conflicts and choice of law within the australian

CONFLICTS AND CHOICE OF LAW WITHIN THEAUSTRALIAN CONSTITUTIONAL CONTEXT

Jeremy Kirk*

According to the orthodox principles of private international law, as applied withinAustralia during the twentieth century, the different States are essentially to beregarded as foreign entities. At common law, the courts of one State will generallyapply the statutory laws of another State to resolve a civil law dispute if directed to doso by the common law choice of law rules, but not otherwise. Yet federation was aeustatic event in the evolution of the Australian legal system, albeit that the sea changehas taken some time to flow through to many areas.

Australian States are not foreign nations but sub-entities within one nationestablished and maintained by the Australian Constitution. The law to be applied whenthere is some competition between Australian legal rules cannot appropriately bedictated just by the common law. That raises constitutional questions by its verynature. Further, s 118 of the Constitution appears to have something to say on the issue,directing that:

Full faith and credit shall be given, throughout the Commonwealth to the laws, thepublic Acts and records, and the judicial proceedings of every State.

The view that 'choice' of law was a matter of constitutional law was taken by Wilson,Deane and Gaudron JJ in Breavington v Godleman1 in 1988, but was rejected by amajority of the High Court at the time. The issue has now been reopened by thereasoning and the implications of the High Court's decisions in Lipohar v The Queen2

and John Pfeiffer Pty Ltd v Rogerson.3 In particular, although the judgments in thosecases did not attempt an exposition of the meaning and effect of s 118, they didchallenge a number of aspects of the orthodox principles, they accepted that theConstitution spoke to the area, and gave some hint of the applicable constitutionalimperatives.

At least until the judgments in Breavington, constitutional mechanisms had 'seldombeen explored' as methods of resolving choice of law problems within Australia.4 Any

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BA LLB (hons) (ANU), BCL DPhil (Oxon); barrister, Sydney. Thanks are due to GeoffreyLindell, and to participants at the Public Law Weekend on 3 November 2001 at theAustralian National University, for comments on an earlier draft of this paper.(1988) 169 CLR 41('Breavington').(1999) 200 CLR 485 ('Lipohar').(2000) 203 CLR 503 (,Pfeiffer').Brian Opeskin, 'Constitutional Dimensions of Choice of Law in Australia' (1992) 3 PublicLaw Review 152, 153.

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resolution to the issue, any construction of s 118, has significant advantages anddisadvantages. Thus Sykes and Pryles examine a variety of possible interpretations ofs 118, settling on one with weak enthusiasm whilst noting that it does not provide 'avery ideal solution'.5 Kirby J supported a vigorous approach to the provision whilst onthe NSW Court of Appea1,6 but appears to have had his faith shaken? More broadly,any particular choice of law rule will have some costs and some circumstances inwhich its operation is less than desirable.s Yet answers must be provided in the searchfor the most appropriate, principled and justifiable approach within the Australianconstitutional context.

The aim of this paper is to explore three possible interpretations of s 118. Thetraditional, narrow view is that the section has little substantive operation and does notalter or overthrow the common law choice of law rules. This approach avoids somedifficulties that arise with other constructions, but suffers from at least four majorfaults. It facilitates non-uniform results, depending on where in Australia proceedingsare instituted. It is based on a false premise, namely that the Australian States areforeign entities one to another. It leads judges, acting pursuant to common lawprinciples, to ignore the dictates of valid, applicable, democratically-mandatedstatutes. And it gives little effect to s 118.

The alternative approach suggested by Deane J, and also Wilson and Gaudron H,sought to achieve uniformity of outcome by linking one body of law to a dispute withinterstate elements, especially by reference to the territoriality of where relevantconduct took place. This view avoids the faults of the first construction but suffersfrom other disadvantages, including an undermining of the legitimate interests of theStates in passing laws with some extra-territorial operation, an absence of clear criteriawhere a dispute is connected to two jurisdictions, and it may be difficult to apply inareas of law other than tort.

A third construction - the main focus of this paper - is one which has beenderided,9 but which reflects the natural meaning of the words, gives the provisionsubstantive effect, recognises the unified nature of the Australian nation, and allowsfor legitimate extra-territorial application of State laws. It, too, has disadvantages butthese may not be as substantial as has been suggested. That construction is to regards 118 as requiring that full effect be given to all the statutes - civil and criminal - ofall States. In the event of an inconsistency between them then the law with the closerconnection to the particular issue should be applied. A similar result can also beargued to flow for statutes of the Territories. This approach is similar to that proposedby Deane J, and for similar reasons, but with an important difference relating to thesignificance attributed to 'legal silences' and the common law.

The analysis in this paper is undertaken in the following manner. First, the papersketches the general background to the issues. It provides illustrations of the problemsthat arise when statutes create divergences in the law applicable to disputes arising

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Edward Sykes and Michael Pryles, Australian Private International Law (3rd ed, 1991) 333, seegenerally at 329-34.Thompson v Hill (1995) 38 NSWLR 714, 716-18.Pfeiffer (2000) 203 CLR 503,556-8 [138]-[143]; Mobil Oil Australia Pty Ltd v Victoria (2002) 76ALJR 926 ('Mobil Oil'), 941 [80].Note Pfeiffer (2000) 203 CLR 503,539 [82].Sykes and Pryles, above n 5,319.

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within Australia, and examines the ability of the States to make laws with operationbeyond their own boundaries, which ability increases the likelihood of a court havingto 'choose' between the application of one law or another. The second and third partsof the paper discuss the nature and significance of the High Court's recent decisions inLipohar and Pfeiffer respectively. Having set out the context for proper analysis, thepaper moves in Part 4 to provide an overview of the three approaches to s 118 justmentioned, and Part 5 analyses the arguments for and against these approaches. Part 6of the paper fills in some of the detail of what such an approach would entail,including in relation to the difficult area of criminal law. Part 7 summarises thepropositions which emerge from this excursis.

1 BACKGROUND

1.1 Choice of law rules

A competition of law (or 'conflict' on the traditional usage) arises when there are twoor more systems of law which have some plausible claim to govern the resolution of anon-criminal legal dispute. If X has a car accident in Tasmania with a carelessTasmanian, and X sues in her home State of Victoria, then the Victorian court is facedwith two sets of laws which could plausibly apply, namely, those of Tasmania andVictoria.

The original common law principles in this area were developed by courts inEngland (with further development in the United States). The principles developedfrom cases which, in the main, involved some foreign (overseas) element. It is notinsignificant that the legal rules in this area are referred to as rules of 'privateinternational law'. In essence, the traditional approach within Australia has been toapply these common law choice of law rules to intra-Australian competitions of law.The Australian States were each to be regarded as 'a distinct and separate country'.l0

The traditional common law rule in relation to choice of law for tort issues wasderived from the 1870 decision of Phillips v Eyre.11 It involves double actionability; thatis, and ignoring some of the agonising complications, a plaintiff would recover for aclaim in tort only to the extent that liability of that kind could be established bothunder the law of the forum if the act or omission had occurred there (the lex fori) andthe law of the place where the tort occurred (the lex loci delicti).12 In the car accidentexample, if there was any difference in the law applying in Tasmania or Victoria then Xwould only be able to claim to the extent of the lowest common denominator. Yet if Xsued in Tasmania, where the accident occurred, then only Tasmanian law would beapplied, and any limitations in Victorian law would be ignored. Thus X might get adifferent result depending on where she chose to sue.

There was one major rebellion against this orthodoxy prior to Pfeiffer. InBreavington, in 1988, four judges of the High Court rejected the double actionability

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Laurie v Carroll (1958) 98 CLR 310,331 (Dixon CJ, Williams and Webb JJ). Also, eg, Pedersenv Young (1964) 110 CLR 162, 170 (Windeyer J), approved McKain v Miller (1991) 174 CLR 1(' McKain'), 36 (Brennan, Dawson, Toohey and McHugh JJ).(1870) LR 6 QB 1.See, eg, Koop v Bebb (1951) 84 CLR 629, 642; Anderson v Eric Anderson Radio & TV Pty Ltd(1965) 114 CLR 20 ('Anderson'); McKain (1991) 174 CLR 1, 39 (Brennan, Dawson, Toohey andMcHughJJ).


rule and held that, at least in general, for torts occurring in Australia the lex loci delictishould alone be the governing law.l3 Mason CJ took this approach as a matter ofcommon law. Wilson and Gaudron JJ (together) and Deane Jheld, in effect, that the lexloci delicti should generally be applied because of constitutional imperatives (seefurther below, Part 4.3).

The rebellion was short-lived. In 1991 in McKain, Brennan, Dawson and Toohey JJwere joined by McHugh J in re-asserting that the double actionability rule applied toAustralian torts as a matter of common law.l4 They rejected the application ofconstitutional imperatives to the issue.1S The re-established orthodoxy held sway untilthe strength of its foundations was brought into question by Lipohar.

1.2 The nature and reach of State statutory lawThe real focus of choice of law disputes within Australia is whether or not particularState or Territory statutes should be applied. The reasons for this are explained belowin Part 2.2. In that context, it is useful to provide some illustrations of the problem:

(i) B, a resident of Victoria, has a car accident in NSW caused by C, a resident ofQueensland. B may be able to sue in NSW, Victoria, Queensland and perhapselsewhere, all depending on where B can establish and maintain jurisdiction.NSW has a statute restricting the amounts of damages which can berecovered for car accidents occurring in NSW. Would the restrictionsprovided for by this Act apply if B sued in the various possible jurisdictions?

(ii) What if the same fact situation arose but Victoria also had a statute settingdamages limits, different from those applying under the NSW law, on whatany person who was ordinarily resident in Victoria could claim if they wereinjured in a car accident anywhere in Australia?

(iii) Western Australia passes a statute providing for the invalidity of any contractentered over the internet for the sale of cigarettes involving any businessconnected to Western Australia in specified ways (eg operates in that State, orhas its registered office there, or has shareholders there). The Act specifiesthat it applies regardless of where the actions take place or whether or not theproper law of the contract is Western Australian. Corporation D has itsregistered office in South Australia but trades in Western Australia and hasshareholders there. It offers cigarettes for sale from a net site based in SouthAustralia and with the contract specifying South Australian law as the properlaw. Would a contract for sale made by D be enforceable in WesternAustralia, or South Australia, or in other States?

(iv) Would the answer to (iii) be any different if South Australia had a statutoryregime providing for the licensing of internet cigarette vendors, andCorporation D had a licence under that regime?

These examples involve 'choice of law' questions. In the first, the issue is theapplication of a NSW statute applying to events in NSW - in other words, a prettyordinary course of events. The second example involves a potential clash of twostatutes, one of which (the Victorian) can be seen as having potential extra-territorial

1314IS

(1988) 169 CLR 41.(1991) 174 CLR 1, 39.Ibid 34-7.

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operation. In the third, the question is the application of a statute with some extraterritorial effect in the area of contract, and the fourth involves the clash of the laws oftwo States.

On the orthodox approach to such problems within Australia, the principle ofparliamentary supremacy is taken to require that a court is obliged to apply the lawspassed by the Parliament of its own forum, even if that conflicts with the law thatwould otherwise be applied pursuant to the common law choice of law rules. In otherwords, a Parliament can override the choice of law rules in a way that is binding on itsown courts. Thus on the second example, if B sued in Victoria the court would beobliged to apply the Victorian law to the accident occurring in NSW because the lawwas expressed to apply to Victorian residents. If B sued in NSW or Queensland,however, under the common law choice of law rules the Victorian law (being neitherthe lex loci delicti nor the lex fori) would not be picked up and applied. Thus a validState law, expressed to apply, would simply be ignored. And, once again, differentresults would ensue depending on where B chose to sue.

The first example shows that 'choice of law' questions can arise about quiteordinary statutes applying in the ordinary way to conduct within the legislating State.There need not be any evident extra-territorial application in any of the laws for acompetition to arise. However, if one State seeks to regulate matters which may takeplace (to some extent) in the territory of another State then this may make the 'choices'more difficult, and is more likely to raise conflicts between the statutes of differentStates. In any case, the law requires some mechanism for resolving conflicts betweenthe requirements of competing statutory regimes.

The ability of the States to enact laws with operation beyond their own boundaries,and the resolution of conflicts between competing State statutes, are thus the nextbackground issues which must be examined here.

1.3 The extra-territorial operation of State lawsThe States have the constitutional authority to enact statutes with extra-territorialeffect.16 The power was seen in increasingly broad terms as the 20th centuryprogressed, reflecting the gradual diminution of the restriction that was seen to beimplicit in the grants of powers to the States to make laws for the 'peace, order andgood government', or such like, of their territories.17 This power was confirmed bys 2(1) of the Australia Acts 1986 (Cth) and (UK), which provide that the legislativepowers of each State 'include full power to make laws for the peace, order and goodgovernment of that State that have extra-territorial operation'.

The High Court unanimously accepted in Union Steamship and Port MacDonnellProfessional Fishermen's Association v South Australia18 that the appropriate test ofvalidity was a low one, namely, that there must be some 'real connexion' or 'relevantconnexion' between the enacting State and the circumstances on which the lawoperates, and this test is to be 'liberally applied', such that even 'a remote and general

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Note discussion in Christopher Gilbert, 'Extra-Territorial Laws and the Australian States'(1987) 17 Federal Law Review 25; Mark Moshinsky, 'Extra-Territorial Laws and theAustralian States' (1987) 61 Australian Law Journal 779.See discussion in Union Steamship Co of Aust Pty Ltd v King (1988) 166 CLR 1 ('UnionSteamship'), 9-14 (per curiam).(1989) 168 CLR 340 (,Port MacDonnell').


cOlmexion' will suffice.19 In Union Steamship the Court did not consider it necessary todecide whether this nexus requirement arose from the phrase 'peace, order and goodgovernment', but the Court implied that the real foundation of the requirement lay insome constitutional doctrine of federalism by talking of 'territorial limitations of Statelegislative powers inter se which are expressed or implied in the Constitution'.20 Inparticular, the Court appeared to accept here that it is inherent in the Australianfederation that the legislative powers of the component States have a territorial focus.21

The Port MacDonnell case involved a question as to whether South Australia'sFisheries Act 1982 could apply to an offshore area which was actually closer to Victoriathan South Australia. In the end it was unnecessary to resolve the question, but theCourt's analysis suggests that so long as the nexus test is satisfied, and in the absenceof any inconsistency with a statute of another State, then it is not to the point that theother State mat; have a nexus which is 'as strong or stronger' than the nexus of theenacting State. 2 In other words, the nexus test is not a comparative one for the simplepurpose of assessing whether extra-territorial operation is valid.

It also appears that the nexus test is usually to be applied in a general mmmer. TheCourt in Union Steamship approved Dixon J's statement that 'it is of no importanceupon the question of validity that the liability imposed is, or may be, altogetherdisproportionate to the territorial connection or that it includes many cases that cannothave been foreseen. '23

It is commonplace for statutes to provide no clear indication of their exact reach,but to regulate conduct, relationships, transactions, rights or duties in general terms(for example, 'a person shall not, in trade or commerce, engage in conduct that ismisleading or deceptive').24 There is a presumption that statutes regulate conductwithin, and only within, the territory of the legislating State.25 This presumption isrebuttable. Further, the presumption does not solve many problems. Conduct may takeplace in more than one place, or be directed across time and space. Different elementsof a cause of action or an offence may take place in different locations. And somematters regulated are not self-evidently territorial. For example, if an Act regulatescontracts, does it regulate contracts formed in the State, or for which State law is theproper law (and thus applicable under choice of law rules), and/or which involvesperformance in the State? For such statutes the courts must identify what exact reachand operation, or what 'connecting factor',26 the Parliament intended the Act to have.Doing this can be difficult, and different approaches have been suggested.27

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Ibid 372 (per curiam); Union Steamship (1988) 166 CLR 1, 14.(1988) 166 CLR 1,14. Cf Moshinsky, above n 16,782-5.See also State Superannuation Authorities Board v Commissioner of State Taxation (WA) (1996)189 CLR 253, 271 (Brennan CJ, Dawson, Toohey and Gaudron JJ).(1989) 168 CLR 340, 373-4 (per curiam).(1988) 166 CLR, 1, 13, also 14, quoting Broken Hill South Ltd v Commissioner of Taxation(NSW) (1937) 56 CLR 337, 375.See, eg, Fair Trading Act 1987 (NSW) s 42.]umbunna Coal Mine NL v Victorian Coal Miners Association (1908) 6 CLR 309, 363. This isreflected, to a degree, in many interpretation Acts: eg, Interpretation Act 1987 (NSW) s 12;Interpretation of Legislation Act 1984 (Vic) s 48.Akai Pty Ltd v The People's Insurance Co Ltd (1996) 188 CLR 418 ('Akai'), 442-3 (Toohey,Gaudron and Gummow JJ).See, eg, discussion in Sykes and Pryles, above n 5, 240-6; see further below Part 6.4.


Whether statutes have extra-territorial operation is generally a question of degree,depending on the extent to which the elements of a cause of action or offence must beconnected to Australia and the manner in which they must be connected. It is very rarefor a statute to have a pure extra-territorial focus. Australian Parliaments have notsought to regulate littering on the streets of Paris.28

The nexus test of validity applicable in Australia29 is broad and general, offeringlittle restriction to States legislating with respect to matters outside their territories butwhich have some connection to the enacting State. This approach has increased thelikelihood of conflicts arising between the operation of the statutory laws of differentStates (in the sense that both purport to regulate the same thing). A conflict can alsoarise between two statutes neither of which has apparent (or at least significant) extraterritorial operation: for example, if the laws governed conduct within a contractual orpersonal relationship of two people residing in different States, or the conduct crossedthe border. Yet the century since federation has neither required nor produced ananswer to how direct conflicts between inconsistent, applicable State statutes are to beresolved.3D Application of the rules of private international law has enabled the courtsto avoid the question.

