John Holland Pty Ltd v Construction, Forestry, Mining and Energy Union

THE PLEADINGS AND THE STRIKE OUT APPLICATION 6 In its statement of claim, John Holland has pleaded, among many other things, that it is and was a "non-Commonwealth licensee". It does so in par 1(c) in the following terms: The applicant is and was at all material times … a 'non-Commonwealth licensee' resulting in it being an 'employer' within the meaning of that expression in s 5 of the [Commonwealth] Act by reason of it holding a current licence under the [SRC Act]. 7 The Union has put this particular matter in issue in its defence and cross-claim by pleading, at par 1(b), that: [The respondents] deny each and every allegation in subparagraph 1(c) and say further that the applicant is not a non-commonwealth licensee under the [SRC Act] as the purported declaration under s100 of that Act was invalid because the Applicant did not fulfil the relevant criteria contained in s100. Particulars The purported declaration was made by the Minister for Employment and Workplace Relations on 31 October 2006 and entitled Safety, Rehabilitation and Compensation (Licence Eligibility) Notice 2006(4). At the time of the approval under s100 the applicant was not a Commonwealth Authority, a former Commonwealth Authority or in competition with either a Commonwealth Authority or a former Commonwealth Authority. 8 It is appropriate, at this point, to set out s 100 of the SRC Act. It provides:

If the Minister is satisfied that it would be desirable for this Act to apply to employees of a corporation that: (a) is, but is about to cease to be, a Commonwealth authority; or (b) was previously a Commonwealth authority; or (c) is carrying on business in competition with a Commonwealth authority or with another corporation that was previously a Commonwealth authority; the Minister may, by legislative instrument, declare the corporation to be eligible to be granted a licence under this Part. 9 In its defence to the cross-claim, John Holland has alleged that the Union's allegation in par 1(c) is embarrassing and should be struck out because it is "an impermissible collateral challenge to the Minister's declaration": see par 1(b). 10 John Holland has now sought to strike out this part of the Union's pleadings. The central issue in the strike-out application is whether the Union can make a collateral challenge in these proceedings to the validity of the Minister's declaration made on 31 October 2006 that John Holland was an eligible corporation. 11 Unfortunately, this strike out application was filed on 18 September 2009, a little over three weeks before the trial of these proceedings, which is due to commence on 12 October 2009. It appears to have been provoked by a notice of motion filed on 14 September 2009 by the Union seeking an order for discovery of documents relating to John Holland's application for the declaration under s 100 of the SRC Act. Since the outcome of these countering applications was likely to affect the preparations for trial, I agreed to hear the strike out application as a matter of urgency on 24 September 2009. I mention these matters because the limited time available to me to prepare these reasons has meant that I have not been able to make a detailed analysis of all the authorities and other materials relating to what is quite a complex issue.

the principles on strike out applications 12 John Holland has made its application under O 11 r 16 of the Federal Court Rules on the ground that the Union's pleading "discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading" and is embarrassing. 13 The principles applicable to this kind of strike-out application are well established. John Holland must establish that the Union's pleading is so clearly untenable that it cannot possibly succeed: see General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130 per Barwick CJ; or is absolutely hopeless or does not raise a debatable question: see Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91 per Dixon J; or it is plain and obvious that the matter pleaded is unarguable: see Murex Diagnostics Australia Pty Limited v Chiron Corporation (1994) 55 FCR 194 at 203 per Burchett J; or that there is such a high degree of certainty about the ultimate outcome of the point that it should be dismissed summarily: see Agar v Hyde (2000) 201 CLR 552 at 576 per Gaudron, McHugh, Gummow and Hayne JJ. 14 It follows that what I have to decide at this stage is whether the matter pleaded by the Union is so clearly untenable or unarguable that it should be prevented from pursuing that matter at trial. I do not have to decide whether the Union is likely to succeed on this matter and nothing I have to say in these reasons should be taken as an indication to that effect.

