McCully v Sydney Trains

Section 2B 16 Section 2B provides for the application of the CC Act to the States and Territories. It provides (relevantly): 2B Application of Act to States and Territories (1) The following provisions of this Act bind the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory: (a) Part IV; (aaa) Part IVBA; (aa) Part V; (b) Part XIB; (ba) Part XICA; (c) the other provisions of this Act so far as they relate to the above provisions. … 17 As is apparent, Pt XI of the CC Act, which provides for the application of the ACL as a law of the Commonwealth, is not listed in s 2B. 18 It was common ground that Sydney Trains is a "NSW Government agency" to which s 13A of the Interpretation Act refers and, accordingly, has the status, privileges and immunities of the Crown in the right of the State of NSW. The applicants accepted that the effect of s 2B of the CC Act is to make Pt XI of the Act and the ACL inapplicable to Sydney Trains. 19 The applicants' acceptance of this position is supported by the legislative history of s 2B and by the authorities. The CC Act was originally enacted as the Trade Practices Act 1974 (Cth) (the TPA). In Bradken Consolidated Ltd v Broken Hill Proprietary Co Ltd [1979] HCA 15; (1979) 145 CLR 107, it was held that the TPA (which did not then contain a counterpart of s 2B) did not bind the Crown in right of a State because it did not indicate an intention to do so, whether by express words or necessary implication. It was also held that the TPA did not apply "so as to prejudice [the Crown's] interests when in contractual relationship with parties to whom the Act clearly applie[d] or when otherwise interested in transactions affecting those parties": at 129 (Stephen J), at 124 (Gibbs ACJ), at 137-8 (Mason and Jacobs JJ). 20 Section 81 of the Competition Policy Reform Act 1995 (Cth) inserted s 2B into the TPA. In its then form, s 2B provided that Pt IV of the TPA (which included in s 52 the predecessor of s 18 of the ACL) and other provisions to the extent to which they related to Pt IV, did bind the Crown in right of each of the States and Territories but only in so far as the Crown carried on a business, either directly or by an authority of the State or Territory. In Australian Competition and Consumer Commission v Baxter Healthcare Pty Ltd [2007] HCA 38; (2007) 232 CLR 1 at [43], Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ said of the 1995 amendment: … When, in 1995, s 2B was added, providing that certain provisions of the Act bound the Crown in right of a State or Territory when carrying on a business, the conclusion reached in Bradken was reversed in so far as the Crown was carrying on a business, but reinforced in so far as the Crown was not carrying on a business. (Emphasis added and citation omitted) 21 In Lin v State Rail Authority of NSW [2004] FCAFC 219; (2004) 209 ALR 577, the Full Court accepted that the State Rail Authority of NSW was a manifestation of the Crown in right of the State of NSW so that s 2B of the TPA had the effect that the TPA did not apply to it in respect of a claimed contravention of s 51AC of the TPA.

Section 131 22 Section 131 of the CC Act provides (relevantly): 131 Application of the Australian Consumer Law in relation to corporations etc. (1) Schedule 2 applies as a law of the Commonwealth to the conduct of corporations, and in relation to contraventions of Chapter 2, 3 or 4 of Schedule 2 by corporations. Note: Sections 5 and 6 of this Act extend the application of this Part (and therefore extend the application of the Australian Consumer Law as a law of the Commonwealth). … 23 Prima facie, s 131(1) confines the application of the ACL to conduct by corporations. However, it was common ground that s 131 is given an extended application by s 6 of the CC Act and, relevantly for this case, by s 6(3): see JWR Productions Australia Pty Ltd v Duncan-Watt (No 2) [2020] FCA 236; [2020] 377 ALR 467 at [497].

