' for establishing any religion. The High Court held in Black that a law authorising Commonwealth grants to States to be applied towards non-government schools (including schools conducted by or on behalf of, or associated with, religious bodies) is not a law 'for establishing any religion'. There are two features of the reasoning of the majority in Black that are of particular significance: 1. First, Section 116 is directed towards laws which are made 'for' one or other of the prohibited purposes. As far as the first limb is concerned, Section 116 is not infringed unless the establishment of religion is the object of the making of the law: per Barwick CJ at 579; Gibbs J at 598 and 604; Mason J at 615-616, Aickin J at 635, Wilson J at 653; and 2. Second, the reference in Section 116 to 'establishing' a religion has a specific and narrow meaning. A religion is relevantly 'established' only if it is set up as an institution of the Commonwealth (per Barwick CJ at 582), constituted as a state or national religion or church (per Gibbs J at 597-598, 603-604; per Stephen J at 606), authoritatively established or recognised as a national institution in the form of a state church, for example by being made the official religion of the state (per Mason J at 612, 616) or recognised by statute as a national institution by way of a deliberate selection of one religion to be preferred from among others, 'resulting in a reciprocal relationship between church and state which confers and imposes rights and duties upon both parties' (per Wilson J at 653).
4. It is clear from Black that a law that benefits a religion or religions is not, for that reason alone, a law for establishing a religion: Barwick CJ at 582, Gibbs J at 604, Stephen J at 610, Mason J at 616, Wilson J at 653, 656. Barwick CJ and the other members of the majority held that a law of the Commonwealth that provides for grants to the States on the condition that they be paid to schools, including denominational schools, is not a law for establishing a religion within Section 116: per Barwick CJ at 582-584, per Gibbs J at 604, per Stephen J at 610-611, per Mason J at 617-618 and per Wilson J at 656-657. As Barwick CJ held, at 583, a law which 'in operation may indirectly enable a church to further the practice of religion is a long way away from a law to establish religion'. A fortiori, a law which indirectly enables a school that has a religious affiliation to further the provision of educational services is a long way away from a law to establish religion.
5. The approach of the majority in Black to the establishment clause in Section 116 is fatal to the argument advanced by the plaintiffs concerning the validity of the Schools Assistance Act and the Australian Education Act. The object of both is to grant financial assistance to non-government schools for primary and secondary education and for related purposes. There is nothing in the body or intended operation of either Act to suggest that they were made 'for' establishing any religion. As with the legislation considered in Black, described by Wilson J at 656, the Schools Assistance Act and the Australian Education Act reflect a secular legislative purpose, namely supporting, funding and upgrading the quality of education in non-government schools. Religion or religious affiliation is not a criterion that attracts funding under either Act.
6. As I have already explained, it is neither necessary nor appropriate, when considering the validity of the Schools Assistance Act and the Australian Education Act, to consider what characteristics the 'project' itself has - as the plaintiffs seek to do by their allegations in paragraph 28 of the amended statement of claim. The purpose and character of the relevant laws cannot be ascertained by reference to the characteristics of particular institutions that happen to be the beneficiaries of funding pursuant to those laws. I repeat what I said in paragraph [15] above. In this case, the evidence does not support the contention that religion, or any of the characteristics of 'the project' alleged by the plaintiffs, played any part in the decision to provide funding to the School or its the Hoxton Park campus. The terms, conditions or objects of funding do not depend on, and are not referable to, those matters.
7. In any event, the plaintiffs' case in respect of the first limb of Section 116 involves an erroneous approach to the concept of 'establishment' as used in Section 116, as explained in Black. The plaintiffs have not alleged that any feature of the Schools Assistance Act or the Australian Education Act, or any executive act by the Commonwealth pursuant to them, has the object or effect of 'establishing' the Islamic religion in the sense described in Black. The relevant laws do not have the purpose or effect of making the Islamic religion a state religion having an institutional status or otherwise conferring upon Islam any particular status, let alone an official status in preference to other religions.
