Telstra Corporation Ltd v State of Queensland [2013] FCA 1296 | Case summary

The issues 11 The State submits that there is a presumption that is "not a rebuttable presumption" that delegated legislation is valid unless and until it is determined by a court of competent jurisdiction to be invalid. It contends that, therefore, Telstra is presently obliged to comply with the Land Regulation by paying rent at the prescribed rates, and the declaration it seeks is necessary to obtain such compliance. The State argues that the effect of the irrebuttable presumption is that no evidence can be led or submissions made by Telstra to demonstrate the strength of the case for invalidity, because such evidence and submissions could not affect the outcome of its application for the declaration. 12 Telstra submits that the State has applied for an interlocutory declaration which cannot not be granted because an interlocutory declaration is a form of order not known to the law. Telstra also submits variously that delegated legislation is presumed to be invalid pending the determination of proceedings seeking a declaration of invalidity, and that there is a rebuttable presumption that that the legislation is valid. It argues that the declaration sought cannot be made without hearing evidence and submissions relevant to the validity of the relevant provisions of the Land Regulation. 13 Telstra's submission that the State seeks an interlocutory declaration is readily understandable. The State's application is headed "Interlocutory Application" and contains the subheading "Interlocutory orders sought". The declaration sought by the State is set out immediately under that subheading. The declaration is expressed to be "pending determination of this proceeding". The State's written submissions describe the declaration sought as "this interlocutory relief". The application is certainly dressed up as an application for an interlocutory declaration: cf Morrison v Hudson [2006] QCA 170 at [30], per Keane JA. 14 However, in oral submissions the State raised a new argument, that the declaration it seeks is final because it will finally determine, "the rights of the parties in terms of the obligation to comply with the State law until such time as this Court determines the validity of the [Regulation]." It argues that the words "pending the determination of the proceedings" do not indicate that the declaration is interlocutory, but, rather, they are intended to reflect that unless and until a declaration of invalidity is made, the delegated legislation must be obeyed. 15 The issues that fall to be decided are these: (a) whether there is an irrebuttable presumption that the provisions of the Land Regulation under challenge under cl 44(1) of the Telecommunications Act and s 109 of the Constitution are valid unless and until declared invalid by a court of competent jurisdiction; (b) whether Telstra should have the opportunity to call evidence to demonstrate the strength of its case that the relevant provisions of the Land Regulation are invalid, and whether such evidence could operate to avoid the making of the declaration sought by the State; (c) whether the declaration sought by the State is interlocutory or final; (d) whether the Court should refuse the declaration in the exercise of its discretion.

Consideration 16 The State was unable to cite any case in which a court has made a declaration to the effect that a party is required to comply with legislation pending the determination of its validity. The State did not explain why it sought a declaration rather than a mandatory interlocutory injunction. Much of the complexity involved in the present application results from the form of relief sought by the State. 17 The State relies upon Castlemaine Tooheys Limited v South Australia (1986) 161 CLR 148 in support of its proposition that there is an irrebuttable presumption that delegated legislation is valid unless and until declared invalid. In that case, the plaintiffs alleged that South Australian legislation contravened s 92 of the Constitution and was invalid. The plaintiffs sought interlocutory injunctions restraining the State from enforcing the legislation against them. Mason ACJ (as his Honour was then) held at 155-156: In Canada the courts have taken the view that only in exceptional circumstances will an interlocutory injunction be granted to restrain enforcement of a statute challenged on constitutional grounds. In Morgentaler v Ackroyd (1983) 42 OR (2d) 659 at 668 Linden J said: "… the balance of convenience normally dictates that those who challenge the constitutional validity of laws must obey those laws pending the court's decision. If the law is eventually proclaimed unconstitutional, then it need no longer be complied with, but until that time, it must be respected and this court will not enjoin its enforcement. Such a course of action seems to be the best method of ensuring that our society will continue to respect the law at the same time as it is being challenged in an orderly way in the courts. This does not mean, however, that in exceptional circumstances this court is precluded from granting an interim injunction to prevent grave injustice, but that will be rare indeed." … It may be that the last sentence in the passage quoted from Morgentaler v Ackroyd states the position too strongly against the plaintiff who seeks