CONFLICTS AND CHOICE OF LAW WITHIN THE AUSTRALIAN CONSTITUTIONAL CONTEXT

Transcription

1 CONFLICTS AND CHOICE OF LAW WITHIN THE AUSTRALIAN CONSTITUTIONAL CONTEXT Jeremy Kirk* According to the orthodox principles of private international law, as applied within Australia during the twentieth century, the different States are essentially to be regarded as foreign entities. At common law, the courts of one State will generally apply the statutory laws of another State to resolve a civil law dispute if directed to do so by the common law choice of law rules, but not otherwise. Yet federation was a eustatic event in the evolution of the Australian legal system, albeit that the sea change has taken some time to flow through to many areas. Australian States are not foreign nations but sub-entities within one nation established and maintained by the Australian Constitution. The law to be applied when there is some competition between Australian legal rules cannot appropriately be dictated just by the common law. That raises constitutional questions by its very nature. 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, the public 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 Godleman 1 in 1988, but was rejected by a majority of the High Court at the time. The issue has now been reopened by the reasoning and the implications of the High Court's decisions in Lipohar v The Queen 2 and John Pfeiffer Pty Ltd v Rogerson. 3 In particular, although the judgments in those cases did not attempt an exposition of the meaning and effect of s 118, they did challenge a number of aspects of the orthodox principles, they accepted that the Constitution spoke to the area, and gave some hint of the applicable constitutional imperatives. At least until the judgments in Breavington, constitutional mechanisms had 'seldom been explored' as methods of resolving choice of law problems within Australia. 4 Any BA LLB (hons) (ANU), BCL DPhil (Oxon); barrister, Sydney. Thanks are due to Geoffrey Lindell, and to participants at the Public Law Weekend on 3 November 2001 at the Australian 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 Public Law Review 152, 153.

2 248 Federal Law Review Volume 31 resolution to the issue, any construction of s 118, has significant advantages and disadvantages. Thus Sykes and Pryles examine a variety of possible interpretations of s 118, settling on one with weak enthusiasm whilst noting that it does not provide 'a very ideal solution'.5 Kirby J supported a vigorous approach to the provision whilst on the 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 in which its operation is less than desirable. s Yet answers must be provided in the search for the most appropriate, principled and justifiable approach within the Australian constitutional context. The aim of this paper is to explore three possible interpretations of s 118. The traditional, narrow view is that the section has little substantive operation and does not alter or overthrow the common law choice of law rules. This approach avoids some difficulties that arise with other constructions, but suffers from at least four major faults. It facilitates non-uniform results, depending on where in Australia proceedings are instituted. It is based on a false premise, namely that the Australian States are foreign entities one to another. It leads judges, acting pursuant to common law principles, to ignore the dictates of valid, applicable, democratically-mandated statutes. 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 with interstate elements, especially by reference to the territoriality of where relevant conduct took place. This view avoids the faults of the first construction but suffers from other disadvantages, including an undermining of the legitimate interests of the States in passing laws with some extra-territorial operation, an absence of clear criteria where a dispute is connected to two jurisdictions, and it may be difficult to apply in areas of law other than tort. A third construction - the main focus of this paper - is one which has been derided,9 but which reflects the natural meaning of the words, gives the provision substantive effect, recognises the unified nature of the Australian nation, and allows for legitimate extra-territorial application of State laws. It, too, has disadvantages but these may not be as substantial as has been suggested. That construction is to regard s 118 as requiring that full effect be given to all the statutes - civil and criminal - of all States. In the event of an inconsistency between them then the law with the closer connection to the particular issue should be applied. A similar result can also be argued to flow for statutes of the Territories. This approach is similar to that proposed by Deane J, and for similar reasons, but with an important difference relating to the significance attributed to 'legal silences' and the common law. The analysis in this paper is undertaken in the following manner. First, the paper sketches the general background to the issues. It provides illustrations of the problems that arise when statutes create divergences in the law applicable to disputes arising S 9 Edward Sykes and Michael Pryles, Australian Private International Law (3 rd ed, 1991) 333, see generally at Thompson v Hill (1995) 38 NSWLR 714, Pfeiffer (2000) 203 CLR 503,556-8 [138]-[143]; Mobil Oil Australia Pty Ltd v Victoria (2002) 76 ALJR 926 ('Mobil Oil'), 941 [80]. Note Pfeiffer (2000) 203 CLR 503,539 [82]. Sykes and Pryles, above n 5,319.

3 2003 Conflicts and Choice oflaw 249 within Australia, and examines the ability of the States to make laws with operation beyond their own boundaries, which ability increases the likelihood of a court having to 'choose' between the application of one law or another. The second and third parts of the paper discuss the nature and significance of the High Court's recent decisions in Lipohar and Pfeiffer respectively. Having set out the context for proper analysis, the paper moves in Part 4 to provide an overview of the three approaches to s 118 just mentioned, and Part 5 analyses the arguments for and against these approaches. Part 6 of 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 the propositions 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 two or more systems of law which have some plausible claim to govern the resolution of a non-criminal legal dispute. If X has a car accident in Tasmania with a careless Tasmanian, and X sues in her home State of Victoria, then the Victorian court is faced with two sets of laws which could plausibly apply, namely, those of Tasmania and Victoria. The original common law principles in this area were developed by courts in England (with further development in the United States). The principles developed from cases which, in the main, involved some foreign (overseas) element. It is not insignificant that the legal rules in this area are referred to as rules of 'private international law'. In essence, the traditional approach within Australia has been to apply 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 was derived from the 1870 decision of Phillips v Eyre. 11 It involves double actionability; that is, and ignoring some of the agonising complications, a plaintiff would recover for a claim in tort only to the extent that liability of that kind could be established both under the law of the forum if the act or omission had occurred there (the lex fori) and the law of the place where the tort occurred (the lex loci delicti).12 In the car accident example, if there was any difference in the law applying in Tasmania or Victoria then X would only be able to claim to the extent of the lowest common denominator. Yet if X sued in Tasmania, where the accident occurred, then only Tasmanian law would be applied, and any limitations in Victorian law would be ignored. Thus X might get a different result depending on where she chose to sue. There was one major rebellion against this orthodoxy prior to Pfeiffer. In Breavington, in 1988, four judges of the High Court rejected the double actionability Laurie v Carroll (1958) 98 CLR 310,331 (Dixon CJ, Williams and Webb JJ). Also, eg, Pedersen v 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 and McHughJJ).

4 250 Federal Law Review Volume 31 rule and held that, at least in general, for torts occurring in Australia the lex loci delicti should alone be the governing law.l 3 Mason CJ took this approach as a matter of common law. Wilson and Gaudron JJ (together) and Deane Jheld, in effect, that the lex loci delicti should generally be applied because of constitutional imperatives (see further below, Part 4.3). The rebellion was short-lived. In 1991 in McKain, Brennan, Dawson and TooheyJJ were joined by McHugh Jin re-asserting that the double actionability rule applied to Australian torts as a matter of common law.l 4 They rejected the application of constitutional imperatives to the issue. 1S The re-established orthodoxy held sway until the strength of its foundations was brought into question by Lipohar. 1.2 The nature and reach of State statutory law The real focus of choice of law disputes within Australia is whether or not particular State or Territory statutes should be applied. The reasons for this are explained below in 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 of Queensland. B may be able to sue in NSW, Victoria, Queensland and perhaps elsewhere, all depending on where B can establish and maintain jurisdiction. NSW has a statute restricting the amounts of damages which can be recovered for car accidents occurring in NSW. Would the restrictions provided 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 setting damages limits, different from those applying under the NSW law, on what any person who was ordinarily resident in Victoria could claim if they were injured in a car accident anywhere in Australia? (iii) Western Australia passes a statute providing for the invalidity of any contract entered over the internet for the sale of cigarettes involving any business connected to Western Australia in specified ways (eg operates in that State, or has its registered office there, or has shareholders there). The Act specifies that it applies regardless of where the actions take place or whether or not the proper law of the contract is Western Australian. Corporation D has its registered office in South Australia but trades in Western Australia and has shareholders there. It offers cigarettes for sale from a net site based in South Australia and with the contract specifying South Australian law as the proper law. Would a contract for sale made by D be enforceable in Western Australia, or South Australia, or in other States? (iv) Would the answer to (iii) be any different if South Australia had a statutory regime providing for the licensing of internet cigarette vendors, and Corporation D had a licence under that regime? These examples involve 'choice of law' questions. In the first, the issue is the application of a NSW statute applying to events in NSW - in other words, a pretty ordinary course of events. The second example involves a potential clash of two statutes, one of which (the Victorian) can be seen as having potential extra-territorial IS (1988) 169 CLR 41. (1991) 174 CLR 1, 39. Ibid 34-7.

5 2003 Conflicts and Choice oflaw 251 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 of two States. On the orthodox approach to such problems within Australia, the principle of parliamentary supremacy is taken to require that a court is obliged to apply the laws passed by the Parliament of its own forum, even if that conflicts with the law that would otherwise be applied pursuant to the common law choice of law rules. In other words, a Parliament can override the choice of law rules in a way that is binding on its own courts. Thus on the second example, if B sued in Victoria the court would be obliged to apply the Victorian law to the accident occurring in NSW because the law was 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 neither the lex loci delicti nor the lex fori) would not be picked up and applied. Thus a valid State law, expressed to apply, would simply be ignored. And, once again, different results would ensue depending on where B chose to sue. The first example shows that 'choice of law' questions can arise about quite ordinary 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 a competition to arise. However, if one State seeks to regulate matters which may take place (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 different States. In any case, the law requires some mechanism for resolving conflicts between the 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 next background issues which must be examined here. 1.3 The extra-territorial operation of State laws The States have the constitutional authority to enact statutes with extra-territorial effect. 16 The power was seen in increasingly broad terms as the 20th century progressed, reflecting the gradual diminution of the restriction that was seen to be implicit in the grants of powers to the States to make laws for the 'peace, order and good government', or such like, of their territories. 17 This power was confirmed by s 2(1) of the Australia Acts 1986 (Cth) and (UK), which provide that the legislative powers of each State 'include full power to make laws for the peace, order and good government of that State that have extra-territorial operation'. The High Court unanimously accepted in Union Steamship and Port MacDonnell Professional Fishermen's Association v South Australia 18 that the appropriate test of validity was a low one, namely, that there must be some 'real connexion' or 'relevant connexion' between the enacting State and the circumstances on which the law operates, and this test is to be 'liberally applied', such that even 'a remote and general Note discussion in Christopher Gilbert, 'Extra-Territorial Laws and the Australian States' (1987) 17 Federal Law Review 25; Mark Moshinsky, 'Extra-Territorial Laws and the Australian States' (1987) 61 Australian Law Journal 779. See discussion in Union Steamship Co of Aust Pty Ltd v King (1988) 166 CLR 1 ('Union Steamship'), 9-14 (per curiam). (1989) 168 CLR 340 (,Port MacDonnell').

