Vass v Commonwealth of Australia [2000] FCA 47 (2 February 2000)

Last Updated: 3 February 2000

FEDERAL COURT OF AUSTRALIA

Vass v Commonwealth of Australia [2000] FCA 47

CONSTITUTIONAL LAW- whether absence of appropriation affected Executive's power to contract - whether a failure to appropriate to meet a debt of the Commonwealth could involve a breach of s 51(xxxi) of the Constitution - whether a Commonwealth contract incidentally beneficial to a Minister would amount to a breach of ss 44(v) and 45 of the Constitution.

CONTRACT - whether implementation of a Cabinet decision to pay costs of proposed litigation involved a contract - power of Commonwealth to contract before Parliament has made a necessary appropriation - whether contract illegal - authority - intention to contract, judged objectively.

STATUTORY CONSTRUCTION - Parliamentary Entitlements Act 1990 - provision drafted per maiorem cautelam not to affect construction of other provisions - consideration of background to and context of the statute - meaning of "payable".

WORDS & PHRASES - "payable".

Bill of Rights 1689 (UK), Article 9

Commonwealth Constitution, ss 44(v), 45, 49, 51(xxxi), 61

Constitution Act 1889 (WA), s 36

Parliamentary Privileges Act 1987 (Cwlth), ss 5, 16

Appropriation Act (No. 4) 1995-96 (Cwlth), s 4

Appropriation Act (No. 4) 1996-97 (Cwlth), s 6

Parliamentary Entitlements Act 1990 (Cwlth), ss 3, 4, 5, 8, Sch 1

Federal Court of Australia Act 1976 (Cwlth), s 51A

Parliamentary Privileges Act 1891 (WA), s 1

Re Webster [1975] HCA 22; (1975) 132 CLR 270, referred to

Australian Woollen Mills Pty Limited v Commonwealth [1954] HCA 20; (1954) 92 CLR 424, referred to

Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540, applied

Gissing v Gissing [1971] AC 886, applied

Brown v West [1990] HCA 7; (1990) 169 CLR 195, discussed

Commonwealth v Human Rights and Equal Opportunity Commission (X's case) (1998) 76 FCR 513, applied

X v The Commonwealth [1999] FCA 63, applied

The State of New South Wales v Bardolph [1934] HCA 68; (1934) 52 CLR 455, applied

Clyne v Deputy Commissioner of Taxation [1981] HCA 40; (1981) 150 CLR 1, applied

Ashfield Municipal Council v Joyce [1978] AC 122, applied

The Minister of State for the Army v Dalziel [1944] HCA 4; (1944) 68 CLR 261, referred to

Georgiadis v Australian and Overseas Telecommunications Commission [1994] HCA 6; (1994) 179 CLR 297, referred to

The Commonwealth of Australia v Mewett [1997] HCA 29; (1997) 191 CLR 471, referred to

Monroe Schneider Associated (Inc) v No. 1 Raberem Pty Ltd (1991) 33 FCR 1, referred to

CEDRIC BOHRSMANN VASS & ORS v THE COMMONWEALTH OF AUSTRALIA

NG 96 of 1997

BURCHETT J

2 FEBRUARY 2000

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG96 of 1997

BETWEEN:	CEDRIC BOHRSMANN VASS, MICHAEL ANTHONY BOWYER, CHRISTOPHER BRUCE BRIERLEY, JOHN MICHAEL CHURCHILL, MICHAEL FRANCIS PAUL DANIEL, EDWARD MALCOLM WYNDHAM DAVIES, JOHN DAVID LATIMER FABIAN, GRAHAM ARUNDEL FRANCIS, DOUGLAS JAMES HAMILTON, IAN GEORGE JOHNSTON, ROBERT CARLYLE JORDAN, STEVEN HOWARD KLOTZ, JULIAN PATRICK McGRATH, BRUCE NEIL McLEAN, JOHN NELSON MILLER, PHILIP STUART DOUGLAS PURCELL, ANDREW SPEARRITT, ANASTASIA TSEKOURAS, HAROLD WERKSMAN AND MICHAEL BRUCE YATES Applicants
AND:	THE COMMONWEALTH OF AUSTRALIA Respondent
JUDGE:	BURCHETT J
DATE OF ORDER:	2 FEBRUARY 2000
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

The applicants bring in, on a date to be fixed, short minutes of orders appropriate to be made in the light of these reasons.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG96 of 1997

BETWEEN:

CEDRIC BOHRSMANN VASS, MICHAEL ANTHONY BOWYER, CHRISTOPHER BRUCE BRIERLEY, JOHN MICHAEL CHURCHILL, MICHAEL FRANCIS PAUL DANIEL, EDWARD MALCOLM WYNDHAM DAVIES, JOHN DAVID LATIMER FABIAN, GRAHAM ARUNDEL FRANCIS, DOUGLAS JAMES HAMILTON, IAN GEORGE JOHNSTON, ROBERT CARLYLE JORDAN, STEVEN HOWARD KLOTZ, JULIAN PATRICK McGRATH, BRUCE NEIL McLEAN, JOHN NELSON MILLER, PHILIP STUART DOUGLAS PURCELL, ANDREW SPEARRITT, ANASTASIA TSEKOURAS, HAROLD WERKSMAN AND MICHAEL BRUCE YATES Applicants

AND:

THE COMMONWEALTH OF AUSTRALIA Respondent

JUDGE:	BURCHETT J
DATE:	2 FEBRUARY 2000
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 By an application supported by a statement of claim, both filed 10 February 1997, the applicants sued the Commonwealth of Australia upon a contract alleged to have been entered into between them, seeking declarations that the making of payment to the applicants under that contract is not prohibited by certain Commonwealth legislation to which I will refer when summarising the defences to the claim. Alternatively, the applicants contend that, in the circumstances, the Commonwealth is estopped from disputing the existence of the contract. The Commonwealth, by its defence, denied reaching any agreement with the applicants as alleged, denied the matters put forward as the foundation of an estoppel, raised s 4 of the Appropriation Act (No. 4) 1995-96 (Cwlth) and s 6 of the Appropriation Act (No. 4) 1996-97 (Cwlth) as barring payment of the claim "save for the amount of $49,776 (subject to the conditions prescribed by [the said] section 6)", and alleged that payment of any part of the amount claimed was and continues to be prohibited by the Parliamentary Entitlements Act 1990 (Cwlth), so as to make any contract for payment illegal and void, and so as to prevent any obligation of the kind alleged from arising, whether by estoppel or otherwise. The defence also alleged a condition precedent to any payment by the Commonwealth, to which reference will be made later.