8. The fact that the Schools Assistance Act and the Australian Education Act are neutral on the question of religion is sufficient to dispose of the allegation that they are laws for establishing the religion of Islam. A law for 'establishing' a religion must, by definition, be a law for establishing one particular religion: Black at 598-599 per Gibbs J. The establishment clause in Section 116 reflects a concern with the establishment of one religion as against others: Black at 615 per Mason J (Aickin J agreeing at 635; see also Wilson J at 653). A law that could be said to benefit indiscriminately any number of religions indirectly through assistance to educational institutions which have religious affiliations, cannot meaningfully be said to 'establish' any or all of those religions.
9. As I have mentioned, there is no occasion on the facts of this case to consider the theoretical possibility raised by French J (as he then was) in Nelson v Fish (1990) 21 FCR 429 at 433 that 'a certain level of statutory discrimination could … amount to establishment in the prohibited sense'. French J noted in that regard the observations of Quick and Garran in The Annotated Constitution of the Australian Commonwealth (1901) at 951 as follows: By the establishment of religion is meant the erection and recognition of a State Church, or the concession of special favours, titles and advantages to one church which are denied to another. (emphasis added)
10. There was no comparative examination in this case. And in any event, the reasoning in Black suggests that only 'establishment' of the former kind is constitutionally impermissible. However, it is sufficient to observe that, even accepting for the sake of argument that the conferral of concessions or special and discriminatory favours may constitute a form of 'establishment', there is no feature of the funding arrangements that apply in respect of the School or its Hoxton Park campus that justifies that characterisation in this case.
11. Nor is there any support for the plaintiffs in the suggestion by Basten JA in Hoxton Park Residents' Action Group Inc v Liverpool City Council (No 2) [2011] NSWCA 363; (2011) 256 FLR 156 at [28] and [34]-[35] that Black may be distinguishable. His Honour was addressing the possibility that 'the direct funding of a religious institution for religious purposes' may raise a question of validity which is distinguishable from that considered by the High Court in Black. Similarly, at [70] Basten JA referred to the possibility that the funding provided by the Commonwealth in respect of the Hoxton Park campus may be proven to have had a 'clear religious purpose'.
12. The evidence in this case indicates that the possibility raised by Basten JA does not arise for determination. It could not be said reasonably that the Commonwealth has, by providing funding for the Hoxton Park campus under the Schools Assistance Act and the Australian Education Act, provided 'direct funding of a religious institution for religious purposes'. The funding for recurrent expenditure provided by the Commonwealth was not 'for religious purposes'. Rather, it was expressly for educational purposes. No regard was given to religious affiliations or purposes.
13. The plaintiffs' case is not enhanced by the allegation that the School or its Hoxton Park campus is part of a 'national network of that and similar projects'. To say that a particular school with a particular religious affiliation is part of a 'national network' of similar educational facilities says nothing of the religion in question having the character of an 'established' religion, in the sense of being authoritatively recognised above all other religions as a state church (or any of the similar concepts used in Black to describe the constitutional notion of 'establishment'). I accept the analysis of Rein J in Hoxton Park Residents' Action Group Inc. v Liverpool City Council [2010] NSWSC 1312; (2010) 246 FLR 207 at [33]-[35]. In any event, a national network is not 'established' by reason of the funding of a particular campus within that network.
14. I should add that there was no evidence at a factual level to support the proposition that either the School or the Hoxton Park campus or the provision of funding for the 'project', has in any sense, let alone the constitutional sense, 'established' the Islamic religion either nationally or in the Hoxton Park area. In any event, as I have endeavoured to emphasise, there is no support in the authorities or any of the extrinsic material bearing on the interpretation of Section 116, for the proposition that a law whose operation indirectly serves to assist a particular religion in establishing a presence in a particular geographical area within Australia, infringes the first limb of Section 116.