the contentions of the parties 15 Mr Herbert, who appeared for John Holland, accepted that a collateral challenge may be brought in relation to an administrative action in the course of dealing with an issue arising in other proceedings. He did not submit that any provision of, or the scheme of, the relevant legislation prevented such a challenge. However, he submitted that any collateral challenge was limited in these proceedings to defects appearing on the face of the Minister's declaration, ie patent defects, and could not extend to the evidence relied upon by the Minister to make the declaration. In making these submissions, Mr Herbert relied heavily on the High Court's decision in Ousley v The Queen (1997) 192 CLR 69 ("Ousley"). 16 Mr Friend, who appeared for the Union, submitted that the collateral challenge raised by the Union in this case goes to the existence of an essential pre-condition to the exercise of the Minister's power to make the declaration in question, viz whether the Minister could have been satisfied as to the matters in s 100(c) of the SRC Act. In support of this contention, he referred to the High Court's more recent decision in Gedeon v NSW Crime Commission (2008) 236 CLR 120 ("Gedeon"). He submitted that this form of collateral challenge was not prevented by anything the High Court said in Ousley.

matter PLEADED not clearly untenable or unarguable 17 In my view, there is a number of reasons for concluding that the collateral challenge the Union wishes to make in these proceedings, to the Minister's declaration, is not clearly untenable or unarguable. 18 First, the question of the limits to collateral challenges in these circumstances does not appear to have been argued as a discreet issue in Ousley. Indeed, counsel for the appellant in Ousley appears to have accepted the proposition that the Court could only have regard to defects on the face of the warrant in question and he sought to attack the warrant on the basis that it contained such patent defects: see Ousley at 126, per Gummow J and the discussion in Aronson M, "Criteria for Restricting Collateral Challenge" (1998) 9 Public Law Review 237 at 242. 19 Secondly, probably because the question was not distinctly put in issue in Ousley, the decision in that case does not, in my view, define the limits that apply to collateral challenges in the present circumstances. In his decision, Toohey J referred to the Court's decision in Coco v The Queen (1994) 179 CLR 427 ("Coco") at 444 and Grollo v Palmer (1995) 184 CLR 348 ("Grollo") at 360 and 389 and stated that: "… there is no bar to collateral review by a trial judge of the validity of a warrant on its face", and went on to add that: "… it is not open to the judge to adjudicate on the sufficiency of a warrant or whether the issuing authority was in fact satisfied as to any statutory requirements": see Ousley at 80. Gaudron J concluded that the validity of a warrant may be challenged in collateral proceedings, however, her Honour emphasised that the inquiry as to the validity of the warrant was a limited inquiry which: "depends upon the warrant having been regularly issued, not on the sufficiency of the material supporting the application for its issue" at 87. In support of this latter proposition, her Honour referred to the decision of Mason CJ and Toohey J in Murphy v The Queen (1989) 167 CLR 94 at 106 that: where a warrant can be issued by [an] appropriate authority only upon its being satisfied of prescribed matters to be shown by the applicant for the warrant, the validity of the warrant is not open to collateral attack merely on the ground that the material laid before the authority was insufficient to satisfy it of those matters. 20 On the other hand, in his decision, McHugh J expressed the view that, since the High Court's decision in Coco, a collateral challenge to a warrant could not be confined to defects appearing on the face of the warrant. His Honour pointed out that in Coco, the Court had quashed the conviction and implicitly accepted that the trial judge had jurisdiction to determine whether the issue of the warrant was void by reason of jurisdictional error that lay behind its issue: see Ousley at 102. 21 In his decision, Gummow J expressed the view that the trial judge was bound to determine the challenge to the admissibility of the evidence and it was therefore necessary to determine whether the warrant was issued in compliance with the relevant legislation: see Ousley at 127. He then said that: "[this] consideration … was distinct from a consideration of the nature or sufficiency of materials upon which the issuing judge based the grant of the warrants. Arguments based on the 'legal propriety' of a warrant may be tested in separate proceedings for judicial review". His Honour referred to Grollo at 359 in support of this proposition. Finally, Kirby J appeared to accept that a collateral attack on the validity of a warrant could be mounted in the course of a criminal trial: see Ousley at 146 and footnote 343. However, his Honour did not proceed to identify the limits, if any, that applied to such challenges because he considered that this point, and a number of other points, did not need to be finally determined in that appeal: see Ousley at 146. 