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French, Justice Robert --- "Dolores Umbridge and the concept of policy as legal magic" (FCA) [2007] FedJSchol 14

Speeches

Australian Law Teachers’ Association – National Conference
Perth

Dolores Umbridge and the Concept of Policy as Legal Magic

Justice RS French

24 September 2007


Introduction

1 Policy, in the wide realm of the law, is a little like Harry Potter’s wand. By its deft application apparently inert statutes may be imbued with magical energies and transformed for purposes dreamt of but unrealised by their creators. Its magic is not limited to statutes. Even the majestic centuries long flow of the common law may be opened to the tributaries of justice with the wand of policy.

2 There was a time a few years ago, when the High Court was thought to have become a wellspring of new policy. But now there are those who say that the magic has vanished. The spirit of Dolores Umbridge, pink power dressed bureaucrat from the Ministry of Magic, is said to rule over the land.[1] Magic may be read about in old books on the history of the common law but not done. Dark magicians are said to bind us in the chains of dead verbiage and drain the life force from the common law. This is not only an embarrassingly overblown metaphor. It is also unwarranted pessimism. For policy in the law is, like magic in the lands of fantasy, a power that can never be put out although it may, from time to time, be more or less visible in the work of the courts.

3 Policy has always had a role to play in statutory interpretation and in the development of the common law. Old magic in the form of the equity of the statute survives in reduced form as statutory purpose and public policy. In its days of power, the equity of the statute, judicially discerned, could extend its operation to facts beyond its language but within its policy. It could exclude matters within its language but outside its policy. It was much diminished by the rise of parliamentary sovereignty and Jeremy Bentham’s denunciation of it as a branch of customary law which had infected statute law. Nevertheless it gave birth to equitable principles which survived it including the doctrine of part performance and the avoidance of preferences in insolvency which is now part of the statute law.[2]

4 There was nothing novel then, in 1996, about the proposition enunciated by three members of the High Court when they said, in a case called Akai:

… considerations of public policy present in an Australian court may flow from, even if not expressly mandated by the terms of, the Constitution or statute in force in the Australian forum. Thus, the courts may disregard or refuse effect to contractual obligations which, whilst not directly contrary to any express or implied statutory prohibition, nevertheless contravene “the policy of the law” as discerned from a consideration of the scope and purpose of the particular statute. [3]

5 But even watered down spells are dangerous and resistance to them encountered if they are improperly used. In 2001 Ansett Australia Holdings Ltd entered into a deed of company arrangement. It had been a member of the International Air Transport Association Clearing House which had responsibility for the clearance of accounts between member airlines arising from transactions entered into by them. The payment and clearance of accounts was governed by regulations contractually binding on members. The question arose in the High Court just three weeks ago, on 5 September 2007, whether money due on transactions between airlines under the regulations became payable to the Clearing House so that the property of an insolvent airline would not include an entitlement to receive payment from any other member airline. Senior counsel for Ansett arguing against that contention waved the policy wand and said:

A preferential scheme for members to effect multilateral settlements ahead of the queue of ordinary creditors simply does not work in the face of the policy of the bankruptcy laws.

The following exchange ensued:

Gummow J: Why do you keep saying ‘the policy of the bankruptcy laws? I thought it was the text. I cannot find any prior submissions to that effect in your written materials.

Counsel: Yes. The cases speak about the policy of the bankruptcy laws.

Gummow J: I know they do, but we do not.

Counsel: Even Akai, your Honour, spoke about the policy.

Gummow J: Not of the bankruptcy laws.

6 Counsel tried the spell again a little later:

Your Honours, we do say that there is an underlying policy of the bankruptcy law and the public policy rule operates to ensure that even if you cannot find some technical inconsistency with the Act, you do find an inconsistency with the distribution policy of the Act, then the private contract fails.

Hayne J characterised this as “…an argument that says the courts supplement the legislative prohibition” and described it as “a very large proposition”. Kirby J reflecting, as his Honour so often does, contemporary societal concerns, expanded the metaphor of policy as an unruly horse and said:

It is just that when judges hear those words “public policy”, or even the word “policy”, sometimes they get equine images in their mind and we do not want to get equine flu.

Nobody would describe Kirby J as a disciple of Dolores Umbridge or even as a Muggle. The first lesson is clear. In the law policy can be difficult magic. It has a protean character. And ultimately it is constructed. The second lesson reflects judicial philosophy and legal practice. In the discovery of the law for a particular case the first resort is to its words be they expressed in a statute or as the statement in the cases of a rule of the common law. Policy gives life to the rules but the words of the rules must first be found. Policy divorced from law has no voice in the courts. The question then arises why discuss law and policy at all?