6 252 Federal Law Review Volume 31 colmexion' will suffice. 19 In Union Steamship the Court did not consider it necessary to decide whether this nexus requirement arose from the phrase 'peace, order and good government', but the Court implied that the real foundation of the requirement lay in some constitutional doctrine of federalism by talking of 'territorial limitations of State legislative powers inter se which are expressed or implied in the Constitution'.20 In particular, the Court appeared to accept here that it is inherent in the Australian federation 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's Fisheries Act 1982 could apply to an offshore area which was actually closer to Victoria than South Australia. In the end it was unnecessary to resolve the question, but the Court's analysis suggests that so long as the nexus test is satisfied, and in the absence of any inconsistency with a statute of another State, then it is not to the point that the other State mat; have a nexus which is 'as strong or stronger' than the nexus of the enacting State. 2 In other words, the nexus test is not a comparative one for the simple purpose of assessing whether extra-territorial operation is valid. It also appears that the nexus test is usually to be applied in a general mmmer. The Court in Union Steamship approved Dixon J's statement that 'it is of no importance upon the question of validity that the liability imposed is, or may be, altogether disproportionate to the territorial connection or that it includes many cases that cannot have 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 is misleading or deceptive').24 There is a presumption that statutes regulate conduct within, and only within, the territory of the legislating State. 25 This presumption is rebuttable. Further, the presumption does not solve many problems. Conduct may take place in more than one place, or be directed across time and space. Different elements of a cause of action or an offence may take place in different locations. And some matters regulated are not self-evidently territorial. For example, if an Act regulates contracts, does it regulate contracts formed in the State, or for which State law is the proper law (and thus applicable under choice of law rules), and/or which involves performance in the State? For such statutes the courts must identify what exact reach and operation, or what 'connecting factor',26 the Parliament intended the Act to have. Doing this can be difficult, and different approaches have been suggested Ibid 372 (per curiam); Union Steamship (1988) 166 CLR 1, 14. (1988) 166 CLR 1,14. Cf Moshinsky, above n 16, 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, (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 is reflected, to a degree, in many interpretation Acts: eg, Interpretation Act 1987 (NSW) s 12; Interpretation oflegislation Act 1984 (Vic) s 48. Akai Pty Ltd v The People's Insurance Co Ltd (1996) 188 CLR 418 ('Akai'), (Toohey, Gaudron and Gummow JJ). See, eg, discussion insykes and Pryles, above n 5, 240-6; see further below Part 6.4.

7 2003 Conflicts and Choice oflaw 253 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 be connected to Australia and the manner in which they must be connected. It is very rare for a statute to have a pure extra-territorial focus. Australian Parliaments have not sought to regulate littering on the streets of Paris.2 8 The nexus test of validity applicable in Australia 29 is broad and general, offering little restriction to States legislating with respect to matters outside their territories but which have some connection to the enacting State. This approach has increased the likelihood of conflicts arising between the operation of the statutory laws of different States (in the sense that both purport to regulate the same thing). A conflict can also arise between two statutes neither of which has apparent (or at least significant) extraterritorial operation: for example, if the laws governed conduct within a contractual or personal relationship of two people residing in different States, or the conduct crossed the border. Yet the century since federation has neither required nor produced an answer to how direct conflicts between inconsistent, applicable State statutes are to be resolved. 3D Application of the rules of private international law has enabled the courts to avoid the question. 2 ONE AUSTRALIAN COMMON LAW - THE SIGNIFICANCE OF LIPOHAR 2.1 The decision It was the High Court's decision in Lipohar which made plain that competitions of law within Australia are about statutory law. It did so by its discussion of the nature of the common law (which for the purposes of this discussion includes equity). Whether there is one uniform Australian common law, or separate strands of common law within 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, that view was expressed before the Privy Council had accepted that Australian common law 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, 4 and some previous judgments,35 the High Court made some reference to the notion of Cf Polyukhovich v Commonwealth (1991) 172 CLR 501,552 (Brennan J). Even the War Crimes Act 1945 (Cth) at issue there, which retrospectively applied to conduct in World War II in Europe, applied only to persons with a connection to Australia. The Canadian approach, in contrast, is more restrictive: See discussion by Justice William Gummow, 'Full Faith and Credit in Three Federations' (1995) 46 South Carolina Law Review 979, Note Gummow, ibid See discussion by Justice L J Priestley in 'A Federal Common Law in Australia?' (1995) 6 Public Law Review 221. Sir Owen Dixon, 'The Common Law as an Ultimate Constitutional Foundation', reproduced in Jesting Pilate (1965) Australian Consolidated Press Ltd v Uren [1969]1 AC 590, (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 CLR 51, (McHugh J), (Gummow J).

8 254 Federal Law Review Volume 31 a unified common law of Australia. But it was not until Lipohar that this notion had a direct, material application in a High Court decision. The defendants in Lipohar were convicted of the common law offence of conspiracy to defraud. The issue in the appeal was whether the South Australian Supreme Court had been competent to conduct the trial. The two appellants were resident in Queensland and Victoria respectively. The intended victim of the conspiracy was a corporation ultimately owned by the South Australian Government and based in Adelaide. The focus of the conspiracy was a building in Melbourne. All of the acts performed in furtherance of the conspiracy were conducted in Queensland, Victoria, Indonesia and Thailand, although one fax was sent directly to Adelaide where the defendants intended that it be acted upon. 36 In the High Court a majority of five held that the Supreme Court had had the power to try and punish the defendants, despite the limited link between the offences and 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 a different approach. Kirby J dissented. McHugh J did not sit. Two, parallel issues need to be distinguished to understand the decision: the territorial ambit of the substantive law, and the territorial reach of the court's jurisdiction (that is, its authority to decide the case).37 In relation to the first, if D steals from E in Paris, it would be surprising if this was a breach of the criminal law of Tasmania. One would reasonably expect that there be some nexus or connection between the legal system and the allegedly criminal act before there will be any breach of that system's law. For statutory offences, reflecting the general law, there is an interpretational presumption against extra-territorial operation. In other words, it is presumed that 'the legislature did not intend to proscribe acts done outside the territory of the legislature'}8 though this may still leave open the question of exactly what the required connection to the territory is. This presumption is rebuttable, and the Parliaments may define and extend the territorial ambit of statutory offences. Thus a South Australian statute provides that South Australian criminal law is breached if there is a territorial nexus between the State and anyone element of an offence. 39 If an Australian State statute is found to have extra-territorial operation, a separate question arises as to whether the legislature had the constitutional authority to pass that law, as was discussed above in Part 1.3. The second issue, jurisdictional reach, involves the question whether the particular court has the authority to hear the case. Jurisdiction has a geographic element. If a State statute 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 'real connection' to the State to be constitutionally valid, just as any law creating the substantive offence must have that connection. This geographical qualification may seem unimportant given that it mirrors the qualification which applies to substantive Lipohar (1999) 200 CLR 485, [8]-[10], [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, [215].

9 2003 Conflicts and Choice oflaw 255 State law. Yet the source of substantive law may be different from the source of the jurisdiction, as when the offence arises under common law. In Lipohar the offence arose under the common law, but the penalty was set and the Court's jurisdictions was granted by statute. Further, the charge was conspiracy to defraud, and the agreement which constituted the conspiracy had been made outside South Australia. The first question was what territorial connection was required between the substantive common law offence and the State. This required analysis of the nature of the common law and its application within the Australian federation. Five judges indicated that it should be recognised in considering these questions that Australia does not consist of a series of foreign nations, and that considerations of comity between different jurisdictions had no place in relations between States within the federation. 40 Kirby J stated that to 'treat the several jurisdictions of the Australian Commonwealth, in relation to each other, as foreign states is erroneous, even absurd.'41 The same majority of five held that there is one uniform common law of Australia. 42 Callinan J disagreed, stating that common law should 'be regarded as the common law of each State'.43 Despite this substantial agreement, there was a significant difference of opinion as to what the existence of a uniform Australian common law means in relation to what the relevant law area is in considering rules of the common law. In other words, when establishing the requisite connection between the impugned conduct and the legal system (whatever that connection was), which legal system were we talking of - Australia or South Australia? On this important point there is no clear majority position within the judgment. The plurality of Gaudron, Gummow and Hayne JJ took the view that the relevant law area is Australia as a whole. 44 There is one Australian common law, and that law applies uniformly in Australia without any regard for State or Territory boundaries. In relation to the charge of conspiracy to defraud, the plurality took the view that it was sufficient that steps to implement the conspiracy were taken to a significant degree inside the law area, even if the conspiracy was formed outside. In this case some significant steps had been committed within Australia, and this was sufficient to establish breach of the Australian common law. For the purposes of substantive liability it was not necessary to show any particular connection between the events and South Australia. 45 This finding did not necessarily mean that the South Australian Supreme Court had jurisdiction to hear the matter (the second issue discussed above). The jurisdiction of the Court to hear such matters was established by statute. Section 17(2)(a) of the Supreme Court Act 1935 (SA) gave the Supreme Court that jurisdiction, 'in and for the State', as was formerly vested in certain English courts. This general allocation of jurisdiction was still subject to the constitutional limit on the power of the States to Lipohar (1999) 200 CLR 485, 503 [37] (Gleeson Cn, 526 [102]-[103], 515 [73], 532 [116] (Gaudron, Gummow and Hayne JJ), 551 [165] [169]-[170] (Kirby n. Ibid [170]. Ibid 500 [24] (Gleeson CJ), [43]-[57] (Gaudron, Gummow and Hayne JJ), 552 [167] (Kirby n. Ibid 584 [259], generally [230]-[261]. Ibid 513 [67],517 [80], 522 [92],531-2 [112]-[116]. Ibid [112]-[114].