22 Because of the urgency of this matter, I have not been able to undertake a complete review in these reasons of all the views expressed in Murphy, Ousley, Coco and Grollo and the numerous other authorities on this point. However, based on the review I have been able to undertake (above), I think it is relatively clear that the various views expressed in Ousley do not amount to a clear definition of the limits that apply to collateral challenges of this kind. Instead, in my view, Ousley is authority for the particular proposition that a collateral challenge to a warrant (and perhaps even more particularly to a warrant authorising a listening device - see [26] below) during a criminal trial is limited to defects appearing on the face of the warrant and may not involve an examination of the sufficiency of the materials placed before the person who issued the warrant: see the discussion in Aronson (above) at 242. 23 In support of this conclusion, I note that in Jacobs v OneSteel Manufacturing Pty Ltd (2006) 93 SASR 568, a five member bench of the South Australian Full Court allowed a collateral challenge to the validity of delegated legislation based on "simple or narrow ultra vires" and, in the course of his decision, Besanko J (with whom three of the other four judges agreed: Duggan J at [1]; Vanstone J at [116] and Layton J at [117] - Debelle J reached the same conclusion in a separate judgment at [2] to [41]) observed that no general principle had yet been established as to when a collateral challenge is permissible and Ousley only applied to a particular area. He said (at [91]): I have considered if the question whether a collateral challenge is permissible in this case may be answered by reference to a general principle that applies in the case of all legislative and administrative acts. However, I do not think the law has reached the stage where such a general principle has been identified. The authorities are still in a state of flux and, to adopt the words of Bray CJ in Hinton Demolitions Pty Ltd v Lower (No 2) (at 520-521), it is "hardly likely that this Court will be able to construct an enduring causeway through the flood". Having said that, since 1971 there have been authoritative decisions such as Boddington and Ousley, which provide the answer to whether a collateral challenge is permitted in particular areas. 24 To similar effect, see the decision of Debelle J in Jacobs at [14] and see Besanko J at [96] where his Honour says that the formulation of a general principle in this area should be left to the High Court. 25 My third reason for concluding that the Union's collateral challenge in this case is not clearly untenable or unarguable is that the Full Court of this Court has allowed a collateral challenge to be pursued in somewhat analogous circumstances in civil proceedings in Federal Airports Corporation v Aerolineas Argentinas (1997) 76 FCR 582. In that case, Aerolineas Argentinas and a number of other airlines were seeking to recover moneys paid to the Federal Airports Corporation pursuant to an invalid administrative determination made by the Federal Airports Corporation. Lehane J (with whom Beaumont and Whitlam JJ agreed, at 584) rejected the patent defect limitation and allowed the possibility that an applicant may call "substantial evidence" in support of a collateral challenge to an administrative decision, as follows (at 599): If the 1991 determination was made beyond power, I do not think there is anything in authority or principle which will allow the airlines to recover charges paid under it or to defend, on the ground of its invalidity, proceedings to recover further charges (in each case without taking judicial review proceedings), only to the extent that the lack of power appears on the face of the determination. There is no apparent reason why a different result should ensue simply because it is necessary to call evidence, even substantial evidence, of facts in order to establish lack of power (compare Monarch Airlines Ltd v Airservices Australia (1997) 72 FCR 534: a judicial review case). 26 Fourthly, returning briefly to Ousley, one obvious reason underlying a difference in approach between collateral challenges in criminal trials and the same challenges in civil trials is the important public interests involved in the expeditious resolution of criminal proceedings and in avoiding the fragmentation of the criminal process: see Ousley at 104, per McHugh J and 147, per Kirby J and see also Gedeon at [23] to [24], albeit dealing with declarations. Moreover, both Ousley and Grollo involved warrants authorising listening devices and there are some peculiar aspects of the processes relating to the issue of such warrants that may have required a different approach being taken to any collateral challenges to them, including the secrecy of the process, the fact no records are kept and no reasons are given: see Ousley at 118 - 119 per Gummow J. These processes contrast starkly with those that would undoubtedly have been followed by the Minister before issuing the declaration in this matter. 27 Fifthly, in Gedeon, the High Court seemed to reject a suggestion that the Authorities in question in that case had to be accepted for what they were on their face and that it was not open to go behind them: see Gedeon at [22] referring to the submissions recorded at [19]. Later in Gedeon, the Court made the uncontentious point that, if a criterion which enlivens the exercise of a statutory power is not satisfied, then the decision purportedly made in exercising that power will have been made without statutory authority: see at [43]. The Court then appeared to accept that a collateral attack could be mounted to the validity of the exercise of a statutory power when it said at [47]: If it be established upon a "collateral" attack which is decided in a ruling at trial under s 138 of the Evidence Act, or other form of "collateral" attack or (if the proceeding be appropriate) upon judicial review, that, for example, the authority in