Proper construction of the legislation
38The nub of the submissions put for Mr and Mrs McMahon is that there are three possible scenarios in which a s 11 certificate can validly be issued: first, where the farmer refuses to participate in a mediation offered by the creditor; second, where there is a mediation but it is unsuccessful in reaching a resolution of the dispute; and, third, where there is an agreement reached at mediation, enforceable or otherwise, and the time for compliance with any provisions in that agreement has expired such that the farmer is then in default of compliance with those provisions. The last of those scenarios reflects what Mr Boskovitz argues is the need to "take into account" the agreement reached at mediation at the time of the issue of the s 11 certificate.
39Mr Boskovitz submits that such a reading of s 11(1)(a) is required having regard to the perceived ambiguity in the words "farm mortgage" and the principles of statutory construction expounded in Project Blue Sky v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355. There, McHugh, Gummow, Kirby and Hayne JJ said, at [69]:
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute (See Taylor v Public Service Board (NSW) (1976) 137 CLR 208 at 213, per Barwick CJ). The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole" (Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 at 320, per Mason and Wilson JJ. See also South West Water Authority v Rumble's [1985] AC 609 at 617, per Lord Scannan, "in the context of the legislation read as a whole"). In Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed (Toronto Suburban Railway Co v Toronto Corporation [I915] AC 590 at 597; Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322 at 332; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 312, per Gibbs CJ; at 315, per Mason J; at 321, per Deane J).
40At [78], their Honours said:
However, the duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction (for example, the presumption that, in the absence of unmistakable and unambiguous language, the legislature has not intended to interfere with basic rights, freedoms or immunities: Coco v The Queen (1994) 179 CLR 427 at 437) may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning.
41Mr Boskovitz points to the following statement in a passage from Statutory Interpretation (3rd ed (1997) Bennion, F., pp 343-344), extracted with apparent approval in Project Blue Sky: "the desirability of applying the clear literal meaning may conflict with the fact that this does not remedy the mischief that Parliament intended to deal with".
42Mr Boskovitz submits that, in considering the purpose of the legislation, it is not the mediation that is of essence but, rather, the outcome of the mediation process; and that any construction of the Act that has the effect of "circumventing" an agreement reached at mediation cannot be maintained. Hence, his submission that the phrase "default under the farm mortgage" must be read more widely, by reference to the outcome of the mediation.
43The "unsatisfactory result", inconsistent with the objects of the Act, to which Mr Boskovitz submits a literal reading of s 11(1)(a) may give rise, is that the parties might, following default under a farm mortgage, reach an agreement at mediation that is unenforceable at common law. It is submitted that if, in those circumstances, it were open to the creditor to obtain a s 11 certificate and to commence enforcement action, without reference to the mediation "agreement", before the matters "agreed" under the mediation agreement are due to be performed, this would be an outcome incompatible with the object of the Act.
44There are a number of difficulties with Mr Boskovitz's submissions.
45First, I see no room for ambiguity in the expression "default under a farm mortgage". Both "default" and "farm mortgage" are defined terms. Nothing in the definition of those terms suggests that the question whether there is default for the purposes of s 11(1)(a) requires an exploration of whether there has been compliance, or conversely any default, in the provisions of an agreement reached at a farm debt mediation, whether or not that agreement be enforceable. There is no doubt as to the plain meaning of the definition of "farm mortgage" in this context.
46Second, the Act itself contemplates that a mediation may be "satisfactory" without there being a final agreement as to resolution of the dispute having been reached. Section 11(1)(c) contemplates that a certificate may issue, in the circumstances therein set out, whether or not satisfactory mediation has taken place in the relevant period. Section 11A(5), to which this Court's attention was not drawn, provides that the Authority must not issue a certificate under s 11 to a creditor, on the ground that satisfactory mediation in respect of a farm debt has taken place, if Heads of Agreement are in force in relation to the farm debt and the statutory cooling off period has not expired. There is no similar provision precluding the issue of a certificate while Heads of Agreement are in force but under which the time for compliance by the farmer with the provisions of the Heads of Agreement has not expired.
47Third, the formulation put forward by Mr Boskovitz contemplates that the creditor should not be able to apply for a certificate "without reference" to the mediation agreement. However, where, as here, there is nothing in the mediation agreement that precludes, or deals with the time of, application for a s 11 certificate (other than the initial acknowledgement that Permanent Custodians was then able to apply for one), it is difficult to see how applying for a certificate, but not proceeding to enforcement action at that stage, is something that need be done "with reference" to the mediation agreement.
48Fourth, there is no textual basis for the proposition that it is the outcome of the mediation and not the implementation in good faith of a mediation process (or "breathing space" for the farmer) that is of essence in the operation of the legislation.
49In Myross (NSW) Pty Ltd v Kahlefeldt Securities Pty Ltd [2003] NSWSC 138, Barrett J, as his Honour then was, noted at [23] that the purpose of the Act was to require a mortgagee "to hold his hand on enforcement of the farm mortgage until there has been an opportunity for resolution of differences with respect to the mortgage by mediation and either an arrangement acceptable to mortgagor and mortgagee has been reached or the possibility of resolution is seen to be exhausted", it being only at that point that the mortgagee is free to resort to enforcement action. Here, however, the application for a s 11 certificate is not enforcement action. There is nothing inconsistent with the objects of the Act in a creditor applying for a s 11 certificate in advance of the time at which enforcement action could commence under the terms of any mediation agreement. Obviously, if the mediation agreement in its terms precluded reliance on that certificate, then there would be remedies available for the farmer if the creditor, in breach of the agreement, sought to do so.