10 256 Federal Law Review Volume 31 make laws with extra-territorial effect. Thus for the Supreme Court to have a jurisdiction 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, having regard to the fact that the intended immediate victim was a company incorporated in South Australia, with South Australian legal advisers for the proposed transaction, and given the 'commercial realities of the situation', the requisite connection was established. 47 On the plurality's approach, distinguishing as it does between the territorial reach of common law offences and the issue whether a particular court can hear them, it was possible that a number of different States or Territories might have jurisdiction to try an 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 uniform common law, they took the view that that law recognised the States as separate jurisdictions or law areas. One could not ignore the constitutional 'division of Australia into territorial units called States or Territories.'49 On Callinan J's view, if the common law was that of the State then the relevant law area was also that of the State. 50 Thus for these three judges, unlike for the plurality, it was necessary as a question of substantive law to establish some connection between the impugned conduct and South Australia. 51 For Gleeson CJ the two questions of the required nexus between the conduct and the territory for the substantive offence to be made out at common law, and the question of the constitutional reach of the relevant statutes, were to be given the same answer. For both, the question was whether there was a 'real connection' between the conspiracy and South Australia. He found that there was such a connection, because fraud was to be practised upon people in South Australia with a view to their acting, in South Australia, to their detriment. 52 This approach is likely to produce the same answer as that of the plurality, at least for the offence of conspiracy, because both approaches apply the 'real connection' test. Callinan J applied a similar test of whether there was 'a real link with the jurisdiction' in relation to both questions,53 finding that there was. Kirby J, with some regret, felt it inappropriate to extend the requisite territorial connection at common law to a test of 'real and substantial connection'. He thought that to do so was in effect to create a new offence. 54 The traditional criterion of jurisdiction, also necessary to establish the substantive offence, was that the 'gist' or 'essential element' or 'last terminal element' of the offence occurred within the jurisdiction.55 This was not the case here, therefore he dissented in the result Ibid 510 [59],534-5 [123]. Ibid 522 [93], [121]-[124]. Ibid 514 [70],532 [116]. Ibid [170] (Kirby J); see also 500 [24] (Gleeson CJ). Ibid 583 [254]. Ibid 500 [24] (Gleeson CJ); [170], 557 [179]-[180], [191], [197]-[201] (Kirby J); [254]-[263] (Callinan J). Ibid [27]-[39]. Ibid [269]-[270]. Ibid [181]-[200]. Ibid 543 [144].

11 2003 Conflicts and Choice oflaw The significance of the decision for present purposes Five points emerge from the case which are material here. The first relates to sources of law 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 their application throughout Australia. Constitutional doctrines have a uniform application. Commonwealth laws apply uniformly throughout Australia, even though they may have disparate effect. It is now clear that the fifth source, the common law, is a unitary one. Thus the debate about what rules should apply to competitions of law can be more narrowly focused than might previously have been thought. The issue is the application of State and Territory statutes. That distinguishes the Australian position from that in the United States, where common law is disparate, creating significantly greater divergence in the law. Secondly, the case contains clear statements that the fact of federation must be taken to change the legal relationships between States. States are not simply foreign entities vis-a.-vis each other. It is also noteworthy that the Australian constitutional context was seen by all judges as affecting the nature and operation of the common law. Thirdly, if the plurality's view as to the relevant law area comes to be accepted then this 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, or for breach of confidence, or other such matters, the person is suing under the Australian common law and in relation to the whole of Australia, subject to their own pleading, to any applicable legislation and to the requirement for a constitutional and statutory nexus between the events and the court's jurisdiction. Fourthly, if the plurality's view is accepted this would raise the question of whether the common law choice of law rules, as they are currently understood, can apply to the Australian States and Territories. Those rules arguably would be taken to apply to Australia as one law area. Law foreign to the law area would be law foreign to Australia. Those rules would not then suffice to resolve internal competitions. Fifthly, the judgment of the plurality is also significant for giving some extended operation to the constitutional guarantee in s 118 of the Commonwealth Constitution. They stated that the section gave 'a constitutional footing... for the 0feration in other States of the doctrines of autrefois acquit and autrefois convict'.5 Thus a person already acquitted or convicted of an offence in one part of Australia cannot be retried for that offence in another. 56 Lipohar (1999) 200 CLR 485, 534 [120], generally 532 [116]-[120].

12 258 Federal Law Review Volume 31 3 THE PFEIFFER REFORMULATION OF CHOICE OF LAW RULES FOR TORT 3.1 The decision Having decided Lipohar in late 1999, the case of Pfeiffer in 2000 presented the High Court with the opportunity to consider federal relationships within the area of civil law. The facts of the case presented a familiar scenario in the area of private international law. Mr Rogerson was employed in the Australian Capital Territory as a carpenter, but was doing some work in Queanbeyan in NSW when he was injured. He sued his employer, in tort, in the ACT Supreme Court. A NSW statute,57 applicable on its terms, provided that general damages were not relevantly recoverable at common law for such workplace accidents. There was no such statutory limitation applied under ACT statute law. The question was whether the NSW Act had to be applied by the ACT Supreme Court. The High Court held unanimously that it did. Three judgments were written: a joint judgment by Gleeson CI, Gaudron, McHugh, Gummow and Hayne JJ; a similar concurring judgment by Kirby J; and a separate judgment by Callinan J. Two important new principles were established by the Court. First, it created a new common law choice of law rule for Australian torts, overruling its previously operative 1991 decision in McKain. If a claim is made in any Australian Court in relation to a tort occurring within Australia, then the Court must apply the law of the jurisdiction where the wrong occurred (the lex loci delicti).58 In relation to this part of the case CallinanJ indicated 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 would have been applicable in any case under the McKain double actionability rule. The critical issue was whether the NSW statute should be characterised as procedural or substantive. 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 4-3 majorities in McKain and Stevens v Head 60 laws such as the NSW provisions would have been treated as procedural, and thus inapplicable in cases such as this. The High Court here unanimously shifted the boundary between substance and procedure. The new test is as follows: matters which go to the existence, extent and enforceability of legal rights or duties are relevantly regarded as substantive; matters which are directed to 'the mode or conduct of Court proceedinps', the 'machinery' or 'mechanical' provisions, shall be characterised as procedura1. 6 Thus legal rules on matters such as limitation periods and limitations on damages are now to be regarded as substantive for intra-australian disputes Workers Compensation Act 1987 (NSW) Part 5. (2000) 203 CLR 503, 544 [102] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ), [157] (Kirby n. (2000) 203 CLR 503,576 [201]-[202]. (1993) 176 CLR 433. Pfeiffer (2000) 203 CLR 503, [99]-[100], 544 [102] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) 554 [133]-[134],563 [161] (Kirby n, 574 [192] (Callinan n. See also McKain (1991) 174 CLR 1, 26-7 (Mason Cn.

13 2003 Conflicts and Choice oflaw 259 In relation to the change made to the choice of law rule for Australian torts the argument took the following lines. First, the joint judgment attributed significance to the position which it stated would arise in relation to federal jurisdiction. In matters falling within federal jurisdiction the law to be applied is taken to be determined by where the Court is sitting: Judiciary Act 1903 (Cth), ss 79 and 80, as interpreted. Thus the resolution of a matter commenced in the original jurisdiction of the High Court, for example, might depend on where the Court happened to be sitting at the time the action was heard. For this factor to produce a different result 'is properly called odd or unusual', and warranted reconsideration of the issue in matters involving federal jurisdiction. 62 Further, it is undesirable to have a different rule applying to matters in federal jurisdiction and non-federal jurisdiction. 63 The common law of Australia must adapt to conform to the Constitution and its imperatives, as was recognised in Lange v ABC. 64 The common law rule for choice of law in tort should therefore be developed to take into account the following matters arising 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 enforce the laws of another Australian jurisdiction on the basis that it is contrary to the first jurisdiction's public policy);66 the 'predominant territorial concern of the statutes of State and Territory legislatures'; '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 and uniformity of outcome no matter where in the Australian federation a matter is litigated, and whether it is litigated in federal or non-federal jurisdiction'.67 This point reflects the arguments made by Wilson, Deane and Gaudron JJ in Breavington (see below 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 118 or 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 Pfeiffer (2000) 203 CLR 503, 532 [58]-[59] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ). Ibid [60]. (1997) 189 CLR 520; Ibid 524 [34], [66]-[71] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ), 557 [142]-[143]. Pfeiffer (2000) 203 CLR 503, [67] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ), see also [119]-[124] (Kirby J). Ibid 533 [63] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ), approving Merwin Pastoral Co Pty Ltd v Moolpa Pastoral Co Pty Ltd (1933) 48 CLR 565 ('Merwin Pastoral'), 577, Ibid 528 [44] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ); also [123], 552 [126],553 [129] (Kirby J). Ibid 534 [65], 535 [70] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ). Ibid 535 [70].