Validity of Executive Acts

1. I have also reached the conclusion that the plaintiffs' contentions based on the first limb of Section 116 as to the invalidity of the executive acts of the Commonwealth in providing funding for the Hoxton Park campus must fail. It is a statement of the obvious that Section 116 of the Constitution imposes a constraint on legislative power. In Black at 580-581 Barwick CJ observed that Section 116 'is directed to the making of law. It is not dealing with the administration of a law'. In Cheedy on behalf of the Yindjibarndi People v State of Western Australia [2010] FCA 690 at [83] McKerracher J observed that Section 116 is 'directed to the making of Commonwealth laws, not with their administration or with executive acts done pursuant to those laws'.
2. Insofar as the plaintiffs suggest that the Schools Assistance Act and the Australian Education Act should not be construed as authorising the executive to exercise power to achieve a constitutionally impermissible purpose, so that the funding provided under the Act is ultra vires those Acts, rather than directly contrary to Section 116, the argument fails on the facts. As I have said, there is no feature of the funding in fact provided by the Commonwealth for the School or its Hoxton Park campus that suggests any purpose or effect of 'establishing' religion in any relevant sense.
3. When it comes to the validity of the executive acts of the Commonwealth, there is a logically antecedent question as to the proper construction of that Act. This in turn leads to an issue as to whether the funding provided by the Commonwealth was within the terms of the Act: Hoxton Park Residents' Action Group Inc v Liverpool City Council (No 2) [2011] NSWCA 363; (2011) 256 FLR 156. The plaintiffs have not identified any basis for doubting that the funding provided by the Commonwealth in respect of the Hoxton Park campus was funding within the terms of, and for purposes consistent with the objects of, the Schools Assistance Act and the Australian Education Act. The funding was for the purposes of recurrent expenditure, in accordance with those Acts and on the terms and conditions specified in the respective Funding Agreements and the Administrative Guidelines. There is nothing in the circumstances or the terms of the funding to suggest that the Commonwealth, in providing such funding, has acted outside the powers given by either Act.

Laws for Imposing Any Religious Observance

1. I reject the plaintiffs' contention that, directly or indirectly, either the Schools Assistance Act or the Australian Education Act or the terms of Commonwealth funding, 'impose any religious observance' on any person, by force of law or otherwise. The plaintiffs' starting premise, at its highest, is that the School or its Hoxton Park campus, imposes religious observance on those who attend the school. But this contention, even if accepted, does not logically establish that the Schools Assistance Act or the Australian Education Act has the prohibited purpose or object of imposing a religious observance. Neither Act has the purpose or effect of requiring any person to attend the School or its Hoxton Park campus or to engage in any religious observance or practice.
2. Nor has any of the funding provided by the Commonwealth, by its terms or character, had the purpose or effect of requiring any person to attend the School or its Hoxton Park campus or to engage in any religious observance or practice. I gratefully adopt Rein J's analysis of the governing authorities and their application to the plaintiffs' contentions in Hoxton Park Residents' Action Group Inc. v Liverpool City Council [2010] NSWSC 1312 at [45]-[49].

Laws for Prohibiting Free Exercise of Religion

1. As I have mentioned, the majority in Black held that Section 116 is not infringed unless the law in question was made for one or other of the prohibited purposes. This applies to the second and third limbs as well as the first. The proposition was confirmed by the High Court in Kruger v Commonwealth (1997) 190 CLR 1. A law contravenes the third limb of Section 116 only if it is made with the end, object or purpose of 'prohibiting the free exercise of religion': per Brennan CJ at 40, Toohey J at 86, Gaudron at 132, Gummow J at 160. There is some support (albeit not a majority of the High Court) for the proposition that for the purposes of Section 116 a law may have more than one purpose and that the constitutional prohibition is infringed if one of those purposes is prohibiting the free exercise of religion: Toohey J at 86, Gaudron J at 133. However, even on that premise, 'purpose is the criterion and the sole criterion selected by Section 116 for invalidity': Gaudron J at 132.
2. However, to say that a law has the effect of impairing or even prohibiting the free exercise of religion is not sufficient to establish that the law has the requisite unconstitutional character: per Toohey J at 86. Identifying the effect of a law may assist in characterising its purpose, but the effect of the law is not the determinative matter: see APLA Limited v Legal Services Commissioner (NSW) (2005) 224 CLR 322 at 394, [178]; Cheedy on behalf of the Yindjibarndi People v State of Western Australia [2010] FCA 690 at [73] per McKerracher J. A merely incidental effect, arising in the context of the pursuit of a different purpose, will not mean that the law has the purpose of bringing about the constitutionally impermissible result: Kruger per Gaudron J at 134.
3. A law prohibits the free exercise of religion if it prohibits the doing of acts that are done in the practice of religion: Krygger v Williams (1912) 15 CLR 366 at 369. In my opinion, there is no provision of the Schools Assistance Act that has the end, object or even effect (noting that the effect of a law can be no more than a step in the inquiry for the purposes of Section 116) of prohibiting the free exercise of religion.
4. Once again, I agree with the analysis of Rein J in Hoxton Park Residents' Action Group Inc. v Liverpool City Council [2010] NSWSC 1312 at [36]-[44]. The Schools Assistance Act and the Australian Education Act lack the relevant characteristic of having as one of their purposes, ends or objects the prohibition of the free exercise of religion. Rein J was quite justified in noting at [44] the absurd but logically necessary consequences of the plaintiffs' argument.
5. The plaintiffs' case as to the third limb involves the proposition that the School prohibits the free exercise of religion in the sense that, the practice of religions other than Islam within the institution is prohibited. But to say that certain religious practices are prohibited at the School does not demonstrate that either the Schools Assistance Act or the Australian Education Act or any action by the Commonwealth pursuant to them has the unconstitutional purpose of prohibiting the free exercise of religion: see Cheedy on behalf of the Yindjibarndi People v State of Western Australia [2010] FCA 690 at [84]-[85] per McKerracher J.
6. On the plaintiffs' case, the Schools Assistance Act and the Australian Education Act are laws that facilitate the provision of Commonwealth funding to a school which imposes restrictions on religious activities at the school. However, it is not enough to characterise the 'project' or the School or the Hoxton Park campus as being a consequence of the Commonwealth funding, and seize upon one alleged aspect of the operation of the School itself. There is no basis for a contention that either the provisions of the Schools Assistance Act, or the Australian Education Act or the terms of Commonwealth funding, impose any legal prohibition on the carrying out of religious activities. Nor is it suggested that any provision of the laws in question, or any term or condition of the Commonwealth funding, has any connection to, or gives any legal force to, those characteristics which are said to constitute a prohibition against the free exercise of religion.
7. In the circumstances, even if there did exist some restriction or prohibition on religious activities at the School, it would not be a restriction or prohibition whose legal force arises expressly or impliedly from Commonwealth law or from the actions of the Commonwealth in providing funding for the School or its Hoxton Park campus. No law or action by the Commonwealth operates to compel any person to attend the School or its Hoxton Park campus. Even if there were such a restriction or prohibition, it would not provide a sound basis for the argument that the third limb of Section 116 has been contravened.