question was in relation to a proposed operation involving any participant engaging in conduct that was likely to seriously endanger the health or safety of that or any other participant or any other person, then the grant of the authority was beyond power. No question of abuse of discretion or unreasonable decision making arises. The question is answered at an earlier stage of legal analysis. … 28 Finally, it occurs to me that the Union's collateral challenge may well come down to a question of statutory construction of the provisions of s 100 of the SRC Act as to whether acts done in breach (assuming they were) of those provisions by the Minister in issuing the declaration are to be regarded as essential preliminaries to the exercise of the statutory power by the Minister, and therefore invalid, or instead are to be regarded as procedural conditions for the exercise of that power, and therefore not invalid: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [92] and [93]. If this is correct, I do not see why the Union should be prevented from pursuing this issue at the trial of these proceedings. 29 Before concluding on this issue, I should briefly address a number of other specific submissions made by Mr Herbert on behalf of John Holland. First, he submitted that it would be inappropriate to allow a collateral challenge to proceed in relation to the Minister's declaration when he or she is not a party to these proceedings. It may be observed at the outset that, if this were so, few, if any, collateral challenges would be permitted because it is in the very nature of a collateral challenge that in most, if not all, cases the person who made the original decision will not be a party to the proceedings in which the collateral challenge is being pursued. Furthermore, in Ousley, McHugh J did not appear to consider the absence of the person most directly affected by the collateral challenge was a reason for rejecting the challenge: see Ousley at 100. However, the absence of the Minister as a party in these proceedings may well be a factor that affects the ultimate success of this collateral challenge. Indeed, in Jacobs, Besanko J identified this factor among a number of other factors that may be considered in deciding whether to allow, or deny, a collateral challenge: see Jacobs at [93]. Nonetheless, I do not consider the absence of the Minister as a party in these proceedings provides a basis, on a strike out application, for denying the Union the opportunity to pursue the collateral challenge at all. I therefore reject this submission. 30 Secondly, Mr Herbert submitted that there was a presumption of regularity in relation to the Minister's declaration which, as I understood his submission, operated to prevent the Union attacking the validity of it by collateral challenge in these proceedings. While such a presumption is clearly recognised in the authorities, I do not consider it operates to prevent the Union making a collateral challenge to the Minister's declaration in these proceedings. As Hayne J pointed out in Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at [151], this presumption does not afford all administrative acts and decisions to be of valid and binding effect until they are set aside. What the presumption may do is to: "identify and emphasise the need for proof of some invalidating feature before a conclusion of invalidity may be reached". I cannot, therefore, see how the presumption could operate to prevent the Union making a collateral challenge to the Minister's declaration. I therefore reject this submission. 31 Thirdly, Mr Herbert submitted that allowing the Union's collateral challenge to proceed in these proceedings will lead to a great deal of uncertainty about the self-insured workers' compensation scheme that has been established and operated by John Holland for the past few years on the basis, in part, of the Minister's declaration. The short answer to this submission is that, if the Minister's declaration was validly made, the self-insured workers' compensation scheme will obviously not be affected. On the other hand, if the Minister's declaration was made without statutory power or authority, I do not consider this uncertainty provides a basis for summarily denying the Union the opportunity to make a collateral challenge to its validity. As Mr Friend pointed out, the High Court's decision in Re Wakim; Ex parte McNally (1999) 198 CLR 511 provides testimony for the fact that challenges like this can, if successful, often lead to widespread, significant, and inconvenient results. For these reasons, I reject this submission.

CONCLUSION 32 For these reasons, I do not consider that it has been clearly and authoritatively established in Australia that a collateral challenge of the kind the Union seeks to pursue in this case is limited to patent defects in the Minister's declaration. I consider this is even more so in civil proceedings, as distinct from criminal proceedings, where the basis of the collateral challenge goes to the existence of an essential pre-condition to the valid exercise of the statutory power by the Minister. It follows that, I do not consider that the Union has raised a matter in its defence and cross-claim at par 1(b) that is clearly untenable or unarguable.

33 I therefore order that the notice of motion filed by John Holland on 18 September 2009 be dismissed. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Reeves J.

Counsel for the Applicant: Mr Herbert Solicitor for the Applicant: Herbert Geer Counsel for the Respondents: Mr Friend Solicitor for the Respondents: Hall Payne Lawyers Date of Hearing: 24 September 2009