2 ONE AUSTRALIAN COMMON LAW - THE SIGNIFICANCE OFLIPOHAR

2.1 The decisionIt was the High Court's decision in Lipohar which made plain that competitions of lawwithin Australia are about statutory law. It did so by its discussion of the nature of thecommon law (which for the purposes of this discussion includes equity). Whetherthere is one uniform Australian common law, or separate strands of common lawwithin each Australian jurisdiction, had not previously been authoritatively resolved.31

In 1957 Sir Owen Dixon referred to a unitary view of the common law.32 However, thatview was expressed before the Privy Council had accepted that Australian commonlaw could diverge from English common law,33 a holding which raised the possibili%of different strands of the common law. In Lange v Australian Broadcasting Corporation, 4and some previous judgments,35 the High Court made some reference to the notion of

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Cf Polyukhovich v Commonwealth (1991) 172 CLR 501,552 (Brennan J). Even the War CrimesAct 1945 (Cth) at issue there, which retrospectively applied to conduct in World War II inEurope, applied only to persons with a connection to Australia.The Canadian approach, in contrast, is more restrictive: See discussion by Justice WilliamGummow, 'Full Faith and Credit in Three Federations' (1995) 46 South Carolina Law Review979,1013-14.Note Gummow, ibid 1012.See discussion by Justice L J Priestley in 'A Federal Common Law in Australia?' (1995) 6Public Law Review 221.Sir Owen Dixon, 'The Common Law as an Ultimate Constitutional Foundation',reproduced in Jesting Pilate (1965) 204-5.Australian Consolidated Press Ltd v Uren [1969]1 AC 590,641-4.(1997) 189 CLR 520,563-6 ('Lange v ABC') (per curiam).See authority gathered in Priestley, above n 31, fn 44. See also Kable v opp (1996) 189 CLR51, 112-15 (McHugh J), 137-9 (Gummow J).


a unified common law of Australia. But it was not until Lipohar that this notion had adirect, material application in a High Court decision.

The defendants in Lipohar were convicted of the common law offence of conspiracyto defraud. The issue in the appeal was whether the South Australian Supreme Courthad been competent to conduct the trial. The two appellants were resident inQueensland and Victoria respectively. The intended victim of the conspiracy was acorporation ultimately owned by the South Australian Government and based inAdelaide. The focus of the conspiracy was a building in Melbourne. All of the actsperformed in furtherance of the conspiracy were conducted in Queensland, Victoria,Indonesia and Thailand, although one fax was sent directly to Adelaide where thedefendants intended that it be acted upon.36

In the High Court a majority of five held that the Supreme Court had had thepower to try and punish the defendants, despite the limited link between the offencesand South Australia. The main judgment was that of Gaudron, Gummow and Hayne JJ(the plurality). Gleeson CJ and Callinan J agreed with the plurality's order but took adifferent approach. Kirby J dissented. McHugh J did not sit.

Two, parallel issues need to be distinguished to understand the decision: theterritorial ambit of the substantive law, and the territorial reach of the court'sjurisdiction (that is, its authority to decide the case).37 In relation to the first, if D stealsfrom E in Paris, it would be surprising if this was a breach of the criminal law ofTasmania. One would reasonably expect that there be some nexus or connectionbetween the legal system and the allegedly criminal act before there will be any breachof that system's law.

For statutory offences, reflecting the general law, there is an interpretationalpresumption against extra-territorial operation. In other words, it is presumed that 'thelegislature did not intend to proscribe acts done outside the territory of thelegislature'}8 though this may still leave open the question of exactly what therequired connection to the territory is. This presumption is rebuttable, and theParliaments may define and extend the territorial ambit of statutory offences. Thus aSouth Australian statute provides that South Australian criminal law is breached ifthere is a territorial nexus between the State and anyone element of an offence.39 If anAustralian State statute is found to have extra-territorial operation, a separate questionarises as to whether the legislature had the constitutional authority to pass that law, aswas discussed above in Part 1.3.

The second issue, jurisdictional reach, involves the question whether the particularcourt has the authority to hear the case. Jurisdiction has a geographic element. If a Statestatute grants a court jurisdiction to try charges with some extra-territorial element,then the grant and exercise of jurisdiction will need to have the requisite 'realconnection' to the State to be constitutionally valid, just as any law creating thesubstantive offence must have that connection. This geographical qualification mayseem unimportant given that it mirrors the qualification which applies to substantive

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Lipohar (1999) 200 CLR 485, 495-6 [8]-[10],528-31 [109]-[110].See Thompson v The Queen (1988) 169 CLR 1,19 (Brennan n.Ibid 24; Lipohar (1999) 200 CLR 485,522-3 [94]-[96].Criminal Law Consolidation Act 1935 (SA) s 5C; see Lipohar (1999) 200 CLR 485, 569-70 [215].


State law. Yet the source of substantive law may be different from the source of thejurisdiction, as when the offence arises under common law.

In Lipohar the offence arose under the common law, but the penalty was set and theCourt's jurisdictions was granted by statute. Further, the charge was conspiracy todefraud, and the agreement which constituted the conspiracy had been made outsideSouth Australia. The first question was what territorial connection was requiredbetween the substantive common law offence and the State. This required analysis ofthe nature of the common law and its application within the Australian federation.

Five judges indicated that it should be recognised in considering these questionsthat Australia does not consist of a series of foreign nations, and that considerations ofcomity between different jurisdictions had no place in relations between States withinthe federation.40 Kirby J stated that to 'treat the several jurisdictions of the AustralianCommonwealth, in relation to each other, as foreign states is erroneous, evenabsurd.'41

The same majority of five held that there is one uniform common law ofAustralia.42 Callinan Jdisagreed, stating that common law should 'be regarded as thecommon law of each State'.43 Despite this substantial agreement, there was asignificant difference of opinion as to what the existence of a uniform Australiancommon law means in relation to what the relevant law area is in considering rules ofthe common law. In other words, when establishing the requisite connection betweenthe impugned conduct and the legal system (whatever that connection was), whichlegal system were we talking of - Australia or South Australia? On this importantpoint there is no clear majority position within the judgment.

The plurality of Gaudron, Gummow and Hayne JJ took the view that the relevantlaw area is Australia as a whole.44 There is one Australian common law, and that lawapplies uniformly in Australia without any regard for State or Territory boundaries. Inrelation to the charge of conspiracy to defraud, the plurality took the view that it wassufficient that steps to implement the conspiracy were taken to a significant degreeinside the law area, even if the conspiracy was formed outside. In this case somesignificant steps had been committed within Australia, and this was sufficient toestablish breach of the Australian common law. For the purposes of substantiveliability it was not necessary to show any particular connection between the events andSouth Australia.45

This finding did not necessarily mean that the South Australian Supreme Court hadjurisdiction to hear the matter (the second issue discussed above). The jurisdiction ofthe Court to hear such matters was established by statute. Section 17(2)(a) of theSupreme Court Act 1935 (SA) gave the Supreme Court that jurisdiction, 'in and for theState', as was formerly vested in certain English courts. This general allocation ofjurisdiction was still subject to the constitutional limit on the power of the States to

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Lipohar (1999) 200 CLR 485, 503 [37] (Gleeson Cn, 526 [102]-[103], 515 [73], 532 [116](Gaudron, Gummow and Hayne JJ), 551 [165] 552-3 [169]-[170] (Kirby n.Ibid 552-3 [170].Ibid 500 [24] (Gleeson CJ), 505-10 [43]-[57] (Gaudron, Gummow and Hayne JJ), 552 [167](Kirby n.Ibid 584 [259], generally 574-84 [230]-[261].Ibid 513 [67],517 [80], 522 [92] ,531-2 [112]-[116].Ibid 531-2 [112]-[114].


make laws with extra-territorial effect. Thus for the Supreme Court to have ajurisdiction in this case it had to be established that there was a 'real connection', albeit'liberally applied', between the alleged offence and South Australia.46 Here, havingregard to the fact that the intended immediate victim was a company incorporated inSouth Australia, with South Australian legal advisers for the proposed transaction, andgiven the 'commercial realities of the situation', the requisite connection wasestablished.47

On the plurality's approach, distinguishing as it does between the territorial reachof common law offences and the issue whether a particular court can hear them, it waspossible that a number of different States or Territories might have jurisdiction to tryan accused for a breach of an offence created by the Australian common law.48

In contrast, although Gleeson CJ and Kirby J agreed that there was one uniformcommon law, they took the view that that law recognised the States as separatejurisdictions or law areas. One could not ignore the constitutional 'division of Australiainto territorial units called States or Territories.'49 On Callinan J's view, if the commonlaw was that of the State then the relevant law area was also that of the State.50 Thusfor these three judges, unlike for the plurality, it was necessary as a question ofsubstantive law to establish some connection between the impugned conduct andSouth Australia.51

For Gleeson CJ the two questions of the required nexus between the conduct andthe territory for the substantive offence to be made out at common law, and thequestion of the constitutional reach of the relevant statutes, were to be given the sameanswer. For both, the question was whether there was a 'real connection' between theconspiracy and South Australia. He found that there was such a connection, becausefraud was to be practised upon people in South Australia with a view to their acting, inSouth Australia, to their detriment.52 This approach is likely to produce the sameanswer as that of the plurality, at least for the offence of conspiracy, because bothapproaches apply the 'real connection' test. Callinan J applied a similar test of whetherthere was 'a real link with the jurisdiction' in relation to both questions,53 finding thatthere was.

Kirby J, with some regret, felt it inappropriate to extend the requisite territorialconnection at common law to a test of 'real and substantial connection'. He thoughtthat to do so was in effect to create a new offence.54 The traditional criterion ofjurisdiction, also necessary to establish the substantive offence, was that the 'gist' or'essential element' or 'last terminal element' of the offence occurred within thejurisdiction.55 This was not the case here, therefore he dissented in the result.

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Ibid 510 [59],534-5 [123].Ibid 522 [93], 534-5 [121]-[124].Ibid 514 [70],532 [116].Ibid 552-3 [170] (Kirby J); see also 500 [24] (Gleeson CJ).Ibid 583 [254].Ibid 500 [24] (Gleeson CJ); 552-3 [170], 557 [179]-[180], 560-1 [191], 563-5 [197]-[201](Kirby J); 583-5 [254]-[263] (Callinan J).Ibid 501-3 [27]-[39].Ibid 588-9 [269]-[270].Ibid 557-64 [181]-[200].Ibid 543 [144].


2.2 The significance of the decision for present purposesFive points emerge from the case which are material here. The first relates to sources oflaw within Australia. Five types of source can be distinguished:

1 constitutional (the Constitution, the Australia Acts);

2 federal statutes (whether primary or subordinate);

3 Territorial statutes;

4 State statutes; and

5 the common law.

What Lipohar clarifies is the extent to which these sources are uniform in theirapplication throughout Australia. Constitutional doctrines have a uniform application.Commonwealth laws apply uniformly throughout Australia, even though they mayhave disparate effect. It is now clear that the fifth source, the common law, is a unitaryone. Thus the debate about what rules should apply to competitions of law can bemore narrowly focused than might previously have been thought. The issue is theapplication of State and Territory statutes. That distinguishes the Australian positionfrom that in the United States, where common law is disparate, creating significantlygreater divergence in the law.

Secondly, the case contains clear statements that the fact of federation must betaken to change the legal relationships between States. States are not simply foreignentities vis-a.-vis each other. It is also noteworthy that the Australian constitutionalcontext was seen by all judges as affecting the nature and operation of the commonlaw.

Thirdly, if the plurality's view as to the relevant law area comes to be accepted thenthis will further alter the way in which we conceive of many legal issues and actions.For example, when one person sues another in defamation, or for breach of contract, orfor breach of confidence, or other such matters, the person is suing under theAustralian common law and in relation to the whole of Australia, subject to their ownpleading, to any applicable legislation and to the requirement for a constitutional andstatutory nexus between the events and the court's jurisdiction.

Fourthly, if the plurality's view is accepted this would raise the question of whetherthe common law choice of law rules, as they are currently understood, can apply to theAustralian States and Territories. Those rules arguably would be taken to apply toAustralia as one law area. Law foreign to the law area would be law foreign toAustralia. Those rules would not then suffice to resolve internal competitions.

Fifthly, the judgment of the plurality is also significant for giving some extendedoperation to the constitutional guarantee in s 118 of the Commonwealth Constitution.They stated that the section gave 'a constitutional footing ... for the 0feration in otherStates of the doctrines of autrefois acquit and autrefois convict'.5 Thus a personalready acquitted or convicted of an offence in one part of Australia cannot be retriedfor that offence in another.

56 Lipohar (1999) 200 CLR 485, 534 [120], generally 532 [116]-[120].


3 THE PFEIFFER REFORMULATION OF CHOICE OF LAW RULESFOR TORT

3.1 The decisionHaving decided Lipohar in late 1999, the case of Pfeiffer in 2000 presented the HighCourt with the opportunity to consider federal relationships within the area of civillaw. The facts of the case presented a familiar scenario in the area of privateinternational law. Mr Rogerson was employed in the Australian Capital Territory as acarpenter, but was doing some work in Queanbeyan in NSW when he was injured. Hesued his employer, in tort, in the ACT Supreme Court. A NSW statute,57 applicable onits terms, provided that general damages were not relevantly recoverable at commonlaw for such workplace accidents. There was no such statutory limitation appliedunder ACT statute law. The question was whether the NSW Act had to be applied bythe ACT Supreme Court. The High Court held unanimously that it did. Threejudgments were written: a joint judgment by Gleeson CI, Gaudron, McHugh,Gummow and Hayne JJ; a similar concurring judgment by Kirby J; and a separatejudgment by Callinan J.

Two important new principles were established by the Court. First, it created a newcommon law choice of law rule for Australian torts, overruling its previously operative1991 decision in McKain. If a claim is made in any Australian Court in relation to a tortoccurring within Australia, then the Court must apply the law of the jurisdiction wherethe wrong occurred (the lex loci delicti).58 In relation to this part of the case Callinan Jindicated that although he did not regard it as necessary to decide the issue, he (alone)regarded the double actionability rule as serving a real purpose in the federation.59

He was right that it was not necessary to decide the first issue. NSW law wouldhave been applicable in any case under the McKain double actionability rule. Thecritical issue was whether the NSW statute should be characterised as procedural orsubstantive. It is well-established, and was not doubted here, that when a court'chooses' to apply some foreign or external law it only picks up the substantive law,and applies its own procedural law. On the approach to this issue established by 4-3majorities in McKain and Stevens v Head60 laws such as the NSW provisions wouldhave been treated as procedural, and thus inapplicable in cases such as this.

The High Court here unanimously shifted the boundary between substance andprocedure. The new test is as follows: matters which go to the existence, extent andenforceability of legal rights or duties are relevantly regarded as substantive; matterswhich are directed to 'the mode or conduct of Court proceedinps', the 'machinery' or'mechanical' provisions, shall be characterised as procedura1.6 Thus legal rules onmatters such as limitation periods and limitations on damages are now to be regardedas substantive for intra-Australian disputes.

5758

596061

Workers Compensation Act 1987 (NSW) Part 5.(2000) 203 CLR 503, 544 [102] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ),562-3 [157] (Kirby n.(2000) 203 CLR 503,576 [201]-[202].(1993) 176 CLR 433.Pfeiffer (2000) 203 CLR 503, 543-4 [99]-[100], 544 [102] (Gleeson CJ, Gaudron, McHugh,Gummow and Hayne JJ) 554 [133]-[134],563 [161] (Kirby n, 574 [192] (Callinan n. See alsoMcKain (1991) 174 CLR 1, 26-7 (Mason Cn.


In relation to the change made to the choice of law rule for Australian torts theargument took the following lines. First, the joint judgment attributed significance tothe position which it stated would arise in relation to federal jurisdiction. In mattersfalling within federal jurisdiction the law to be applied is taken to be determined bywhere the Court is sitting: Judiciary Act 1903 (Cth), ss 79 and 80, as interpreted. Thusthe resolution of a matter commenced in the original jurisdiction of the High Court, forexample, might depend on where the Court happened to be sitting at the time theaction was heard. For this factor to produce a different result 'is properly called odd orunusual', and warranted reconsideration of the issue in matters involving federaljurisdiction.62 Further, it is undesirable to have a different rule applying to matters infederal jurisdiction and non-federal jurisdiction.63

The common law of Australia must adapt to conform to the Constitution and itsimperatives, as was recognised in Lange v ABC.64 The common law rule for choice oflaw in tort should therefore be developed to take into account the following mattersarising from the Constitution:65

• the existence and scope of federal jurisdiction;• the position of the High Court as the ultimate court of appeal;• the impact of ss 117 and 118 of the Constitution upon issues of the 'public policy

exception' (namely, that one Australian jurisdiction cannot decline to enforcethe laws of another Australian jurisdiction on the basis that it is contrary to thefirst jurisdiction's public policy);66

• the 'predominant territorial concern of the statutes of State and Territorylegislatures';

• 'more generally, the nature of the federal compact'.The common law should provide practical solutions to legal problems arising in the

federation. Thus 'ideally, the choice of law rules should provide certainty anduniformity of outcome no matter where in the Australian federation a matter islitigated, and whether it is litigated in federal or non-federal jurisdiction'.67 This pointreflects the arguments made by Wilson, Deane and Gaudron JJ in Breavington (seebelow Part 4.3), although these judgments were not cited to support the proposition.