14 260 Federal Law Review Volume 31 that this area should not be constitutionalised, at least in terms of specifying a detailed rule?o A key theme of the case, reflecting Lipohar, was that 'the terms of section 118 indicate that, as between themselves, the States are not foreign powers as are nation states for the purposes of internationallaw. i71 In relation to choosing between different possible formulations of the choice of law rule for tort, the majority rejected the 'proper law of the tort' approach, whereby the judge looks for the law having the most real and substantial connection to the parties and/or events. The Court took the view that it did not provide sufficient guidance to courts, litigants or others such as insurers, thus in turn increasing costs to all those parties and to society at large. 72 The possibility of having a 'flexible exception' to any general rule was rejected for the same reason. It was recognised that invariably to apply the law of the place of the tort could produce injustice, as that place might be entirely fortuitous. Nevertheless, the majority stated that 'for every hard case that can be postulated if one form of universal rule is adopted, another equally hard case can be postulated if the opposite universal rule is adopted.'73 The chief advantage of applying the lex loci delicti was that it gave effect to what was likely to be the reasonable expectations of the parties?4 The main reason for potentially applying the lex fori (the law of the forum) was a concern that the laws of another jurisdiction might be contrary to the public policy of the jurisdiction in which the action is brought. However, such a concern could have no place within the Australian federation?5 Thus for torts committed within Australia courts should apply the lex loci delicti on issues of substance, and should apply only that law. The High Court subsequently held in Regie National des Usines Renault SA v Zhang 76 that the same choice of law rule should apply to torts committed outside Australia. 3.2 The significance of the case Two material points emerge from Pfeiffer. First, the Court reinterpreted the common law to take account of the Australian constitutional context. Thus the Constitution was seen to speak to the area of choice of law, if possibly in muffled tones. True, the Court was careful to indicate that the new principles developed were common law rules, not constitutional diktats, and the Court did not attempt to provide an exposition of the meaning or requirements of s 118. Nevertheless, if there are constitutional imperatives which operate in this area of law then their nature and significance require further examination for it may well be that what appears to be flexible common law closely reflects hard constitutional requirements Ibid [110], [138]-[143]; Mobil Oil (2002) 76 ALJR 926, 941 [80]. Pfeiffer (2000) 203 CLR 503, 534 [65] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ); see also [121]-[124] (Kirby J). Ibid 538 [79]-[80] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ). Ibid 539 [82]. Ibid [75], 540 [87]. Ibid 541 [91] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ); 551 [123] (Kirby J). (2002) 76 ALJR 551 ('Renault').

15 2003 Conflicts and Choice oflaw 261 Secondly, a theme of the judgments is that, at least 'ideally',?7 one set of facts in a dispute occurring within Australia should produce one legal result, regardless of where litigated within the country. This point raises further questions. What, then, of other areas of private international law, such as the choice of law rule for contract? In particular, how is this theme to be reconciled with the fact that on the orthodox analysis the application of an Australian statute may depend on where in Australia proceedings are instituted? The decisions in Lipohar and Pfeiffer thus challenged a number of aspects of the orthodox approach to resolving competitions of law within Australia, implicitly reopened the question of the meaning and effect of s 118 of the Constitution, and gave some indications of what the constitutional imperatives might be. In this context it is appropriate to re-examine the construction of s THREE CONSTRUCTIONS OF SECTION Relevant provisions Section 118 of the Constitution provides as follows: Full faith and credit shall be given, throughout the Commonwealth to the laws, the public Acts and records, and the judicial proceedings of every State. Under s 51 (xxv) the Commonwealth Parliament is granted power to legislate with respect 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 the Constitution, shall be binding on the courts, judges, and people of every State and of every part of the Commonwealth, notwithstanding anything in the laws of any State The narrow approach to s 118 That s 118 has some substantive effect was suggested by a majority of three High Court judges in Merwin Pastoral in Rich, Dixon and Evatt JJ indicated that if the rules of private international law rendered an interstate statute applicable to a dispute within an Australian court, then s 118 prevented a party (at least in that case) from seeking to prevent the ap~licationof that law by asserting that it was contrary to the public policy of the forum. 8 This suggestion marked the provision's high water mark until Breavington. The case of Anderson,?9 in 1965, involved a suit brought in NSW over a car accident occurring in the ACT. A federal ordinance for the ACT had introduced apportionment, overturning the common law rule that contributory negligence was a complete defence. In NSW the common law defence still applied. The defendant sought to rely on this defence, whereas the plaintiff sought to have ACT law govern the dispute, Pfeiffer (2000) 203 CLR 503,528 [44] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); see also 551 [123], 553 [129]-[130] (Kirby J). Merwin Pastoral (1933) 48 CLR 565, 577, (1965) 114 CLR 20.

16 262 Federal Law Review Volume 31 arguing that s 118 dictated what law should be applied in matters within federal jurisdiction. The plaintiff's constitutional argument unanimously was rejected by the High Court. One part of the judges' reasoning was to take a narrow view of the ACT ordinance, regarding it as directed only to ACT courts. 80 This construction was open but it is not a necessary view of such laws (see further below, Part 6.4). Another element of the reasoning was that the Jilaintiff was suing to 'enforce a right given to him by the law of New South Wales'. 1 Yet, at least on the modern view applied in Lipohar, the plaintiff was actually suing to exercise his rights under the Australian common law, not under some peculiarly NSW construct. In any case, it was implicit in the judges' approach that s 118 did not override the operation of the common law principles of choice of law. This view was reaffirmed in McKain in The majority of Brennan, Dawson, Toohey and McHugh JJ rejected the type of approach adopted by Wilson, Deane and Gaudron JJ three years before in Breavington. In Breavington itself Mason CJ had also rejected the view that s 118 overthrew the common law rules. 83 A clear majority in Breavington did affirm that the suggestion in Merwin Pastoral was good law,84 as was confirmed in Pfeiffer. And it appears that s 118, like its partial reflection in s 185 of the Evidence Act 1995 (Cth),85 has some evidentiary effect. 8 Thus the content of interstate law is a matter of judicial notice and need not be proved as a question of fact. Beyond this, on the orthodox view, s 118 has little to say on the recognition and enforcement of interstate 'laws' and 'public Acts'. As will be argued below in Part 5, there are four key objections to the narrow approach to s 118: it denudes an apparently significant constitutional guarantee of content; it facilitates different legal answers for a dispute depending upon where it is litigated; it deviates from principles of parliamentary supremacy and representative democracy; 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 JJ Breavington involved a car accident in the Northern Territory, litigated in Victoria. A competition of law arose because a Northern Territory statute provided for a statutory compensation scheme and restricted recovery of common law damages. In Victoria the common law would have applied. The statute was expressed to apply to residents of the Territory, and the plaintiff was such a resident at the time of the accident. The Court unanimously held that the Territory law did apply to restrict the plaintiff's claim. Unlike the other members of the Court, Wilson, Deane and Gaudron JJ took a constitutional approach to the question Ibid (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 (Brennan n, (Dawson n. Ibid 81 (Mason Cn, 96-7 (Wilson and Gaudron JJ), 116 (Brennan n, (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) 114 CLR 20, 45 (Windeyer n.

17 2003 Conflicts and Choice oflaw 263 Deane J held that Australia had a unitary system of law, in the sense that it was a comprehensive system 'in which the substantive law applicable to govern particular facts or circumstances is objectively ascertainable or predictable and internally consistent or reconcilable.'87 In other words, the applicable substantive law would be the same regardless of where a matter was litigated within Australia. This view was supported by six considerations: 88 1 The conferral of original jurisdiction on the High Court, and the creation of federal jurisdiction, suggests 'the existence of a national law, with Commonwealth and State ingredients' to be applied when disputes fall to be determined in this jurisdiction. 89 In other words, the existence of a form of national jurisdiction presupposes the existence of some coherent and uniform means of identifying one governing law for any type of dispute, wherever arising. 2 A jurisprudential basis of the Constitution, implicit in the separation of judicial power, is that there are independently existing and ascertainable laws to be applied by judges when the occasion arises. It cannot have been intended that the content of State law be indefinite, in the sense that its application was contingent on where in Australia proceedings were instituted. 3 The 'pervading influence' of the uniform common law within Australia suggests the existence of a unitary system It is implicit in the constitutional system that individuals should not be 'exposed to the injustice of being subjected' to the simultaneous but inconsistent demands of two laws. 91 This principle was recognised in University ofwollongong v Metwally92 in 1984, in which the High Court held that the Commonwealth could not retrospectively deem one of its laws to be not inconsistent with State laws The conferral of general, and now final, appellate jurisdiction on the High Court facilitates and implies 'an ultimate unity' within the Australian legal system The States were established and are maintained by the Constitution, as manifest in the preservation in ss of State constitutions, powers and laws. The Constitution established one 'new national structure'.95 Deane Jconcluded that the application of the rules of private international law to intra Australian disputes is inconsistent with the recognition that Australia is a unitary legal system, for those rules may produce different legal results depending on where one (1988) 169 CLR 41,121. Ibid Ibid 122. Ibid 123. Ibid. (1984) 158 CLR 447, see especially 467, Breavington (1988) 169 CLR 41,123. Ibid 124. Ibid

18 264 Federal Law Review Volume 31 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 power of the States is 'fundamentally territorial'.97 If there is a competition between the statutory laws of two or more States, then that competition is to be resolved by reference to territoriality. The law prima facie applicable will be the law governing conduct, property or status within a State's own territory. However, there may be instances in which there are territorial connections to two or more States, and then the governing law is identified by 'determination of predominant territorial nexus.'98 Some guidance for this test can be found from the principles of private international law, at least insofar as they do not give preference to the law of the forum. 99 Further, there may be some areas, such as taxation, which by their nature can be governed by two or more State laws without inconsistency.loo This approach is not simply about resolving competitions between State statutes. A legal system 'can operate by silence'.lol Thus the principles just identified actually apply to determine which State's body of law, including the common law, should be applied. Similar principles apply in relation to the self-governing Territories, on the premise that the Commonwealth sought to put those polities in essentially the same position as the States with its grant of ~owers to legislate for the 'peace, order and good government' of those Territories. l 2 In this particular case, therefore, Northern Territory law applied as the law governing the rights and liabilities arising from tortious conduct within its boundaries. l03 The arguments of Wilson and Gaudron JJ in Breavington, writing together, were to similar effect but expressed in somewhat different and briefer terms. They argued that it was 'manifestly absurd' that one set of facts in one country could give rise to different legal consequences depending on where an action was brought, and this was especially so when a court was exercising national federal jurisdiction. l04 Whilst s 118 did not directly operate upon choice of law rules, it did resolve conflicts between State laws before those rules could apply.1 05 Section 118 had the effect that 'the one set of facts occurring in a State would be adjudged by only one body of law and thus give rise to only one legal conse~uence, regardless of where in the Commonwealth the matter fell for adjudication'.l 6 The section did not provide a formula for identifying the applicable law. But it did imply an 'inflexible rule that questions of liability in tort be determined by the substantive law that would be applied if the matter were adjudicated in a court... of the State in which the events occurred.'l07 This principle was not directly applicable to the Territories, but should be adopted as a matter of Ibid 125, 128. Ibid 128. Ibid 129, 135. Ibid 137. Ibid 136. Ibid. Ibid Ibid 139. Ibid 88. Ibid Ibid 98. Ibid.

