The Commonwealth v Evans Deakin Industries Ltd

Section 78 of the Constitution empowers the Parliament to confer rights to proceed against the Commonwealth or a State and s. 75(iii) of the Constitution confers jurisdiction on this Court in any matter in which the Commonwealth is a party. There has been some difference of judicial opinion as to whether s. 75(iii) operates without the assistance of any law made pursuant to s. 78 to impose substantive liability on and to authorize proceedings against the Commonwealth in this Court: see The Commonwealth v. New South Wales [29] ; Musgrave v. The Commonwealth [30] ; Werrin v. The Commonwealth [31] ; Asiatic Steam Navigation Co. Ltd. v. The Commonwealth [32] ; The Commonwealth v. Anderson [33] ; South Australia v. The Commonwealth [34] ; Maguire v. Simpson [35] . The better view is, in my opinion, expressed by Higgins J. in The Commonwealth v. New South Wales [36] :

to give jurisdiction to a particular Court over actions or matters of a certain character is not to make a matter actionable or justiciable if it is not otherwise actionable or justiciable under some law to which the parties are alike subject; and the King in right of one State is not subject to any law binding him in right of another State, or of the Commonwealth, unless by force of some positive enactment; and sec. 78 was designed to supply such an enactment, through the Federal Parliament. 1. (1923) 32 C.L.R. 200. 2. (1937) 57 C.L.R. 514, at pp. 546-547, 550. 3. (1938) 59 C.L.R. 150, at pp. 161, 165-168. 4. (1956) 96 C.L.R. 397, at pp. 416-417, 422-423. 5. (1960) 105 C.L.R., at pp. 308-309. 6. (1962) 108 C.L.R. 130, at pp. 139-140, 148. 7. (1977) 139 C.L.R., at pp. 371, 404. 8. (1923) 32 C.L.R., at pp. 219-220.

The Constitution thus draws a distinction between the conferring of rights to proceed against the Commonwealth or a State and the conferring of jurisdiction to entertain a suit brought to obtain a remedy against the Commonwealth or a State when a right to proceed is conferred. If no right to proceed on a cause of action has been conferred by a law made pursuant to s. 78 of the Constitution, no suit invoking federal jurisdiction against the Commonwealth or a State on that cause of action is validly constituted, and s. 64 does not apply. In China Ocean Shipping Co. [37] , an action to limit liability under s. 504 of the Merchant Shipping Act 1894 Imp was brought against the State of South Australia in the Supreme Court of that State. Section 64 was held to be inapplicable. Gibbs J. said [38] :

Before it can be said that a State is a party to a suit, it must be shown that there is some law of the Commonwealth which enables the State to sue or be sued in the case in question. The Parliament has power to make laws conferring rights to proceed against a State in matters within the limits of the judicial power: s. 78 of the Constitution. If a suit is brought against a State in pursuance of a law made under s. 78, the provisions of s. 64 of the Judiciary Act will apply. The source of the power to enable proceedings to be brought by a State is not so clear (cf. Maguire v. Simpson [39] per Jacobs J.) but that question does not arise here. By s. 58 of the Judiciary Act any person making any claim against a State, whether in contract or in tort, in matters of federal jurisdiction may bring a suit against the State, and s. 64 would apply in any suit so brought, but the claim in the present case is not either in contract or in tort. It was not suggested that there is any law of the Commonwealth which confers a right to proceed against a State in a limitation suit. For these reasons, the present suit is not one to which a State is a party within the meaning of s. 64. 1. (1979) 145 C.L.R. 172. 2. (1979) 145 C.L.R., at p. 205. 3. (1977) 139 C.L.R., at pp. 404-405.

A law made pursuant to s. 78 must confer rights to proceed against the Commonwealth or a State before s. 64 applies, for s. 64 applies only when a right to proceed is conferred aliunde. Although it was not thought in China Ocean Shipping Co. that the State's immunity from a limitation suit was lifted by s. 64, it is submitted in the present case that s. 64 does not require a plaintiff in a suit against the Commonwealth to have a right to proceed against the Commonwealth arising independently of the section, and that, if a subject's obligation in particular circumstances is enforceable by suit, a similar obligation may be enforced against the Commonwealth in like circumstances provided a suit is commenced. Since rights and remedies are correlative, so the argument runs, and the remedies to be granted in a suit to which the Commonwealth is a party enforce substantive rights as nearly as possible the same as in a suit between subject and subject, the substantive rights enforceable against the Commonwealth are as nearly as possible the same as the rights enforceable against a subject.