The majority found it unnecessary to decide whether the Constitution, through s 118or otherwise, has the effect of entrenching the new common law choice of law rule.68

They expressly acknowledged that this was possible.69 Kirby Jappears to take the view

62

6364

65

66

67

6869

Pfeiffer (2000) 203 CLR 503, 532 [58]-[59] (Gleeson q, Gaudron, McHugh, Gummow andHayne JJ).Ibid 532-3 [60].(1997) 189 CLR 520; Ibid 524 [34], 534-5 [66]-[71] (Gleeson q, Gaudron, McHugh,Gummow and Hayne JJ), 557 [142]-[143].Pfeiffer (2000) 203 CLR 503, 534-5 [67] (Gleeson q, Gaudron, McHugh, Gummow andHayne JJ), see also 549-551 [119]-[124] (Kirby J).Ibid 533 [63] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ), approving MerwinPastoral Co Pty Ltd v Moolpa Pastoral Co Pty Ltd (1933) 48 CLR 565 ('Merwin Pastoral'), 577,587-8.Ibid 528 [44] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ); also 550-1 [123],552 [126],553 [129] (Kirby J).Ibid 534 [65], 535 [70] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ).Ibid 535 [70].


that this area should not be constitutionalised, at least in terms of specifying a detailedrule?O A key theme of the case, reflecting Lipohar, was that 'the terms of section 118indicate that, as between themselves, the States are not foreign powers as are nationstates for the purposes of internationallaw. i71

In relation to choosing between different possible formulations of the choice of lawrule for tort, the majority rejected the 'proper law of the tort' approach, whereby thejudge looks for the law having the most real and substantial connection to the partiesand/ or events. The Court took the view that it did not provide sufficient guidance tocourts, litigants or others such as insurers, thus in turn increasing costs to all thoseparties and to society at large.72 The possibility of having a 'flexible exception' to anygeneral rule was rejected for the same reason.

It was recognised that invariably to apply the law of the place of the tort couldproduce injustice, as that place might be entirely fortuitous. Nevertheless, the majoritystated that 'for every hard case that can be postulated if one form of universal rule isadopted, another equally hard case can be postulated if the opposite universal rule isadopted.'73 The chief advantage of applying the lex loci delicti was that it gave effect towhat was likely to be the reasonable expectations of the parties?4 The main reason forpotentially applying the lex fori (the law of the forum) was a concern that the laws ofanother jurisdiction might be contrary to the public policy of the jurisdiction in whichthe action is brought. However, such a concern could have no place within theAustralian federation?5

Thus for torts committed within Australia courts should apply the lex loci delicti onissues of substance, and should apply only that law. The High Court subsequentlyheld in Regie National des Usines Renault SA v Zhang76 that the same choice of law ruleshould apply to torts committed outside Australia.

3.2 The significance of the case

Two material points emerge from Pfeiffer. First, the Court reinterpreted the commonlaw to take account of the Australian constitutional context. Thus the Constitution wasseen to speak to the area of choice of law, if possibly in muffled tones. True, the Courtwas careful to indicate that the new principles developed were common law rules, notconstitutional diktats, and the Court did not attempt to provide an exposition of themeaning or requirements of s 118. Nevertheless, if there are constitutional imperativeswhich operate in this area of law then their nature and significance require furtherexamination for it may well be that what appears to be flexible common law closelyreflects hard constitutional requirements.

7071

7273747576

Ibid 546-7 [110], 556-7 [138]-[143]; Mobil Oil (2002) 76 ALJR 926, 941 [80].Pfeiffer (2000) 203 CLR 503, 534 [65] (Gleeson q, Gaudron, McHugh, Gummow and HayneJJ); see also 550-1 [121]-[124] (Kirby J).Ibid 538 [79]-[80] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ).Ibid 539 [82].Ibid 536-7 [75], 540 [87].Ibid 541 [91] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ); 551 [123] (Kirby J).(2002) 76 ALJR 551 ('Renault').


Secondly, a theme of the judgments is that, at least 'ideally',?7 one set of facts in adispute occurring within Australia should produce one legal result, regardless ofwhere litigated within the country. This point raises further questions. What, then, ofother areas of private international law, such as the choice of law rule for contract? Inparticular, how is this theme to be reconciled with the fact that on the orthodoxanalysis the application of an Australian statute may depend on where in Australiaproceedings are instituted?

The decisions in Lipohar and Pfeiffer thus challenged a number of aspects of theorthodox approach to resolving competitions of law within Australia, implicitlyreopened the question of the meaning and effect of s 118 of the Constitution, and gavesome indications of what the constitutional imperatives might be. In this context it isappropriate to re-examine the construction of s 118.

4 THREE CONSTRUCTIONS OF SECTION 118

4.1 Relevant provisions

Section 118 of the Constitution provides as follows:Full faith and credit shall be given, throughout the Commonwealth to the laws, thepublic Acts and records, and the judicial proceedings of every State.

Under s 51(xxv) the Commonwealth Parliament is granted power to legislate withrespect to:

The recognition throughout the Commonwealth of the laws, the public Acts and records,and the judicial proceedings of the States.

Covering clause 5, in the enacting Commonwealth of Australia Constitution Act 1900(Imp), is also relevant:

This Act, and all laws made by the Parliament of the Commonwealth under theConstitution, shall be binding on the courts, judges, and people of every State and ofevery part of the Commonwealth, notwithstanding anything in the laws of any State ...

4.2 The narrow approach to s 118That s 118 has some substantive effect was suggested by a majority of three High Courtjudges in Merwin Pastoral in 1933. Rich, Dixon and Evatt JJ indicated that if the rules ofprivate international law rendered an interstate statute applicable to a dispute withinan Australian court, then s 118 prevented a party (at least in that case) from seeking toprevent the ap~licationof that law by asserting that it was contrary to the public policyof the forum. 8 This suggestion marked the provision's high water mark untilBreavington.

The case of Anderson,?9 in 1965, involved a suit brought in NSW over a car accidentoccurring in the ACT. A federal ordinance for the ACT had introduced apportionment,overturning the common law rule that contributory negligence was a completedefence. In NSW the common law defence still applied. The defendant sought to relyon this defence, whereas the plaintiff sought to have ACT law govern the dispute,

77

7879

Pfeiffer (2000) 203 CLR 503,528 [44] (Gleeson CJ, Gaudron, McHugh, Gummow and HayneJJ); see also 551 [123], 553 [129]-[130] (Kirby J).Merwin Pastoral (1933) 48 CLR 565, 577, 587-8.(1965) 114 CLR 20.


arguing that s 118 dictated what law should be applied in matters within federaljurisdiction. The plaintiff's constitutional argument unanimously was rejected by theHigh Court. One part of the judges' reasoning was to take a narrow view of the ACTordinance, regarding it as directed only to ACT courts.80 This construction was openbut it is not a necessary view of such laws (see further below, Part 6.4). Anotherelement of the reasoning was that the Jilaintiff was suing to 'enforce a right given tohim by the law of New South Wales'. 1 Yet, at least on the modern view applied inLipohar, the plaintiff was actually suing to exercise his rights under the Australiancommon law, not under some peculiarly NSW construct.

In any case, it was implicit in the judges' approach that s 118 did not override theoperation of the common law principles of choice of law. This view was reaffirmed inMcKain in 1991.82 The majority of Brennan, Dawson, Toohey and McHugh JJ rejectedthe type of approach adopted by Wilson, Deane and Gaudron JJ three years before inBreavington. In Breavington itself Mason CJ had also rejected the view that s 118overthrew the common law rules.83

A clear majority in Breavington did affirm that the suggestion in Merwin Pastoral wasgood law,84 as was confirmed in Pfeiffer. And it appears that s 118, like its partialreflection in s 185 of the Evidence Act 1995 (Cth),85 has some evidentiary effect.8 Thusthe content of interstate law is a matter of judicial notice and need not be proved as aquestion of fact. Beyond this, on the orthodox view, s 118 has little to say on therecognition and enforcement of interstate 'laws' and 'public Acts'.

As will be argued below in Part 5, there are four key objections to the narrowapproach to s 118: it denudes an apparently significant constitutional guarantee ofcontent; it facilitates different legal answers for a dispute depending upon where it islitigated; it deviates from principles of parliamentary supremacy and representativedemocracy; and it is based on the false premise that the States are foreign entities vis-avis each other.

4.3 The views of Wilson, Deane and Gaudron JJBreavington involved a car accident in the Northern Territory, litigated in Victoria. Acompetition of law arose because a Northern Territory statute provided for a statutorycompensation scheme and restricted recovery of common law damages. In Victoria thecommon law would have applied. The statute was expressed to apply to residents ofthe Territory, and the plaintiff was such a resident at the time of the accident. TheCourt unanimously held that the Territory law did apply to restrict the plaintiff'sclaim. Unlike the other members of the Court, Wilson, Deane and Gaudron JJ took aconstitutional approach to the question.

8081828384

8586

Ibid 24-25 (Barwick CJ ), 32-3 (Kitto n, 37 (Taylor n, 38-9 (Menzies n, 45-6 (Windeyer n·Ibid 37 (Taylor n, also 33 (Kitto n, 45 (Windeyer n.(1991) 174 CLR 1, 37.(1988) 169 CLR 41,81-3; see also 114-17 (Brennan n, 148-51 (Dawson n.Ibid 81 (Mason Cn, 96-7 (Wilson and Gaudron JJ), 116 (Brennan n, 136-7 (Deane n, 150(Dawsonn·Previously State and Territorial Law and Records Recognition Act 1901 (Cth) s 18.Varawa v Howard Smith & Co Ltd (1911) 13 CLR 35, 69 (O'Connor n; Anderson (1965) 114CLR 20, 45 (Windeyer n.


Deane J held that Australia had a unitary system of law, in the sense that it was acomprehensive system 'in which the substantive law applicable to govern particularfacts or circumstances is objectively ascertainable or predictable and internallyconsistent or reconcilable.'87 In other words, the applicable substantive law would bethe same regardless of where a matter was litigated within Australia. This view wassupported by six considerations:88

1 The conferral of original jurisdiction on the High Court, and the creation offederal jurisdiction, suggests 'the existence of a national law, withCommonwealth and State ingredients' to be applied when disputes fall to bedetermined in this jurisdiction.89 In other words, the existence of a form ofnational jurisdiction presupposes the existence of some coherent and uniformmeans of identifying one governing law for any type of dispute, whereverarising.

2 A jurisprudential basis of the Constitution, implicit in the separation of judicialpower, is that there are independently existing and ascertainable laws to beapplied by judges when the occasion arises. It cannot have been intended thatthe content of State law be indefinite, in the sense that its application wascontingent on where in Australia proceedings were instituted.

3 The 'pervading influence' of the uniform common law within Australiasuggests the existence of a unitary system.90

4 It is implicit in the constitutional system that individuals should not be'exposed to the injustice of being subjected' to the simultaneous butinconsistent demands of two laws.91 This principle was recognised inUniversity of Wollongong v Metwally92 in 1984, in which the High Court heldthat the Commonwealth could not retrospectively deem one of its laws to benot inconsistent with State laws.93

5 The conferral of general, and now final, appellate jurisdiction on the HighCourt facilitates and implies 'an ultimate unity' within the Australian legalsystem.94

6 The States were established and are maintained by the Constitution, asmanifest in the preservation in ss 106-8 of State constitutions, powers andlaws. The Constitution established one 'new national structure'.95

Deane Jconcluded that the application of the rules of private international law to intraAustralian disputes is inconsistent with the recognition that Australia is a unitary legalsystem, for those rules may produce different legal results depending on where one

878889909192939495

(1988) 169 CLR 41,121.Ibid 120-4.Ibid 122.Ibid 123.Ibid.(1984) 158 CLR 447, see especially 467, 477-9.Breavington (1988) 169 CLR 41,123.Ibid 124.Ibid 120-1.


sues, and the Constitution thus leaves no room for their direct application.96 How, then,does one determine what law applies?

The answer is to be found, Deane Jargued, in recognising that the legislative powerof the States is 'fundamentally territorial'.97 If there is a competition between thestatutory laws of two or more States, then that competition is to be resolved byreference to territoriality. The law prima facie applicable will be the law governingconduct, property or status within a State's own territory. However, there may beinstances in which there are territorial connections to two or more States, and then thegoverning law is identified by 'determination of predominant territorial nexus.'98 Someguidance for this test can be found from the principles of private international law, atleast insofar as they do not give preference to the law of the forum. 99 Further, theremay be some areas, such as taxation, which by their nature can be governed by two ormore State laws without inconsistency.lOO

This approach is not simply about resolving competitions between State statutes. Alegal system 'can operate by silence'.lOl Thus the principles just identified actuallyapply to determine which State's body of law, including the common law, should beapplied. Similar principles apply in relation to the self-governing Territories, on thepremise that the Commonwealth sought to put those polities in essentially the sameposition as the States with its grant of ~owers to legislate for the 'peace, order andgood government' of those Territories.l 2 In this particular case, therefore, NorthernTerritory law applied as the law governing the rights and liabilities arising fromtortious conduct within its boundaries.l03

The arguments of Wilson and Gaudron JJ in Breavington, writing together, were tosimilar effect but expressed in somewhat different and briefer terms. They argued thatit was 'manifestly absurd' that one set of facts in one country could give rise todifferent legal consequences depending on where an action was brought, and this wasespecially so when a court was exercising national federal jurisdiction.l04 Whilst s 118did not directly operate upon choice of law rules, it did resolve conflicts between Statelaws before those rules could apply.105 Section 118 had the effect that 'the one set offacts occurring in a State would be adjudged by only one body of law and thus giverise to only one legal conse~uence, regardless of where in the Commonwealth thematter fell for adjudication'.l 6 The section did not provide a formula for identifyingthe applicable law. But it did imply an 'inflexible rule that questions of liability in tortbe determined by the substantive law that would be applied if the matter wereadjudicated in a court ... of the State in which the events occurred.'l07 This principlewas not directly applicable to the Territories, but should be adopted as a matter of

96979899100101102103104105106107

Ibid 125, 128.Ibid 128.Ibid 129, 135.Ibid 137.Ibid 136.Ibid.Ibid 137-8.Ibid 139.Ibid 88.Ibid 95-6.Ibid 98.Ibid.


common law. Thus, again, the Northern Territory law governed the particular disputebefore the court, for that is the law that a Northern Territory court would apply.

It was not made clear exactly why the law which would be applied by the courts ofthe place of the tort should be given effect throughout Australia, but it is implicit thatpriority was being given to the predominant interest of the States and Territories inregulating matters occurring within their own boundaries. This emphasis onterritoriality was later made express by Gaudron J in McKain, in 1991 (after Wilson Jhad retired), where she re-expressed her views in slightly different terms:

because the States have identifiable territorial limits, the applicable body of law willordinarily be that of the State in which the events in question occurred.lOS

Talk of what the court of the place would do was omitted. Her view thus moved closerto Deane J's approach.

In McKain both Deane and Gaudron JJ developed their tests for identifying theapplicable law where a dispute had a territorial connection to two or more States.Deane Jfilled out his 'predominant territorial nexus' test by stating that to identify thegoverning law would, at least in borderline cases, 'involve a weighing process' ofcompeting factors including 'what is fair and just'.109 Gaudron J accepted thedifficulties of identification where 'acts occur partly in one State and partly in another',and accepted there may be cases where the place of the act 'is entirely fortuitous' orwhere for some other reason another State may have 'a more substantial connection'with the relevant acts.l1O

Both judges thus moved towards applying an approach which might be labelled asearch for the 'proper law of the dispute' for cases connected to two or morejurisdictions. Even with this development, Opeskin made the point that Deane J didnot specify what type of interests were to be assessed: legitimate governmentalinterests of the States, or objective factual connections (that is, balance of conveniencetype considerations such as where the parties and witnesses reside).111

There is much to be said for the type of approach taken by Wilson, Deane andGaudron JJ. In particular, the notion of one set of facts being judged by one law withone consequence within Australia is an attractive ideal. Nevertheless, as will emergebelow in Part 5, there are also some difficulties with their views. In summary, theyallow insufficient recognition of the States in passing laws with some extra-territorialoperation, they may be difficult to apply to areas of law other than tort, and do notprovide clear criteria for identifying the applicable law.

4.4 An alternative view: full effectAn alternative interpretation112 of s 118 is that it requires what it says: that the lawsand 'public Acts' of every State be given full faith and credit, in the sense of full effect,

lOS109110111112

McKain (1991) 174 CLR 1, 56. See also Stevens v Head (1993) 176 CLR 433, 464.McKain (1991) 174 CLR 1, 46, 53.Ibid 56 (Gaudron n.Opeskin, above n 4, 164.Stephen Gageler has argued for a similar approach to the 'full effect' construction: 'PrivateIntra-National Law: Choice or Conflict, Common Law or Constitution?' (2003) 23 AustralianBar Review 184. A somewhat similar view in the American context is put by DouglasLaycock, 'Equal Citizens of Equal and Territorial States: The Constitutional Foundations ofChoice of Law' (1992) 92 Columbia Law Review 249. For other views again of the operation of


throughout the Commonwealth. In resolving any Australian legal dispute allAustralian courts would thus be required to apply any valid Australian statute whichapplied to the dispute by its terms, properly construed. If two State statutes purportedto apply, and were inconsistent, then that conflict should be resolved by applying thelaw more closely connected, in terms of legitimate governmental interests, to theparticular issue in the particular case. Certain principles can be stated to assist inresolving such conflicts.