2 Events of some notoriety in Australia, and particularly in Western Australia, form the backdrop against which the individuals involved in the present case played their various parts. I do not need to paint that backdrop in detail. It is sufficient to recall that on 5 November 1992 a petition was presented to the Legislative Council of Western Australia, the presentation of which was afterwards widely condemned as a shameful act. Questions arose concerning the involvement of the then Premier of Western Australia, Dr Lawrence, who was elected in 1994 to the federal parliament and became a senior minister in the Commonwealth Government. She denied any significant prior knowledge of the petition, but, later, evidence emerged that she had taken part in discussion of it in Cabinet before its presentation. Following publication of this evidence, and of Dr Lawrence's further denials, the Lieutenant-Governor of Western Australia, on 9 May 1995, appointed the Honourable Kenneth Marks QC (a former judge of the Supreme Court of Victoria) a Royal Commissioner to inquire into and report on these matters. It is plain that the controversy was one of intense public and political interest, and that it involved questions of the extent to which the confidentiality of Cabinet proceedings and the privileges of Parliament might be touched upon by the Royal Commissioner's inquiries. Indeed, the Terms of Reference expressly recognized the possibility that the Commission's work might be restricted as a result of coming into collision with Article 9 of the Bill of Rights 1689 (UK) (as to whether the Bill of Rights should be so referred to or should be called the Bill of Rights 1688, see footnote (43) to the judgment of McHugh and Gummow JJ in Commissioner of Stamps (South Australia) v Telegraph Investment Company Pty Limited [1995] HCA 44; (1995) 184 CLR 453 at 466); in that event, there was to be an interim report on the difficulty. Article 9 provides: "The freedom of speech and debate or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament." It is enshrined in the Commonwealth Constitution by s 49, and by the operation of ss 5 and 16 of the Parliamentary Privileges Act 1987 (Cwlth). Similarly, s 36 of the Constitution Act 1889 of Western Australia and s 1 of the Parliamentary Privileges Act 1891 of that State define the privileges of members of the Legislative Council and Legislative Assembly of Western Australia in terms which attract a consideration of the effect of Article 9 of the Bill of Rights.

3 From the point of view of the Commonwealth, the integrity of a senior minister was under attack. I received evidence from Mr Lavarch, the then Attorney-General of the Commonwealth, to the effect that he understood, by April and May 1995, that "the attacks on Dr Lawrence were politically motivated and were being made because of her move from State politics to a high profile position in the Federal Labor Government", and that "those attacks were intended to force her resignation or dismissal as a Commonwealth Minister by questioning her fitness for that office" and "to distract her so that she could not continue to administer her portfolios effectively". Mr Lavarch also gave evidence of his concern about the possible effect of the Royal Commission on parliamentary privilege and cabinet confidentiality. Plainly, any decision on the meaning of Article 9 of the Bill of Rights in its impact on the State Constitution might affect the construction and operation of s 49 of the Commonwealth Constitution. Mr Lavarch had discussions with the Prime Minister and other senior ministers in which these views were expressed. Similar evidence was given by Mr Gareth Evans, formerly Senator Evans, who was at the time a senior minister in the Government. Although the inquiry that was actually set up was a State inquiry, the then Leader of the Opposition, particularly through his spokesman on health issues, Dr Wooldridge, had for some time been pressing for a federal inquiry into the same matters. In all the circumstances, I accept the evidence to which I have referred.

4 From the establishment of the Royal Commission, questions arose about the representation of Dr Lawrence at the Commission and in proceedings related to it. There was no suggestion that she was in a position to fund such complicated and extensive litigation herself. On 22 May 1995, a Mr Russell, Dr Lawrence's Senior Adviser, spoke to Mr Churchill, the managing partner of Dunhill Madden Butler, as the firm of solicitors in which the applicants were all partners was called, about Dunhill Madden Butler representing Dr Lawrence. According to Mr Churchill (whose evidence I accept, as generally I accept the evidence of the applicants where it differs from that of Mr Russell), Mr Russell said words to the effect: "Your fees will be looked after by the Commonwealth, not Carmen [Lawrence]." At no time did either Mr Churchill or Mr Werksman, the partner who became the solicitor on the record for Dr Lawrence, according to their evidence which I accept, have any contemplation of acting on the basis that Dr Lawrence would herself pay their fees. Mr Werksman had a telephone conversation with Mr Russell, on 23 May 1995, in which the nature and cost of the representation to be provided for Dr Lawrence in the Commission and in challenges to the Commission through the courts were discussed. In this conversation, Mr Russell said words to the effect:

"The Western Australian Government will give some assistance to Dr Lawrence in respect of her appearance before the Commission. ... The costs of the challenge to the validity of the Commission is proposed to be funded by the Commonwealth. For the inquiry the Commonwealth will probably pay the difference between what the Western Australian Government would provide and the actual costs."

Following this conversation, Dunhill Madden Butler did some preliminary work, and on 30 May 1995 there was a further telephone discussion between Mr Russell and Mr Werksman, in which Mr Russell said:

"You should draw up a formal agreement in favour of Carmen. You will be indemnified in respect of your costs by the Commonwealth Government. Carmen will be your client."

Mr Werksman understood this to mean that his firm would take instructions from Dr Lawrence and the costs would be paid by the Commonwealth Government. But it was early days, and various possibilities were being explored - for instance, on 2 June 1995, Mr Russell referred to the possibility that Dunhill Madden Butler might have the Commonwealth itself as client.