Section 6 24 As was noted by McKerracher J in Bride v Shire of Katanning, s 6 gives the CC Act an extended operation in those cases in which there is a sufficient link to the Constitutional power of the Commonwealth, be it international, interstate, intra-territory, suppliers to the Commonwealth, or usage of postal, telegraphic or telephonic services - see s 6(2), 6(3) and 6(3A) of the CC Act. It provides (relevantly): 6 Extended application of this Act to persons who are not corporations (1) Without prejudice to its effect apart from this section, this Act also has effect as provided by this section. … (3) In addition to the effect that this Act, other than Parts IIIA, VIIA and X, has as provided by another subsection of this section, the provisions of Parts 2-1, 2-2, 3-1 (other than Division 3), 3-3, 3-4, 4-1 (other than Division 3), 4-3, 4-4 and 5-3 of the Australian Consumer Law have, by force of this subsection, the effect they would have if: (a) those provisions (other than sections 33 and 155 of the Australian Consumer Law) were, by express provision, confined in their operation to engaging in conduct to the extent to which the conduct involves the use of postal, telegraphic or telephonic services or takes place in a radio or television broadcast; and (b) a reference in the provisions of Part XI to a corporation included a reference to a person not being a corporation. … (Emphasis added) 25 As is apparent, s 6(3) has the effect of extending the application of specified provisions in the ACL to conduct involving "the use of postal, telegraphic or telephonic services" by a "person" who is not a corporation. These provisions include Pt XI and the ACL (other than Pt 5-3). 26 The applicants contend that s 6(3) is engaged by reason of Mr Blackmore having sent the letter by email to Abergeldie, it being accepted that the expression "postal, telegraphic or telephonic services" encompasses the use of the internet: Australian Competition and Consumer Commission v Jutsen (No 3) [2011] FCA 1352, (2011) 206 FCR 264 at [100]; Seafolly Pty Ltd v Madden [2012] FCA 1346, (2012) 297 ALR 337 at [78]; Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 2) [2012] VSC 239, (2012) 266 FLR 243 at [392]-[396]. 27 The respondents submitted that it was not open to the applicants to rely upon s 6(3) in the present case. First, they submitted that there was no specific reference to s 6(3) in the applicants' pleading. I do not regard this submission as meritorious as the applicants have pleaded the factual elements to attract the operation of s 6(3) if it is otherwise available, and it was not necessary for them to plead expressly the statutory provision: Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251 at [38]-[39]. 28 Next, the respondents submitted that the immunity afforded them by s 2B cannot be abrogated by s 6(3). Counsel relied on two authorities for this submission. The first was Mason v MWREDC Limited [2011] FCA 1512; (2011) 199 FCR 151 in which Greenwood J held that it would not be open to the Court, in exercising the power under s 236 of the ACL, to award damages against officers of the State of Queensland "involved" in a contravention of s 50 of the ACL when, by reason of s 2B, the ACL had no application to that State. His Honour said: [81] … The provisions of the Act (s 2, Schedule 2) which determine whether a person is involved in a contravention of a provision of Schedule 2 and, in particular, Chapter 3 of Schedule 2, are not to be construed in a way that extends the application of the Act to persons acting in their capacity as officers of the State of Queensland as such a construction would defeat the express limitation of the application of the Act contained in s 2B … (Emphasis in the original) 29 As is apparent, the decision in Mason turned on the inter-relationship between provisions in the CC Act bestowing particular powers on the Court, on the one hand, and a provision (s 2B) concerning the application of the Act, on the other. It was not necessary for Geenwood J, in the circumstances of that case, to address the operation of s 6(3) in relation to the application of the CC Act in the context of s 2B. 30 The second authority to which the respondents referred was Woodlands v Permanent Trustee Co Ltd (1996) 68 FCR 213 in which the Full Court (Wilcox, Burchett and Olney JJ) answered reserved questions of law. The first was whether a claim under Pt IVA of the TPA was actionable against the State of NSW. The Full Court answered that question in the negative, referring to the principle stated in Bradken. 31 The second reserved question was whether the respondents other than the State of NSW were also immune from action because the application of the TPA to them would prejudice the interests of the State. The Full Court discussed and applied the principle emerging from Roberts v Ahern [1904] HCA 17; (1904) 1 CLR 406, Broken Hill Associated Smelters Pty Ltd v Collector of Imposts (Vic) (1918) 25 CLR 61 and Re Telephone Apparatus Manufacturers' Application [1963] 1 WLR 463 and held, at 237-8, that: The respondents other than the State of New South Wales are immune from the claims made against them in reliance on the Trade Practices Act to the extent, and only to the extent, that the acts or omissions giving rise to those claims were not outside the scope of the HomeFund Scheme, as devised by the State of New South Wales, or that those acts or omissions were carried out pursuant to the direction or request of the State of New South Wales. 