The utility of discussing law and policy

7 The preliminary answer to the question is that without consideration of policy interpretation and application of the statute law and the application and development of the common law are likely to lack any normative justification and any intelligible connection to societal attitudes and values. Interpretations, applications and developments divorced from policy are likely to be unpersuasive, unstable and short lived. Like most generalisations in the law that is not universally true.

8 In accepting the utility of a discussion about law and policy it must also be accepted that the subject matter is untidy. There are circumstances in which the search for a policy informing the law is futile. Examples abound in the common law. Its growth is a little like biological evolution. It proceeds through myriad cases which may or may not support the development of emergent organising principles. Coherence cannot always be manufactured. The point was made rather emphatically by the High Court in its recent judgment in Farah Constructions.[4]The Court there rejected the imposition by the New South Wales Court of Appeal of a constructive trust on property held by defendants by reason of a liability for restitution based on their unjust enrichment at the expense of the plaintiff. The Court of Appeal held that such liability did not depend on the defendants’ having any notice of the plaintiff’s rights. This conclusion was said to have been based upon that Court’s rejection of the first limb of Barnes v Addy in favour of a more “coherent” restitutionary approach. The High Court cited with approval the observation of Gummow J that:

There is support in Australasian legal scholarship for considerable scepticism respecting any all-embracing theory in this field, with the treatment of the disparate as no more than a species of the one newly discovered genus.[5]

The restitutionary approach was said to reflect a “mentality in which considerations of ideal taxonomy prevail over a pragmatic approach to legal developments”.

9 It follows, so it seems, at least on this High Court’s watch, that if, for historical reasons, there is an absence of coherent or satisfactory principle or policy explaining and informing a particular area of the common law, it may be a hazardous exercise for intermediate appellate and trial courts, to supply that absence. That is not to say that general principle and generalising principles may not emerge from the case by case development of the law. Gummow J himself referred in Wik to the “time honoured methodology of the common law whereby principle is developed from the issues in one case to those which arise in the next”.[6]

10 Some untidiness and some incoherence is historically entrenched. There is no meta-principle which allows for satisfactory prediction of the circumstances in which incoherence or untidiness will be rectified by an ultimate appeal court. There continues in existence the general principle of restraint enunciated by Mason J in State Government Insurance Commission v Trigwell[7] who declined, with the majority, to alter the longstanding common law rule limiting liability of property owners for straying stock:

The court is neither a legislature nor a law reform agency. Its responsibility is to decide cases by applying the law to the facts as found. The court’s facilities, techniques and procedures are adapted to that responsibility; they are not adapted to legislative functions or to reform activities.[8]

Trigwell was, of course, early days for Mason J. Since that time there has been ebb and flow in the tides of judicial restraint and creativity in the High Court in relation to the areas of the common law wanting coherent policy bases or overtaken by changing social conditions.[9] But the reality remains that there are areas of the judge made law which will not be amenable to explanation by reference to any coherent policy nor amenable to change to bring them within the scope of such a policy. In that case the legislatures and the Law Reform Commissions and their analogues offer the best path forward.

11 The common law is not the only area of the law in which there are incidents of non-existent, undeveloped or incoherent policy. The statute law shows many examples of such cases. The categories of goods defined for the purposes of the imposition of particular rates of duty under excise and custom law and the former sales tax legislation offered courts a rich wilderness of single instances through which to pick their way. No statements of purpose, no explanatory memoranda, no textual guidance, just broadly defined categories of uncertain content in some cases probably the result of successful special interest lobbying.

12 I remember, many years ago, having to decide whether a popular drink called “Sub-zero Alcohol Soda” was a “spirituous beverage” for the purposes of sales tax legislation. If it were such a beverage it attracted a higher rate of tax than if it were not. It did not seem to be a spirit in the ordinary sense of that word. It was derived from the production of Fosters Light Beer. Fosters Light Beer was made by evaporating alcohol out of full strength Fosters Beer through a low pressure distillation process. The reduced alcohol product was mixed back with the full strength beer to produce Fosters Light. The leftovers from the distillation process contained 13% alcohol and were diluted with soda water and mixed with flavouring to make the trendily named party drink. Nothing in the Act gave any clue to the purpose of the particular classification. The word “spirituous” imposed no precise boundaries on the class of beverage it described. There was no information available about legislative history or purpose of that particular classification.