This 'full effect' construction of s 118 overlaps significantly with the approach takenby Deane J. There is one major difference. The effect of his Honour's view was to applythe body of law of one State or Territory to a dispute, at least if the dispute wasprimarily connected to just one State. The law applied included the 'silence' of the law,which meant in effect that the common law (applying in one State) may takeprecedence over the statute passed by another State. In contrast, the full effectapproach simply involves applying the valid statutes of all States. Let us say, forexample, that a tort occurred in NSW and there was no NSW statute regulating theissue, thus leaving the matter to the common law, but there was a valid Queenslandstatute which purported to apply. On Deane J's approach the common law wouldreign, whereas on this approach the Queensland statute would be given effect.

A comment should be made on terminology. In Pfeiffer the majority stated that thecommon law rules were appropriately described as 'choice of law rules' rather than'conflict of law rules', because the only conflict is in the mind of the judge decidingwhich system of law to apply. The 'choice' tag, it was said, correctly acknowledges thepossibility of applying 'one or other system of law to the facts of the case underconsideration'. The term 'conflicts' is better used to identify inconsistency betweenlaws, leading to the invalidity of one.113 On this understanding of the terminology,were the full effect approach to be taken then the language of 'choice of law' would notbe appropriate.114 There is but one legal system. The judge does not choose which oftwo bodies of law to apply according to common law rules, rather he or she is requiredto apply all laws to the extent that they are valid and applicable. A 'conflict' ariseswhen two State or Territory laws apply to one matter in an inconsistent way, and thatconflict is resolved by means of the closer connection test, such that one of the laws isinapplicable or invalid to the extent of the inconsistency.

This statement of the approach is a brief summary. Necessarily, much of the work isin the detail, which is discussed below in Part 6. Before delineating the approach it isappropriate to examine the case for adopting some such change, including why thisconstruction might be preferable to both the traditional narrow approach and theviews of Wilson, Deane and Gaudron JJ.

113114

s 118 see, eg, Sykes and Pryles, above n 5, 329-34, Opeskin, above n 4, 173-80; GeorginaWhitelaw, 'Interstate Conflicts of Laws and Section 118' (1994) 5 Public Law Review 238, 2412,248-51.(2000) 203 CLR 503, 528 [43].See similarly McKain (1991) 174 CLR 1, 55 (Gaudron J).


5 THE CASE FOR TAKING THE 'FULL EFFECT' APPROACH

5.1 The natural and appropriate reading

To take the full effect approach to s 118 is to give the words of the provision theirnatural meaning.115 Full faith and credit is provided to the statutory laws of each of theStates, throughout the Commonwealth, for those laws are to given effect by all courtswhenever applicable by their terms, unless they cannot validly apply by reason of theirinconsistency with another law.

It is significant that s 118 is in Chapter V of the Constitution dealing with 'TheStates', a chapter also containing ss 106-108, which preserve the constitutions, powersand laws of the States; s 109, which regulates the relationship between federal andState laws; s 113, which expressly preserves the power of the States to regulate alcoholwithin their boundaries (and itself potentially affecting issues of governing law); andthat it is between ss 114-115 and ss 119-120, which regulate aspects of federal-Staterelations.

Section 118 is next in order in the Constitution after the guarantee of freedom ofreligion and the prohibition on discrimination on the grounds of State residence.Section 117 was itself attributed with little effect for most of the 20th century untilreinvigorated in Street v Queensland Bar Association.116 Mason CJ said in that case:

The very object of federation was to bring into existence one nation and one people. Thissection is one of the comparatively few provisions in the Constitution which was designedto enhance national unity and a real sense of national identity by eliminating disability ordiscrimination on account of residence in another State. 117

Section 118, by its terms and placement, also appears to be a provision of substance,affecting legal relationships within the federation, and designed to effectuate nationalunity. Its words - 'Full faith and credit' - suggest some high purpose, rather higherthan modifying a rule of evidence. And its terms appear directed to the question ofhow State laws are to be treated in other States. Yet the orthodox narrow approachgives it little effect.118 As Deane J argued in Breavington, '[t]o give full faith and creditto something does not, as a matter of ordinary language, mean merely to acknowledgethe fact that it exists'.119

If reference to the Convention debates of the constitutional framers is taken to bepermissible or desirable,120 they add little here. There was only one brief discussion ofthe effect of the clause and the only speaker who said anything material was Barton.121

Acknowledging the 'similar section' in the United States Constitution, he quoted anAmerican text which suggested that the effect of that clause was merely evidentiary,

115116117118119120

121

Note similarly Harris v Harris [1947] VLR 44,57-9 (Fullagar J).(1989) 168 CLR 461.Ibid 485.Sykes and Pryles, above n 5, 321-3, 334; Gummow, above n 29,1004.(1987) 169 CLR 41,129; note also Stevens v Head (1993) 176 CLR 433, 464 (Gaudron J).As to which, see Jeremy Kirk, 'Constitutional Interpretation and a Theory of EvolutionaryOriginalism' (1999) 27 Federal Law Review 323,354-7,362-3.Official Report of the National Australasian Convention Debates (1986) 1004-6 (Adelaidesession).


such that courts of one State could take judicial notice of the laws, Acts and records ofanother.122

At that stage, and until the 1930s, there had been little consideration by the USSupreme Court of the effect of the Full Faith and Credit Clause on the recognition andeffect of interstate statutes.123 At least one statement had been made by the Courtwhich was arguably consistent with a full effect construction,124 but it cannot be saidthat was the prevailing interpretation.125

In this context it is impossible to identi~ with any precision what the Australianframers intended to achieve through s 118. 26 Pryles and Hanks make a plausible, ifspeculative, argument that the framers appear to have wished to adopt some 'principleof greater legal comity between the colonies', and were content to adopt the Americanphrase without directing their minds to any precise principle.127 This notion suggeststhat the section was intended to have some significant effect, and that this was part ofthe project of creating one nation. But no clear intended effect is ascertainable from theConvention debates or the historical context.

Section 118 should be construed in a manner which gives effect to the naturalmeaning of its words (reflecting the primary principle of construction),128 whichrecognises its place in the Constitution and its general unifying aim, and which isconsonant with broader Australian constitutional doctrines of federalism,representative democracy, parliamentary supremacy and the rule of law (see furtherbelow, Part 5.2). The full effect approach is such a construction. The content it providesto the section is simple: all valid statutes are given full effect. It assists to bring about acloser union by providing one legal answer to legal disputes, wherever litigated. Thecriterion for resolving inconsistencies between statutes - the closer connection test emerges not from s 118 but from broader notions of federal relations within theAustralian constitutional context (see further below, Part 6.1).

Applying this approach avoids a significant difficulty with the territorial focus ofWilson, Deane and Gaudron JJ. Whilst that focus might provide a relatively clearanswer in the case of torts - or at least some torts - this is not so for other areas oflaw.129 Tort law involves conduct, which must take place somewhere. But other areasof law involve questions about relationships or status. A focus on territoriality does notreadily indicate what law should govern a contract, for example, which may involveparties residing in different jurisdictions, operating in different jurisdictions,

122123

124125126

127

128

129

Ibid 1005, see also 1006.Note Harvard Law Review, 'Developments in the Law- The Law of Family and Marriage'(2003) 116 Harvard Law Review 1996, 2028.Chicago & Alton Railroads v Wiggins Ferry Co, 119 US 615 (1887),622.Note discussion by Laycock, above n 112, 300-1.See discussion in Michael Pryles and Peter Hanks, Federal Conflict of Laws (1974) 64-5;Zelman Cowen, 'Full Faith and Credit: The Australian Experience' in Rae Else-Mitchell(ed), Essays on the Australian Constitution (1961, 2nd ed) 298-301.Pryles and Hanks, above n 126, 66. The American framers appear to have been similarlyhazy: Justice Robert Jackson, 'Full Faith and Credit - The Lawyer's Clause of theConstitution' (1945) 45 Columbia Law Review 1, 6; note also Sun Oil Co v Wortman ('Sun OilCo'), 486 US 717 (1988) 723.Note Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (The Engineers Case) (1920)28 CLR 129,148-9.Sykes and Pryles, above n 5, 326, 328.


performing their obligations in various jurisdictions, and entering or terminating thecontract in different jurisdictions. Even tort law raises difficulties where conductcrosses boundaries.130

In Commonwealth v Mewett Gaudron J applied her 'one legal consequence' approachto the area of contracts, albeit strictly as a matter of common law within federaljurisdiction.131 She indicated that if the law of a particular State or Territory was theproper law, then that law was the governing law, and if the proper law was simply'Australian law' without further specification, then the State or Territory law whichwas 'most closely connected' should be applied. Some such principle was needed onher approach to achieve uniformity, but she provided no justification for why thiselevation of the common law choice of law rule was supported by notions ofterritoriality.

A related objection to the approach of Wilson and Gaudron H, and to a lesser extentDeane J, is that it does not readily comport with the words of s 118. Their view did notconstitutionalise the choice of law rules as such. But it did regard s 118 as playing therole of selecting the one governing body of law. As Kirby J argued in Pfeiffer, 'thelanguage of 'faith and credit' is not apt to describe the making of a choice where thereare two or more available possibilities'.132 Sykes and Pryles make a related point: 'Thetrend of the section so far as its language is concerned, seems to be more towardsdiversity rather than unity'.133 Such objections would not arise if one saw s 118 not asmandating some set of choice of law rules, nor as directed to choosing the oneapplicable body of law, but rather as requiring obedience so far as possible to all validState laws.

5.2 One system of lawThe case put by Deane J for Australia being a unitary system of law is a powerful one,even if one does not agree with every aspect of his argument. Some additionalcomments should be made. Deane J's second consideration in support of such a systemwas the jurisprudential assumption of there being an independently existing law withnon-contingent operation. I would prefer directly to invoke the doctrine of the rule oflaw. This doctrine has been recognised as a legitimate influence on constitutionalinterpretation.134 Its scope and effect are the subject of some dispute. Yet there is nodoubting of a central tenet, namely that it involves the law being obeyed (such that the

130

131

132133134

See Voth v Manildra Flour Mills (1991) 171 CLR 538, 567-9; Renault (2002) 76 ALJR 551,565[74]; Dow Jones Ltd v Gutnick (2002) 77 ALJR 255, 263[43].(1997) 191 CLR 471, 527-8. Note similarly Re E & B Chemicals and Wool Treatment Pty Ltd[1939] SASR 441, 443-5.(2000) 203 CLR 503,556-7 [139]; see also Breavington (1988) 169 CLR 41,150 (Dawson J).Sykes and Pryles, above n 5, 326.Australian Communist Party v Commonwealth (1951) 83 CLR I, 193 (Dixon J); Theophanous vHerald & Weekly Times Ltd (1993) 182 CLR 104, 196 (McHugh J); Re Residential TenanciesTribunal; Ex parte Defence Housing Authority (1996) 190 CLR 410, 443-4 (Dawson, Tooheyand Gaudron JJ), 507 (Kirby J); Kartinyeri v Commonwealth (1998) 195 CLR 337, 381 [89](Gummow and Hayne JJ); Abebe v Commonwealth (1999) 197 CLR 510, 560-1 [137]-[139](Gummow and Hayne JJ), note also 586 [220] (Kirby J); Plaintiff 5157/2002 v Commonwealth(2003) 77 ALJR 454474 [103]-[104] (Gaudron, McHugh, Gummow, Kirby and Hayne JJ).


The primary fault in the vested rights view was that 'no court can enforce any lawbut that of its own sovereign, and, when a suitor comes to a jurisdiction foreign to theplace of the tort, he can only invoke an obligation recognised by that sovereign'.146 Yetthe Australian States are not foreign entities to each other but part of one nation andone legal structure established and maintained by the Constitution. If it is useful tospeak of sovereignty here we must at least recognise that 'sovereignty is shared'147within Australia between the different polities. The fault in that theory thus has noapplication to the approach here.

Opeskin and Juenger have each asserted that the main arguments about the choiceof law rules in Australia have arisen in relation to tort, and that the problems there canbe resolved by reforming that common law rule (a result now achieved in Pfeiffer).148Yet different results may occur in any area of law if one jurisdiction has an applicablestatute which the courts of the forum must apply, but courts of the other jurisdictionswould not apply that statute because it was not part of the body of law selected by thecommon law rules. The problem of non-uniformity lies at a deeper level than the rulein Phillips v Eyre.

A further argument in support of the unitary view can be made in terms of publicpolicy. If substantial legal rights and duties are contingent on the court in whichproceedings are instituted then forum shopping is facilitated. As Callinan J argued inPfeiffer, this then 'could have a significant impact upon the economic, social and otherpolicies of States which have legislated in respect of them differently from otherStates.'149 Moreover, '[i]t is undesirable that courts might be placed in a position whichcould lead to a perception, however unwarranted, that they are in competition withone another' .150

One of the reasons for concern about afplying foreign laws is that they may becontrary to the public policy of the forum. 15 Juenger decries elevating uniformity over'substantial justice',152 But since Merwin Pastoral that concern has had no place withinthe Australian federation in relation to a valid Australian law,153

For these reasons, along with those put forward by Deane J, Australia should berecognised as one integrated legal system in which one set of facts will havesubstantially one set of legal consequences regardless of where litigated withinAustralia. This conclusion is qualified. Uniformity must remain something of an ideal.Litigants must take courts as they find them, and this may mean that a remedyprovided for in one jurisdiction is not available in another. That the ideal of uniformitycannot wholly be achieved does not mean that all attempts to achieve it should be

146147

148

149150151

152153

Guiness v Miller, 291 F 769 (1923) 770 (Learned Hand n.Pfeiffer (2000) 203 CLR 503, 534 [65],536 [74] (Gleeson q, Gaudron, McHugh, Gummowand Hayne JJ); note also Whitelaw, above n 112, 244.Opeskin, above n 4,163; Friedrich Juenger, 'Tort Choice of Law in a Federal System' (1997)19 Sydney Law Review 529, 537-8.(2000) 203 CLR 503,570 [184].Ibid 570-1 [184].See, eg, discussion in Renault (2002) 76 ALJR 551, 561-3 [52]-[60] (Gleeson q, Gaudron,McHugh, Gummow and Hayne JJ).Juenger, above n 148, 543.(1933) 48 CLR 565.


156157

abandoned. And in this area substantial achievement of the ideal does not come at toohigh a cost, for reasons explored further below.

5.3 The significance of federal jurisdictionThree points should be made here. The first is that the existence of this jurisdictionfavours a one-system approach. When disputes arise within federal jurisdiction being jurisdiction sourced from the Constitution and/or federal law - then there is aparticular problem in identifying the law which governs a dispute. The Constitutionand federal legislation define and allocate federal jurisdiction, but do not provide acomprehensive legal code to govern all disputes within that jurisdiction. Somesubstantive law must be identified and connected to the dispute.l54 Federal jurisdictionis now recognised to be national jurisdiction,155 and thus even when a State courtexercises federal jurisdiction (and leaving aside the Judiciary Act) it could notautomatically be assumed that the court must apply the State law of the forum inpreference to other Australian laws.

Federal law does purport to direct how the governing law is to be identified b~

means of ss 68, 79 and 80 of the Judiciary Act 1903 (Cth). Suffice it to say here that,1 6subject to the Constitution and federal law, these provisions make it likely that thestatutory law of the State or Territory where the court is sitting (to hear the case),together with the common law (including the choice of law rules), will be applied tofill any gaps in federallaw.157

In Pfeiffer the majority stated that the fact that the outcome of an action in tort infederal jurisdiction 'may be affected significantly by where the court sits is properlycalled odd or unusual.'158 This was a significant step in their reformulation of thechoice of law rule for tort. The point may equally be made of the areas of law beyondtort. It is a factor militating in favour of a system which produces a uniform governinglaw wherever a matter is litigated within Australia.l59

One should be wary of attributing too much significance to this point. Sections 79and 80 are the creatures of the federal Parliament, not constitutional provisions. TheHigh Court has noted that there may be constitutional imperatives at work here.160 It isfar from self-evident that any such imperatives would give particular significance towhere a court happens to be sitting. Despite its longstanding existence, the

154 Pfeiffer (2000) 203 CLR 503, 530 [53] (Gleeson q, Gaudron, McHugh, Gummow and HayneJJ); Australian Law Reform Commission, The Judicial Power of the Commonwealth, Report No.92 (2001) 558-9 [30.16]-[30.17].

155 Pfeiffer (2000) 203 CLR 503, 530 [53] (Gleeson q, Gaudron, McHugh, Gummow and HayneJJ).See generally ALRC, Report No. 92, above n 154, chapters 2 and 30.Pfeiffer (2000) 203 CLR 503, 531-2 [55]-[58] (Gleeson q, Gaudron, McHugh, Gummow andHayne JJ), noting Musgrave v Commonwealth (1937) 57 CLR 514. See also Kruger vCommonwealth (1997) 190 CLR 1,139 (Gaudron J).

158 (2000) 203 CLR 503,532 [59].159 Breavington (1988) 169 CLR 41, 88 (Wilson and Gaudron JJ), 122 (Deane J); cf Anderson

(1965) 114 CLR 20,30 (Kitto J).160 Pfeiffer (2000) 203 CLR 503, 531 [56] (Gleeson q, Gaudron, McHugh, Gummow and Hayne

JJ); ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559, 587 [57] (Gleeson q, Gaudron andGummow JJ), cf 639 [219] (Hayne and Callinan JJ).


166

162163164165

constitutional validity of at least s 79 (in whole or part) is not beyond question, evenleaving aside s 118 of the Constitution.