32 Earlier, at 230, the Full Court said: The principle of Roberts seems to be that the immunity that attaches to the Crown itself, from the effect of a statute making unlawful a particular act, extends also to persons retained by the Crown to perform the act, whatever the precise nature of the relationship between the Crown and them. The rationale, no doubt, is that the Crown acts through servants and agents. It would make a mockery of Crown immunity if servants and agents of the Crown were bound by the statute, although performing the very act they were retained to perform and in relation to which the Crown itself was immune. 33 As in Mason, the Full Court reached this decision without reference to s 6(3) of the TPA. 34 Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 is the decision of the High Court on appeal from Woodlands. The High Court confirmed the decision of the Full Court with respect to the immunity of the State of NSW, holding that, despite s 22(1)(a) of the Acts Interpretation Act 1901 (Cth), the term "person" in s 6(3) of the TPA did not include the State. However, the High Court upheld the appeal with respect to the application of the TPA to the respondents other than the State of NSW and substituted "inappropriate to answer" for the answer given by the Full Court. The Court considered the reserved question concerning these respondents to be hypothetical and, accordingly, as not raising a matter appropriate for the exercise of judicial power, at [42]-[59]. The plurality (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ) did say, however, that the Full Court reasoning in Woodlands had extended beyond the rule of construction applied in Re Telephone Apparatus and in Bradken, at [42]. 35 Accordingly, neither of the authorities to which the respondents referred is an express authority for the proposition that s 6(3) does not abrogate the effect of the immunity afforded to the State and its agencies by s 2B. The question of whether that is so depends on the proper inter-relationship between ss 2B and 6(3). That inter-relationship is stated, in part, in s 6(1) which provides "without prejudice to its effect apart from this section, this Act also has effect as provided by this section" (emphasis added). The opening words in s 6(3) are also relevant to the inter-relationship as they indicate that, in addition to the effect which the other subsections in s 6 give to the CC Act, the Act has effect in the circumstances described therein. 36 Section 6(3) has formed part of the CC Act ever since its first enactment as the TPA in 1974 (subject to some amendments which are not presently material). It is doubtful that the insertion of s 2B into the TPA in 1995 to which reference was made earlier should be understood as impliedly qualifying the operation of s 6(3) as, even before its insertion, the TPA did not apply to activities of a State: Bradken at 123 (Gibbs ACJ). 37 Prima facie, there is an inconsistency between the immunity given to the State of NSW by s 2B and, in accordance with Bradken, to those in contractual relationships with it to whom the CC Act would otherwise apply when that application would affect the interests of the State and its authorities, on the one hand, and the extended application of the CC Act given by s 6(3), on the other. The manner in which conflicts of this kind are to be resolved was discussed by McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355 at [70]: A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court "to determine which is the leading provision and which the subordinate provision, and which must give way to the other". Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. (Citations omitted) 38 In resolving the apparent conflict between the effect of s 2B, and s 6(3), some features of s 6 may be noted. 39 It is evident that the purpose of s 6 is to give the CC Act a broad application to the extent that that application is capable of being supported by the heads of Commonwealth legislative power. Its effect is to indicate that, even if not supported by the corporations power, the specified provisions in the CC Act have application in the various circumstances to which the subsections in s 6 refer independently of other provisions in the CC Act. 40 It is also evident that s 6(3) indicates a legislative intention that postal, telegraphic or telephonic services should not be used by anyone, be it a corporation or an individual, as a means of engaging in conduct proscribed by the CC Act and the ACL (other than by the specified provisions). Relevantly for this case, it evidences a legislative intention that the postal, telegraphic or telephonic services should not be used as a means of engaging in misleading or deceptive conduct. 41 However, despite these matters, it is established that the word "person" in s 6(3) does not include a State or Territory: Bass v Permanent Trustee at [24]. Moreover, as already noted, Bradken indicates that the CC Act does not apply to those with whom the State is in contractual relations if to do so would prejudice a State's interests. Mr Blackmore is such a person, and the State of NSW would be affected by a finding that he is liable to the applicants, given the plea, and the admission, of vicarious liability. 