an interlocutory injunction in Australia. The decisions in this court to which I have already referred demonstrate that there are a variety of situations in which the court, on a proper balance of convenience, will restrain enforcement of a statute in aid of a plaintiff's constitutional right. In arriving at a balance of convenience the court will take into account the seriousness of the conduct enjoined by the statute and the damage to the public interest that may be caused by restraining its enforcement. And in some cases the balance of convenience may be affected by the court's perception or evaluation of the strength of the plaintiff's case for invalidity. But, subject to these qualifications there can be no reason to doubt the correctness of the general thrust of the comments in the passage which I have quoted. In the absence of compelling grounds, it is the duty of the court to respect, indeed, to defer to, the enactment of the legislature until that enactment is adjudged ultra vires. 18 The words "it is the duty of the court to respect, indeed, to defer to, the enactment of the legislature until that enactment is adjudged ultra vires" in the last sentence of this passage support the State's submission that there is a presumption of validity of legislation. However, the passage as a whole demonstrates that in an application for an interim injunction, such a presumption can be overcome by the balance of convenience, including the court's assessment of the strength of the case for invalidity. 19 The State referred to the decision of the House of Lords in Hoffman-La Roche v Secretary of State for Trade and Industry [1975] AC 295. There a government department sought and obtained an injunction restraining a pharmaceutical company from charging prices in excess of those allowed under subordinate legislation despite the company having commenced proceedings challenging the validity of the legislation. 20 Lord Diplock stated at 367: The duty of the Crown is to see that the law declared by the statutory instrument is obeyed is not suspended by the commencement of proceedings in which the validity of the instrument is challenged. Prima facie the Crown is entitled as of right to an interim injunction to enforce obedience to it. 21 Lord Diplock had said earlier at 366: All that can usefully be said is that the presumption that subordinate legislation is intra vires prevails in the absence of rebuttal. And that it cannot be rebutted except by a party to legal proceedings in a court of competent jurisdiction who has locus standi to challenge the validity of the subordinate legislation in question. 22 In R v Wicks [1998] AC 92 at 115, Lord Hoffman said of this passage: The presumption of validity to which Lord Diplock referred was in my view an evidential matter at the interlocutory stage and the presumption existed pending a final decision by the Court. Lord Diplock was not putting forward the sweeping proposition that subordinate legislation must be treated for all purposes as valid until set aside. 23 Lord Hoffman's analysis of Lord Diplock's statement was cited with approval by Finkelstein J (with whom Beaumont J agreed) in Leung v Minister for Immigration and Multicultural Affairs (1997) 150 ALR 76 at 87. 24 In Hoffman-La Roche, each member of the House of Lords considered that even though delegated legislation is presumed to be the law unless and until it is declared invalid, a court has a discretion whether to grant or refuse an interim injunction to compel compliance with it; and the strength of the case for invalidity is relevant to the exercise of the discretion: at 342, 353, 355, 367, 371. That is consistent with the Australian position, reflected in Castlemaine Tooheys. 25 The presumption of validity has been regarded in both Australian and English cases as a rule of evidence at an interlocutory stage that may be rebutted by evidence. If the State's proposition that there is an irrebuttable presumption of validity were correct, there could be no discretion to refuse an interim injunction, and the strength of the case and the balance of convenience would be irrelevant. I therefore reject the State's submission that there is a presumption that is "not a rebuttable presumption" that delegated legislation is valid unless and until declared otherwise by a court of competent jurisdiction. 26 I will assume for the moment that the State is correct in its submission that the declaration it seeks is a final declaration. Telstra was entitled to lead evidence relevant to its case that carriers are discriminated against under the relevant provisions of the Land Regulation. It did not lead any such evidence and it follows that the relevant provisions have not been shown to be invalid. 27 The grant of a declaration is discretionary: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581. I would decline to grant the declaration sought by the State because Telstra has not had the opportunity to call evidence relevant to its case that the Land Regulation discriminates against carriers. It has not had that opportunity because it seemed irrelevant for Telstra to lead such evidence when faced with what appeared to be an application for an interlocutory declaration. The State's position that it was applying for final relief was not apparent until the commencement of oral submissions. If the State had applied for a final declaration by way of originating application or cross-claim, rather than interlocutory application, as was required under the Federal Court Rules 2011, Telstra would have been put on notice that final relief was being sought. It would no doubt have defended the application on the basis that the relevant Land Regulation provisions were discriminatory and invalid and did not have to be complied with and, at the hearing, would have had the opportunity to lead evidence to establish that defence. 