The second point here is that the High Court has recently held that when s 79applies in federal jurisdiction to 'pick up' State and Territory laws as 'surrogate federallaws', any inconsistencies between those laws and federal laws are to be resolved asthou~h they were laws from the same source, that is, as though both were federallaws. 61 It may be questioned for how long this surprising conclusion will be upheldand how far it will be pursued. In any event, this approach might encourage anargument that any direct inconsistencies between competing State or Territory laws arealso to be resolved by treating the laws as though they were enacted by the samesource. Presumably, this might give priority to a later statute over an earlier one.Whilst that is not the approach to resolving inconsistencies suggested in this paper,162there are similarities, particularly insofar as this issue would be resolved without resortto the common law choice of law rules.

Thirdly, ss 68, 79 and 80 of the Judiciary Act would not alter the potential operationof the full effect approach. All of those sections are expressed to be subject to theConstitution. If s 118 was construed as dictating that full faith and credit should begiven by all Australian courts to a State law, then those sections would not be read aspurporting to provide otherwise.163

5.4 The American experience and the cost of uncertaintyArticle IV clause 1 of the Constitution of the United States requires that 'Full Faith andCredit shall be given in each State to the public Acts, Records, and judicial Proceedingsof every other State'. Plainly s 118 was based on this clause. The Supreme Court of theUnited States did briefly come close to recognising something approaching the fulleffect view in its construction of the clause. In particular, its decision in Bradford ElectricLight Co v Clapper164 in 1932 concerned a claim in negligence brought in NewHampshire in relation to the death of a Vermont resident killed in New Hampshirewhilst working for his Vermont employer. The Court held that the court was obligedto apply a Vermont workers compensation statute excluding liability in negligence.The decision invoked some notion of the balancing of competing interests of the states.

The Court did not develop the approach in any detail. Instead it quicklyretreated.165 The case of Pacific Employers Insurance Co v Industrial AccidentCommission,166 in 1939, involved similar facts to Bradford but the Court held that thecourt could apply the law of the forum, stating:

the very nature of the federal union of states, to which are reserved some of the attributesof sovereignty, precludes resort to the full faith and credit clause as the means for

161 Northern Territory v GPAO (1999) 196 CLR 553, 588 [80] (Gleeson CJ and Gummow J), 606[135] (Gaudron J), 650 [254] (Hayne J); Austral Pacific Group Ltd (in liq) v Airservices Australia(2000) 203 CLR 136, 144 [17] (Gleeson CJ, Gummow and Hayne JJ), 155 [53] (McHugh J).Cf Gageler, above n 112, 188.Cf analogously Dao v Australian Postal Commission (1987) 162 CLR 317, 331-2.286 US 145 (1932) ('Bradford').As noted by a unanimous Court in Franchise Tax Board of California v Hyatt, 538 US (2003)judgment transcript 6.306 US 493 (1939).


compelling a state to substitute the statutes of other states for its own statutes dealingwith a subject matter concerning which it is competent to legislate.167

In Allstate Insurance Co v Hague168 in 1981 the Court held that the Full Faith andCredit clause imposed no more exacting standard than that set by the Due Processclause. All that either clause required was that the state of the law applied must have 'asignificant contact or significant aggregation of contacts, creating state interests, suchthat choice of its law is neither arbitrary nor fundamentally unfair.'169 There was to beno comparative balancing or weighing of interests.170 Thus in Sun Oil Coin in 1988 theCourt asserted that 'it is frequently the case under the Full Faith and Credit Clause thata court can lawfully apply either the law of one state or the contrary law of another'.l72This view was reaffirmed in 2003 in Franchise Tax Board of California v Hyatt.173

Disparate and indeterminate results are thus regarded as quite acceptable.

The Supreme Court implied in Hyatt that the main reason it pulled backed from itsearlier view was the difficulty and uncertainty of applying a balancing of interestsapproach: 'the question of which sovereign interest should be deemed more weighty isnot one that can be easily answered.'174

Similarly, the Australian Law Reform Commission CALRC') has asserted that an'interest analysis' test would be:

hard to apply in practice, and likely to result in additional complexity and legal dispute.For example, ascertaining the 'interests' of a State or Territory might involve assessingbroad political, financial and social factors, which would be a difficult and arguablyinappropriate task for courts.175

There is some force in the complexity and uncertainty points. The closer connectiontest suggested here as part of the full effect approach does involve government interestanalysis. This type of analysis is not new to the common law world, even leaving asideNorth American experience. As the High Court correctly acknowledged in Renault,176the flexible exception created by the House of Lords in Boys v Chaplin involvedelements of such.177 Both the High Court in Pfeiffer and Renault and the CanadianSupreme Court in Tolofson v Jensen rejected a 'proper law of the tort' approach to choiceof law, along with notions of a flexible exception, on the basis that they were toouncertain.178 The Supreme Court said that '[o]ne of the main goals of any conflicts ruleis to create certainty in the law.'179 This may be accepted.

167168169170171172173174175176177178

179

Ibid 501.449 US 302 (1981).Ibid 313. See also Phillips Petroleum v Shutts, 472 US 797, 818-23 (1985).Allstate Insurance Co v Hague, 449 US 302,308 n 10 and 312 n 15 (1981).486 US 717 (1988).486 US 717, 727 (1988).538 US (2003) judgment transcript 5-7.Ibid 9.ALRC, Report No. 92, above n 152,610 [34.71], also, 608 [34.60].(2002) 76 ALJR 551, 563 [63] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).[1971] AC 356.Pfeiffer (2000) 203 CLR 503, 538 [78]-[80] (Gleeson CJ, Gaudron, McHugh, Gummow andHayne JJ); Renault (2002) 76 ALJR 551, 563 [63]-[66], 565 [75] (Gleeson CJ, Gaudron,McHugh, Gummow and Hayne JJ), 573 [115],574-5 [121]-[123] (Kirby J); Tolofson v Jensen[1994] 3 SCR 1022, 1062.Tolofson v Jensen [1994] 3 SCR 1022,1061.


Yet certainty is not the only goaP80 The ALRC had itself previously recommendeda choice of law rule in tort which involved elements of interest analysis.181 And whilstthe High Court has now rejected flexible exceptions and proper law tests, in Renaultthe majority re-emphasised that an Australian court may decline to apply foreign lawwhich is contrary to Australian public policy, and indicated that this required 'closerattention to the respective governmental interests involved'.182

Here, the imperatives of uniformity and of courts giving effect to valid, applicablestatutory law are weighty. And one type of complexity is traded off for another, in thatthe strategic and legal complexity involved in potentially having different legalanswers in different States and Territories would substantially be removed.

The suggestion by the Supreme Court in Pacific Employers Insurance183 that 'the verynature of the federal union' precludes requiring one State to give effect to the laws ofanother begs the question. The issue is what sort of federal union the Constitutionscreate. There is no single model of federalism to provide an answer.184 Guidance isprovided by the doctrines of the rule of law, parliamentary supremacy andrepresentative democracy, combined with an acceptance that Australia is and shouldbe a substantially integrated and united nation.

In any event, the force of the uncertainty objection is limited in the Australiancontext because the issue will not frequently arise. The closer connection test is only tobe applied where two or more statutes purport to apply and do so inconsistently. It isrelatively uncommon for laws to be interpreted as having application to significantlyextra-territorial conduct, and laws are less likely to conflict if they only apply tomatters arising within the polity's territory. Moreover, State and Territory laws areoften in parallel terms. As Mason CJ noted in Breavington, 'there is a basic homogeneityor similarity in the common law and the statute law in force in the various States andTerritories.'185

Practical difficulties that might arise in appging some 'interest' test in the UnitedStates will not arise here to the same degree.1 6 Australia is not nearly so diverse anation - socially, economically or legally - as the United States. Resolving conflicts isboth less likely to be required, and more easily achieved, where there are eightsubstantially similar jurisdictions rather than fifty divergent ones, and where the onlydifferences between the laws of those jurisdictions are ones arising from local statutes.In the United States the common law is disparate between States and there has beensome suggestion that the Full Faith and Credit clause applies to these common laws.187

180

181182

183184185

186

187

Cf Breavington (1988) 169 CLR 41,113-14 (BrennanJ); also, analogously Perre v Apand PtyLtd (1999) 198 CLR 180, 215-23 [88]-[113] (McHugh J).ALRC, Choice of Law, Report No 58 (1992), 61-2 [6.63]-[6.65] and 175 [Appendix B, cl6(8)].(2002) 76 ALJR 551, 561 [53], also 563 [60] and 565 [73] (Gleeson CJ, Gaudron, McHugh,Gummow and Hayne JJ); note also 574 [122] (Kirby J).306 US 493 (1939) 501.Cf Leslie Zines, The High Court and the Constitution (1997, 4th ed) 76-7,283-4.(1988) 169 CLR 41, 77-8. Cf Peter Nygh, 'Full Faith and Credit: A Constitutional Rule forConflict Resolution' (1991) 13 Sydney Law Review 415, 415-16.Harris v Harris [1947] VLR 44, 58 (Fullagar J); note also Jackson, above n 125, 18. CfBreavington (1988) 169 CLR 41, 81-3 (Mason CJ).See discussions in Laycock, above n 112, 290-1; Roger C Cramton, David P Currie andHerma Hill Kay, Conflict ofLaws: Cases - Comments - Questions (1981, 3rd ed) 425.


It is also necessary to look at the degree of certainty of the alternatives. As notedabove, in McKain Deane and Gaudron JJ each moved towards applying an approachwhich might be labelled finding the 'proper law of the dispute' for matters connectedto more than one State or Territory. Such an approach would be more uncertain thanthe full effect approach. It would require a case by case analysis on the facts of eachsuch case, seemingly including reference to such matters as whether the particularparties had a merely fortuitous connection to the place where the events occurred.lSSIn contrast, on the full effect approach all applicable statutes would be appliedregardless. And in the event of statutory conflicts, the particular circumstances of theparties would have limited relevance to the 'closer connection' test (see Part 6.2 below).

Even the current American and Australian positions involve uncertainty. In bothjurisdictions the question arises of when a court can and should apply the statute lawof another State which is not rendered applicable by the choice of law rules. In therecent Hyatt case, the issue was whether a Nevada court was required to give effect toa statutory immunity created by Californian law for a state entity. The Nevada courtapproached the issue by applying a doctrine of comity by which it would voluntarilyapply the Californian law unless to do so would 'contravene Nevada's policies orinterests'.IS9 It answered that question by referring to the degree to which equivalententities were given immunity under Nevada's laws. The Supreme Court held thisapproach was consistent with the Constitution.190 This method itself involves somegovernmental interest analysis. Whilst the reference to local law as a guide increasedthe certainty of the analysis, it did so by adopting a Phillips v Eyre type of parochialism.

Similarly, in Borg Warner (Australia) Ltd v Zupan191 in 1982, the Victorian FullSupreme Court had to consider whether to allow an employer, which had paidworkers compensation to an employee injured in a car accident, to seek recompense forits payments from the allegedly negligent driver who had caused the employee'sinjury. The employer was suing not in negligence but on a distinct statutory right ofindemnity under NSW law. The Court held that because Victoria had similarlegislation, the NSW law did not offend local public policy and there was no reasonnot to give effect to it.192 But the Court did not hold that Victorian courts were bound togive effect to the law, and Murphy and Starke JJ stated no criteria (apart from publicpolicy) by which the choice to give effect to such a law was to be made, whilst Marks Jresorted to broad and undefined notions of 'the interests of justice'.193 On the full effectapproach, Victorian courts with jurisdiction would simply have been obliged to applythe NSW law, in the absence of any conflict with Victorian statute law.

The approach in both these decisions would now be suspect within Australia in anycase. Insofar as they rest on the possibility of excluding the application of the law ofanother State based on public policy, that cannot sit with the confirmation in Pfeifferthat public policy may not be employed as a basis for declining to enforce the laws of

ISSIS9190191192193

McKain (1991) 174 CLR 1, 46 and 53 (Deane J), 56 (Gaudron J).See Franchise Tax Board of California v Hyatt, 538 US (2003) judgment transcript 4.Ibid 10.[1982] VR 437.Ibid 443-4 (Murphy J), agreeing 463 (Starke J); 462 (Marks J).Ibid.


another Australian State.194 Similarly, reliance on comity is not consistent with therejection in Lipohar of the relevance of this notion to issues arising within theAustralian federation.195

As to the inappropriateness point raised by the ALRC, the sorts of considerationswhich arise here are similar to those which may arise in other constitutional areas, suchas the questions which arise for the justifiable infringement of the guarantees in ss 92and 117 of the Constitution.196 Courts do not relish judging such matters. However, thedifficulties of application can be reduced by recognising and developing generalprinciples as to the types of governmental nexus which will take priority (see furtherParts 6.1 and 6.2).

It has been suggested that one of the reasons the US Supreme Court abandoned aninterest balancing approach was that 'it would effectively preempt all existing stateconflicts rules' and the Court was reluctant to engage in the task of rewriting thoserules.197 In Sun Oil Co, Scalia J for the Court suggested that to go further than thecurrent approach to the clause would be to 'embark upon the enterprise ofconstitutionalizing choice-of-Iaw rules, with no compass to guide us beyond our ownperceptions of what seems desirable.'198 The concern about constitutionalising the areais addressed below (Part 5.5). But the points made also reflect the fact that, subject tothe Supreme Court's role in enforcing the Constitution, the common law generally is amatter for state courts in the United States. In contrast, cases such as Stevens v Head,Pfeiffer and Renault illustrate that the High Court is already well-travelled on the pathof developing common law choice of law rules. There can be no equivalent concern inAustralia about pre-empting the legitimate sphere of State courts.

Finally, another reason given for the Supreme Court's retreat was a concern that itwould require a state court to give effect to the laws of all the other states in preferenceto the laws of its own jurisdiction.199 Mason CJ noted this point in Breavington.200 Evenif there was any reason to adopt such a bizarre construction of the American clause(which requires that full faith and credit be given to the laws of 'every other state'), it iscertainly not required of the injunction in s 118 which requires giving full faith andcredit to the laws of 'every State'. On the full effect approach the laws of the forum aregiven just as much respect - no more and no less - than the laws of otherjurisdictions.

194

195

196

197198199

200

(2000) 203 CLR 503, 535 [67] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ),549-551 [119]-[124] (Kirby J).Note (1999) 200 CLR 485, 503 [37] (Gleeson CJ), 526 [102]-[103] (Gaudron, Gummow andHayne JJ), 551 [165] (Kirby J).See, eg, Bath v Alston Holdings Pty Ltd (1988) 165 CLR 411; Castlemaine Tooheys Ltd v SouthAustralia (1990) 169 CLR 436; Street v Queensland Bar Association (1989) 168 CLR 461; Goryl vGreyhound Australia Pty Ltd (1994) 179 CLR 463.Harvard Law Review, above n 121, 2045.486 US 717 (1988) 727-8.For example, Alaska Packers Association v Industrial Accident Commission, 294 US 532 (1935)547.(1988) 169 CLR 41,82 (Mason CJ). The decision of Shepherdson J in Jellyn Pty Ltd v Horwath& Horwath (Qld) Pty Ltd (1993) ATPR ~41-284, 41,777 appears to be an example of such anerroneous application of s 118.


5.5 Inappropriate to constitutionalise the area?The concern expressed by the US Supreme Court about giving constitutional status tochoice of law rules (or equivalents) has been reflected in Australia. In BreavingtonMason CJ argued:

If any provision in the Constitution is to be regarded as the source of a solution to interjurisdictional conflicts of law problems within Australia, it is perhaps s 51(xxv). It ispreferable that Parliament should provide a solution by an exercise of legislative power,if that be legitimate, than that the Court should spell out a rigid and inflexible approachfrom the language of s 118.201

Similarly, in Pfeiffer Kirby J said that there was reason for caution given that anyconstitutional solution 'would be insusceptible to ready legislative amendment orvariation', which was troubling given 'the complexities of the many issues to beaddressed'.202

Difficult and complex matters with which the common law has struggled to deal,and on which minds may reasonably differ, should not lightly be constitutionalised.But in considering whether the proposed constitutional construction should beadopted it is important to clarify exactly what degree of legislative freedom is beinggiven up.

In practical terms it may not be much. Fifty years ago, in Koop v Bebb, McTiernan Jset out this prescient foreboding:

Litigation involving questions like those in this appeal may increase with the growth oftravel between the States and the Territories of the Commonwealth. It seems desirable forthe States and the Commonwealth to take any action which is within their constitutionalpowers to prevent the recurrence of like questions in such litigation.203

In 1992 the ALRC, in its comprehensive report on choice of law, similarly called forjoint legislative action to regulate the area.204 Such calls have largely goneunheeded.2os Legislatures have managed to resist these sirens' songs.

The full effect approach to s 118 would only constitutionalise the area to a limitedextent in any case. If the Commonwealth does have power to legislate on choice of lawunder s 51(xxv), as Mason CJ implies it may,206 this would not be taken away. Theapproach examined here requires that full effect be given to all valid applicable Statestatutes. Any valid Commonwealth choice of law statute would have overriding statusunder s 109 of the Constitution, rendering invalid (to the extent of the inconsistency)any State law which purported to regulate an issue inconsistently with theCommonwealth direction. There would then be no valid applicable State law for s 118to apply throughout the Commonwealth.207

201202

20320420S206207

(1988) 169 CLR 41,83.Pfeiffer (2000) 203 CLR 503, 557 [140]. See further Juenger, above n 148, 534-8; AdrienneStone, 'Choice of Law Rules, the Constitution and the Common Law' (2001) 12 Public LawReview 9, 12.(1951) 84 CLR 629, 650-1.ALRC, Report No. 58, above n 181.ALRC, Report No. 92, above n 154,586-7 [33.9]-[33.10], 588 [33.19],591-2 [33.34]-[33.35].See discussion in ALRC, Report No. 92, above n 154, 564-5 [30.44]-[30.49].Note Breavington (1988) 169 CLR 41,99-100 (Wilson and Gaudron JJ).