42 It is true, as counsel for the applicants submitted, that the presumption against the applicability of general words to bind employees of a State which is immune from legislation is little more than a starting point in the ascertainment of the relevant legislative intent: Bropho v Western Australia [1990] HCA 24; (1990) 171 CLR 1 at 23. However, recognition that that is so does not assist the applicants presently, as it is evident that while there is a legislative intent that persons making use of postal, telegraphic or telephonic services will be subject to the specified provisions of the CC Act, there is also a legislative intent not to abrogate the immunity of the States by making the CC Act applicable to those with whom it contracts when the State's interests may thereby be affected. 43 There is an evident ambiguity in the expression "without prejudice to its effect apart from this section" appearing in s 6(1). Does it indicate that s 6 is not to be understood as modifying the operation of other provisions of the CC Act, and relevantly for present purposes, s 2B? That is, as not altering the effect of other provisions, including their effect in limiting the application of the CC Act? Alternatively, does it mean that, despite the effect of other provisions in the Act, s 6 has the additional effect for which its content provides? 44 In my view, the first of these alternatives is the appropriate construction. This is so because some operation has to be given to the words "without prejudice to its effect apart from this section" with which s 6(1) commences: Project Blue Sky at [71]. Those words mean that s 6(1) is not to be understood as though it provided simply "this Act also has effect as provided by this section". The opening words of s 6(1) serve to indicate that the content of s 6 is not intended to alter the effect of the Act achieved by its other provisions. And, as already seen, the effect of s 2B is to indicate that Pt XI of the CC Act and the ACL do not bind the Crown in right of a State, even when the Crown is carrying on a business, whether directly or by an authority. Further, its effect is to extend the immunity to protect it from the operation of the Act when it is in a contractual relationship with parties to whom the Act applies or when otherwise interested in transactions affecting those parties. 45 This understanding of s 6 enables s 2B and s 6(3) to have a harmonious operation. 46 When s 6(3) is understood this way, it should be concluded that it does not apply to the conduct of Mr Blackmore in sending the email to Abergeldie on 3 October 2019.

The effect on the Court's jurisdiction 47 The conclusion that the claim of alleged misleading or deceptive conduct in contravention of s 18 of the ACL is not maintainable against either Sydney Trains or Mr Blackmore is not conclusive of this Court's jurisdiction to hear the claim of misleading or deceptive conduct arising under the FT Act (NSW) and the claims of defamation and interference with contractual relations. If the applicants' claims were "federal" at their commencement, they retain that character even though the claim under the CC Act against Mr Blackmore not be maintainable: Lin v State Rail Authority at [8]. 48 In Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212, the Full Court (Bowen CJ, Morling and Beaumont JJ), having found that claims under the TPA were not maintainable against the Northern Territory and one of its authorities, nevertheless found that the Court had jurisdiction to hear the applicant's common law claims. The Court said at 219: It is true that in answering questions 1 and 2 in the negative, we have determined the preliminary points of law in the claims under the Act brought against the second and third respondents; and that, in consequence, there will be no further trial of those issues. But it does not follow that the Court ever lacked jurisdiction to deal with such claims. Nor does it follow that the Court now loses its jurisdiction to deal with the attached, law claims … In principle, the position is no different than it would have been if the claims under the Act had proceeded to trial and had been dismissed on the merits. In that situation, it could not seriously be suggested that the dismissal of the claims under the Act had the effect of depriving the Court of jurisdiction to deal with any attached non-federal claim. (Citations omitted) 49 The Full Court (Allsop CJ, Besanko and White JJ) also explained the position in Rana v Google Inc [2017] FCAFC 156; (2017) 254 FCR 1: [20] Once a matter is within federal jurisdiction, the entire matter is within federal jurisdiction … There is never any concurrent exercise of federal and State jurisdiction … [21] Generally, non-colourable assertion of a federal issue is enough to attract federal jurisdiction … Upon the existence of federal jurisdiction, the matter remains within federal jurisdiction regardless of how the federal issue or issues within it are ultimately resolved … It remains federal even if the federal claim is struck out … Nor does dismissal of the federal claim mean that a court exercising federal jurisdiction somehow loses jurisdiction over the balance of the matter … The same is true if the federal claim is effectively abandoned … Indeed, a matter remains in federal jurisdiction even if a party is added and no federal claim is made against that party, provided it is all part of the same matter, the same controversy … The position is summarised in Macteldir Pty Ltd v Dimovski [2005] FCA 1528; 226 ALR 773 at 784 [36] as follows: It is a fundamental tenet of federal jurisdiction that once a federal claim is made, even a bad one, and even one that is abandoned, or struck out, the whole matter in which that claim is made is, and remains, federal jurisdiction … (citations omitted) (Citations omitted) See also Unilan Holdings Pty Ltd v Kerin (1993) 94 FCR 481 at 481-2. 50 The above principles apply unless the federal claim is "colourable".