13 In some cases the legislature may abstain from any clear policy position. In Stevens v Sony[10]the High Court cautioned against picking a single legislative purpose to guide statutory construction when the legislature had stayed its hand from doing so. Extrinsic materials relevant to the constructional question in that case, which had to do with the word “prevent” were said to be replete with “shifting and contradictory positions” taken by a range of interest holders in the legislative outcomes. The legislative purpose was “to express an inarticulate (or at least not publicly disclosed) compromise.” [11]

14 Less difficult but still challenging are cases in which the law reflects a tension between conflicting policies. An example may be found in the protection of patentees from indirect or contributory infringement of their patents. Since the enactment of s 117 of the Patents Act 1990 (Cth) liability for infringement of a patent has been extended, beyond direct infringers and joint tortfeasors, to persons who supply goods for infringing use. However the liability does not extend to the supply of “staple commercial products” unless accompanied by an inducement to apply the products to infringing use. The imposition of the indirect liability and its limitation in the case of “staple commercial products” reflects two competing policies:

1. That a patentee’s rights should be effectively protected.

2. That the patentee’s monopoly is not extended so as to prevent dealings in ordinary articles of trade and commerce.

15 The interpretation of the term “staple commercial product” as well as other aspects of s 117 must have regard to the competing policies. The difficulties in striking a balance were reflected in the judgment of the Full Federal Court, delivered last Wednesday, in Collins v Northern Territory [2007] FCA 152. The Northern Territory had granted licences to a company, under its Crown Lands Act 1992 (NT), to remove from Crown land Tropical Cypress Pines which were used for the production of an aromatic oil. Mr and Mrs Collins held a patent for a method of producing the oil from that species of tree which they said was being infringed by the company. They contended that the Northern Territory had engaged in contributory infringement by granting the licences. The questions for the Full Court were:

(i) was the grant of the licences a supply of the trees for the purposes of contributory infringement”;

(ii) were the trees staple commercial products whose supply, in the circumstances, would not constitute contributory infringement.

The trial judge found in favour of the Northern Territory. The Full Court, by a majority of two to one, found against the Northern Territory. A critical question at each level was the scope of the term “staple commercial product”. The tension between effective protection for a patentee and proper limitation of the patentee’s monopoly has informed the law relating to contributory infringement in its judge-made ancestry in the United States and subsequent codification of it in that country, in the European community, the United Kingdom, Australia and other countries.

16 Sometimes statutes will be amended in response to particular political imperatives which will change or diversify or generate confusion about their policy objectives. Section 46 of the Trade Practices Act 1974 (Cth) (the TPA) is a case in point. The policy of the section as originally enacted and later amended was identified by the High Court as protection of competition, not competitors.[12] If small business affected by the conduct of a larger more powerful competitor were to bring an action under the section it could only succeed on the basis that all the elements of a contravention, as defined by the terms of the section, have been established. In Boral, Gleeson CJ and Callinan J made the point:

17 The purpose of the Act is to promote competition not to protect the private interests of particular … competitor. If the damage is sufficiently serious competition may eliminate a competitor. [13]

There has been a political response to the High Court’s decision. The Senate Economics References Committee published a report in March 2004 under a reference requiring it to inquire into the effectiveness of s 46 in protecting small businesses. The Committee recommended that the section be amended “to clarify the intentions of the parliament”. The changes proposed by the Committee were for the purpose, not of protecting competition, but of protecting small business. It might, with respect, have been more apposite to locate laws for the protection of small business against bullying by powerful competitors within the provisions of Pt IVA of the TPA concerned with unconscionable conduct. A long time has elapsed between recommendation and legislative change. In the last week or so amendments to s 46 have been introduced including the so-called Birdsville amendment named for its proponent, Senator Joyce, who was concerned to ensure effective protection for small business against sustained below cost pricing by corporations with a substantial market share.

18 An acute example of amendment giving rise to a provision supported by conflicting policies is the amendment to the Constitution which occurred 40 years ago. That was the amendment to the race power, the power conferred on the Commonwealth Parliament by s 51(xxvi) under which, in its original form, it could make laws for:

The people of any race other than the Aboriginal race in any State, for whom it is deemed necessary to make special laws.