5 On 8 June 1995, the question came before Cabinet, and a decision was made which is recorded in a Cabinet minute, as follows:

"The Cabinet noted that:-

(a) the establishment of the Royal Commission is an attempt to embarrass Dr Carmen Lawrence in her capacity as a Commonwealth Minister; and

(b) there is no governmental obligation to provide Dr Lawrence with financial assistance.

2. The Cabinet agreed that, without creating any agreement between Dr Lawrence and the Public Service of the Commonwealth:

(a) the legal costs incurred by Dr Lawrence in relation to the Royal Commission be met by the Commonwealth, these costs being limited to amounts certified as fair and reasonable by the Australian Government Solicitor; and

(b) the assistance outlined in sub-paragraph (a) above be provided by means of a separate appropriation line item.

3. The Cabinet also agreed that the Attorney-General be authorised to take appropriate action, including court action, as necessary to protect the Commonwealth's interests in matters relating to the Royal Commission."

It should be pointed out that the expression "without creating any agreement between Dr Lawrence and the Public Service of the Commonwealth" involves no mystery. These words were included in the formulation of Cabinet's decision by reason of the terms of s 44(v) and s 45 of the Constitution, pursuant to which a member of the House of Representatives or a senator who "[h]as any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons" is disqualified from sitting and "his place shall thereupon become vacant". Cabinet was being careful, although these provisions of the Constitution were given only a limited operation in Re Webster [1975] HCA 22; (1975) 132 CLR 270.

6 The question of more immediate importance is whether the decision to meet the costs "in relation to the Royal Commission" clearly stated in paragraph 2(a) is so tied to the means of carrying it out expressed in paragraph 2(b) as to be negated by a failure of the particular means so specified. But the assistance was required immediately, as the Royal Commission was about to commence, and Cabinet knew that. The contemplated line item would in the normal practice be inserted in an Appropriation Bill in the future. Paragraph 3 of the decision, which authorised the Attorney-General "to take appropriate action" is relevantly unqualified, and I think it would be perverse to construe the minute otherwise than as operating immediately to enable solicitors to be engaged on the basis that their costs would be met by the Commonwealth.

7 On 9 June 1995, the day after the Cabinet decision, Mr Russell spoke to Mr Werksman by telephone, saying:

"I have received advice of the Cabinet decision that the Commonwealth will pay Dr Lawrence's costs. There will be no need to have a contract between Dr Lawrence and Dunhill Madden Butler. The Commonwealth will meet Dr Lawrence's costs certified as fair and reasonable by the Australian Government Solicitor. You are to go ahead and represent Dr Lawrence."

In the context of the matters then known to be involved, I think it is clear that the costs referred to embraced both legal work associated with the hearings of the Royal Commission and legal work associated with the challenge to the Commission proposed to be brought by Dr Lawrence in the courts. What Mr Russell said was intended to be acted upon without delay. He was authorised to say it by the Prime Minister's Principal Adviser and Chief of Staff, Mr Bowan, who himself, I infer, spoke with the authority of the Prime Minister. No evidence was offered by the Commonwealth from Mr Bowan to rebut this inference. I accept Mr Werksman's account of the conversation against that of Mr Russell, and I accept that Mr Russell was understood as communicating the Commonwealth's offer to pay the certified costs of Dunhill Madden Butler if they acted in the Royal Commission and in court matters related to it. Dunhill Madden Butler had already indicated their willingness to act on such a basis, and I think that there was at least tacit immediate acceptance of the Commonwealth's offer; in any case, if some further acceptance was needed, it was provided by prompt and continuing performance on the faith of that offer, with the knowledge at all times of the Commonwealth.

8 By 15 June 1995 a conference had been held with senior counsel. On 16 June, Mr Russell said to Mr Werksman by telephone:

"I have spoken to Barry Leader at the Attorney-General's Department [he was the Deputy Government Solicitor] in relation to your fees being fair and reasonable. He said Dunhills should work at their normal commercial rates. The Attorney-General's Department approve of Dunhills retaining junior counsel in Perth and Mr Gyles QC. It is in order for Dunhills to act for Mr Halden [the Western Australian parliamentarian who had actually presented the petition which was at the heart of the Royal Commission's inquiry]. Barbara Pearson at the Attorney-General's Department will be dealing with you in relation to costs ... ."

9 On 22 June 1995 Mr Werksman spoke by telephone to Ms Pearson who said:

"I am looking after the matter in the Canberra office and I will be sending off a letter to you in regard to costs. The Commonwealth Government is happy to meet the costs of representing Dr Lawrence. Your fees and charges will have to be certified as reasonable by the Deputy Government Solicitor. ..."

A considerable amount of further work was done following Mr Werksman's conversation with Ms Pearson, and there were various conversations, over the next few weeks, about the progress of the matter and about the assessment of the reasonableness of the costs being incurred. On 19 July 1995, Mr Werksman received a letter by facsimile from Ms Pearson, who signed herself as a Principal Solicitor for the Australian Government Solicitor. In that letter, she wrote:

"I confirm my oral advice of 22 June 1995 that the Commonwealth Government has decided that it will meet the legal costs incurred by Dr Lawrence in relation to the Royal Commission. As part of its decision, the Government decided that it would only meet those expenses as are certified fair and reasonable by the Australian Government Solicitor and it was for this purpose that I raised the issue with you.

...

I understand that Dr Lawrence has written to the Premier of Western Australia seeking that her costs before the Royal Commission be met by the State of Western Australia. It is expected that all avenues of legal aid or other funding for Dr Lawrence's expenses before the Royal Commission will be pursued in full before your memoranda of costs, if not paid from those sources, are forwarded to the Commonwealth."

Ms Pearson did not give evidence, and it is not clear how she came to write the last part of the quoted portion of her letter. The Cabinet minute states no qualification of this kind, and I accept the applicants' evidence that the requirement, if it was actually meant to be a requirement, was outside what had already been agreed. But the words "It is expected" stand in contrast to the language ("As part of its decision") by which the requirement that the costs be fair and reasonable was expressed. Furthermore, in fact Ms Pearson did not reject the forwarding to the Commonwealth of memoranda of costs in terms of her letter, but assessed their reasonableness, although payment was then delayed. On 24 August 1995, she said to the Administration Director of Dunhill Madden Butler, Mr Ritchie:

"We are negotiating with the Western Australian Government and you cannot expect payment until this has been concluded."