This illustrates that Mason CJ's suggestion208 that the presence of s 51(xxv) made itimpossible to regard s 118 as commanding respect of State laws is not correct.Recognising the substantive effect of s 118 does not desiccate the Commonwealth'spower under s 51(xxv).

Could the States pass a valid choice of law statute which would change theapplicable law? Deane and Gaudron JJ rejected that possibility in Goryl v GreyhoundAustralia, applying s 118 to invalidate a Queensland provision which purported toapply the law of a person's residence to the question of the calculation of damages forthose injured in motor accidents. They stated that 'the States cannot legislate contraryto the command of s 118.'209

On the full effect approach the question would be approached somewhatdifferently. A statute regulating the laws to be applied by courts of the forum wouldprima facie be constitutional. If that statute dictated that another State's statute shouldnot be applied, though it purported to apply, then a competition would arise and thequestion would be which law had the closer connection to the particular issue. The twostatutes would operate at different levels, one regulating a substantive issue and theother purporting to direct a court's 'choice' of law. Generally the substantive statutewould take precedence. If that law had some genuine connection to the particular issueit should not be displaced by a generic statutory direction as to what sort of law shouldbe applied in disputes with some interstate element.

There may some instances, however, where the forum statute gave effect to aparticular legitimate interest of the forum which would outweigh the interest of theother State. For example, in Part 5.6 below a putative NSW law is discussed whichpurports to require all mining contracts within Australia to be approved by a NSWminister (if one party had a place of business in NSW). If South Australia sought tocounteract this with a law providing that 'the NSW Act shall not be given effect inrelation to mining contracts for mines in South Australia', then this law could be seento have a closer connection to the issue, even though it might be characterised as achoice of law provision.

It can be conceded that generally the full effect approach would prevent the Statesenacting choice of law provisions. This does reduce flexibility in a difficult area, andthis is a factor counting against adoption of the suggested constitutionalconstruction.210 Nevertheless, the practical significance of this restriction may belimited, and any Commonwealth power would remain unfettered. In light of thestrength of the positive constitutional imperatives discussed above, this factor shouldnot be determinative here.

5.6 Silence, the common law and the over-application of statutesThe most important difference between the full effect approach and Deane J's viewrelates to the treatment of the common law and 'the fact that a legal system can operateby silence'.211 The effect of his view, and that of Wilson and GaudronJJ, is to seek aconnection between the dispute before the court and the body of law of one State or

208209210

211

Breavington (1988) 169 CLR 41,79.(1994) 179 CLR 463, 476.See factor (4) in Jeremy Kirk, 'Constitutional Implications (I): Nature, Legitimacy,Classification, Examples' (2000) 24 Melbourne University Law Review 645, 656.Breavington (1988) 169 CLR 41,136.


Territory. This may involve applying the common law (applicable in one State) inpreference to the statute of another State or Territory, even though the statutepurported to apply. In contrast, the full effect approach involves giving effect tostatutes (properly construed) and would never involve the common law overriding anapplicable statute. This means that a conflict or competition only arises if there is aninconsistency between two or more applicable statutes.

There are two virtues in Deane J's suggestion. It recognises that a legislature'sdecision to stay its hand may reflect positive approval of the common law position(though it may also reflect lethargy or lack of attention).212 It also provides a degree ofsimplicity in identifying just one body of applicable law. There are also disadvantagesto this view, which will be addressed shortly.

Sykes and Pryles have ridiculed the notion of giving full effect to Australianstatutes.213 They give the example of a NSW law providing that all contracts involvingmining anywhere in Australia, where one party had a place of business within NSW,are void unless approved by a NSW minister. If an action was brought in SouthAustralia in relation to a contract for mining in that State, and all the relevantconnections were to South Australia except that one party had a place of business inNSW, then they say it would defy 'common sense' to apply the NSW law.

The point made by Sykes and Pryles does not have the overwhelming force thatthey appear to regard as self-evident. First, the connection between the putative NSWlaw and the extensive matters regulated is slight. It appears that the State was merelyseeking to use the existence of some link to regulate matters quite unconnected in anyreal sense to governance of its territory. Given this, the law would be of borderlinevalidity even on the liberal 'real connection' test relating to laws with extra-territorialoperation. That the threshold for validity of a law is low does not mean there is nothreshold at all.214

Secondly, laws with significant extra-territorial operation are relatively rare, letalone laws which effectively seek to impose one State's policy throughout theCommonwealth.21S And thirdly, reflecting this, there would be political controversyover such an attempt by a State to punch above its weight. The internationalexperience with extra-territorial laws of the United States illustrates this. One shouldbe wary of reading down the natural meaning of constitutional words because of theunlikely possibility of 'extravagant use'.216

Fourthly, a NSW court would be obliged to apply the putative NSW law were oneparty to institute proceedings there. Thus despite the invocation of 'common sense', theSouth Australian contract would be contingently invalid on the current approachanyway. The real objection to the law is that it is an objectionable law.

Fifthly, were such a law passed then South Australia could pass a contrary statuteprotecting its own mining contracts from the requirement of NSW ministerialapproval. Such a law would clearly have a closer connection to the facts discussed.

212213214

215216

See similarly Pryles and Hanks, above n 126, 91, 171-2.Sykes and Pryles, above n 5,319.Note, eg, Mobil Oil (2002) 76 ALJR 926, 936 [48] (Gaudron, Gummow and Hayne JJ), 953[138] (Kirby n, 964 [189]-[191] (Callinan n.Recognised by Kirby J in Mobil Oil (2002) 76 ALJR 926, 946 [107]-[108].The Engineers Case (1920) 28 CLR 129, 151-2 (Knox CJ, Isaacs, Rich and Starke JJ).


Admittedly, it would be inconvenient for South Australia to have to do so. But SouthAustralia may wish to do so anyway given the possibility of NSW proceedings.Australia, amongst other nations, has gone to the effort of passine, legislation tocounteract some of the American laws with extra-territorial operation.2 The full effectapproach would ensure that the South Australian law would override the NSW law inall courts within Australia for the facts postulated.

Moreover, what some might see as a problem of over-applying statutes can also becharacterised as a recognition of the legitimate interest-normatively andconstitutionally - that States and Territories have in regulating some matters beyondtheir own borders. An objection to the approaches of Deane J and Wilson andGaudron JJ is that they unduly restrict the legitimate application of State laws.

States may have good reason to apply their laws even in instances where that lawwould not be selected either by the choice of law rules or by a pure focus onterritoriality. As noted above, in Commonwealth v Mewett Gaudron Jheld as a matter ofcommon law that her uniformity approach meant that generally the proper law of acontract would be applied.218 Parties to a contract - or least the party with thebargaining power - may choose the governing law precisely to avoid statutoryobligations imposed by a polity.219 Yet if the contract or the parties are intimatelyconnected with that polity, such as if they both reside there, then that polity may havegood cause to seek to impose its laws regardless of the parties' choice. Thus the FairTrading Acts may regulate misleading or deceptive conduct occurring within thejurisdiction regardless of the proper law governing a related contract.220 The ContractsReview Act 1980 (NSW) provides that it applies to contracts in some circumstances evenwhere NSW law is not the proper law (s 17(3)). Such extended application is hardlysurprising given that one of the main points of that Act is to overcome inequalities inthe bargaining power of parties. If the parties had chosen another Australian law toapply, and if only the proper law could be taken to apply by any Australian court(including NSW courts), then the extended application of such protective legislationwould be thwarted. A legitimate attempt by NSW to protect its residents could theneasily be sidestepped.

If one body of law is to apply, and that body of law is the one with the predominantterritorial nexus (per Deane J) or 'will ordinarily be that of the State in which the eventsin question occurred' (per Gaudron J)221 then this leaves little place for laws with extraterritorial effect. This point is implicitly conceded by Deane Jin Breavington.222

Yet States have a quite legitimate interest in enacting statutes of extra-territorialeffect. States may seek to protect their residents from conduct, or the effects of conduct,which takes place in whole or part outside the State but which has significant impactwithin the State. The example of the Contracts Review Act illustrates this. Similarly,where a contract or relationship is substantially connected to one State but one party

217218219

220

221222

Foreign Proceedings (Excess ofJurisdiction) Act 1984 (Cth).(1997) 191 CLR 471,527-8.Recognised in Kay's Leasing Corp Pty Ltd v Fletcher (1964) 116 CLR 124,143 (Kitto J); see alsoAkai (1996) 188 CLR 418, 435, 442-3 (Toohey, Gaudron and Gummow JJ).See, analogously, Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39NSWLR 160, 164 (Gleeson CJ).McKain (1991) 174 CLR 1, 56.(1988) 169 CLR 41,128-9,140.


travels into another State to perform an act of termination, then the first State has alegitimate interest in regulating the contract or relationship, including as to the validityof its termination. Another illustration is the type of situation considered in Brownlie vState Pollution Control Commission,223 in which the NSW Court of Appeal upheld theapplication of a NSW pollution law to activities occurring within Queensland becauseof the polluting effect felt within NSW boundaries.

It must be remembered that extra-territorial operation is a matter of degree (seeabove Part 1.3). That a law has some degree of extra-territorial operation is notinconsistent with the law still being closely tied to the interests of the State and itsresidents. As Gleeson CJ stated in Mobil Oil v Victoria:

There is nothing either uncommon, or antithetical to the federal structure, aboutlegislation of one State that has legal consequences for persons or conduct in anotherState or Territory ... The idea that all transactions and relationships giving rise to legalconsequences can be located "in" one particular State or Territory is unrealistic.224

Deane and Gaudron JJ did concede some room for movement with their move towardswhat might be called a 'proper law of the dispute' when a matter has a significantconnection to two or more jurisdictions. Deane Jalso accepted that in some areas, suchas taxing laws, it might be possible for the laws of two States' to both apply if they arenot inconsistent.225

Yet these concessions raise further questions. What criteria are to be applied indetermining when another State has sufficient interest to apply its laws to eventswhich happened (if in part) in the territory of another State? To focus on territorialitycannot supply the answer, for it is implicit in the concession that territoriality is notnecessarily determinative. One must come back to an assessment of competinginterests, along the lines of the 'closer connection' test outlined below (Parts 6.1 and6.2). And by what criteria does one distinguish those areas of law in which it may bepossible to have the laws of two or more jurisdictions apply? On the full effectapproach no such distinction is made, recognising that frequently two or more Stateswill have legitimate interests in regulation, and that this should be given effect so far aspossible.

It can thus be seen that whilst there is some virtue in respecting the 'silences' of alegal system, this comes at the cost of undermining the legitimate extra-territorialinterests of the States and Territories. Furthermore, in protecting legal silences,constitutional protection is effectively being given to the common law and the degreeto which it regulates an area. Section 118 does speak of 'the laws, the Public Acts andrecords ... of every State', and the words 'laws' could be construed as extending to thecommon law. This construction would not be persuasive.226 The word 'laws' adds tothe words 'Public Acts' by making plain that subordinate legislation is covered.227

Conceivabl~ it might also cover English statutory law, inherited at different times bythe States.2 8 The common law operates uniformly throughout the Commonwealth,except where superseded by statute. There is no need to give credit to its operation in

223224225226227228

(1992) 27 NSWLR 78 (' Brownlie').(2002) 76 ALJR 926, 931 [16].Breavington (1988) 169 CLR 41,136.Cf Jackson, above n 127, 12.Sykes and Pryles, above n 5, 332.A possibility suggested to the author by Dr Gary Rumble.


different States.229 Nor is it the law of a 'State'.230 Moreover, it would be surprisingwithin the Australian legal tradition were the general common law to be rendered(partially) immune from statutory modification by the operation of the Constitution.231

6 ASPECTS OF THE FULL EFFECT APPROACH

Having set out the case for the full effect approach, it is necessary to fill out some detailof how it might operate. The approach is generally simple: if a valid State law appliesby its terms, properly construed, then it should be applied. Questions of statutoryconstruction do arise about the reach of statutes, as they do in any case, and aspects ofthis issue are addressed below. Territorial statutes are in a peculiar position and thisrequires examination. Perhaps the most contentious issue, however, is how to resolvethe situation when two States laws address the same subject matter in different terms.

6.1 Resolving inconsistencies between State statutesAustralian law is familiar with the notion of statutory inconsistency.232 If two statutesof the same legislature conflict, then the common law takes the later one to overrule theearlier. If a valid Commonwealth law is inconsistent with a State law, then the latter isinvalid to the extent of the inconsistency by virtue of s 109 of the Constitution.

In this context, the absence of an express constitutional provision to resolveconflicts between State laws should not greatly worry us. The possibility of directconflicts between State laws has always existed. Situations may be conceived of wherethe rules of private international law will not avert the clash, of which the potentialcompetition between State laws dealing with sea areas was an instance noted by theHigh Court in Port MacDonnell. 233 The situation is analogous to the issue of whetherand to what extent the different polities in the federation can bind each other by theirlaws-the Constitution creates an inherent tension which must be resolved, but doesnot itself provide any clear resolution.234 The constitutional framers appear to haveseen the potential for such State-State clashes to arise by the provision in s 74 fordealing with appeals 'as to the limits inter se of the Constitutional powers of any twoor more States'.

Federal laws traditionally may be inconsistent with State Acts for the purposes ofs 109 of the Constitution in two sorts of ways. The Commonwealth law may 'cover thefield', that is, the federal law may be taken to be 'a comJ'lete statement of the lawgoverning a particular matter or set of rights and duties'.23 If the Commonwealth didnot seek to provide an exhaustive statement of the law then the question is whether

229230

231

232233

234235

Gummow, above n 29, 990, 1010.James Hardie & Co Pty Ltd v Barry (2000) 50 NSWLR 357, 376 [82] (Mason P); Gageler, aboven 112, 186.Note Nicholas v The Queen (1998) 193 CLR 173, 232 [143] (Gummow J); Gummow, above n29,1005.See discussion in University ofWallongong v Metwally (1984) 158 CLR 447, 463-4 (Mason J).(1989) 168 CLR 340, 374. Note also discussion of the possibility in State AuthoritiesSuperannuation Board v Commissioner of State Taxation (WA) (1996) 189 CLR 253, 285-6(McHugh and Gummow JJ); Mobil Oil (2002) 76 ALJR 926, 946-7 [108]-[110] (Kirby J).See discussion in Kirk, above n 210, 673-4.Victoria v Commonwealth (1937) 58 CLR 618 (' Kakariki'), 630 (Dixon J), approved TelstraCorporation Ltd v Worthing (1999) 197 CLR 61,76-7 [28] (per curiam).


there is direct inconsistency between the requirements of Commonwealth and Statelaw. In fact, this notion overlaps with the 'covering the field' doctrine, for the questionis whether the State law 'would alter, impair or detract from the operation of a law ofthe Commonwealth Parliament'.236 Complying with one law might detract from theintended operation of another even if it is theoretically possible to comply with both. Insome cases direct inconsistency may only arise when a federal or State Rower actuallyis exercised, producing a conflict between two sets of legal requirements.237

Of course, there are important differences between Commonwealth-State and StateState conflicts. The Commonwealth has paramount power, and only on certain limitedsubject areas. The States have general legislative power within their own territory,along with some extra-territorial legislative power. The Constitution does not assignparamountcy between States.

In Port MacDonnell the High Court implicitly contemplated some test of 'stronger'nexus in resolving interstate statutory conflicts.238 It is submitted that the test mustinvolve a decision as to which State has the closer connection to the matter beingregulated. No State can be presumed to have primacy.

What constitutional basis would the suggested closer connection test have? Itwould not be particularly tied to s 118. On the full effect construction that provisionrequires that effect be given to valid applicable laws but does not resolveinconsistencies between them. The test instead is based on necessity and federalism, asinformed by the rule of law.

If State laws conflict then the conflict must be resolved. Outside the world of Kafkaa person cannot be required by one court to obey two inconsistent legal demands. Oneof the demands must be inapplicable or invalid vis-a-vis that person to the extent of theinconsistency (whether one sees the result as inapplicability or invalidity is not of greatmoment). In identifying the appropriate means of resolution it is clearly appropriate torefer to the nature of the federal system established by the Constitution and theAustralia Acts, for it is within that system that the States exist and exercise their powerspursuant to ss 106-108 of the Constitution. Within that system States have power tomake laws for the government of the territory within their boundaries. They also havepower to make laws governing matters outside those boundaries if those matters havea real connection to their territory. The common element to these two types of power ishaving a connection to the government of the territory. If an assessment ofparamountcy is required, it is natural and appropriate to assess the relative strengthsof that connection, that is, the strength of the governmental interest in regulating amatter connected to the governance of the polity's territory. This test can be seen as animplied limitation on State powers derived from the incorporated constitutionaldoctrine of federalism (informed by the rule of law), a doctrine which is manifest inmultiple provisions of the Constitution.239 It thus has much the same basis as wasalluded to by the High Court with respect to the limitation on State powers to makelaws with extra-territorial operation.240

236237238239240

Kakariki (1937) 58 CLR 618, 630 (DixonJ).Commonwealth v Western Australia (1999) 196 CLR 392, 439-442 [138]-[147] (Gummow J).(1989) 168 CLR 340, 374.Cf Kirk, above n 210,661-8.Union Steamship (1988) 166 CLR 1,14 (per curiam), discussed in Part 1.3 above.