19 In its original form, at federation, there could have been little doubt that the power was not intended for the making of laws beneficial to particular races. Its clear purpose was to allow adverse discriminatory and controlling legislation to be enacted. The 1967 amendment on the other hand was designed to extend the Commonwealth Parliament’s legislative power with respect to particular races to the Aboriginal people by removing the exclusion relating to them. The intention of the amendment was entirely beneficial. That however did not turn the power generally into a beneficial one. The weight of High Court authority supports the view that s 51(xxvi) authorises both beneficial and adverse laws. It can properly be described as a constitutional chimera.[14]

20 In any discussion of the place of policy in the law, it is necessary to bear in mind that law’s realm has its policy deserts, devoid of purpose, its badlands where conflicting purposes are tumbled up against each other in an incoherent jumble and the undulating country of policies in tension.

21 The preceding observations give a reasonable indication of what is meant by policy for the purposes of this paper. But discussion about policy in the law does seem to have some definitional difficulty. It is therefore useful to consider what definition will assist consideration of law and policy and their interaction.

Working definition of law and policy

22 From the perspective of practising lawyers and judges in Australia the law is primarily the Commonwealth and State Constitutions, statutes made under them including delegated legislation and the judge-made or common law. The law so identified is of course not isolated from its social and cultural context. As McHugh J said in Theophanous[15]

The true meaning of a legal text almost always depends on a background of concepts, principles, practices, facts, rights and duties which the authors of the text took for granted or understood, without conscious advertence, by reason of their common language or culture.

That is not to say that all of these things assume the description of “laws” but that the content of “laws” cannot be understood without reference to them. Those matters are part of the cultural environment or matrix from which law takes its meaning. Although the distinction is imperfect they can be distinguished from particular policies which inform the interpretation or development of the law.

23 It is difficult to be as concrete about a working definition of “policy” as one can about a working definition of “law”. The relevant ordinary English meaning of “policy” is:

A course of action or principle adopted or proposed by a government, party, individual etc.; any course of action adopted as advantageous or expedient’.[16]

A related concept is that of ‘principle’ which is relevantly defined as:

A general law or rule adopted or professed as a guide to action; a fundamental motive or reason for action.

By these definitions, a principle may be a policy.

24 Discussion about policy particularly in relation to what courts do has significance for:

1. The interpretation of statute law.

2. The application of legal standards created by statute law.

3. The application of legal standards created by the common law.

4. The development of the common law.

Policy in this setting is best taken as referring to a purpose which is often expressed in normative terms. It is attributed to the legislature in the case of statute law or posited as underpinning the rules comprising the common law. If, for completeness, attribution is necessary in the latter case, policy can be attributed to generations of judges.

25 The working definition of “policy” as “purpose” is undoubtedly contestable. So too is the equation of policy and principle. Stephen J drew a distinction between the two in Caltex Oil ( Australia) Pty Ltd v The Dredge “ Willemstad”[17] when he observed that policy considerations play a significant part in the judicial definition of liability and entitlement in new areas of the law. He regarded principle as the application of policy saying:

To apply generalized policy considerations directly, in each case, instead of formulating principles from policy and applying those principles, derived from policy, to the case in hand, is, in my view, to invite uncertainty and judicial diversity.

That may be seen as little more than a statement that policy is not a legal rule but informs the development of a rule. It is the legal rules that are then applied to the case in hand.

26 Distinctions between policy and principle were discussed by Alan Beever in a special edition of the Queensland University Law Journal on the “Role of Policy in Private Law Adjudication” published in December 2006. He observed three general understandings:

  1. Principle refers to rules found in the case law and policy to the reasons for or against those rules. This he criticised on the basis that it fails to account for the normative nature of legal principles.
  2. Principle is relatively concrete while policy is relatively general. The neighbour principle in Donaghue v Stevenson[18]deals with the setting of the duty of care in the law of negligence. The general policy upon which it is based is that offenders must pay for their wrongdoing. This distinction was criticised for lack of interest because while principle and policy are different there is no distinction between them.
  3. Principle is general and policy explains exceptions. The general principle that one is responsible for the consequences of negligent actions is subject to policy based exceptions as the general unavailability of recovery for pure economic loss.[19]

In the end Beever suggested that the principle/policy analysis in the law of negligence and elsewhere in private law is and must be a failure. He proposed as the best alternative the discovery of “a genuinely principled account of the law”. In my opinion however the problem which he identified is not a problem which it is necessary to confront here. A concept of policy which defines it as an attributed purpose, be it legislative or devised by judges, may require unpacking. Provided it is expressed in terms of a purpose it does provide a tool for consideration of the proper functioning of the judicial system in the interpretation, application and development of the law. It may be accepted that there can be more than one purpose at work and a hierarchy of policies expressed as general and more specific purposes. The utility of this approach can be tested by reference to the judicial function.