That, of course, was to take quite a different stance from the stance taken in the letter. The applicants never accepted that a qualification of their arrangements with the Commonwealth was imposed by the letter according to its terms, and continued to submit memoranda. At the same time, they also pursued the question of obtaining some assistance from Western Australia, which Dr Lawrence had sought sometime in May.

10 Much had happened before the letter of 19 July was written. On 29 June 1995, proceedings were commenced in the Supreme Court of Western Australia on behalf of Dr Lawrence by which the validity of the Royal Commission was challenged. On the next day, Ms Pearson asked Mr Werksman for a copy of the documents filed in the Supreme Court, and said to him:

"Please send your account for Dr Lawrence to Ed Russell and he will forward it to me for processing."

On 4 and 5 July 1995, Steytler J heard an application for an interim injunction made on behalf of Dr Lawrence in the Supreme Court proceedings, and on 10 July 1995 he dismissed that application. The Royal Commission commenced its hearing on 17 July 1995, and on 17 to 19 July 1995 Heenan J heard a further application in the Supreme Court for an injunction restraining the continuance of the Royal Commission hearing. On 19 July 1995, that application was referred to the Full Court of the Supreme Court of Western Australia, an interim injunction being granted in the meantime. Consequently, the Royal Commission's hearing came to a temporary halt. The hearing before the Full Court took place on 27 and 28 July 1995, and on 2 August 1995 the Full Court dismissed Dr Lawrence's appeal, terminating the interim injunction granted by Heenan J. The Royal Commission hearing recommenced on 10 August 1995. On 14 August 1995, an application for special leave to appeal to the High Court of Australia was made on behalf of Dr Lawrence, and dismissed. Dawson J, delivering the decision of the Court, said:

"While we do not necessarily agree with the Full Court that there was no serious question to be tried with regard to Parliamentary privilege, we do not think the court was in error in concluding that this was not a proper case for interlocutory relief at this stage."

On 25 August 1995, Steytler J refused an application for an expedited hearing of the proceeding challenging the legality of the Royal Commission. Dr Lawrence gave evidence in the Commission on 13 September 1995, and on 14 September 1995 the Western Australian government advised that it would grant limited financial assistance to her in respect of the costs of her appearance before the Commission.

11 Over the whole period since the Cabinet decision, there had been numerous conversations between representatives of Dunhill Madden Butler and representatives of the Commonwealth in respect of the proceedings and the costs being incurred. There was also much publicity through the press. On 20 June 1995, it was reported in The West Australian that Mr Skehill, the then Secretary to the Commonwealth Attorney-General's Department, had told a Senate Estimates Committee that "the Government had agreed to meet fair and reasonable costs [ie in relation to Dr Lawrence's challenge through the courts to the Royal Commission] but had no estimate of what these would be." Mr Skehill, in evidence, pointed out that this was only a press report. But there is no suggestion that the report was ever denied. On the contrary, Mr Lavarch, on the same day, issued a press release confirming that the Commonwealth would meet Dr Lawrence's costs if the Western Australian government did not. In evidence, Mr Lavarch explained that he did not intend to qualify the Cabinet decision at all, but rather to argue publicly that the State had a responsibility in the matter since it had set up the Royal Commission. Mr Lavarch issued a further press release to the same effect the next day.

12 By late August 1995, the applicants were becoming concerned about the amount of the costs outstanding and the lack of payment. Mr Werksman wrote a letter dated 25 August 1995 on behalf of Dunhill Madden Butler addressed to Ms Pearson at the Attorney-General's Department, Canberra, enclosing for her information a communication received from the State of Western Australia and the firm's response. His letter then continued:

"We confirm that when we received our original instructions to act in this matter, it was on the basis that our fees were to be paid by the Federal Government. Any recovery obtained from the Western Australian Government will be for the credit of the Federal Government. Accordingly, whilst we will do everything we can to ensure that payment is made by the Western Australian Government, will you please ensure that our fees are paid on our normal terms."

The Court was informed without objection that no letter from the Commonwealth was ever received in reply denying this allegation by Mr Werksman, although on 6 September Mr Skehill told representatives of the applicants that their "costs will not be paid until Dunhills have done everything they can to obtain payment from the West[ern] Australian government". On the same day, Mr Werksman made it clear to Mr Russell that counsel would not appear, when Dr Lawrence came to give evidence, unless there was payment. This resulted in a telephone conference involving Mr Bowan, the Senior Adviser to the Prime Minister (Mr Keating), and Mr Stanhope, the Senior Adviser to the Attorney-General, on behalf of the Commonwealth, and Messrs Churchill, Fabian and Loosley on behalf of the applicants, in which Mr Churchill said:

"We are becoming concerned that our fees will not be paid. We are being placed under pressure by counsel and we may have to withdraw from the case unless we receive some guarantee that we will be paid. We would like to remain in the case, but we are having difficulty reassuring counsel. There is a large amount of money due to the firm."

Mr Bowan replied:

"You are not dealing with any backyard operators; you are dealing with the Commonwealth of Australia and your fees will be paid."

Mr Churchill responded:

"We accept that and we're pleased to have that assurance. We will talk to the Attorney-General's department about the detail and we may need to talk further with you, John [ie Mr Bowan], but in the meantime I will speak to Perth and make sure that they're back in court."

Mr Bowan repeated:

"Your fees will be paid."

13 Evidence was called, for the Commonwealth, from Mr Stanhope. He confirmed, in cross-examination, that the submission of bills of costs by the applicants "was something that was anticipated". He also confirmed Mr Bowan's use of words to the effect: "Look, you're not dealing here with some backyard operation, you're dealing with the Commonwealth of Australia." And he said: "Mr Bowan had quite clearly conveyed the impression that Mr Gyles's costs and Dunhills' costs would be met by the Commonwealth." Mr Stanhope was asked the following questions and gave the following answers:

"Question: And Mr Churchill made it clear that they - that is Dunhills and counsel - wanted an assurance that if they did go ahead they would be paid, is that fair?