The test Deane J suggested in Breavington was 'predominant territorial nexus',241which is a way of stating 'closer connection' but giving emphasis to territoriality in thesense of focusing on where conduct takes place. As was noted above, neither Deane Jnor Gaudron J articulated developed criteria for applying these tests beyondprioritising the lex loci delicti for torts. The closer connection test should be determinedby assessment of competing governmental interests rather than by a simple focus onwhere conduct takes place. Indeed, as noted above in Part 4.3, the two judges appearedto move away from a focus on simple territoriality, with Deane Jspeaking of having toweigh competing factors including 'what is fair and just',242 and Gaudron Jacceptingthat there may be cases where another State (than the one where the conduct occurred)may have 'a more substantial connection' to the issue.243

Whilst both the intra- and extra-territorial power of States is based on their powerto govern their territories, where particular conduct takes place may be fortuitous, asGaudron Jaccepted.244 The particular act or omission may also only be a minor aspectof the overall conduct with which a legal dispute is concerned (for instance where justone element of the cause of action occurred in a jurisdiction). In either case, the Statewhere the conduct occurred may have a much weaker claim to regulate the matterthan another State: for example, if the legal issue was the basis on which a contractcould be terminated, and the contract and the parties were intimately linked with oneState but the contract happened to be terminated in another. Moreover, a pure focus onterritoriality would not resolve all issues, for the conflict might be between two lawshaving extra-territorial operation. However, whilst connection should be assessed on acase-by-case basis (see further below), balance of convenience type considerations suchas the location of particular evidence or witnesses should not determine theconstitutional question of which State's law is entitled to take priority.

Although one should not articulate a firm rule of territorial paramountcy, it iscertainly important to recognise the 'predominant concern' of State Parliaments with'acts, matters and things in their respective law areas'.245 For issues where particularconduct is the most important feature, then generally the State in which that conductoccurs will be the State with the closest connection, given its strong claim to regulatewhat conduct takes place within its boundaries.246 Thus negligent acts are likely to bemost closely connected to the State in which they occur, and omissions connected tothe area in which the non-performed actions could and should have been expected tooccur. And this will be so even, for example, if all the parties and witnesses involved ina car accident happen to be in a jurisdiction somewhat fortuitously, and it would bemore convenient for them to have the case heard elsewhere.

Stephen Gageler, who has also proposed a full-effect construction of s 118, hassuggested that conflicts between State laws should be resolved as though they werelaws enacted by the same source, so that 'the general might be expected to give way to

241242243244245

246

(1988) 169 CLR 41,129.McKain (1991) 174 CLR 1, 46, 53.Ibid 56.Ibid.Pfeiffer (2000) 203 CLR 503, 536-7 [75], also 534-5 [67] (Gleeson CJ, Gaudron, McHugh,Gummow and Hayne JJ).Note Pacific Employers Insurance Co v Industrial Accident Commission, 306 US 493 (1939) 5023; cf Allstate Insurance Co v Hague, 449 US 302 (1981).


the particular and, in the extreme case of equal particularity, the earlier to the later.'247The rules developed to deal with same-source inconsistencies are based on the premisethat the one Parliament has sought to enact laws in a coherent manner, and thus thatthe laws must be read together so far as possible. No such premise applies to lawsfrom different Parliaments who are relevantly competing to regulate an issue. Further,this approach takes no account of which State has the stronger interest in regulating anissue. That another State has spoken more specifically or more recently on the subjectare rather fortuitous factors. They do not provide sufficient constitutional or normativejustification for a judge to disapply an otherwise valid State law. Such a test could alsoencourage unseemly re-enactment of laws by States in order to gain themselves last-intime status.

6.2 Applying the closer connection testConflicts between State statutes should be resolved on a case by case basis, and not byabstract assessments of paramountcy simply by comparing the two laws (as frequentlyoccurs under s 109).248 One cannot say in the abstract that either State had a greaterright to regulate the issue, but must refer to particular facts. This approach does reducelegal certainty but is unavoidable when deciding between two legal regimes whichstand on an equal footing.

Secondly, it is inappropriate for the 'covering the field' notion to apply in this arena.That approach presupposes that one system has the paramount right to legislate, and ifit has spoken on an area then that is the final word.249 The Commonwealth has thepower to exclude State law from application with respect to its enumerated heads ofpower by virtue of its paramount position. The States do not have this power vis-a.-visthe general legislative powers of each other. However, this does not mean that oneshould ask only whether or not it is possible to obey both laws. Rather, the questionshould be whether the application of either law 'would alter, impair or detract from theoperation' of the other. If so, a conflict situation arises and one law only should beidentified as governing the particular situation.

Thirdly, as Deane Jrecognised, when assessing connection some indirect assistancecan be gained from the common law choice of law rules, at least insofar as they do notdiscriminate in favour of applying the law of the forum. 250 A key objective of thechoice of law principles is to identify the legal system with which the issue (or the typeof issue) is most closely connected.251 This overlaps with the need here to identifywhich of two or more statutes has the closer connection to the particular issue. Thusgenerally the law of the place would have the closest connection to legal issues relatingto immovable property, and the law of a person's domicile would frequently have theclosest connection to issues of succession for movable property. Such an approach canreduce uncertainty.

Fourthly, in speaking of comparing the degree of connection, the question arises ofconnection to what? The question is whether one assesses the connection between thewhole claim and the two States (with that statutory law then applying to the whole

247248249250251

Gageler, above n 112, 188.Note Mobil Oil (2002) 76 ALJR 926,952 [131] (Kirby n.For example, see analysis in Ex parte McLean (1930) 43 CLR 472, 483 (Dixon n.Breavington (1988) 169 CLR 41, 137.Otto Kahn-Freund, General Problems ofPrivate International Law (1976) 263.


dispute) or rather the connection between the particular legal issue and the two States(with that law then applying just to that issue).

An instance which illustrates the difference comes from the second example set outabove in Part 1.2. A Victorian resident has a car accident in NSW. NSW has a lawimposing statutory limits on common law damages. Let it be assumed that Victoriapasses a law setting different limits on the damages payable to anyone ordinarilyresident there who is injured in a car accident anywhere in Australia. The Victoriangovernment might justify such a law by asserting that it provides a range of servicesand care options to accident victims, and there should be limits on the costs borne bythe community (through insurance schemes) beyond this. B, a resident of Victoria, hasan accident in NSW. One cannot apply both, for to apply one would be to alter, impairor detract from the operation of the other. To ascertain which law should apply, shouldone assess connection between the whole claim (duty, breach and damage) and the twoStates, or between the particular issue (damage) and the States? As argued above, inrelation to tortious conduct it will generally be the case that the law of the place willhave the closest connection to the subject matter, but that is not obviously true inrelation to levels of damages.

I suggest that one should look to the particular issue in assessing closer connection.This approach minimises the degree to which courts refuse to apply applicable, validAustralian laws, thus it is the result which is most closely tied to relevant constitutionalimperatives. One is not attempting to tie a dispute, or a transaction, to one system oflaw. There is one Australian system of law at work. The issue here involves resolving aconstitutional conflict between two applicable statutes with inconsistent demands on aparticular issue.

However, it is submitted that certainty and simplicity can be taken into account aslegitimate considerations in determining whether a particular issue is more closelyconnected to one or other State. Certainty is, after all, an important element of the ruleof law. For example, I have suggested that tortious conduct will generally have theclosest connection to the place where it occurs. Given this, it would be legitimate toargue that all the consequences of tortious conduct will generally also be most closelyconnected to that place in the absence of some very compelling competing interest ofanother State, on the basis that the breach and damage are intimately intertwined andit is artificial and productive of uncertainty to separate them. On this view, thecalculation of damages would generally be governed by the law of the place where thetort occurred if there were a conflict between two States' laws.

Thus it should not be assumed that in the example discussed the Victorian lawrestricting damages necessarily would be the one with the closer connection. The courtwould have to assess the strength and legitimacy of the Victorian governmental claimto regulate damages payable to its residents. It would be strongly arguable that whilstthe effects of tortious conduct outside Victoria can certainly be felt within Victoria (forexample, potentially burdening Victoria's health or insurance system), a law restrictingdamages payable does not significantly mitigate this effect.252 Therefore the NSW lawmight have the closer connection. A different Victorian law - say one requiring some ofthose damages to be held on trust by a statutory corporation and paid out only overtime - might have more chance of applying.

252 Cf Goryl v Greyhound Australia (1994) 179 CLR 463, 479-80 (Deane and Gaudron JJ).


6.3 Conflicts between State and Territorial statutes253

In Lamshed v Lake,254 it was held that laws made by the Commonwealth under itsplenary constitutional power over the Territories (s 122) apply as binding federal lawsthroughout the Commonwealth, may have extra-territorial operation as an incidentalpart of governing the Territory, and will attract primacy over State laws under s 109 ofthe Constitution. 5 Laws passed by Territorial Legislative Assemblies, too, depend onthe federal territories power for their validity. Such laws would thus also appear to be'a law of the Commonwealth' under s 109 of the Constitution, in which case they maybe treated as having automatic paramount status over inconsistent State laws in theevent of inconsistency, although this view is not beyond argument.256

Section 118 of the Constitution is directed to the laws of the States, and does notapply directly to protect the laws of the Territories. However, assuming that Territorialstatutes are granted overriding status throughout the Commonwealth by s 109 andcovering clause 5, this already has the effect of ensuring that full faith and credit-inthe sense of full effect - is given to Territorial laws throughout the Commonwealth.257

The problem is, in fact, that this operation of the Constitution may give too muchcredit to Territorial laws. On the face of it, one would not be applying a 'closerconnection' test in a competition between a State and Territorial law. Rather, theTerritorial law would have automatic primacy if inconsistency arose in the broad s 109sense of that notion (that is, including the 'covering the field' doctrine). There is nogood policy reason why Territorial law made by local legislative assemblies shouldhave such automatic priority.

Deane J offered a resolution to the problem which is persuasive.258 He noted thatthe Commonwealth had granted powers to the self-governing Territorial legislatures tomake laws for the 'peace, order and good government', within certain limits, of theirterritories. This grant of power thus used the traditional phrase for grants of legislativepower, and can be taken to manifest an intention in the Commonwealth to give theTerritories legislative powers which substantially correspond to those of the States. Itwas therefore open to recognise an implied statutory limitation on the grants of powerthat corresponded to the constitutional limitation on State legislative power, namelythat in the event of a competition between statutes of different provincial jurisdictionsthe statute would prevail which had the predominant territorial nexus (or, on myformulation, the closer connection). This type of construction is not unprecedented,being similar to Dixon 1's view that statutes should be interpreted as being intended toapply only when dictated by the choice of law rules.259

253

254255256257258259

In relation to conflicts between Commonwealth and Territorial laws, see Northern Territoryv GPAO (1999) 196 CLR 553, 578-583 [42]-[61] (Gleeson CJ and Gummow n, 636-638 [219]-[223] (Kirby n. .Lamshed v Lake (1958) 99 CLR 132.Ibid 141, 146 and 148 (Dixon Cn.Cf Opeskin, above n 4,181-2.Breavington (1988) 169 CLR 41,115-6 (Brennan n, 148-9 (Dawson n.Ibid 137-8.Barcelo v Electrolytic Zinc Co ofAustralasia Ltd (1932) 48 CLR 391, 427-8; Wanganui-RangitikeiElectric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581, 600-1.


In relation to conflicts between the statutes of two self-governing legislatures, itwould be reasonable to presume that the Commonwealth intended that the law withthe closer connection would prevail, regardless of which law was enacted first.

A supplementary, partial solution could also lie at a lower level. It would bereasonable to presume in the absence of a clear contrary intention that, in theAustralian constitutional context, Territory legislators did not intend their laws toapply in circumstances where another jurisdiction's laws had a closer connection.

6.4 Interpreting statutes and giving effect to limitationsWere the full effect approach to be adopted then the issue of delimiting the reach ofstatutes - that is identifying what 'connecting factor' they depend upon260 - wouldbecome more importaI].t. Statutes are commonly expressed in general terms. If taken atface value such statutes would constantly apply and potentially conflict, causing theneed for assessments of closer connection. Yet it has long been recognised that suchgenerality of expression is not to be taken literally. Thus, as noted above in Part 1.3,there is a presumption against extra-territorial operation. The issues of delimitationwhich arise can be difficult, but they are questions which can come up already.

Two further issues arise here. First, does the full effect approach involve givingState and Territory laws some extra-territorial effect insofar as it means that thosestatutes are taken to be directed to courts outside of that jurisdiction? Secondly, what isto be done if the words in the statute do seem to be directed only to the courts of theenacting jurisdiction?

In Pedersen v Young,261 Menzies J held that when a statutory limitation period isexpressed in general terms then it 'must of necessity' be construed as being directedonly to the courts of that jurisdiction.262 In McKain Gaudron Jcorrectly noted that thisnecessity arose only if one took the view that the applicable law was and could only bethe law of the forum (or the law provided by s 79 of the Judiciary Act). If s 118 of theConstitution were given a substantive operation then this assumption is no longercorrect, and it is possible and appropriate to see such provisions as directed to allcourts.263

This view does not necessarily conflict with the presumption that statutes do nothave extra-territorial o~eration. The main focus of that presumption is the regulationof conduct of persons. 64 Limitation statutes do not regulate conduct of persons butrather the manner in which remedies for that conduct can be sought. In any case, if thefull effect approach is seen as attributing extra-territorial operation to laws it is only ofa minor kind, and that operation flows as a result of the substantive effect of s 118rather than from States and Territories seeking to extend their legislative reach.Further, whilst there are limits on the extent to which one State can dictate what occursin proceedings in other State's courts,265 most laws can appropriately be characterised

260261262263264

265

Akai (1996) 188 CLR 418,442-3 (Toohey, Gaudron and Gummow JJ).(1964) 110 CLR 162.Ibid 167.McKain (1991) 174 CLR 1,61.As is arguably implicit in Akai (1996) 188 CLR 418, 443 (Toohey, Gaudron and GummowJJ). Note also Stevens v Head (1993) 176 CLR 433, 467-8 (Gaudron J).Re Tracey; Ex parte Ryan (1989) 166 CLR 518, 547 (Mason CJ, Wilson and Dawson JJ) and574-5 (Brennan and Toohey JJ).


in substance as stating the law on a particular topic rather than being specificallydirected to binding courts which have to apply the law.

However, these points do not solve the problem if the terms of a statute areexpressly directed to the courts of the enacting jurisdiction. For instance, the NorthernTerritory Act at issue in Breavington provided that 'no action shall lie in the Territory' inthe relevant circumstances. If this statute were simply applied according to its strictterms then it would not be applied by courts of other jurisdictions (leaving asidepotential reliance on cross-vested jurisdiction).266

A constitutional question arises of whether the enacting legislature is capable oflimiting the application of its statutes in this way. But before reaching that issue, thereis another question of whether the enacting legislature should be taken as havingintended that limit to apply. To give substantive operation to s 118 would represent asignificant change in approach, and it is not one that legislatures would havecontemplated in enacting such provisions.267 Further, the substantive operation ofs 118 would be significantly limited if such incidental statutory restrictions were to begiven literal effect. In any case, such limitations were generally not taken to prevent thelaws being applied by other courts under the principles of private international law.

For these reasons, as a matter of statutory construction, there should be apresumption that such usages are not intended to prevent other courts giving effect tothe statutes unless there is a clear manifestation of a positive policy to restrict thecourts in which relevant rights, duties or powers can be given effect. Of course, thispresumption may have to bow to other construction considerations, such as thepresumption of legislating within constitutional limits. Further, the presumptionrelates only to civil matters; there are distinct reasons supporting a presumption theopposite way in relation to criminal law (see below, Part 6.5).

What, then, if there was a clear manifestation of such a policy? There is somediscussion in the joint judgment in Pfeiffer of the perplexing issues which arise whenpowers or jurisdiction are allocated by a statute to a particular court or tribunal, and acourt in a different State or Territory has to decide whether it can exercise thosepowers or jurisdiction. Kirby Jlabels this an issue of 'procedural enforceability'.268 Themajority state that applicants to a court must take 'the procedures and remedies of thatcourt as they are', and 'cannot ask that the courts of the forum adopt procedures orgive remedies of a kind which their constituting statute do not contemplate'.269 Primafacie, the majority continued, 'if the statute law of a State or Territory provides for aremedy at the hands of a specialist tribunal, and not through the courts, the remedywill be one that can be enforced only in that tribunal.'270

A parallel issue can arise when a court exercises federal jurisdiction, such as whenthe Federal Court exercises accrued jurisdiction. This issue was considered by the HighCourt in ASIC v Edensor Nominees Pty Ltd.271 The majority there held that in matters offederal jurisdiction a State cannot withdraw jurisdiction from where it has been

266267268269270271

See Anderson (1965) 114 CLR 20, 33 (Kitto J).Cf Bropho v Western Australia (1990) 171 CLR 1, 23 (per curiam).Pfeiffer (2000) 203 CLR 503,548-9 [116]-[117].Ibid 542 [94] and 543 [99] respectively.Ibid 542 [94].(2001) 204 CLR 559.


allocated by the Constitution or federal law.272 Where powers are allocated to aparticular court by State law then those powers must also be open to other courtsexercising federal jurisdiction, for otherwise 'the operation of federal jurisdiction mightreadily be stultified'.273 Very limited exceptions to this principle were recognised. Thematter might be one which could not appropriately be dealt with in federaljurisdiction, for example if it involved the exercise of non-judicial power.274 The statutemay be structured in such a way that the exercise of a power by a particular court is infact a necessary precondition for legal efficacy of, say, an agreement, and without thatprecondition the agreement could not relevantly be the subject of a dispute.275

The same stultification point might be made about courts exercising non-federaljurisdiction. The question, then, is whether there is some equivalent constitutionalimperative protecting the ability of State courts to decide matters involving the laws ofother States. No doubt parties must take interstate courts as they find them andprocedural limitations have to be accepted. The question of applying the laws ofanother State or Territory can only arise if there is a controversy properly justiciable inthat court. The issue here arises when interstate courts are quite capable of hearing thematter and providing appropriate relief.