This argument derives support from opinions expressed in two cases preceding China Ocean Shipping Co., namely, the opinions of Kitto J. in Asiatic Steam Navigation Co. Ltd. [40] , and of Gibbs and Jacobs JJ. in Maguire v. Simpson [41] . In the latter case, after reviewing a number of cases in which s. 56 of the Judiciary Act had been mentioned as the section conferring or contributing to the conferring of rights to proceed against the Commonwealth in tort, Gibbs J. expressed the opinion that "it was s. 64, unaided by s. 56, that rendered the Commonwealth subject to the State legislation considered in those cases". It may be that s. 64, unaided by s. 56, rendered the Commonwealth subject to State legislation but that was in the field of tort, and in that field there is no doubt that the subject has a right to proceed against the Commonwealth. In my opinion, that right is conferred by s. 56. Once s. 56 lifts the Commonwealth's immunity in tort, s. 64 might apply to prescribe the measure of the Commonwealth's liability. With all respect, I am unable to accept the argument that s. 64 itself confers rights to proceed against the Commonwealth or a State. The actual decision in Maguire v. Simpson does not require its acceptance. In that case, where it was held that s. 64 affects the substantive rights as well as the procedural rights of the litigants, no question arose as to the Commonwealth's immunity from suit. No remedy was sought in that case against the Commonwealth or against any party being sued on behalf of the Commonwealth.

1. (1956) 96 C.L.R., at p. 427. 2. (1977) 139 C.L.R., at pp. 381, 405.

The introductory words of s. 64 are inconsistent with its conferring a right to proceed against the Commonwealth or a State. Those words define the condition precedent to the application of s. 64; the following words contain its substantive provision. To treat the substantive provision as conferring a right to proceed against the Commonwealth or a State, it is necessary to treat the condition precedent as satisfied whenever the right is purportedly exercised. That is to say, a right to proceed against the Commonwealth or a State is conferred whenever a party proceeds against the Commonwealth or a State. Upon that construction, the introductory words contain no condition precedent. That construction should be rejected. The true construction of the section requires, in satisfaction of the condition precedent, a suit commenced in exercise of a right to proceed. That right must be conferred by another provision. When the right to proceed is conferred and exercised, s. 64 prescribes the rights to which effect is to be given by the court in granting a remedy. In actions for tort, s. 56 of the Judiciary Act has been construed as conferring a right to proceed against the Commonwealth either alone (see Musgrave v. The Commonwealth [42] ; Washington v. The Commonwealth [43] ; Suehle v. The Commonwealth [44] ; Downs v. Williams [45] ) or in conjunction with s. 64: see, e.g., Baume v. The Commonwealth [46] ; Pitcher v. Federal Capital Commission [47] ; Shaw Savill and Albion Co. Ltd. v. The Commonwealth [48] ; Parker v. The Commonwealth [49] ; Downs v. Williams [50] ; Groves v. The Commonwealth [51] . It has not hitherto been thought that s. 64 alone confers a right to proceed. One cannot equate s. 64 with the statutory provisions considered in Farnell v. Bowman [52] which were held to make the Government of New South Wales liable in tort. Those provisions conferred an express right to proceed against the nominal defendant: "The petitioner may sue such nominal defendant at law or in equity in any competent Court ". Corresponding language may be found in ss. 56, 57, 58 and 59 but not in s. 64 of the Judiciary Act. It is only when one puts ss. 56 and 64 together that one finds language corresponding with the Farnell v. Bowman provisions: cf. Maguire v. Simpson [53] . Similarly, the statutes considered in Jamieson v. Downie [54] ; Welden v. Smith [55] and The Crown v. Dalgety & Co. Ltd. [56] (see per Williams J. [57] ) each contained a provision conferring rights to proceed against the Government as well as a provision relating to the law governing the determination of claims against the Government.

1. (1937) 57 C.L.R., at pp. 533, 544, 550. 2. (1939) 39 S.R. (N.S.W.) 133, at p. 142. 3. (1967) 116 C.L.R. 353, at p. 355. 4. (1971) 126 C.L.R. 61, at p. 82. 5. (1906) 4 C.L.R. 97, at pp. 110, 118. 6. (1928) 41 C.L.R. 385, at pp. 391, 392-393, 395-396. 7. (1940) 66 C.L.R. 344, at pp. 352-353. 8. (1965) 112 C.L.R. 295, at p. 300. 9. (1971) 126 C.L.R., at p. 99. 10. (1982) 150 C.L.R. 113, at pp. 121-122. 11. (1887) 12 App. Cas. 643. 12. (1977) 139 C.L.R., at p. 381. 13. [1923] A.C. 691. 14. [1924] A.C. 484. 15. (1944) 69 C.L.R. 18. 16. (1944) 69 C.L.R., at pp. 46-47.