The judicial function

27 The judicial function, simply stated, is to hear and decide cases. There is a simple syllogistic model which provides a framework for its further exploration. The judge identifies a major premise which is the relevant rule of law. It typically states that in a given factual situation certain rights, obligations or liabilities exist. Facts are found. They identify the minor premise. The rule of law is then applied to the facts as found and a determination of the existence or non-existence of rights, obligations and liabilities emerges to support the award or refusal of remedies as the case may be.

28 The syllogistic model has the virtue of simplicity and the vice of incompleteness as a description of the judicial function. In each of its elements questions of policy, in accordance with the working definition, may have to be considered.

29 The determination of the relevant rule of law in the case of statutes goes beyond correct identification of the relevant sections of an Act. The applicable rule of law is not identified until the relevant part of the statute is interpreted. Principles of interpretation require consideration of the ordinary meaning of the words of the provision having regard to context but also to legislative purpose. That purpose may be the purpose of the Act as a whole or the purpose of the particular provision. It may be both. Where the common law is concerned, the first problem is to identify an authoritative formulation of the rule apposite to the problem before the Court. If the problem is novel then it may not be covered by existing formulations. That does not make it an extra-legal problem. A generalisation of existing principles in accordance with underlying policy may be necessary to a resolution of the matter before the Court. There may also be questions about whether policy considerations, unrelated to the relevant rule, can defeat its application to novel circumstances. This was one of the matters before the High Court in Cattanach v Melchior.[20] I have chosen this case because the term “public policy” appears 96 times in the judgments. This is the highest strike rate for the use of that term in any High Court decision for the past decade. The Court upheld by majority an award of damages to the parents of a child born after a sterilisation procedure performed on the mother. The cause of action was for negligent advice from the treating doctor. The argument for the defendant who was the appellant in the High Court, contended in effect that recovery should be barred on public policy grounds. McHugh and Gummow JJ observed that this did not involve any denial of the relevant duty of care but rather a proscription of the recovery. They rejected a distinction between public policy as something that would defeat the enjoyment of legal rights and legal policy which is the policy of the law. They quoted Cresswell J in the old case of Egington:[21]

… we are not asked our opinions as to public policy, but as to the law; and I apprehend that when in our law-books of reports we find the expression, it is used somewhat inaccurately instead of ‘the policy of the law’. Thus, contracts in restraint of trade have been said to be illegal as against public policy, but in truth it is part of the common law that trade shall not be restricted … and unreasonable contracts in restraint of trade violate the policy of that part of the common law, and are therefore illegal.

So while, as Lord Radcliffe said, in an article quoted in the judgment, public policy is “the proper subject of the minister or the member of the legislature” the law speaks “for a system of values at any rate less mutable than this”.[22] What courts are and remain concerned with, on this approach, with which I respectfully agree, is the policy of the law which can be described in terms of a social purpose or purposes.

30 The second area of the judicial function is the fact finding process. In many cases this will be conceptually a fairly pedestrian exercise. Most facts, like the truth in the X-Files, are out there just waiting to be found. On the other hand, the application of the relevant legal rule may be dependent upon the finding of “facts” constructed by its language. A finding of those facts may involve normative or purposive judgments to give effect to the policy of the legislation.

31 By way of example, a number of provisions in the TPA use such terms as “market” and “substantial lessening of competition”. The provisions are framed in such a way that the existence and definition of a relevant market and whether certain conduct has or is likely to have the effect of substantially lessening competition in that market, are matters of fact to be found before application of the relevant legal rule. Section 50(1) of the TPA provides, inter alia:

A corporation must not directly or indirectly:

(a) acquire shares in the capital of a body corporate; or

(b) acquire any assets of a person;

if the acquisition would have the effect, or be likely to have the effect, of substantially lessening competition in a market.