50Finally, the reference to the principles outlined in Project Blue Sky does not assist Mr Boskovitz. True it is that the Farm Debt Mediation Act is beneficial legislation and its purpose must be taken into account in construing s 11(1)(a). However, the fact that this is beneficial legislation from the perspective of farmers does not require the Court to find ambiguity where there is none. In Minister of Employment and Workplace Relations v Cribbles Radiology Pty Ltd [2005] HCA 9; (2005) 222 CLR 194 at 208, the majority of the High Court, when considering the expression 'business of an employer' in s 149(l)(d), which formed part of the succession provisions in the Workplace Relations Act 1996 (Cth), while noting that the section must be read in a way that gives effect, so far as possible, to its legislative purpose emphasised the need to consider the words of the section when seeking to discern the legislative purpose, saying that:
It is only if some a priori assumption is made about the intended reach of the provision that considering its purpose casts light on the question [that being how far the extension of the operation of awards went beyond those party to the dispute in question]. To reason in that way begs the question. Rather, it is necessary to consider the words of the provision. It is there that the intended reach of the legislation is to be discerned.
51Again, in Kavalee v Burbidge (1998) 43 NSWLR 422, where Mason P (with whom Meagher JA agreed) noted that a liberal approach to the beneficial legislation there being considered (the Family Provision Act) was called for, given the legislative goal of providing adequate provision in favour of eligible persons, his Honour went on to say that:
... the ability to choose a construction which promotes the purpose of extending the powers of the Court to the full range of benefits and advantages controlled by testators exists only in so far as any question of construction presents a choice.
52Here there is no ambiguity calling for a construction other than that which accords with the literal meaning of the words used in the legislation. In circumstances where the concept of a satisfactory mediation expressly envisages a mediation that may not result in any agreement at all, there is no reason to expand the words of s 11(1)(a) to refer to default under both the farm mortgage and any arrangement or agreement that relates to that farm mortgage which is reached at mediation.
53Mr Boskovitz sought to draw support for his submission from the fact that, as noted by Heydon J, in Waller at [27], the Farm Debt Mediation Act is based on similar provisions in legislation of the State of Iowa. Mr Boskovitz noted that, unlike the New South Wales legislation, the legislation in Iowa contains express provision that the borrower and the creditors who are parties to the mediation agreement may enforce the mediation agreement as a legal contract. Such a distinction does not assist Mr Boskovitz. If the legislature here, having the example of the Iowa legislation before it, has chosen not to include a provision to the effect that a mediation agreement is enforceable as a matter of statute, there is no reason to construe s 11(1)(a) to have a similar effect or to operate in some broader fashion than it does having regard to its literal meaning. There is nothing inconsistent with the purpose of the legislation for the parties to be left to determine for themselves whether any "agreement" reached at mediation is to be contractually binding or is, say, to be no more than an agreement in principle or an agreement subject to a condition precedent to its enforcement.
54Finally, Mr Boskovitz submitted that since a s 11 certificate remains in force for a period calculated in accordance with s 11(5), there would potentially be an inconsistency with the objects of the legislation if the creditor were able to obtain a s 11 certificate, before it was known whether there was default under a mediation agreement, if the mediation agreement contemplated that the farm mortgage would continue on foot if there were to be compliance with the mediation agreement. Mr Boskovitz' argument, as I understand it, was to the effect that because a s 11 certificate so obtained would remain in force for the period specified under the Act but, in those circumstances compliance with the mediation agreement would mean that the farm mortgage continued on foot, the certificate would then apply if there a subsequent default under the same farm mortgage and hence the farmer would be deprived of the relief afforded by the Act if and when there was a subsequent default under that same farm mortgage. However, that result would seem to be a function of the parties' agreement. In other words, if it were contemplated that there would be an indulgence granted to the farmer on the satisfaction of certain conditions and that thereafter the same farm mortgage would continue, without giving rise to a new farm mortgage that would require the issue of a new certificate for any default thereunder, then the difficulty envisaged by Mr Boskovitz results from the manner in which the parties have resolved their dispute. There would be nothing, for example, to prevent inclusion of a provision in the mediation agreement by which the creditor was required to undergo a similar mediation process on any subsequent default.
55The caution to be exercised before interpolating the Court's words into statutes or replacing the words of the legislature with their own has been long recognised (Thompson v Goold & Co [1910] AC 409 at 420 per Lord Mercy). In James Hardie & Co Pty Ltd v Seltsam (1998) 196 CLR 53 at [73] Kirby J said:
In Jones v Wrotham Park Settled Estates [Lord Diplock] made it clear that, if the application of the literal or grammatical meaning would lead to a result which would defeat the clear purpose of a statute, the court, construing the legislation, may read words into the text so long as three conditions were fulfilled. First, that the mischief with which the Act was dealing was clear. Secondly, that the court was satisfied that, by inadvertence, Parliament had overlooked an eventuality which must be dealt with if the purpose of the Act was to be achieved. Thirdly, the court must be able to state with certainty what words Parliament, if its attention had been drawn to the defect, would have used to overcome the omission. Lord Diplock's approach to statutory construction now prevails, not only in England but also in Australia and throughout the common law world. Today, unless driven to the result by unyielding words, no judicial satisfaction is to be derived from concluding that the manifest target of legislation has been missed. (footnotes omitted)
56This tripartite test was applied recently by this Court in Rail Corporation of New South Wales v Brown [2012] NSWCA 296, (2012) 82 NSWLR 318 at [46]-[47] per Bathurst CJ (with whom Beazley JA, as her Honour then was, and Basten JA agreed). In the present case, the applicants must fail on at least the second limb of the test. Parliament clearly contemplated that a satisfactory outcome of a mediation under the Act would not necessarily include a final agreement that resolves the relevant dispute. There is no warrant for reading into s 11(1)(a) words of the kind for which Mr Boskovitz contends.