Answer: Yes, well, that was certainly the basis of the conversation.

Question: In answer to that, with his colourful language, Mr Bowan gave an assurance that they would be paid?

Answer: I think it's fair to say that, yes.

Question: It is likely, is it not, that Mr Churchill then said:

`Well, I'll accept your assurance and we'll get on with the job' -

or words to that effect?

Answer: That would be consistent, yes."

Mr Stanhope testified too that he reported back to the Attorney-General, giving him a precise account of what had been said. In fact, the applicants did continue to represent Dr Lawrence, and Mr Gyles QC, as he then was, continued to appear. The Attorney-General did not, then or later, repudiate what Mr Bowan had said.

14 For the Commonwealth, a submission was put that the Court should not find, in the communications between its representatives and the representatives of the applicants, any intention to create a binding contract. Reference was made to the line of cases of which Australian Woollen Mills Pty Limited v Commonwealth [1954] HCA 20; (1954) 92 CLR 424, and on appeal [1955] HCA 61; (1955) 93 CLR 546, is perhaps the leading example, and to Seddon on Government Contracts (1995) at 68 et seq. I have already made it clear that this submission is not in accord with my understanding of the evidence. In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549, Gleeson CJ, delivering a judgment in which Hope and Mahoney JJA agreed, cited with approval the statement of Lord Diplock in Gissing v Gissing [1971] AC 886 at 906:

"As in so many branches of English law in which legal rights and obligations depend upon the intentions of the parties to a transaction, the relevant intention of each party is the intention which was reasonably understood by the other party to be manifested by that party's words or conduct notwithstanding that he did not consciously formulate that intention in his own mind or even acted with some different intention which he did not communicate to the other party."

Gleeson CJ also explained (at 550) that, in the search for an objective determination of the intention of the parties, it may be "both appropriate and necessary to have regard to the commercial circumstances surrounding [an] exchange of communications and, in particular to the subject matter of those communications". In my opinion, the communications made to the applicants on behalf of the Commonwealth were reasonably understood by them as contractual in nature. The assurances of payment by the Commonwealth which they were given, pursuant to the decision of Cabinet, did not constitute them recipients of the promise of a grant; those assurances were offered in the context of their practice as solicitors pursuant to which, in the ordinary course, they would act in reliance upon a contract providing for their remuneration. I accept that Mr Russell required authority other than that of Dr Lawrence, in the circumstances, but it is clear that he had in fact the authority of Cabinet, as also did Ms Pearson and other agents of the Commonwealth within the Attorney-General's Department, including Mr Stanhope, who were involved. Counsel for the Commonwealth suggest that the existence of ss 44(v) and 45 of the Constitution made it objectively unlikely that any of these persons intended to bind the Commonwealth to a contract "in which Dr Lawrence had an interest". However, the answer to this proposition is that there is no suggestion a contract of the kind alleged by the applicants was thought by anyone to be likely to invoke the application of those sections. Mr Lavarch, the Attorney-General, made it clear he did not see the sections as creating a problem.

15 But my finding that the parties intended to enter into a contract does not dispose of the matter. The Commonwealth contends that such a contract would be illegal and void by reason of the terms of the Parliamentary Entitlements Act 1990. In order to understand the effect of this Act, it is necessary to construe it against the background of the decision of the High Court in Brown v West [1990] HCA 7; (1990) 169 CLR 195, which undoubtedly gave rise to its enactment. In Brown v West, the central question was whether the executive power of the Commonwealth extended to the provision to members of Parliament of a postage allowance supplementary to that which had been determined pursuant to the Remuneration Tribunal Act 1973 (Cwlth). The Tribunal had determined that members were entitled to a postage allowance "up to a total expenditure of $9,000-00 per year". In the joint judgment, it was held (at 204):

"An increase in the total expenditure is inconsistent with the express terms of the determination. The Tribunal's determination does not contemplate that, if the Executive Government so chooses, the total expenditure specified be supplemented."

That determination, as the judgment pointed out, was given effect by s 4 of the Parliamentary Allowances Act 1952 (Cwlth). The Court held (at 205):

"It is a necessary implication of a statutory fixing of the amount of total expenditure that there is no residual executive power to increase it."

16 The decision of the High Court in Brown v West was handed down on 1 March 1990. Within a very short time, on 8 May 1990, the Parliamentary Entitlements Bill 1990 came before the House of Representatives. The Bill was received from the House of Representatives in the Senate on 10 May 1990 and, having passed through both Houses, was assented to on 24 May 1990. Plainly, there was seen to be a need of haste. The opening words of the Explanatory Memorandum circulated by the authority of the Minister for Administrative Services, Senator Bolkus, are illuminating:

"This Bill authorises expenditure to or on behalf of members of the Parliament including Ministers and Office-Holders of the Parliament on certain entitlements and to validate any payments made in respect of their entitlements before the commencement of the Bill." (Emphasis added.)

The entitlements which had been made available to members of the House of Representatives and senators which were "not covered directly by legislation or indirectly by any Tribunal determination", as the Minister presenting the Bill in the House of Representatives said (House of Representatives Hansard, 8 May 1990, page 67), were not limited to a supplementary postage allowance, but included "entitlements" in respect of travel, the provision of office accommodation, home telephones and other matters. The Minister summed up the position (at 68) as follows:

"The High Court's decision has raised serious issues which have cast doubt on many of the entitlements available to honourable members and senators to enable them to fulfil their parliamentary and electorate responsibilities. The Government has moved by introducing this Bill to rectify serious anomalies which, in some cases, have existed for many years."

17 I turn to the relevant portions of the Parliamentary Entitlements Act 1990. It contains in s 3, as is usual, a set of definitions, to apply "unless the contrary intention appears". It is relevant to note that "benefit" is defined to mean "a benefit provided by or under this Act". Sections 4 and 5 then provide as follows:

"4.(1) Members are entitled to benefits as set out in Part 1 of Schedule 1.

(2) Parliamentary office-holders and Ministers are entitled to benefits as set out in Part 2 of Schedule 1.