The general plan of the Judiciary Act is consistent with the view that ss. 56, 57, 58 and 59 are the provisions enacted pursuant to s. 78 of the Constitution (cf. per Higgins J. in The Commonwealth v. New South Wales [58] ) and that s. 64 applies in a suit against the Commonwealth or a State when a right to proceed is conferred by one of those sections or by a federal law other than the Judiciary Act. Jurisdiction is conferred on the courts of the States in matters within the limits of their several jurisdictions by ss. 39, 39A and 44. The system of law which is to be applied or to which reference must be made by a court whose jurisdiction is duly invoked is defined by ss. 79 and 80. The rights derived from that system, whether substantive or procedural, to which effect is to be given by the court in a suit to which the Commonwealth or a State is a party are prescribed by s. 64. If rights to proceed are not conferred by ss. 56, 57, 58 and 59, it is difficult to see what operation those sections have except, perhaps, to restrict the bringing of suits in respect of the claims therein mentioned to the courts prescribed in the respective sections: see Washington [59] . In the case of ss. 57 and 59, that restriction would simply repeat the restriction imposed by ss. 38(c) and (d) and 39(1). If s. 64 were held to be a law enacted in pursuance of s. 78 of the Constitution and to confer rights to proceed against the Commonwealth or a State on all causes of action which might lie against a subject, the limitation of rights to proceed to claims in contract and in tort which inheres in ss. 56 and 57 is entirely removed. Neither the text of ss. 56, 57 and 64 nor their context in Pt IX of the Judiciary Act warrants that construction.

1. (1923) 32 C.L.R., at pp. 220-222. 2. (1939) 39 S.R. (N.S.W.), at pp. 141-142.

I would hold that s. 64 is not a law conferring rights to proceed against the Commonwealth or a State. As the present suit is not brought against the Commonwealth in respect of a claim in contract or in tort, s. 56 confers no rights to proceed against the Commonwealth. Nor does any other federal law. The suit is not validly constituted and the demurrer should be allowed.

The same conclusion may be reached by other paths. A suit to enforce a claim of charge under the Act can be brought only in the Supreme Court of Queensland or in some other court of competent civil jurisdiction in that State: s. 12. A charge under the Act is a novel statutory right and a remedy enforcing the right can be sought only in the courts which have been invested with the jurisdiction to grant the remedy: cf.Graziers' Association of New South Wales v. Durkin [60] . Only the Queensland courts have jurisdiction over the subject-matter of claims under the Act. There is no jurisdiction in this Court to grant a remedy against the Commonwealth under s. 12 of the Act. The State law cannot invest that jurisdiction in this Court. No jurisdiction under s. 12 of the Act is invested by s. 64 or by any other federal law. Yet s. 75(iii) confers on this Court jurisdiction in all matters in which the Commonwealth is a party. The jurisdiction of this Court under s. 75(iii) cannot be diminished or destroyed. If a remedy to enforce a right cannot be granted by this Court, the remedy cannot be granted against the Commonwealth. Therefore it is not possible to impose on the Commonwealth a liability which is not justiciable in this Court: cf. The Commonwealth v. Anderson [61] . The liabilities which the Act purports to impose on employers, not being justiciable in this Court, cannot be imposed on the Commonwealth.

1. (1930) 44 C.L.R. 29, at p. 36. 2. (1960) 105 C.L.R., at p. 310.

A further obstacle in the way of applying s. 64 to a suit brought against the Commonwealth in pursuance of s. 12 of the Act should be mentioned. It has to do with the nature and extent of the rights which, it is said, s. 64 imports into a suit brought in pursuance of s. 12 of the Act. The rights of the parties in a suit to which s. 64 applies may not be precisely the same as the rights of subject parties in a similar suit. The law which defines the rights of subject parties may not be applicable in every respect to a suit in which one of the parties is the Commonwealth or a State. Indeed, the very hypothesis on which s. 64 is constructed is that the law by reference to which the rights of the parties are ascertained under that section is a law which is not applicable or not applicable in every respect to a suit in which the Commonwealth or a State is a party. When Dixon C.J. in The Commonwealth v. Anderson [61] noted that "it is the rights of parties as in a suit between subject and subject, not the law, that are to apply as nearly as may be", I understand him to be affirming the application of s. 64 in cases where the referential law could not be applied in the instant suit but where its operation in a suit between subjects would create rights that can be imported to determine the rights of the parties in the instant suit. The words "as nearly as possible" show that the imported rights need not be identical with the rights of the parties in a suit between subject and subject, but the elasticity of the test surely stops short of including rights which are substantially different in nature or extent from those to which the referential law would give rise in a suit between subject and subject.

Assuming, contrary to my opinion, that s. 64 applies to a suit against the Commonwealth brought pursuant to s. 12 of the Act, the rights and the reciprocal obligations which it would import affecting the Commonwealth as employer would be substantially different from the rights and obligations which would affect a subject employer under the Act and to which a suit brought under s. 12 of the Act would give effect if the Commonwealth were not a party. Section 64 is incapable of affecting the rights and obligations of the Commonwealth prior to the bringing of a suit. If s. 64 is construed as affecting the rights and obligations of the Commonwealth when a suit is commenced as though the Commonwealth's rights and obligations had theretofore been affected by the Act, the operation of s. 64 would produce a substantially different set of rights and obligations from those which the Act produces.