The term “market” is used to describe in a metaphorical way a space of economic activity whose dimensions are function, product and geography. It may be defined functionally by reference to wholesale or retail activities or a combination of both. The concept of product encompasses goods and services. It includes the range of goods or services which are substitutable for, or competitive with each other (TPA s 4E). The concept of market has been authoritatively defined as “… the field of actual and potential transactions between buyers and sellers amongst whom there can be strong substitution, at least in the long run, if given a sufficient price incentive”.[23] The process of market identification has also been described as a kind of focusing process. In identifying a relevant market the Court must select what emerges as the clearest picture of the competitive process in the light of commercial reality and the purposes of the law.[24] If the market is expressed narrowly it is generally easier to establish that impugned conduct is likely to substantially lessen competition within it. If it is defined broadly, then the same conduct is less likely to substantially lessen competition in it. Market definition is therefore critical to the determination of liability under a number of provisions of the TPA.

32 The same sort of judgment has to be made in determining whether impugned conduct is likely to substantially lessen competition. The word “likely” has been construed in terms of a “real chance or possibility”. It does not require a finding that a substantial lessening of competition is more likely than not. It offers no quantitative guidance but requires a qualitative judgment about the level of anticompetitive risk associated with the proposed conduct. The judgment is necessarily evaluative and purposive. Set too high, it may have the result that conduct well within the policy of the Act is not prevented or penalised. Set too low, it may sweep up conduct well within the scope of ordinary competitive activity. The word “substantial” requires similar qualitative judgment. The High Court has accepted that a “substantial lessening of competition” is one that is “meaningful or relevant to the competitive process”[25] Here we see policy informing fact finding which overlaps with construction and application of the law.

33 Analogous judgments arise in native title cases. Section 225 of the Native Title Act 1993 (Cth) requires that a determination of native title identify “who the persons, or each group of persons, holding the common or group rights comprising the native title are”. Following the decision of the High Court in Yorta Yorta Aboriginal Community v Victoria[26] this involves consideration of whether the persons said to be native title holders are members of a society which existed from sovereignty to the present time as a group united by its acknowledgment of laws and customs under which the native title rights and interests claimed are said to be possessed. One of the elements of that consideration is identification of the relevant society. Where indigenous groups are dispersed across large tracts of territory but have similar traditional laws and customs, it may be that the relevant society is a cultural bloc which encompasses them all. Where such groups, particularly in coastal areas, are adjacent to each other and have very similar laws and customs, there may be a question about where the limits of a particular society are to be defined. This is a second example of evaluative and necessarily purposive fact finding. The first depends upon statutory terms of a metaphorical character. The second is a non-statutory constructed fact adopted by the High Court as a tool of analysis.

34 Other examples coming out of both statute and common law include the identification of cause and effect relationships for the purposes of attributing responsibility and policy based limitations posed by such concepts as remoteness and foreseeability. It can be accepted that purposive fact finding overlaps with statutory construction in this class of case. Section 82 of the TPA allows a person who suffers loss or damage by conduct of another in contravention of a provision of Pt IV or Pt V to recover the amount of the loss or damage by action against the contravenor. It may be said that the question whether a person has suffered loss or damage “by” the conduct of another is a matter of fact. However it raises questions of both construction and application and, inescapably, policy. This was pointed out in 1987 by Gummow J when he said:

The question … really turns on the nature or quality of the causation which is required by the use of the word “by”. In logic, the cause of any state of being may be not less than “the sum of the entire conditions”, but the courts in expounding the common law and in construing statutes which present issues of causation, have selected some one or more out of what is an infinite number or conditions to be treated as the cause. … in making that selection the law is moved by circumstances of policy not simply of logic…[27]

Considerations of a policy of practical and sensible limits on recovery in relation to s 82 may lead to limitations upon its application which are analogous to, but not derived from, common law concepts of remoteness.

35 The third step in the judicial process, according to the syllogistic model, is the application of the relevant rule of law to the facts as found. It has already been observed that the construction of the rule and the finding of the facts will sometimes be a single process with evaluative and purposive elements and so informed by or requiring an application of the policy underlying the law or judge made policy limits on its application.

36 Applying the law to the facts may be a simple process. On the other hand it also can involve evaluative and purposive judgments. These judgments may arise where:

1. There is an open textured legal rule such as the prohibition in s 52 of the TPA of conduct in trade or commerce that is “misleading or deceptive or likely to mislead or deceive”.

2. Rules which invite characterisation in the area of what Professor Julius Stone has described as categories of meaningless reference. The characterisation of money received as “income” or “capital” falls into this category.

3. Rules which embody broad and undefined legal standards. Standards of “reasonableness” and “good faith” are classic examples. A challenging statutory example is s 51AC of the TPA which provides, inter alia, that a corporation shall not, in trade or commerce, in connection with the supply or acquisition of goods or services to or from a person, engage in conduct that is in all the circumstances unconscionable. The section lists factors which the Court may “have regard to” in determining whether the section has been contravened but the list is not exhaustive. Importantly, however, the prohibition is not limited to conduct which is unconscionable for the purposes of established equitable doctrines.