28 Another way in which the State could conceivably have agitated the issue of Telstra's liability to pay rent at the prescribed rates pending the determination of the principal proceeding would have been to apply for a separate determination of the issue. Rule 30.01(1) of the Federal Court Rules allows a party to apply to the court for an order that a question arising in the proceeding be heard separately from any other questions. If the State had applied for separate determination of the issue it is far from clear that it would have been granted, but the effect of the State's application for the declaration is to bypass r 30.01. 29 Assuming that the State's application should be categorised as an application for a final declaration, I would refuse it because the State has not explained its non-compliance with the Federal Court Rules and there is prejudice to Telstra as a result the non-compliance. The prejudice is the loss of an opportunity to call evidence. The Court has the power under r 1.35 to dispense with compliance with Rules, but no basis has been established for such dispensation. I would therefore decline to grant the declaration in the exercise of my discretion. 30 So far, I have proceeded on the basis of the State's submission that the declaration it seeks is a final one. The conclusion I have expressed in the preceding paragraph is enough to dispose of the application, as the State concedes that it cannot obtain an interlocutory injunction. However, in case I am wrong in that conclusion, I will consider whether the State's application is for a final or an interlocutory declaration. 31 In Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, Gummow and Hayne JJ said at 549: "Interlocutory declaration" is a form of order not known to the law … 32 In Magman International Pty Ltd v Westpac Banking Corporation (1991) 32 FCR 1 at 15, the Full Court of the Federal Court cited the statement of Upjohn LJ in International General Electric Co of New York Ltd v Commissioners of Customs and Excise [1962] Ch 784 at 789: [A]n order declaring the rights of the parties must in its nature be a final order after a hearing when the court is in a position to declare what the rights of the parties are, and such order must necessarily then be res judicata and bind the parties forever, subject only, of course, to a right of appeal. 33 In Warramunda Village Inc v Pryde (2002) 116 FCR 58 Finkelstein J stated at [68]: According to existing law the only declaration that may be granted is a final and conclusive declaration. The reason for this is that a declaration declares the rights of parties and it would be illogical for a court to declare that a person has certain rights on one day and different rights on the next. Put another way, an interlocutory declaration is an inherently contradictory notion. Accordingly, a declaration must produce a state of finality in relation to a particular issue, whether or not there are other issues in the case that still require resolution by a final order. (citations omitted) 34 This passage was referred to with approval by the Full Court of the Federal Court in Ho v Grigor (2006) 151 FCR 236 at [54]. 35 The State, by the way it has framed the declaration it seeks, identifies the issue for determination as whether the applicant is lawfully obliged to pay rent in accordance with the relevant provisions of the Land Regulation pending determination of the validity of those provisions. The State asserts that the declaration would produce a state of finality in relation to that particular issue, regardless of the existence of other issues in the case that still require resolution. 36 If the declaration sought by the State were granted, it would raise the possibility of there being inconsistent declarations at the conclusion of the principal proceedings. 37 On one hand, there would be a declaration that pending the determination of the proceeding, the applicant is lawfully obliged to pay rent at the rates prescribed under the Land Regulation. 38 On the other hand, Telstra seeks, and may be granted, declarations in the principal proceedings to the effect that the relevant provisions of the Land Regulation are invalid and have been invalid since their commencement on 1 July 2010, and that Telstra is not and has never been required to comply with such provisions. That would mean, inconsistently with the declaration presently sought by the State, that Telstra was never under any lawful obligation to pay rent in accordance with those provisions. 39 The declaration sought by the State, therefore, is not one that will necessarily be final and conclusive and is, in that sense, interlocutory. It cannot be granted. 40 I will dismiss the State's application with costs. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.

Telstra Corporation Ltd v State of Queensland

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