Unauthorised Funding of Works

1. Lastly, the plaintiffs contended that the Commonwealth has funded works on the Hoxton Park campus site since 2009, in circumstances where the use of such funds was unauthorised and contrary to law because the provision of such funding was contrary to the Schools Assistance Act or Section 116 of the Constitution. The first factual premise is wrong. The Commonwealth has not provided any funds for the Hoxton Park campus under the Schools Assistance Act for the purpose of capital works. In any event the argument fails because the hypothesised funding is not funding for a constitutionally impermissible purpose, for the reasons already explained.

Standing

1. Given the nature of their connection with the Hoxton Park campus, the plaintiffs have standing to challenge the validity of grants by the Commonwealth which remain current, in the sense that the grants relate to current periods and have not yet been expended. However, the plaintiffs lack standing to bring a challenge in respect of past expenditure. Such past expenditure gives rise to no contested legal right, subsisting or future, as between the plaintiffs and the Commonwealth or any other defendant which could properly be the subject of declaratory relief that would be of any utility: Gardner v Dairy Industry Authority (1977) 18 ALR 55 at 69, 71; Church of Scientology v Woodward (1982) 154 CLR 25 at 62; Williams v The Commonwealth (2012) 248 CLR 156 at 289-292. As observed in Pape v Federal Commissioner of Taxation (2009) 238 CLR 1 at 35, 68 in the Commonwealth context, questions of standing and jurisdiction are intertwined.
2. Although the relief sought in the amended statement of claim includes a reference to the Appropriation Act 2008 to date, it appears from the manner in which the case has been pleaded and explained that there is no separate challenge to the validity of any Appropriation Act. For completeness, I should note that the plaintiffs lack standing to challenge the validity of the appropriation of money from the Consolidated Revenue Fund (as opposed to its expenditure). This is so because they have no particular interest in that subject matter beyond that of any other member of the public: Victoria v The Commonwealth (AAP Case) (1975) 134 CLR 338, 386-387, 392-393, 402; Williams v The Commonwealth (2012) 248 CLR 156 at 289.
3. Similarly, the amended statement of claim does not provide any basis on which the declarations in prayer 7A could properly be made. The plaintiffs have not advanced any reasons in the amended statement of claim as to why the intergovernmental agreement referred to in prayer 7A or any other formal or informal agreement should be declared invalid. An intergovernmental agreement between the Commonwealth and the States does not give rise to rights of a kind which could found such a claim for declaratory relief by the plaintiffs.

Orders

1. I dismiss the plaintiffs' claim with costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 March 2015