37 The application of such language necessarily involves a view about its purpose and ambit. A broadly defined statutory purpose may give little guidance about its limits. In that event the judges develop their own policy based limits on a case by case basis giving rise to something like a common law evolution of subordinate principles. In the 34 years since it was enacted the application of s 52 of the TPA has come to cover a variety of cases almost certainly undreamt of by its drafters. Limits have been defined using the condition that the conduct covered by the section must be “in trade or commerce”.[28] And, limits on the losses recoverable for contravention of the section have emerged from policy based decisions about the scope of s 82.

38 The judicial function as described in relation to the construction of statutes, the ascertainment of relevant common law rules, the finding of facts and the application of the rules to the facts frequently involves consideration of the purpose of the statute or the rule and thus of its policy. Policy is an ineradicable element of the legal landscape.

39 Given the integral role of policy and the judicial function of interpreting and applying the law and even in finding the facts, it is hard to view it as some recent erosion of the separation of powers. It is entirely consistent with what judges are required by the very nature of their office to do. Nevertheless it is useful to say a few words in concluding about the democratic legitimacy of policy based interpretation and application of the law.

Policy and democratic legitimacy

40 There is a democratic legitimacy attaching to any interpretation of a statute which relies simply upon the ordinary meaning of the words used in it. The rule that the interpretation of the laws should take as its starting point the ordinary and grammatical sense of its words is as Gaudron J observed:

… dictated by elementary considerations of fairness, for, after all, those who are subject to the law’s commands are entitled to conduct themselves on the basis that those commands have meaning and effect according to ordinary grammar and usage.[29]

41 Legislative purpose and therefore policy is required to inform all interpretation. Purpose is often expressed in law in terms of legislative intention. To that extent it is cloaked by a fiction. Legislative intention is a construct or metaphor which is based upon a further construct which is “intention” in individual human beings. It is a fiction because neither individual members of Parliament nor even the Executive, necessarily mean the same thing by voting on a Bill “or, in some cases, anything at all”.[30] Where legislative intention is used to describe the collective mental state of the body of individuals who make up parliament, then it has been said, and I respectfully agree, that it is a fiction with no useful purpose.[31]

42 Bennion[32] has written of legislative intention as “not a myth or fiction, but a reality founded in the very nature of legislation” and has criticised as “anti-democratic” the idea that there is no true intention behind an act of parliament. He argues that the concept of legislative intention involves proper recognition of the source of the words being construed. On that basis its text will be seen as:

(a) a text validated by a legislature which is treated by the constitution as sovereign and infallible, and whose members are all taken to share in the intention embodied in the text notwithstanding that certain of them may in fact have disagreed with, or been unaware of, some or all of the Act’s provisions; and

(b) a text produced by a fallible drafter who is not a legislature but possesses an intention taken to be adopted by the legislature.

43 It would seem, with respect, that what is being spoken of by Bennion is an attributed and not a “true intention” and consistently with his approach legislative intention is not used in statutory construction to describe some antecedent mental state of the parliament but rather an attributed intention based on inferences drawn from the statute itself. [33] In my opinion the concept of legislative intention is instrumental. It operates, after the event, as a persuasive declaration or an acceptance that the interpretation adopted is legitimate in a representative democracy characterised by parliamentary supremacy under the rule of law. Legislative intention is a legitimising and normative imprimatur. It directs courts in the construction of statutes to the criteria of construction which are accepted as legitimate. It requires reference to matters which were before the Parliament when the law was enacted, the first and most important of these being the words of the statutes themselves and their ordinary meaning.

44 Although it is said that courts “ascertain” the intention of the legislature, by considering the meaning of the words it has used, their ordinary meaning is accepted as a legitimate criterion according to rules understood by parliament, the executive, parliamentary drafters and the courts.[34] The rules of interpretation generally are rules whose application is predictable and being understood and predictable attract acceptance as criteria of the legitimacy of their product. So when the words used by parliament are interpreted by the court according to commonly understood rules of interpretation a court is entitled to make the normative statement that it has interpreted them in accordance with legislative intention. The rules of interpretation allow for consideration of policy which may be determined in a variety of ways beginning with the text and context of the statute itself. The text may include statements of object or purpose. The extrinsic materials may illuminate the purpose and therefore the policy of the act.