The Act provides for a statutory charge binding the money payable by the employer to the contractor when the notice of charge is given. The rights and obligations of the employer, the contractor and the sub-contractor inter se are immediately and reciprocally affected. But as the Act does not bind the Commonwealth, the giving of a notice of charge to the Commonwealth is ineffective to bind the moneys payable by the Commonwealth to a contractor and the contractor retains his contractual right to be paid. Take the present case. If Maltry had demanded the whole of the moneys due to it under its contract with the Commonwealth after Evans Deakin had given the Commonwealth a claim of charge, on what ground could the Commonwealth have refused to pay them? Not on the ground that it was bound by s. 11 of the Act to retain an amount sufficient to satisfy the claim for, in the absence of suit, the essential condition of the application of s. 64 is not satisfied and the Commonwealth's contractual obligation to pay Maltry what is due under the contract is unaffected. If the Commonwealth, having refused to pay Maltry the amount claimed by Evans Deakin, had been sued on the contract by Maltry, would the Commonwealth have had any defence? Unless the Commonwealth could have set up as against Maltry the right to retain the amount specified in Evans Deakin's notice of claim, it would have had none. An employer's statutory right to retain such an amount against the contractor flows from the employer's statutory obligation to retain that amount to satisfy a claim of which notice is given pursuant to s. 10 of the Act. But the Commonwealth's statutory obligation to retain an amount claimed by a sub-contractor who gives a notice of charge arises, if at all, no sooner than the commencement of a suit by the sub-contractor seeking to enforce the charge. The charge does not arise before any suit is commenced. It can hardly be said to arise in favour of the sub-contractor when the contractor commences a suit to recover what is due to him under his contract.

If the Commonwealth, prior to the commencement of a suit by a sub-contractor but after the service of the notice of charge, had paid the contractor what was then payable to him, how would s. 64 operate once the sub-contractor's suit was commenced? Either the payment to the contractor would be treated as effective to discharge the Commonwealth's contractual obligation when it was made, so that there are no moneys to which the charge may attach when the suit is commenced, or the payment is treated as a failure "to retain the amount that he is required to retain" under s. 11(2) so that the Commonwealth becomes "personally liable to pay the sub-contractor" as well as the contractor.

The anomalies inherent in treating s. 64 as conferring a right to proceed against the Commonwealth as an employer are concealed when the contractor and sub-contractor are both parties to a suit against the Commonwealth brought pursuant to s. 12 of the Act. If the court proceeds as though the notice of charge was effective to bind the moneys payable to the contractor when it was given, the Act and s. 64 appear to operate harmoniously. But the appearance masks another anomaly. An employer is authorized to pay into court the amount that he is required to retain when a notice of charge is given and thereby to be discharged of all further liability in respect of the amount paid: s. 11(5) and (6). Before a suit is brought, the Commonwealth is neither under an obligation to retain the amount claimed in a notice of charge nor entitled to pay that amount into court and thereby discharge its liability to the contractor. The Commonwealth could not avoid litigation under any contract under which it is liable to pay money to which a charge under the Act contingently attaches.

The remedy of a suit to enforce a charge against an employer and the right to a charge on the moneys payable by an employer to a contractor are inseparable. Like the right and remedy in Barraclough v. Brown [1] they are given "uno flatu, and the one cannot be dissociated from the other": per Lord Watson [2] . The right effectively arises on the giving of a notice of charge, the event on which the chief provisions of the Act depend. Consistently with the scheme of the Act, the time when the right arises cannot be deferred until the remedy is sought. Yet an attempt to employ s. 64 to import the sub-contractor's right against the Commonwealth as employer necessarily defers the existence of the right until the suit to enforce the charge is brought. There is a substantial difference between the operation of the Act on the rights and obligations of the three parties concerned - the employer, the contractor and the sub-contractor - when a notice of charge is given and the operation which s. 64 would have when a suit to which the Commonwealth is a party is commenced.

1. [1897] A.C. 615. 2. [1897] A.C., at p. 622.

In my opinion, s. 64 confers no right to proceed against the Commonwealth in a suit brought pursuant to s. 12 of the Act; it imposes no liability which is justiciable in this Court in a suit under s. 75(iii) of the Constitution and it is incapable of importing rights and obligations affecting the Commonwealth which are substantially different from the rights and obligations of a subject employer under the Act. For these reasons, I would hold that s. 64 has no application to the present proceedings.

It follows that the Commonwealth cannot be liable in the present action. I would allow the appeal, set aside the judgment of the Full Court and in lieu thereof allow the demurrer.