19 2003 Conflicts and Choice oflaw 265 common law. Thus, again, the Northern Territory law governed the particular dispute before 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 of the place of the tort should be given effect throughout Australia, but it is implicit that priority was being given to the predominant interest of the States and Territories in regulating matters occurring within their own boundaries. This emphasis on territoriality was later made express by Gaudron J in McKain, in 1991 (after Wilson J had retired), where she re-expressed her views in slightly different terms: because the States have identifiable territorial limits, the applicable body of law will ordinarily 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 closer to Deane J's approach. In McKain both Deane and Gaudron JJ developed their tests for identifying the applicable 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 the governing law would, at least in borderline cases, 'involve a weighing process' of competing factors including 'what is fair and just'.109 Gaudron J accepted the difficulties 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' or where 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 a search for the 'proper law of the dispute' for cases connected to two or more jurisdictions. Even with this development, Opeskin made the point that Deane J did not specify what type of interests were to be assessed: legitimate governmental interests of the States, or objective factual connections (that is, balance of convenience type considerations such as where the parties and witnesses reside).1 11 There is much to be said for the type of approach taken by Wilson, Deane and Gaudron JJ. In particular, the notion of one set of facts being judged by one law with one consequence within Australia is an attractive ideal. Nevertheless, as will emerge below in Part 5, there are also some difficulties with their views. In summary, they allow insufficient recognition of the States in passing laws with some extra-territorial operation, they may be difficult to apply to areas of law other than tort, and do not provide clear criteria for identifying the applicable law. 4.4 An alternative view: full effect An alternative interpretation112 of s 118 is that it requires what it says: that the laws and 'public Acts' of every State be given full faith and credit, in the sense of full effect, los 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: 'Private Intra-National Law: Choice orconflict, Common Law orconstitution?' (2003) 23 Australian Bar Review 184. A somewhat similar view in the American context is put by Douglas Laycock, 'Equal Citizens of Equal and Territorial States: The Constitutional Foundations of Choice of Law' (1992) 92 Columbia Law Review 249. For other views again of the operation of

20 266 Federal Law Review Volume 31 throughout the Commonwealth. In resolving any Australian legal dispute all Australian courts would thus be required to apply any valid Australian statute which applied to the dispute by its terms, properly construed. If two State statutes purported to apply, and were inconsistent, then that conflict should be resolved by applying the law more closely connected, in terms of legitimate governmental interests, to the particular issue in the particular case. Certain principles can be stated to assist in resolving such conflicts. This 'full effect' construction of s 118 overlaps significantly with the approach taken by Deane J. There is one major difference. The effect of his Honour's view was to apply the body of law of one State or Territory to a dispute, at least if the dispute was primarily 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 take precedence over the statute passed by another State. In contrast, the full effect approach simply involves applying the valid statutes of all States. Let us say, for example, that a tort occurred in NSW and there was no NSW statute regulating the issue, thus leaving the matter to the common law, but there was a valid Queensland statute which purported to apply. On Deane J's approach the common law would reign, whereas on this approach the Queensland statute would be given effect. A comment should be made on terminology. In Pfeiffer the majority stated that the common 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 deciding which system of law to apply. The 'choice' tag, it was said, correctly acknowledges the possibility of applying 'one or other system of law to the facts of the case under consideration'. The term 'conflicts' is better used to identify inconsistency between laws, 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 not be appropriate. 114 There is but one legal system. The judge does not choose which of two bodies of law to apply according to common law rules, rather he or she is required to apply all laws to the extent that they are valid and applicable. A 'conflict' arises when two State or Territory laws apply to one matter in an inconsistent way, and that conflict is resolved by means of the closer connection test, such that one of the laws is inapplicable or invalid to the extent of the inconsistency. This statement of the approach is a brief summary. Necessarily, much of the work is in the detail, which is discussed below in Part 6. Before delineating the approach it is appropriate to examine the case for adopting some such change, including why this construction might be preferable to both the traditional narrow approach and the views of Wilson, Deane and Gaudron JJ s 118 see, eg, Sykes and Pryles, above n 5, , Opeskin, above n 4, ; Georgina Whitelaw, 'Interstate Conflicts of Laws and Section 118' (1994) 5 Public Law Review 238, 241 2, (2000) 203 CLR 503, 528 [43]. See similarly McKain (1991) 174 CLR 1, 55 (Gaudron J).

21 2003 Conflicts and Choice oflaw 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 their natural meaning.1 15 Full faith and credit is provided to the statutory laws of each of the States, throughout the Commonwealth, for those laws are to given effect by all courts whenever applicable by their terms, unless they cannot validly apply by reason of their inconsistency with another law. It is significant that s 118 is in Chapter V of the Constitution dealing with 'The States', a chapter also containing ss , which preserve the constitutions, powers and laws of the States; s 109, which regulates the relationship between federal and State laws; s 113, which expressly preserves the power of the States to regulate alcohol within their boundaries (and itself potentially affecting issues of governing law); and that it is between ss and ss , which regulate aspects of federal-state relations. Section 118 is next in order in the Constitution after the guarantee of freedom of religion 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 until reinvigorated in Street v Queensland Bar Association.1 16 Mason CJ said in that case: The very object of federation was to bring into existence one nation and one people. This section is one of the comparatively few provisions in the Constitution whichwas designed to enhance national unity and a real sense of national identity by eliminating disability or discrimination 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 national unity. Its words - 'Full faith and credit' - suggest some high purpose, rather higher than modifying a rule of evidence. And its terms appear directed to the question of how State laws are to be treated in other States. Yet the orthodox narrow approach gives it little effect. 118 As Deane J argued in Breavington, '[t]o give full faith and credit to something does not, as a matter of ordinary language, mean merely to acknowledge the fact that it exists'.119 If reference to the Convention debates of the constitutional framers is taken to be permissible or desirable,120 they add little here. There was only one brief discussion of the 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 an American text which suggested that the effect of that clause was merely evidentiary, 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 Evolutionary Originalism' (1999) 27 Federal Law Review 323,354-7, Official Report of the National Australasian Convention Debates (1986) (Adelaide session).

22 268 Federal Law Review Volume 31 such that courts of one State could take judicial notice of the laws, Acts and records of another.1 22 At that stage, and until the 1930s, there had been little consideration by the US Supreme Court of the effect of the Full Faith and Credit Clause on the recognition and effect of interstate statutes.1 23 At least one statement had been made by the Court which was arguably consistent with a full effect construction,124 but it cannot be said that was the prevailing interpretation. 125 In this context it is impossible to identi~ with any precision what the Australian framers intended to achieve through s Pryles and Hanks make a plausible, if speculative, argument that the framers appear to have wished to adopt some 'principle of greater legal comity between the colonies', and were content to adopt the American phrase without directing their minds to any precise principle. 127 This notion suggests that the section was intended to have some significant effect, and that this was part of the project of creating one nation. But no clear intended effect is ascertainable from the Convention debates or the historical context. Section 118 should be construed in a manner which gives effect to the natural meaning of its words (reflecting the primary principle of construction),128 which recognises its place in the Constitution and its general unifying aim, and which is consonant with broader Australian constitutional doctrines of federalism, representative democracy, parliamentary supremacy and the rule of law (see further below, Part 5.2). The full effect approach is such a construction. The content it provides to the section is simple: all valid statutes are given full effect. It assists to bring about a closer union by providing one legal answer to legal disputes, wherever litigated. The criterion for resolving inconsistencies between statutes - the closer connection test emerges not from s 118 but from broader notions of federal relations within the Australian constitutional context (see further below, Part 6.1). Applying this approach avoids a significant difficulty with the territorial focus of Wilson, Deane and Gaudron JJ. Whilst that focus might provide a relatively clear answer in the case of torts - or at least some torts - this is not so for other areas of law. 129 Tort law involves conduct, which must take place somewhere. But other areas of law involve questions about relationships or status. A focus on territoriality does not readily indicate what law should govern a contract, for example, which may involve parties residing in different jurisdictions, operating in different jurisdictions, Ibid 1005, see also Note Harvard Law Review, 'Developments in the Law-The Law of Family and Marriage' (2003) 116 Harvard Law Review 1996, Chicago & Alton Railroads v Wiggins Ferry Co, 119 US 615 (1887),622. Note discussion by Laycock, above n 112, 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, 2 nd ed) Pryles and Hanks, above n 126, 66. The American framers appear to have been similarly hazy: Justice Robert Jackson, 'Full Faith and Credit - The Lawyer's Clause of the Constitution' (1945) 45 Columbia Law Review 1, 6; note also Sun Oil Co v Wortman ('Sun Oil Co'), 486 US 717 (1988) 723. Note Amalgamated Society of Engineers v Adelaide Steamship Co Ltd (The Engineers Case) (1920) 28 CLR 129, Sykes and Pryles, above n 5, 326, 328.

23 2003 Conflicts and Choice oflaw 269 performing their obligations in various jurisdictions, and entering or terminating the contract in different jurisdictions. Even tort law raises difficulties where conduct crosses boundaries. 130 In Commonwealth v Mewett Gaudron J applied her 'one legal consequence' approach to the area of contracts, albeit strictly as a matter of common law within federal jurisdiction. 131 She indicated that if the law of a particular State or Territory was the proper 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 which was 'most closely connected' should be applied. Some such principle was needed on her approach to achieve uniformity, but she provided no justification for why this elevation of the common law choice of law rule was supported by notions of territoriality. A related objection to the approach of Wilson and Gaudron H, and to a lesser extent Deane J, is that it does not readily comport with the words of s 118. Their view did not constitutionalise the choice of law rules as such. But it did regard s 118 as playing the role of selecting the one governing body of law. As Kirby J argued in Pfeiffer, 'the language of 'faith and credit' is not apt to describe the making of a choice where there are two or more available possibilities'.132 Sykes and Pryles make a related point: 'The trend of the section so far as its language is concerned, seems to be more towards diversity rather than unity'.133 Such objections would not arise if one saw s 118 not as mandating some set of choice of law rules, nor as directed to choosing the one applicable body of law, but rather as requiring obedience so far as possible to all valid State laws. 5.2 One system of law The 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 additional comments should be made. Deane J's second consideration in support of such a system was the jurisprudential assumption of there being an independently existing law with non-contingent operation. I would prefer directly to invoke the doctrine of the rule of law. This doctrine has been recognised as a legitimate influence on constitutional interpretation. 134 Its scope and effect are the subject of some dispute. Yet there is no doubting of a central tenet, namely that it involves the law being obeyed (such that the 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, Note similarly Re E & B Chemicals and Wool Treatment Pty Ltd [1939] SASR 441, (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 v Herald & Weekly Times Ltd (1993) 182 CLR 104, 196 (McHugh J); Re Residential Tenancies Tribunal; Ex parte Defence Housing Authority (1996) 190 CLR 410, (Dawson, Toohey and Gaudron JJ), 507 (KirbyJ); Kartinyeri v Commonwealth (1998) 195 CLR 337, 381 [89] (Gummow and Hayne JJ); Abebe v Commonwealth (1999) 197 CLR 510, [137]-[139] (Gummow and Hayne JJ), note also 586 [220] (Kirby J); Plaintiff 5157/2002 v Commonwealth (2003) 77 ALJR [103]-[104] (Gaudron, McHugh, Gummow, Kirby and Hayne JJ).