45 When the Court has regard to purpose and to extrinsic materials it is not engaged in some creative usurpation of the legislative function. It is doing what the legislature itself has commanded in the Acts Interpretation Act 1901 (Cth). This is so even though purpose is to a degree constructed by the court. But if generally accepted rules are used there can be no doubt about the democratic legitimacy of that approach.

Conclusion

46 Policy is alive and well in the interpretation and application of the law. The requirement to consider and apply it links the law to the purposes which, properly constructed, are rooted in the norms that brought the law into being. It is no unruly horse, but rather a steady steed. In a concluding application of the opening metaphor of policy as magic Dolores Umbridge has been carried off not by the anarchic forces of judicial disorder but rather the guardians of the law as we have known it for some centuries.

[1] Dolores Umbridge is a character in Harry Potter and the Order of the Phoenix. She is sent by the Ministry of Magic to Hogwarts College to oversee and restrict the practice of magic. She ends up being carried off in to the woods by a band of unruly centaurs suitable metaphors for policy usually referred to as an unruly horse.

[2]Nelson v Nelson (1995) 184 CLR 538 at 552-553 (Deane and Gummow JJ); Comcare v Thompson (2000) 100 FCR 375 at 383-384 (Finn J).

[3]Akai Pty Ltd v People's Insurance Co Ltd (1996) 188 CLR 418 at 447 (Toohey, Gaudron and Gummow JJ).

[4]Farah Constructions Pty Ltd v Say Dee Pty Ltd (2007) 236 ALR 209.

[5]Farah 236 ALR at [151] citing Roxborough v Rothmans of Pall Mall Australia Ltd (2001) 208 CLR 516 at 545 [74].

[6]Wik Peoples v Queensland (1996) 187 CLR 1 at 184.

[7] (1979) 142 CLR 617.

[8]Trigwell 142 CLR at 633.

[9]Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; Trident General Insurance Co Ltd v McNeice Bros Pty Ltd (1988) 165 CLR 107; McKinney v The Queen (1991) 171 CLR 468; The Queen v Elle (1992) 66 ALJR 36; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 66 ALJR 768; Dietrich v R (1992) 177 CLR 292; Mabo v Queensland (No 2) [1992] HCA 23; (1992) 175 CLR 1.

[10]Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193

[11]Stevens v Sony 224 CLR at [34].

[12]Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1 at 13; Boral Besser Masonry Ltd v ACCC (2003) 195 ALR 609.

[13]Boral 195 CLR at [87].

[14] French RS, “The Race Power: A Constitutional Chimera” in Lee and Winterton (eds) Australian Constitutional Landmarks ( Cambridge, 2003) at 180

[15]Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104 at 196.

[16] Shorter Oxford English Dictionary, 5 th ed (2002).

[17] (1976) 136 CLR 529 at 567.

[18] [1932] UKHL 100; (1932) AC 562.

[19] Beever A, “Policy in Private Law: An Admission of Failure” (2006) 25 UQLJ 287-306.

[20] (2003) 215 CLR 1.

[21] [1853] EngR 885; (1853) 4 HLC 1 at 87.

[22] Radcliffe, The Law & Its Compass (1960) at 43-44.

[23] Queensland Co-operative Milling Association Ltd; Re Defiance Holdings Ltd (1976) 25 FLR 169 at 190.

[24]Singapore Airlines Ltd v Taprobane Tours WA Pty Ltd (1991) 33 FCR 158 at 178.

[25] Rural Press Ltd v Australian Competition and Consumer Commission [2003)] HCA 75 at [41].

[26] (2002) 214 CLR 422.

[27]Elna Australia Pty Ltd v International Computers ( Australia) Pty Ltd (1987) 16 FCR 410 at 418.

[28]Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594

[29]Corporate Affairs Commission of NSW v Yuill (1991) 172 CLR 319 at 340.

[30]Mills v Meeking (1990) 169 CLR 214 at 234 (Dawson J); Yuill 172 CLR at 339 (Gaudron J).

[31]Yuill 172 CLR at 345-346 (McHugh J); Black-Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1975] UKHL 2; [1975] AC 591 at 612.

[32] Bennion FAR, Statutory Interpretation: A Case (4 th ed, Butterworths, 2002)

[33]Mills 169 CLR at 226 (Mason CJ, Toohey and Brennan JJ agreeing) and 347(McHugh J).

[34]Cooper Brookes ( Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 at 304 (Gibbs CJ).


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