Minds can reasonably differ on whether s 118 should be taken to prevent a Statefrom providing that certain statutory rights or obligations can be litigated only incertain specific courts of its own. A State might have a quite legitimate reason forwishing to limit the courts which can hear matters. It may wish to ensure that judgeshave specialist knowledge, or it may wish to preserve the integrity and consistency ofthe body of caselaw relating to the statute's interpretation and application. TheCommonwealth has excluded State courts from hearing administrative law casesagainst it,276 presumably reflecting a view that such governmental matters are notappropriately heard by courts created by another polity. Yet if such limitations aregiven effect then there may be some deviation from the principle of uniformity of legalconsequences.

In the end it seems inappropriate to require a State or Territory to extend the reachof its laws into litigation in other jurisdictions. A crucial element of the argument forthe full effect approach is the achievement of an integrated, uniform system of law. Butthe ultimate constitutional text and purpose is to give full faith and credit to State laws.The provision is about ensuring due regard is paid to State law, not requiring thatregard be paid that is greater than was hoped for or intended. Further, for reasons setout below, there are good reasons to restrict criminal prosecutions to the courts of theenacting State, and thus s 118 should not be construed so as to prevent this occurring.Thus if legislation relating to civil matters manifests a clear intention to restrict thecourts in which relevant rights, duties and powers can be given effect then s 118should not be seen as overriding this provision.

272

273274275276

Ibid 588 [59], 593 [72] and 594-5 [77] (Gleeson CJ, Gaudron and Gummow JJ), 612 [137] and614 [145] (McHugh J).Ibid 591 [68] (Gleeson CJ, Gaudron and Gummow JJ), also 613 [141] (McHugh J).Ibid 593 [72]-[73] (Gleeson CJ, Gaudron and Gummow JJ), 612 [137] (McHugh J).Ibid 588-9 [59]-[60] (Gleeson CJ, Gaudron and Gummow JJ), 612 [138] (McHugh J).Judiciary Act 1903 (Cth) ss 38, 39 and 39B; Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth)ss 3 and 6.


6.5 Criminal law

Criminal law has traditionally been treated separately from civil law in relation toquestions of conflicts of law. In criminal actions the prosecuting party is usually amanifestation of the polity itself, acting to vindicate the interests of the community.Further, criminal law provides for consequences substantially different from thoseassociated with civil remedies, most notably deprivation of liberty. Enforcement of anyforeign law involves giving effect to the public policy of another polity to some extent.However, vindication of the relevant community's interest in criminal law enforcementhas been seen as something which should be left to that community, and the sharperpotential consequences of criminal prosecutions have made forum courts moresqueamish about giving effect to foreign public policy.277 Moreover, the potentialconsequences of criminal proceedings make issues of fairness to the defendant moreimportant, thus it is good policy for prosecutions to take place only in the jurisdictionwhere the alleged crime occurred so that evidence is more readily obtainable. Thispolicy is reflected in s 80 of the Constitution, which requires that trials of federaloffences take place in the State where the offence was committed. For these types ofreasons it has regularly been stated that there is a presum~tion that 'crime is local',278and that the rules of private international law do not apply. 79

However, a construction of s 118 of the Constitution which ignored criminal lawshould be rejected. The text contains no such limitation, and were it intended it wouldand should have been expressed. The same arguments of principle relating to thedesirability of one legal result apply to this area, perhaps with even greater force thanin the civil arena. In Lipohar the plurality accepted that the section did apply to criminallaw in stating that it gave a 'constitutional footing' to the double jeopardy doctrines ofautrefois acquit and autrefois convict.280 The question, then, is how s 118 would apply tocriminal law on a full effect construction.

The first issue is whether it would require that prosecutions for breach of oneState's laws could be pursued in the courts of another State. It would not. Thepresumption against extra-territorial operation operates with particular strength in thecriminal sphere.281 There would and should be a strong presumption that grants ofcriminal jurisdiction to courts are intended to be exclusive to those courts, that grantsof criminal jurisdiction only extend to prosecution for offences under that State's laws,that prosecutors are only authorised to prosecute within their own State, and thatprosecutors are only authorised to prosecute for offences against the laws of their ownState. These presumptions would be rebuttable. As the cooperative corporateregulatory schemes illustrated, there may be good reason for different jurisdictions toprovide by mutual legislation that offences under one jurisdiction's law can be

277

278

279

280281

Note the quotation from Glanville Williams in Mark Leeming, 'Resolving Conflicts betweenState Criminal Laws' (1994) 12 Australian Bar Review 107, 108.For example, Brownlie (1992) 27 NSWLR 78, 83 (Gleeson CJ); Lipohar (1999) 200 CLR 485,527 [106] (Gaudron, Gummow and Hayne JJ).Lipohar (1999) 200 CLR 485, 526-8 [104]-[108] (Gaudron, Gummow and Hayne JJ),approved Pfeiffer (2000) 203 CLR 503, 521 [25] (Gleeson CJ, Gaudron, McHugh, Gummowand Hayne JJ).Lipohar (1999) 200 CLR 485,534 [120].Brownlie (1992) 27 NSWLR 78, 83 (Gleeson Cn; Akai (1996) 188 CLR 418, 443 (Toohey,Gaudron and Gummow JJ).


prosecuted in another.282 It is likely that the requirement for full mutual authorisation,which belatedly bedevilled the Corporations Law scheme,283 would also apply in someform as between States.

The next issue deals with a situation where the laws of two States regulate the oneinstance of conduct. Criminal actions, too, can cross borders or have effects acrossboundaries. Here, as generally, three questions arise. Do both statutes, properlyconstrued, apply to the conduct? As interpreted, do the statutes conflict? If theyconflict, which has the closer connection?

A number of Australian jurisdictions now have laws providing that an offence ma~be committed if anyone element of an offence takes place within the jurisdiction.2 4

Such provisions increase the likelihood that two or more polities' laws will apply toconduct which crosses boundaries. Further, as noted above in Part 2.1, the plurality'sview in Lipohar that the relevant law area for common law offences is the whole ofAustralia will often mean that conduct in breach of the common law will be triable in anumber of States or Territories.

The two laws might provide for offences with different elements, with differentdefences, and/or with different penalties. It one sense it may be undesirable that onepiece of conduct should be capable of prosecution in different jurisdictions, perhapswith slightly different laws. Thus Mark Leeming has suggested that cross-territorialcrime should only be prosecuted by the State most closely connected to the crime.285

But even within one jurisdiction the law often creates overlapping offences whichdiffer only slightly, and which can be prosecuted at different times. Differentjurisdictions are entitled to choose the content of their regulations, and each has adistinct legitimate interest in seeking to vindicate its community interests.

An example of such interests is the case of Brownlie.286 A NSW body prosecuted aQueensland farmer for polluting NSW waters by spraying chemicals on his farm onthe Queensland side of the Barwon River (being the NSW-Queensland border), whichthen ran off into the river. There was a similar Queensland law regulating pollution ofwaters, in somewhat different terms. The NSW Court of Appeal upheld the conviction.NSW plainly had a legitimate constitutional and normative interest in regulating theconduct, and doing so in such terms as it wished.

Section 118 requires that full faith and credit be given to the law of every State; itdoes not choose one law over another. No inconsistency arises simply from the factthat two States prohibit the same type of conduct in slightly different ways. That issimply a manifestation of two slightly different decisions of public policy, as is to beexpected within the different polities within the federation.

Nor is there any inconsistency per se between two State laws which apply to onepiece of conduct in the same way (that is, where there is an offence with the same

282

283

284

285286

Note Dempster v National Companies and Securities Commission (1993) 9 WAR 215 (FullSupreme Court), where a variant of this occurred.Byrnes v The Queen (1999) 199 CLR 1; Bond v TIle Queen (2000) 201 CLR 213; Macleod v ASIC(2002) 76 ALJR 1445.For example, Criminal Law Consolidation Act 1935 (SA) s 5C, as applied in Lipohar. Seediscussion in Matthew Goode, 'The Tortured Tale of Criminal Jurisdiction' (1997) 21Melbourne University Law Review 411, 457-9.See Leeming, above n 277, 114-15.(1992) 27 NSWLR 78.


elements in each jurisdiction). Even if the two laws create different penalties for thesame offence, this need not be seen as an inconsistency. For the reasons given at thebeginning of this section, a law dictating penalty could and should be construed, primafacie, as directed only to the courts of its own jurisdiction. There is then noinconsistency.

In Brownlie the defendant argued that there was inconsistency if the laws of two.. - States regulated conduct in different ways, because insofar as conduct was not

prohibited by the Queensland law then it was permitted.287 This argument reflects therule of law principle that what is not forbidden is permitted.288 The defendant alsoexpressly invoked Deane J's views about giving effect to legal silences. The latterapproach should be rejected for the reasons given above. As to the former, thatprinciple is not apposite. In the Brownlie type of situation there is a valid and applicablelaw which forbids the conduct, it is just from another component part of the one legalsystem. Ultimately the question of whether there is an inconsistency is a matter ofstatutory interpretation. And as argued above, the 'covering the field' doctrine shouldnot be applied in assessing inconsistency between State laws, which makes it less likelythat State laws will be taken to conflict.

Inconsistency would arise in this situation, however, were the Queensland law tohave gone further than merely prohibiting certain conduct, and actually positivelyauthorised non-prohibited conduct to take place, for example by providing a licence toengage in the relevant conduct. A conflict would exist because Queensland law wouldpositively authorise what NSW law forbids. The defendant in Brownlie argued that thiswas the case, but the Court of Appeal found that the information before the Court fellshort of establishing this proposition.289 If that position had been established, then theCourt would (on the full effect approach) have had to resolve which law had the closerconnection to the facts and issue regulated.

If a person has already been tried for an offence in one State, then it might be saidas suggested by the plurality in Lipohar-that it would be inconsistent with s 118 forthe person to be liable to prosecution for the same offence in another State.290 Thequestion of whether the particular conduct fell within the particular legal norms wouldhave already been determined, and giving full faith and credit to the 'judicialproceedings' might be seen as giving this determination constitutional protection. Thisview does not flow from any inconsistency between the laws of the two States, butrather from the inconsistency of judgments. That is not a topic it is necessary to discusshere.

6.6 IllustrationsIn Part 1.2, above, four examples were set out. The first involved a car accident in NSWcaused by a resident of Queensland, injuring a resident of Victoria. NSW had a lawrestricting the damages recoverable for accidents occurring in NSW. On the full effectapproach the restrictions in this Act are valid and applicable, and would be appliedregardless of where the injured party sued within Australia.

287288289290

(1992) 27 NSWLR 78, 85 (Gleeson CJ).AV Dicey, Introduction to the Study of the Law of the Constitution (8th ed, 1915) 183-4.(1992) 27 NSWLR 78, 82-3 (Gleeson en.(1999) 200 CLR 485,532-4 [116]-[120].


The second example involved the same set of facts, but with a Victorian statutesetting different compensation levels for any car accident victim who was ordinarilyresident in Victoria. A direct inconsistency arises between the NSW and Victorian lawsas both purport to regulate the particular issue of damages in this case. The conflict isto be resolved by the closer connection test. Minds can reasonably differ on which lawwould have the closer connection. However, for the reasons given above in Part 6.2,the better view may be that all substantive aspects of the liabilities arising from thetortious conduct are intertwined, and most appropriately dealt with by the law of theplace where the conduct occurs. On that view, the NSW law would apply.

The third example raised the issue of the validity of a contract where a putative lawof Western Australia would declare it invalid, but that State's law was not selected asthe proper law of the contract. On the full effect approach the Western Australian lawwould be applied regardless of the parties' selection of the governing law.

The fourth illustration involved the same issue, but with a competing statutoryregime of South Australia which provided for the licensing of internet sales ofcigarettes. The issue would be resolved by analysis of closer connection. On the facts,the relevant business and the particular activity were based in South Australia, but letus say the goods were sold into Western Australia. South Australia has a legitimategovernmental interest in regulating the activities of businesses based in its territory.But the relevant conduct related to the importation of cigarettes into WesternAustralia. The conduct crossed the boundary, and cannot simply be located in eitherjurisdiction. The effects of the sale would be felt in Western Australia, not SouthAustralia, and a State has a strong interest in regulating conduct and effects having adirect impact within its territory. For that reason the Western Australian law wouldhave the closer connection to the particular issue of validity in the particular case.Incidentally, if the goods involved were alcohol, it is arguable that s 113 of theConstitution would directly produce the same result.291 That provision certainlymanifests a similar recognition of dominant governmental interests. For cigarettes soldother than in Western Australia, South Australia would have a closer connection to theconduct of businesses based in South Australia.

Another example worth examining is a person suing for defamation. For anypublication with national reach it is common to claim damages for the damage donethroughout Australia. On the view of the plurality in Lipohar, incidentally, one wouldbe claiming under the one Australian common law for the entire Australian law area,subject to any valid and applicable statutory restrictions. In any case, under the fulleffect approach, as now, any particular State or Territory statutory defences orlimitations would apply in relation to the publication and damage suffered within thatjurisdiction. There would thus be no change in approach in practice.

What if Tasmania prevented the recovery of damages in certain circumstances,providing instead for a remedy of public apology? This law would have to be giveneffect in relation to the limitation on damages. As for the replacement remedy, thequestion would be whether the forum court had the capacity to grant such a remedyunder its own constitutive legislation. If it did not-and leaving aside issues of crossvested jurisdiction - then no remedy could be granted in relation to damage in

-..

291 Section 113 provides as follows: 'All fermented, distilled, or other intoxicating liquidspassing into any State or remaining therein for use, consumption, sale, or storage, shall besubject to the laws of the State as if such liquids had been produced in that State.'


",'

Tasmania. Plaintiffs must take the forum court as they find it. The same result wouldflow under present common law rules.

What if the Tasmanian law was expressed in terms such as this: '[n]o compensationshall be recoverable for loss or damage suffered anywhere in Australia from adefamatory statement published anywhere in Australia'? The preliminary question isto construe the scope of this provision. It could be taken to limit the ability ofTasmanian courts to award damages for loss suffered both there and elsewhere inAustralia. This would probably be a valid law, for Tasmania is not obliged to provide aforum for the resolution of interstate disputes, and may define the remedies availablein its own courts. In relation to other courts, and taking account of the presumptionthat a law is not intended to have extra-territorial reach (in regulating external conductetc), and the additional consideration that it could not be valid unless restricted insome way, the provision would be construed as directed only to Tasmanian courts.

What if the statute provided that it applied regardless of where sued upon withinAustralia? Such a law would be unconstitutional unless some real connection toTasmania could be established. It also might be characterised as an invalid interferencein the affairs of the courts of other States.

What if the statute provided that 'this Act only applies to claimants ordinarilyresident in Tasmania'? The statute would then have a real connection to Tasmania andwould probably be valid. Then, on the full effect approach, it would have to be appliedthroughout Australia by any court hearing a defamation claim from a Tasmanianresident. This may seem a surprising and undesirable result. But such an over-reachinglaw is unlikely to be passed, would cause interstate political controversy, and might becapable of counteraction by the other States and Territories if they wished.

7 CONCLUSION

Every construction of s 118 of the Constitution has some significant disadvantages. Theorthodox narrow approach fails to pay due fealty to the text and its place in theConstitution, and is premised on an anachronistic view of interstate relationshipswithin Australia. The approach proposed by Deane J, and also Wilson and Gaudron JJ,does not sufficiently recognise the legitimate interest of States and Territories inpassing laws with extra-territorial operation, may be difficult to apply to areas of lawother than tort, supplies no clear criteria for disputes where two jurisdictions haveterritorial connections, will produce uncertainty in relation to such disputes, andsupplies no clear criteria for identifying areas of law where two States or Territoriescan both regulate an issue.

There are disadvantages, too, in adopting the full effect approach examined here. Itmay increase complexity and uncertainty compared to the orthodox view, and it maylead to some over-application of statutes. It also may lead to a rather rigid andinflexible approach. On the other hand, the practical significance of these problems canbe overstated. And the full effect approach to s 118 reflects the natural meaning of itsterms, gives real effect to its apparent purpose, is consonant with fundamentaldoctrines of the rule of law, parliamentary supremacy and representative democracy,and recognises the legitimate claims of States and Territories to regulate connectedmatters beyond their own borders.


If the approach were adopted, the following principles would be taken to apply toresolve legal issues in which the statutory laws of one or more Australian State orTerritory have a plausible claim to apply. First, State and Territory statutes which areconstitutionally valid, applicable by their terms (properly construed) to the relevantfacts, and not clearly tied to the enacting jurisdiction's courts or tribunals, must begiven effect by any Australian court. An Australian court cannot purport to ignore avalid, applicable Australian statute pursuant to a common law choice of law rule.Secondly, if there is a conflict between two or more State or Territory laws, then thelaw which has the closer connection to the particular fact situation and the specificissue should be applied. Some guidance in applying this test can be obtained from thecommon law rules of private international law, along with other general principles,such as the recognition of imperatives of simplicity and certainty.

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conflicts and choice of law within the australian

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