24 272 Federal Law Review Volume 31 The primary fault in the vested rights view was that 'no court can enforce any law but that of its own sovereign, and, when a suitor comes to a jurisdiction foreign to the place of the tort, he can only invoke an obligation recognised by that sovereign'.146 Yet the Australian States are not foreign entities to each other but part of one nation and one legal structure established and maintained by the Constitution. If it is useful to speak of sovereignty here we must at least recognise that 'sovereignty is shared'147 within Australia between the different polities. The fault in that theory thus has no application to the approach here. Opeskin and Juenger have each asserted that the main arguments about the choice of law rules in Australia have arisen in relation to tort, and that the problems there can be resolved by reforming that common law rule (a result now achieved in Pfeiffer).148 Yet different results may occur in any area of law if one jurisdiction has an applicable statute which the courts of the forum must apply, but courts of the other jurisdictions would not apply that statute because it was not part of the body of law selected by the common law rules. The problem of non-uniformity lies at a deeper level than the rule in Phillips v Eyre. A further argument in support of the unitary view can be made in terms of public policy. If substantial legal rights and duties are contingent on the court in which proceedings are instituted then forum shopping is facilitated. As Callinan J argued in Pfeiffer, this then 'could have a significant impact upon the economic, social and other policies of States which have legislated in respect of them differently from other States.'149 Moreover, '[i]t is undesirable that courts might be placed in a position which could lead to a perception, however unwarranted, that they are in competition with one another'.150 One of the reasons for concern about afplying foreign laws is that they may be contrary 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 within the Australian federation in relation to a valid Australian law,153 For these reasons, along with those put forward by Deane J, Australia should be recognised as one integrated legal system in which one set of facts will have substantially one set of legal consequences regardless of where litigated within Australia. 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 remedy provided for in one jurisdiction is not available in another. That the ideal of uniformity cannot wholly be achieved does not mean that all attempts to achieve it should be Guiness v Miller, 291 F 769 (1923) 770 (Learned Hand n. Pfeiffer (2000) 203 CLR 503, 534 [65],536 [74] (Gleeson q, Gaudron, McHugh, Gummow and 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, (2000) 203 CLR 503,570 [184]. Ibid [184]. See, eg, discussion in Renault (2002) 76 ALJR 551, [52]-[60] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ). Juenger, above n 148, 543. (1933) 48 CLR 565.

25 2003 Conflicts and Choice oflaw 273 abandoned. And in this area substantial achievement of the ideal does not come at too high a cost, for reasons explored further below. 5.3 The significance of federal jurisdiction Three points should be made here. The first is that the existence of this jurisdiction favours a one-system approach. When disputes arise within federal jurisdiction being jurisdiction sourced from the Constitution and/or federal law - then there is a particular problem in identifying the law which governs a dispute. The Constitution and federal legislation define and allocate federal jurisdiction, but do not provide a comprehensive legal code to govern all disputes within that jurisdiction. Some substantive law must be identified and connected to the dispute.l 54 Federal jurisdiction is now recognised to be national jurisdiction,155 and thus even when a State court exercises federal jurisdiction (and leaving aside the Judiciary Act) it could not automatically be assumed that the court must apply the State law of the forum in preference 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 6 subject to the Constitution and federal law, these provisions make it likely that the statutory 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 to fill any gaps in federallaw. 157 In Pfeiffer the majority stated that the fact that the outcome of an action in tort in federal jurisdiction 'may be affected significantly by where the court sits is properly called odd or unusual.'158 This was a significant step in their reformulation of the choice of law rule for tort. The point may equally be made of the areas of law beyond tort. It is a factor militating in favour of a system which produces a uniform governing law wherever a matter is litigated within Australia.l 59 One should be wary of attributing too much significance to this point. Sections 79 and 80 are the creatures of the federal Parliament, not constitutional provisions. The High Court has noted that there may be constitutional imperatives at work here. 160 It is far from self-evident that any such imperatives would give particular significance to where 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 Hayne JJ); Australian Law Reform Commission, The Judicial Power of the Commonwealth, Report No. 92 (2001) [30.16]-[30.17]. 155 Pfeiffer (2000) 203 CLR 503, 530 [53] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ). See generally ALRC, Report No. 92, above n 154, chapters 2 and 30. Pfeiffer (2000) 203 CLR 503, [55]-[58] (Gleeson q, Gaudron, McHugh, Gummow and Hayne JJ), noting Musgrave v Commonwealth (1937) 57 CLR 514. See also Kruger v Commonwealth (1997) 190 CLR 1,139 (Gaudron J) (2000) 203 CLR 503,532 [59]. Breavington (1988) 169 CLR 41, 88 (Wilson and Gaudron JJ), 122 (Deane J); cf Anderson 160 (1965) 114 CLR 20,30 (Kitto J). 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 and Gummow JJ), cf 639 [219] (Hayne and Callinan JJ).

26 274 Federal Law Review Volume 31 constitutional validity of at least s 79 (in whole or part) is not beyond question, even leaving aside s 118 of the Constitution. The second point here is that the High Court has recently held that when s 79 applies in federal jurisdiction to 'pick up' State and Territory laws as 'surrogate federal laws', any inconsistencies between those laws and federal laws are to be resolved as thou~h they were laws from the same source, that is, as though both were federal laws. 61 It may be questioned for how long this surprising conclusion will be upheld and how far it will be pursued. In any event, this approach might encourage an argument that any direct inconsistencies between competing State or Territory laws are also to be resolved by treating the laws as though they were enacted by the same source. 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,162 there are similarities, particularly insofar as this issue would be resolved without resort to the common law choice of law rules. Thirdly, ss 68, 79 and 80 of the Judiciary Act would not alter the potential operation of the full effect approach. All of those sections are expressed to be subject to the Constitution. If s 118 was construed as dictating that full faith and credit should be given by all Australian courts to a State law, then those sections would not be read as purporting to provide otherwise The American experience and the cost of uncertainty Article IV clause 1 of the Constitution of the United States requires that 'Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State'. Plainly s 118 was based on this clause. The Supreme Court of the United States did briefly come close to recognising something approaching the full effect view in its construction of the clause. In particular, its decision in Bradford Electric Light Co v Clapper 164 in 1932 concerned a claim in negligence brought in New Hampshire in relation to the death of a Vermont resident killed in New Hampshire whilst working for his Vermont employer. The Court held that the court was obliged to 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 quickly retreated. 165 The case of Pacific Employers Insurance Co v Industrial Accident Commission,166 in 1939, involved similar facts to Bradford but the Court held that the court could apply the law of the forum, stating: the very nature of the federal union of states, to which are reserved some of the attributes of 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, US 145 (1932) ('Bradford'). As noted by a unanimous Court in Franchise Tax Board of California v Hyatt, 538 US (2003) judgment transcript US 493 (1939).

27 2003 Conflicts and Choice oflaw 275 compelling a state to substitute the statutes of other states for its own statutes dealing with a subject matter concerning which it is competent to legislate. 167 In Allstate Insurance Co v Hague 168 in 1981 the Court held that the Full Faith and Credit clause imposed no more exacting standard than that set by the Due Process clause. All that either clause required was that the state of the law applied must have 'a significant contact or significant aggregation of contacts, creating state interests, such that choice of its law is neither arbitrary nor fundamentally unfair.'169 There was to be no comparative balancing or weighing of interests. 170 Thus in Sun Oil Coin in 1988 the Court asserted that 'it is frequently the case under the Full Faith and Credit Clause that a court can lawfully apply either the law of one state or the contrary law of another'.l72 This 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 its earlier view was the difficulty and uncertainty of applying a balancing of interests approach: 'the question of which sovereign interest should be deemed more weighty is not 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 assessing broad political, financial and social factors, which would be a difficult and arguably inappropriate task for courts. 175 There is some force in the complexity and uncertainty points. The closer connection test suggested here as part of the full effect approach does involve government interest analysis. This type of analysis is not new to the common law world, even leaving aside North American experience. As the High Court correctly acknowledged in Renault,176 the flexible exception created by the House of Lords in Boys v Chaplin involved elements of such. 177 Both the High Court in Pfeiffer and Renault and the Canadian Supreme Court in Tolofson v Jensen rejected a 'proper law of the tort' approach to choice of law, along with notions of a flexible exception, on the basis that they were too uncertain. 178 The Supreme Court said that '[o]ne of the main goals of any conflicts rule is to create certainty in the law.'179 This may be accepted Ibid US 302 (1981). Ibid 313. See also Phillips Petroleum v Shutts, 472 US 797, (1985). Allstate Insurance Co v Hague, 449 US 302,308 n 10 and 312n 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 and Hayne 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, Tolofson v Jensen [1994] 3 SCR 1022,1061.