Is the applicants' claim colourable? 51 The respondents submitted that the Court should characterise the applicants' misleading or deceptive conduct claim under the ACL against Mr Blackmore as "colourable", that is, made for the improper purpose of "fabricating jurisdiction in this Court and for no other purpose" - see Burgundy Royale at 219; Ahmed v Harbour Radio Pty Ltd [2009] FCA 1113, (2009) 180 FCR 313 at [57]-[68]. Counsel submitted that four matters indicated that this was an appropriate characterisation of the applicants' claims, these being: (a) the shifting basis on which the applicants have asserted that the Court has jurisdiction with respect to the misleading or deceptive conduct claim; (b) the circumstance that the applicants assert that Sydney Trains is liable for misleading or deceptive conduct on a basis which is different from that of Mr Blackmore; (c) the absence of evidence from the applicants that the misleading or deceptive conduct claim has been brought against Mr Blackmore for a purpose other than providing a basis upon which this Court may have jurisdiction; and (d) it was unclear why the proceedings had not been brought in the Supreme Court of NSW given that it has jurisdiction to hear and determine all the claims and no explanation has been provided by the applicants for not commencing the proceedings in that Court. 52 Counsel's submissions did not indicate whether the colourability asserted was to be assessed objectively or subjectively. 53 The last two of the matters raised by counsel may be disposed of shortly. The respondents' claim that the applicants' claim was colourable was raised for the first time in counsel's submissions at the hearing. The absence of prior notice to the applicants means that it would not be appropriate to draw any inference adverse to them by reason of an absence of evidence on their part. In saying that, I do not wish to be understood as implying that some evidence about the identified matters would otherwise have been appropriate. 54 I do not regard either of the first two matters as indicating colourability. It is plain that the applicants' position with respect to the jurisdiction of this Court has developed as time has gone by in response to the critique made by the respondents. That may suggest that insufficient attention was given to the basis of this Court's jurisdiction at the time it was invoked. However, there is no reason to suppose that the applicants' mistake was other than genuine. That is to say, that they commenced the proceedings in this Court in the belief that it had jurisdiction to hear and determine their claims but came to realise in the light of the respondents' critique that the issue of jurisdiction was more "live" than they had appreciated. In that circumstance, the applicants' ultimate reliance on a different basis for the Court's jurisdiction than that initially asserted does not support an inference that the claim is colourable. 55 Much the same reasoning indicates that the third matter relied upon by the respondents does not indicate colourability either. It is much more natural to infer that the applicants had made a genuine mistake about the basis upon which this Court does have jurisdiction.

Conclusion 56 In the circumstances, I am not satisfied that the respondents have made good their challenge to this Court's jurisdiction. 57 That conclusion makes it unnecessary to address this Court's power to make an order cross-vesting the proceedings to the Supreme Court of NSW when it has found that it lacks jurisdiction to hear and determine a matter. It is also unnecessary to consider the effect of s 86(1) of the CC Act. 58 The respondents' application for summary dismissal of the proceedings is dismissed. I will hear from the parties as to costs. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice White.