(3) Benefits under subsection (2) are in addition to benefits under subsection (1).

(4) Benefits under this Act do not limit:

(a) benefits under any other law; or

(b) benefits afforded by the Government to a Minister for the purpose of carrying out functions as a Minister.

5.(1) Members, Parliamentary office-holders and Ministers are entitled to such additional benefits as are:

(a) determined by the Remuneration Tribunal under section 7 of the Remuneration Tribunal Act 1973; or

(b) prescribed by the regulations.

(2) Subsection (1) does not extend to a benefit in the nature of remuneration."

Sections 6 and 7 make various provisions concerned with the calculation of benefits, and s 8 is a comprehensive validation of benefits "used by, or made available to, a person at any time before the commencement of this Act", where the benefit is "of a kind set out in Schedule 1". Section 9 provides that a scheduled benefit may be varied or omitted by the Remuneration Tribunal or by regulations. It is unnecessary, for present purposes, to go through the remaining sections, but the character of the provisions of Schedule 1 should be noted. In Part 1 of that Schedule, ten items are listed as benefits the detail of which is not presently relevant but the general nature of which is as follows: certain transfers of bulk papers; Australian flags and certain other material for presentation to constituents; parliamentary or electorate postage up to $9,000.00; stationery; approved publications; approved Parliament House photographic services; approved electorate office; parliamentary or electorate travel in Australia; approved parliamentary travel overseas; and approved additional facilities for former Prime Ministers and Leaders of the Opposition in the House of Representatives. Part 2 of Schedule 1, which is headed "PARLIAMENTARY OFFICE-HOLDERS AND MINISTERS", lists further benefits of a similar general nature, that is to say, in respect of travel, office accommodation, telephone services and postage in relation to official business.

18 Picking up an expression from the joint judgment in Brown v West at 201, counsel for the Commonwealth submitted that, subject to s 4(4), the Parliamentary Entitlements Act 1990 "sets out exhaustively ... `benefits having a pecuniary value which accrued to its [ie Parliament's] members in virtue of their office and which are not mere facilities for the functioning of the Parliament'. This is apparent both from the form of the legislation and from the legislative intention disclosed by the second reading speech." But it is necessary to understand the nature of the benefits with which the Act is concerned. Not everything that can be described as beneficial is a "benefit" within the meaning of this Act. For example, the construction of an airport for bona fide public purposes near a Minister's holiday home would undoubtedly be beneficial to the Minister, but it would not be the kind of benefit covered by any of the provisions of the Act. The Act is concerned with the entitlements of members to benefits of the kind listed in its Schedule 1. This case is not about any entitlement of Dr Lawrence to a benefit of that kind. It is about Cabinet's decision to meet the legal costs of proceedings which it saw as involving important questions of parliamentary privilege and cabinet confidentiality, as well as an attack on the administration of the Commonwealth Government in so far as that administration embraced the services of a senior minister whose integrity was impugned. That the Commonwealth's action was beneficial to the minister personally, did not affect the character of what was done.

19 It seems to me that it would be to strain the Parliamentary Entitlements Act 1990 to interpret its conferral upon members and ministers of an entitlement to receive particular benefits as making it illegal for the executive of the Commonwealth to take action of a different nature, merely because it would be beneficial to a member or minister in some way. Particularly is this so when s 4(4) makes plain the intention of Parliament that benefits of the kind with which the Act is concerned may be conferred without limit provided they fall within paragraph (a) or paragraph (b) of that provision. I recognize, of course, that the second and third uses of the word "benefits" in s 4(4) are not uses in the defined sense, since the benefits in question are not "provided by or under this Act", but the generality of the provision is such that it is apt to cover benefits both within and without the enumerations in Schedule 1. It may be that there is an element of per maiorem cautelam in s 4(4), but it would not be in accordance with the usual rules of construction to allow a subsection so drafted to stretch the meaning of the principal provisions of the Act: cf. Commonwealth v Human Rights and Equal Opportunity Commission (X's case) (1998) 76 FCR 513 at 524-525, and on appeal, X v The Commonwealth [1999] HCA 63 at paras 54, 110; Phonographic Performance Company of Australia Ltd v Federation of Australian Commercial Television Stations [1998] HCA 39; (1998) 154 ALR 211 at 218.

20 Other matters were raised by counsel for the applicants in response to the Commonwealth's reliance on the Parliamentary Entitlements Act 1990. In so far as the Commonwealth appealed to the expression which has been quoted from the judgment of the High Court in Brown v West, "benefits having a pecuniary value which accrue to ... members in virtue of their office", counsel pointed out that Cabinet's concern with questions of parliamentary privilege and cabinet confidentiality, issues fairly within s 61 of the Constitution, founded the decision in a way which could not be said to involve the conferral of a benefit in virtue of Dr Lawrence's office. If that was not accepted by the Court, and the Act was held to apply, counsel relied in the alternative on the provisions of s 4(4), both paragraph (a) and paragraph (b), as taking the case out of its operation. I do not need to consider these issues in view of my clear conclusion that the Act did not invalidate or affect what was done. But I note that an interesting question raised by s 4(4)(a) is how the contract could be illegal, as claimed by the Commonwealth, when, at the time it was entered into, a separate appropriation line item was contemplated, which, the Commonwealth conceded, would enable payment to be made "under [an] other law" for the purposes of the provision. It would be contrary to the tenor of the cases dealing with Parliamentary appropriation, and would hamper the executive extremely, to require the appropriation line item to be enacted before a valid contract could be concluded: cf The State of New South Wales v Bardolph [1934] HCA 68; (1934) 52 CLR 455 at 509, per Dixon J.

21 I turn to the Appropriation Act (No. 4) 1995-96. By s 3 of that Act, the Consolidated Revenue Fund was appropriated as necessary for the services specified in Schedule 2 in respect of the year ending on 30 June 1996. Schedule 2 included in Division 807 an item as follows:

"02. Dr C. Lawrence - legal costs in relation to the Marks Royal Commission ... of $556,463.00".