28 276 Federal Law Review Volume 31 Yet certainty is not the only goap80 The ALRC had itself previously recommended a choice of law rule in tort which involved elements of interest analysis. 181 And whilst the High Court has now rejected flexible exceptions and proper law tests, in Renault the majority re-emphasised that an Australian court may decline to apply foreign law which is contrary to Australian public policy, and indicated that this required 'closer attention to the respective governmental interests involved'.182 Here, the imperatives of uniformity and of courts giving effect to valid, applicable statutory law are weighty. And one type of complexity is traded off for another, in that the strategic and legal complexity involved in potentially having different legal answers in different States and Territories would substantially be removed. The suggestion by the Supreme Court in Pacific Employers Insurance 183 that 'the very nature of the federal union' precludes requiring one State to give effect to the laws of another begs the question. The issue is what sort of federal union the Constitutions create. There is no single model of federalism to provide an answer. 184 Guidance is provided by the doctrines of the rule of law, parliamentary supremacy and representative democracy, combined with an acceptance that Australia is and should be a substantially integrated and united nation. In any event, the force of the uncertainty objection is limited in the Australian context because the issue will not frequently arise. The closer connection test is only to be applied where two or more statutes purport to apply and do so inconsistently. It is relatively uncommon for laws to be interpreted as having application to significantly extra-territorial conduct, and laws are less likely to conflict if they only apply to matters arising within the polity's territory. Moreover, State and Territory laws are often in parallel terms. As Mason CJ noted in Breavington, 'there is a basic homogeneity or similarity in the common law and the statute law in force in the various States and Territories.'185 Practical difficulties that might arise in appging some 'interest' test in the United States will not arise here to the same degree. 1 6 Australia is not nearly so diverse a nation - socially, economically or legally - as the United States. Resolving conflicts is both less likely to be required, and more easily achieved, where there are eight substantially similar jurisdictions rather than fifty divergent ones, and where the only differences 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 been some suggestion that the Full Faith and Credit clause applies to these common laws Cf Breavington (1988) 169 CLR 41, (BrennanJ); also, analogously Perre v Apand Pty Ltd (1999) 198 CLR 180, [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, 4 th ed) 76-7, (1988) 169 CLR 41, Cf Peter Nygh, 'Full Faith and Credit: A Constitutional Rule for Conflict Resolution' (1991) 13 Sydney Law Review 415, Harris v Harris [1947] VLR 44, 58 (Fullagar J); note also Jackson, above n 125, 18. Cf Breavington (1988) 169 CLR 41, 81-3 (Mason CJ). See discussions in Laycock, above n 112, 290-1; Roger C Cramton, David P Currie and Herma Hill Kay, Conflict oflaws: Cases - Comments - Questions (1981, 3 rd ed) 425.

29 2003 Conflicts and Choice oflaw 277 It is also necessary to look at the degree of certainty of the alternatives. As noted above, in McKain Deane and Gaudron JJ each moved towards applying an approach which might be labelled finding the 'proper law of the dispute' for matters connected to more than one State or Territory. Such an approach would be more uncertain than the full effect approach. It would require a case by case analysis on the facts of each such case, seemingly including reference to such matters as whether the particular parties had a merely fortuitous connection to the place where the events occurred. lss In contrast, on the full effect approach all applicable statutes would be applied regardless. And in the event of statutory conflicts, the particular circumstances of the parties would have limited relevance to the 'closer connection' test (see Part 6.2 below). Even the current American and Australian positions involve uncertainty. In both jurisdictions the question arises of when a court can and should apply the statute law of another State which is not rendered applicable by the choice of law rules. In the recent Hyatt case, the issue was whether a Nevada court was required to give effect to a statutory immunity created by Californian law for a state entity. The Nevada court approached the issue by applying a doctrine of comity by which it would voluntarily apply the Californian law unless to do so would 'contravene Nevada's policies or interests'.is9 It answered that question by referring to the degree to which equivalent entities were given immunity under Nevada's laws. The Supreme Court held this approach was consistent with the Constitution. 190 This method itself involves some governmental interest analysis. Whilst the reference to local law as a guide increased the certainty of the analysis, it did so by adopting a Phillips v Eyre type of parochialism. Similarly, in Borg Warner (Australia) Ltd v Zupan 191 in 1982, the Victorian Full Supreme Court had to consider whether to allow an employer, which had paid workers compensation to an employee injured in a car accident, to seek recompense for its payments from the allegedly negligent driver who had caused the employee's injury. The employer was suing not in negligence but on a distinct statutory right of indemnity under NSW law. The Court held that because Victoria had similar legislation, the NSW law did not offend local public policy and there was no reason not to give effect to it. 192 But the Court did not hold that Victorian courts were bound to give effect to the law, and Murphy and Starke JJ stated no criteria (apart from public policy) by which the choice to give effect to such a law was to be made, whilst Marks J resorted to broad and undefined notions of 'the interests of justice'.193 On the full effect approach, Victorian courts with jurisdiction would simply have been obliged to apply the 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 any case. Insofar as they rest on the possibility of excluding the application of the law of another State based on public policy, that cannot sit with the confirmation in Pfeiffer that public policy may not be employed as a basis for declining to enforce the laws of ISS IS McKain (1991) 174 CLR 1, 46 and 53 (Deane J), 56 (Gaudron J). See Franchise Tax Board ofcalifornia v Hyatt, 538 US (2003) judgment transcript 4. Ibid 10. [1982] VR 437. Ibid (Murphy J), agreeing 463 (Starke J); 462 (Marks J). Ibid.

30 278 Federal Law Review Volume 31 another Australian State.1 94 Similarly, reliance on comity is not consistent with the rejection in Lipohar of the relevance of this notion to issues arising within the Australian federation.1 95 As to the inappropriateness point raised by the ALRC, the sorts of considerations which arise here are similar to those which may arise in other constitutional areas, such as the questions which arise for the justifiable infringement of the guarantees in ss 92 and 117 of the Constitution. 196 Courts do not relish judging such matters. However, the difficulties of application can be reduced by recognising and developing general principles as to the types of governmental nexus which will take priority (see further Parts 6.1 and 6.2). It has been suggested that one of the reasons the US Supreme Court abandoned an interest balancing approach was that 'it would effectively preempt all existing state conflicts rules' and the Court was reluctant to engage in the task of rewriting those rules. 197 In Sun Oil Co, Scalia J for the Court suggested that to go further than the current approach to the clause would be to 'embark upon the enterprise of constitutionalizing choice-of-iaw rules, with no compass to guide us beyond our own perceptions of what seems desirable.'198 The concern about constitutionalising the area is addressed below (Part 5.5). But the points made also reflect the fact that, subject to the Supreme Court's role in enforcing the Constitution, the common law generally is a matter 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 path of developing common law choice of law rules. There can be no equivalent concern in Australia about pre-empting the legitimate sphere of State courts. Finally, another reason given for the Supreme Court's retreat was a concern that it would require a state court to give effect to the laws of all the other states in preference to the laws of its own jurisdiction.1 99 Mason CJ noted this point in Breavington. 200 Even if 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 is certainly not required of the injunction in s 118 which requires giving full faith and credit to the laws of 'every State'. On the full effect approach the laws of the forum are given just as much respect - no more and no less - than the laws of other jurisdictions (2000) 203 CLR 503, 535 [67] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ), [119]-[124] (Kirby J). Note (1999) 200 CLR 485, 503 [37] (Gleeson CJ), 526 [102]-[103] (Gaudron, Gummow and Hayne JJ), 551 [165] (Kirby J). See, eg, Bath v Alston Holdings Pty Ltd (1988) 165 CLR 411; Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436; Street v Queensland Bar Association (1989) 168 CLR 461; Goryl v Greyhound Australia Pty Ltd (1994) 179 CLR 463. Harvard Law Review, above n 121, US 717 (1988) 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 an erroneous application of s 118.

31 2003 Conflicts and Choice oflaw Inappropriate to constitutionalise the area? The concern expressed by the US Supreme Court about giving constitutional status to choice of law rules (or equivalents) has been reflected in Australia. In Breavington Mason 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 is preferable 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 approach from the language of s Similarly, in Pfeiffer Kirby J said that there was reason for caution given that any constitutional solution 'would be insusceptible to ready legislative amendment or variation', which was troubling given 'the complexities of the many issues to be addressed'.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 be adopted it is important to clarify exactly what degree of legislative freedom is being given up. In practical terms it may not be much. Fifty years ago, in Koop v Bebb, McTiernan J set out this prescient foreboding: Litigation involving questions like those in this appeal may increase with the growth of travel betweenthe States and the Territories of the Commonwealth. It seems desirable for the States and the Commonwealth to take any action which is within their constitutional powers 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 for joint legislative action to regulate the area. 204 Such calls have largely gone unheeded. 2os Legislatures have managed to resist these sirens' songs. The full effect approach to s 118 would only constitutionalise the area to a limited extent in any case. If the Commonwealth does have power to legislate on choice of law under s 51 (xxv), as Mason CJ implies it may,206 this would not be taken away. The approach examined here requires that full effect be given to all valid applicable State statutes. Any valid Commonwealth choice of law statute would have overriding status under s 109 of the Constitution, rendering invalid (to the extent of the inconsistency) any State law which purported to regulate an issue inconsistently with the Commonwealth direction. There would then be no valid applicable State law for s 118 to apply throughout the Commonwealth S (1988) 169 CLR 41,83. Pfeiffer (2000) 203 CLR 503, 557 [140]. See further Juenger, above n 148, 534-8; Adrienne Stone, 'Choice of Law Rules, the Constitution and the Common Law' (2001) 12 Public Law Review 9, 12. (1951) 84 CLR 629, 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, [30.44]-[30.49]. Note Breavington (1988) 169 CLR 41, (Wilson and Gaudron JJ).