But s 4 of the Act made two significant qualifications upon this. By sub-s (3) it was provided:

"In this Act, any reference, however expressed, to legal costs of Dr C. Lawrence in relation to the Marks Royal Commission does not include legal costs (however constituted) of Dr C. Lawrence for or in relation to proceedings in a court in relation to the Marks Royal Commission."

So the appropriation was limited to costs other than the costs involved in the proceedings in the Supreme Court of Western Australia and the High Court of Australia. The second qualification was made by sub-s (1) of s 4:

"Payments out of such money appropriated by this Act as is specified in subsection (2) [subsection (2) specified the Division 807 item which I have quoted] must not exceed the amount of the legal costs of Dr C. Lawrence in relation to the Marks Royal Commission remaining after deduction from those costs of any amount paid or payable to or for Dr Lawrence by the Government of Western Australia for legal costs in relation to the Marks Royal Commission."

So any amount "paid" by the government of Western Australia for Dr Lawrence for legal costs in relation to the Marks Royal Commission would have to be deducted. I do not understand it to be contended that there is evidence showing, apart from any amount which may have been paid, that there is any amount "payable" to which s 4(1) could relate, that is to say, assuming s 4(1) uses the word "payable" in a sense indicating some obligation to pay, the sense in which the High Court understood the word in Clyne v Deputy Commissioner of Taxation [1981] HCA 40; (1981) 150 CLR 1 at 8-11, 15-17, 24. I think, in a statutory qualification of this kind upon an appropriation to pay a debt of the Commonwealth, the word should not be loosely construed, but should be given its normal legal meaning: cf Ashfield Municipal Council v Joyce [1978] AC 122 at 134, per Lord Wilberforce; Official Trustee in Bankruptcy v Mitchell (1992) 38 FCR 364.

22 Section 3 of the Appropriation Act (No. 4) 1996-97 appropriates the sum of $49,776.00 which is referred to in Schedule 2 Division 807 Item 02, "Legal costs incurred by, or on account of acting for, Dr. Carmen Lawrence for or in relation to the Marks Royal Commission". Similar qualifications to those contained in s 4 of the Appropriation Act (No. 4) 1995-96 were imposed by s 6(1) and (4) of the Appropriation Act (No. 4) 1996-97. In addition, however, s 6(3) imposed a further limitation upon any appropriation "on or after 1 July 1996". Section 6(3) provides:

"No money that has been, or is, appropriated (whether by this Act or any other Act) out of the Consolidated Revenue Fund on or after 1 July 1996 is to be taken to be available for either of the following purposes:

(a) meeting legal costs incurred by, or on account of acting for, Dr Carmen Lawrence for or in relation to the Marks Royal Commission;

(b) meeting the legal costs incurred by, or on account of acting for, Dr Carmen Lawrence for or in relation to proceedings in a court concerning that Royal Commission;

unless the money has been, or is, appropriated expressly for that purpose."

23 Notwithstanding the terms of the Defence filed on behalf of the Commonwealth, in their oral submissions, counsel for the Commonwealth conceded that "a failure to appropriate doesn't extinguish a cause of action [in contract] against the Commonwealth". Senior counsel spelled this out quite expressly, when he put:

"If your Honour finds, contrary to our submissions, that there is a contract which is not invalid by reason of the Parliamentary Entitlements Act the Commonwealth's defence does not involve as a separate proposition that the Appropriation Acts operate as a defence to the claim [in] contract."

Counsel also conceded that there was no suggestion the payments would not be for Commonwealth purposes; indeed, it was pointed out that the very fact some appropriations had been made in the Appropriation Acts to which I have referred (pursuant to which some substantial amounts were paid on account) indicated an acceptance of the position that Commonwealth purposes were involved.

24 That a failure to appropriate did not provide any defence is clearly established by the decision in The State of New South Wales v Bardolph. There, Starke J said (at 502):

"The Crown is dependent upon the supply granted to it by Parliament, and there is an express or implied term in its contracts that payment shall be made out of moneys so provided. But the existence of the contract is not conditional upon Parliamentary authority, or upon provision of funds by Parliament for the performance of the contract. ... Constitutional practice ... may prescribe conditions precedent to the making of contracts with the Crown, and so far as these conditions exist they must be observed. But otherwise contracts made on behalf of the Crown by its officers or servants in the established course of their authority and duty are Crown contracts, and as such bind the Crown. The nature and extent of the authority may be defined by Constitutional practice or express instructions, or inferred from the nature of the office or the duties entrusted to the particular officer or servant."

In the same case, Dixon J said (at 510):

"Notwithstanding expressions capable of a contrary interpretation which have occasionally been used, the prior provision of funds by Parliament is not a condition preliminary to the obligation of the contract. If it were so, performance on the part of the subject could not be exacted nor could he, if he did perform, establish a disputed claim to an amount of money under his contract until actual disbursement of the money in dispute was authorized by Parliament. It is true that in many cases the existence of a fund out of which it is lawful to pay for such purposes as the contract may be supposed to serve might suffice as an authority for the expenditure of money to satisfy the contract, but in many others, where the contract was of an exceptional nature, some specific appropriation would appear to be demanded. It would defeat the very object of such provisions as those contained in the Judiciary Act, if, before the Courts could pass upon the validity in other respects of the subject's claim against the Crown, it were necessary that Parliament should vote the moneys to satisfy it. ... It would be strange if liability to suit upon contract was dependent upon the antecedent fulfilment of the condition that moneys have been made available to satisfy the claim."

In Seddon op.cit. at 89-90, New South Wales v Bardolph is discussed, and the learned author adds the comment:

"Thus, it is theoretically possible that the government could resist the payment of a debt or damages ordered by a court on the basis that there was no appropriation to cover the amount. ... Suffice it to say that it would be quite extraordinary if the government decided to defy a court order on this basis."

Similarly, in New South Wales v Bardolph, Dixon J refers (at 511-512) to a Privy Council judgment on appeal from a decision of Madden CJ of the Supreme Court of Victoria, who had held, of the Victorian equivalent of the Judiciary Act provisions enabling suit to be brought against the Crown in right of the Commonwealth, that it amounted to a special appropriation to answer any judgment. Their Lordships, in a passage which Dixon J cites with apparent approval, stated they "would not enter upon the consideration of that question, as they are satisfied that, the respondent having finally established the validity of his claim against the Crown for the sum for which he has recovered judgment, the provision necessary to satisfy that obligation will be readily and promptly made". Finally, on this point, I note that Seddon op.cit. states (at 89) there is explicit recognition by Finance Regulation 44D of the proposition that absence of parliamentary appropriation of funds "does not affect the rights and liabilities of the parties to a contract". This regulation (read with Regulation 44B) is expressed in terms that justify Seddon's statement.

25 If the limitations I have mentioned that were imposed upon the relevant appropriations, and the annual nature of appropriations combined with the failure of the Commonwealth to make any further appropriations to meet the applicants' claim, did have the result that this claim, or some part of it, could not be the subject of judgment, the applicants say s 51 (xxxi) of the Constitution would come to their aid. For, in that event, they claim they would have been effectively deprived of an accrued contractual right, and that not upon just terms. Their counsel contend that to delay indefinitely their enjoyment of their right, rendering it in reality the mere husk of a right, empty of the substance, would be to offend placitum xxxi: The Minister of State for the Army v Dalziel [1944] HCA 4; (1944) 68 CLR 261 at 286, per Rich J; Georgiadis v Australian and Overseas Telecommunications Commission [1994] HCA 6; (1994) 179 CLR 297 at 305, 308, 310; The Commonwealth of Australia v Mewett [1997] HCA 29; (1997) 191 CLR 471 at 503, 504. But since it is conceded the failure to appropriate is not a defence to the claim, this question may be left to one side.

26 Another question that I have passed over is the applicants' alternative claim of estoppel. My conclusions in respect of the claim in contract make it unnecessary to return to that.

27 However, there remain the issues raised by the Commonwealth in relation to payments made, or to be made, to the applicants by the State of Western Australia, and by the trustees of a fund referred to as the Carmen Lawrence Defence Fund. The latter apparently hold something over $94,000, which at one stage they were willing to pay to the applicants upon their undertaking (inter alia) to make no claim against any former Minister belonging to the Australian Labor Party for the recovery of costs. The applicants were not bound, as against the Commonwealth which has resisted paying them, to accept such a condition. But if they are now to receive from the trustees the sum of $94,000, or part of it, by way of a payment in respect of their costs, they must give credit pro tanto. No submission was put to me as to whether, in fact, they are presently entitled as of right to receive this money, free of unacceptable conditions, under the trusts of the fund, and the trustees were not joined as parties to this action.

28 So far as concerns moneys received, or to be received, from the State of Western Australia, the Commonwealth raises two points. It relies on the proposition put by Ms Pearson in her letter of 19 July 1995 as the basis of a defence of the failure of a condition precedent to the whole of the applicants' claim. I have already explained why I reject this. Then the Commonwealth says the evidence shows the State of Western Australia has set off against any sum it is willing to pay towards Dr Lawrence's costs her debt to it for the costs she was ordered to pay to the State upon its successive litigious victories in the Supreme Court of Western Australia and in the High Court of Australia. The amount so deducted is approximately $133,000, leaving a balance, on the State's calculations, of about $120,000 available to the applicants. The applicants say the Commonwealth cannot be entitled to credit for more than this last figure. On the other hand, the Commonwealth claims credit for the gross figure of $253,000, without allowance for the amount set off.

29 In my opinion, the Commonwealth's argument confuses distinct liabilities which arose between different persons. The Commonwealth owes a contractual obligation in respect of costs to the applicants, practising as solicitors under the name Dunhill Madden Butler. They have an obligation to give credit for a sum received in respect of those costs - unless it were to be received under the kind of special circumstances, not suggested in this case, which were discussed in Monroe Schneider Associated (Inc) v No. 1 Raberem Pty Ltd (1991) 33 FCR 1. However, no sum that has been received, or will be received, by them included, or will include, the $133,000 withheld by the State of Western Australia. Any obligation owed by the State, which is not a party to the action, would appear to be owed, not to the applicants, but to Dr Lawrence, who also is not a party to the action; against such an obligation, the State may well be entitled to set off the debt owed to it by her, but that debt is not owed by the applicants, and is not capable of being set off by the Commonwealth against their rights. As between the parties to this action, I can find no basis to hold that the State's obligation is owed to the applicants.

30 Not only does the foregoing analysis seem to me to apply on the face of the contract; if there were some doubt, the context would resolve it in the applicants' favour. For it was clear that Dr Lawrence was not accepting personal liability for the applicants' costs, and the Commonwealth's agreement to pay them was reasonably to be understood as covering all the costs, not some indeterminate amount that would be left over after a set off of costs payable to Western Australia. On the fair construction of the contract, what the applicants would have to account for would be what they were actually able to receive.

31 It is scarcely necessary to add that it was not ultimately argued, nor could it have been in the absence of the State of Western Australia, that the State was not entitled to set off the costs owed to it by Dr Lawrence.

32 For these reasons, the applicants are entitled to succeed. It is not in dispute that the costs claimed were duly certified as fair and reasonable. Counsel were agreed that, if the applicants succeeded in principle, I should not attempt to calculate figures, but should direct short minutes to be brought in. When that is done, I shall decide any question raised as to interest, to which, by s 51A of the Federal Court of Australia Act 1976 (Cwlth), the applicants would seem prima facie to be entitled as from 15 November 1995, when the process of the certification of the costs by the Deputy Government Solicitor as fair and reasonable was in substance complete. I direct the applicants to bring in short minutes, in accordance with the reasons of the Court, on a date to be fixed.

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burchett.

Associate:

Dated: 2 February 2000

Counsel for the Applicants:	Mr R.J. Ellicott QC Mr R.F. Margo
Solicitors for the Applicants:	Allen Allen & Hemsley
Counsel for the Respondent:	Mr A. Robertson SC Mr S.J. Gageler
Solicitors for the Respondent:	Deacons Graham & James
Dates of Hearing:	15, 16, 17 and 18 March 1999
Written Submissions Received:	25 March, 18 June 1999
Date of Judgment:	2 February 2000