32 280 Federal Law Review Volume 31 This illustrates that Mason CJ's suggestion 208 that the presence of s 51 (xxv) made it impossible 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's power under s 51(xxv). Could the States pass a valid choice of law statute which would change the applicable law? Deane and Gaudron JJ rejected that possibility in Goryl v Greyhound Australia, applying s 118 to invalidate a Queensland provision which purported to apply the law of a person's residence to the question of the calculation of damages for those injured in motor accidents. They stated that 'the States cannot legislate contrary to the command of s 118.'209 On the full effect approach the question would be approached somewhat differently. A statute regulating the laws to be applied by courts of the forum would prima facie be constitutional. If that statute dictated that another State's statute should not be applied, though it purported to apply, then a competition would arise and the question would be which law had the closer connection to the particular issue. The two statutes would operate at different levels, one regulating a substantive issue and the other purporting to direct a court's 'choice' of law. Generally the substantive statute would take precedence. If that law had some genuine connection to the particular issue it should not be displaced by a generic statutory direction as to what sort of law should be applied in disputes with some interstate element. There may some instances, however, where the forum statute gave effect to a particular legitimate interest of the forum which would outweigh the interest of the other State. For example, in Part 5.6 below a putative NSW law is discussed which purports to require all mining contracts within Australia to be approved by a NSW minister (if one party had a place of business in NSW). If South Australia sought to counteract this with a law providing that 'the NSW Act shall not be given effect in relation to mining contracts for mines in South Australia', then this law could be seen to have a closer connection to the issue, even though it might be characterised as a choice of law provision. It can be conceded that generally the full effect approach would prevent the States enacting choice of law provisions. This does reduce flexibility in a difficult area, and this is a factor counting against adoption of the suggested constitutional construction. 210 Nevertheless, the practical significance of this restriction may be limited, and any Commonwealth power would remain unfettered. In light of the strength of the positive constitutional imperatives discussed above, this factor should not be determinative here. 5.6 Silence, the common law and the over-application of statutes The most important difference between the full effect approach and Deane J's view relates to the treatment of the common law and 'the fact that a legal system can operate by silence'.211 The effect of his view, and that of Wilson and GaudronJJ, is to seek a connection between the dispute before the court and the body of law of one State or 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.

33 2003 Conflicts and Choice oflaw 281 Territory. This may involve applying the common law (applicable in one State) in preference to the statute of another State or Territory, even though the statute purported to apply. In contrast, the full effect approach involves giving effect to statutes (properly construed) and would never involve the common law overriding an applicable statute. This means that a conflict or competition only arises if there is an inconsistency between two or more applicable statutes. There are two virtues in Deane J's suggestion. It recognises that a legislature's decision 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 of simplicity in identifying just one body of applicable law. There are also disadvantages to this view, which will be addressed shortly. Sykes and Pryles have ridiculed the notion of giving full effect to Australian statutes. 213 They give the example of a NSW law providing that all contracts involving mining 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 South Australia in relation to a contract for mining in that State, and all the relevant connections were to South Australia except that one party had a place of business in NSW, 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 that they appear to regard as self-evident. First, the connection between the putative NSW law and the extensive matters regulated is slight. It appears that the State was merely seeking to use the existence of some link to regulate matters quite unconnected in any real sense to governance of its territory. Given this, the law would be of borderline validity even on the liberal 'real connection' test relating to laws with extra-territorial operation. That the threshold for validity of a law is low does not mean there is no threshold at all. 214 Secondly, laws with significant extra-territorial operation are relatively rare, let alone laws which effectively seek to impose one State's policy throughout the Commonwealth. 21S And thirdly, reflecting this, there would be political controversy over such an attempt by a State to punch above its weight. The international experience with extra-territorial laws of the United States illustrates this. One should be wary of reading down the natural meaning of constitutional words because of the unlikely possibility of 'extravagant use'.216 Fourthly, a NSW court would be obliged to apply the putative NSW law were one party to institute proceedings there. Thus despite the invocation of 'common sense', the South Australian contract would be contingently invalid on the current approach anyway. 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 statute protecting its own mining contracts from the requirement of NSW ministerial approval. Such a law would clearly have a closer connection to the facts discussed See similarly Pryles and Hanks, above n 126, 91, 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 KirbyJ in Mobil Oil (2002) 76 ALJR 926, 946 [107]-[108]. The Engineers Case (1920) 28 CLR 129, (Knox CJ, Isaacs, Rich and Starke JJ).

34 282 Federal Law Review Volume 31 Admittedly, it would be inconvenient for South Australia to have to do so. But South Australia may wish to do so anyway given the possibility of NSW proceedings. Australia, amongst other nations, has gone to the effort of passine, legislation to counteract some of the American laws with extra-territorial operation. 2 The full effect approach would ensure that the South Australian law would override the NSW law in all courts within Australia for the facts postulated. Moreover, what some might see as a problem of over-applying statutes can also be characterised as a recognition of the legitimate interest-normatively and constitutionally- that States and Territories have in regulating some matters beyond their own borders. An objection to the approaches of Deane J and Wilson and Gaudron 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 law would not be selected either by the choice of law rules or by a pure focus on territoriality. As noted above, in Commonwealth v Mewett Gaudron Jheld as a matter of common law that her uniformity approach meant that generally the proper law of a contract would be applied. 218 Parties to a contract - or least the party with the bargaining power - may choose the governing law precisely to avoid statutory obligations imposed by a polity.219 Yet if the contract or the parties are intimately connected with that polity, such as if they both reside there, then that polity may have good cause to seek to impose its laws regardless of the parties' choice. Thus the Fair Trading Acts may regulate misleading or deceptive conduct occurring within the jurisdiction regardless of the proper law governing a related contract. 220 The Contracts Review Act 1980 (NSW) provides that it applies to contracts in some circumstances even where NSW law is not the proper law (s 17(3)). Such extended application is hardly surprising given that one of the main points of that Act is to overcome inequalities in the bargaining power of parties. If the parties had chosen another Australian law to apply, 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 legislation would be thwarted. A legitimate attempt by NSW to protect its residents could then easily be sidestepped. If one body of law is to apply, and that body of law is the one with the predominant territorial nexus (per Deane J) or 'will ordinarily be that of the State in which the events in 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-territorial effect. 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 impact within 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 Foreign Proceedings (Excess ofjurisdiction) Act 1984 (Cth). (1997) 191 CLR 471, Recognised in Kay's Leasing Corp Pty Ltd v Fletcher (1964) 116 CLR 124,143 (Kitto J); see also Akai (1996) 188 CLR 418, 435, (Toohey, Gaudron and Gummow JJ). See, analogously, Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160, 164 (Gleeson CJ). McKain (1991) 174 CLR 1, 56. (1988) 169 CLR 41,128-9,140.

35 2003 Conflicts and Choice oflaw 283 travels into another State to perform an act of termination, then the first State has a legitimate interest in regulating the contract or relationship, including as to the validity of its termination. Another illustration is the type of situation considered in Brownlie v State Pollution Control Commission,223 in which the NSW Court of Appeal upheld the application of a NSW pollution law to activities occurring within Queensland because of the polluting effect felt within NSW boundaries. It must be remembered that extra-territorial operation is a matter of degree (see above Part 1.3). That a law has some degree of extra-territorial operation is not inconsistent with the law still being closely tied to the interests of the State and its residents. As Gleeson CJ stated in Mobil Oil v Victoria: There is nothing either uncommon, or antithetical to the federal structure, about legislation of one State that has legal consequences for persons or conduct in another State or Territory... The idea that all transactions and relationships giving rise to legal consequences 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 towards what might be called a 'proper law of the dispute' when a matter has a significant connection to two or more jurisdictions. Deane J also accepted that in some areas, such as taxing laws, it might be possible for the laws of two States' to both apply if they are not inconsistent. 225 Yet these concessions raise further questions. What criteria are to be applied in determining when another State has sufficient interest to apply its laws to events which happened (if in part) in the territory of another State? To focus on territoriality cannot supply the answer, for it is implicit in the concession that territoriality is not necessarily determinative. One must come back to an assessment of competing interests, along the lines of the 'closer connection' test outlined below (Parts 6.1 and 6.2). And by what criteria does one distinguish those areas of law in which it may be possible to have the laws of two or more jurisdictions apply? On the full effect approach no such distinction is made, recognising that frequently two or more States will have legitimate interests in regulation, and that this should be given effect so far as possible. It can thus be seen that whilst there is some virtue in respecting the 'silences' of a legal system, this comes at the cost of undermining the legitimate extra-territorial interests of the States and Territories. Furthermore, in protecting legal silences, constitutional protection is effectively being given to the common law and the degree to which it regulates an area. Section 118 does speak of 'the laws, the Public Acts and records... of every State', and the words 'laws' could be construed as extending to the common law. This construction would not be persuasive. 226 The word 'laws' adds to the words 'Public Acts' by making plain that subordinate legislation is covered. 227 Conceivabl~ it might also cover English statutory law, inherited at different times by the 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 (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.

36 284 Federal Law Review Volume 31 different States. 229 Nor is it the law of a 'State'.230 Moreover, it would be surprising within the Australian legal tradition were the general common law to be rendered (partially) immune from statutory modification by the operation of the Constitution ASPECTS OF THE FULL EFFECT APPROACH Having set out the case for the full effect approach, it is necessary to fill out some detail of how it might operate. The approach is generally simple: if a valid State law applies by its terms, properly construed, then it should be applied. Questions of statutory construction do arise about the reach of statutes, as they do in any case, and aspects of this issue are addressed below. Territorial statutes are in a peculiar position and this requires examination. Perhaps the most contentious issue, however, is how to resolve the situation when two States laws address the same subject matter in different terms. 6.1 Resolving inconsistencies between State statutes Australian law is familiar with the notion of statutory inconsistency.232 If two statutes of the same legislature conflict, then the common law takes the later one to overrule the earlier. If a valid Commonwealth law is inconsistent with a State law, then the latter is invalid 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 resolve conflicts between State laws should not greatly worry us. The possibility of direct conflicts between State laws has always existed. Situations may be conceived of where the rules of private international law will not avert the clash, of which the potential competition between State laws dealing with sea areas was an instance noted by the High Court in Port MacDonnell. 233 The situation is analogous to the issue of whether and to what extent the different polities in the federation can bind each other by their laws-the Constitution creates an inherent tension which must be resolved, but does not itself provide any clear resolution. 234 The constitutional framers appear to have seen the potential for such State-State clashes to arise by the provision in s 74 for dealing with appeals 'as to the limits inter se of the Constitutional powers of any two or more States'. Federal laws traditionally may be inconsistent with State Acts for the purposes of s 109 of the Constitution in two sorts of ways. The Commonwealth law may 'cover the field', that is, the federal law may be taken to be 'a comj'lete statement of the law governing a particular matter or set of rights and duties'.23 If the Commonwealth did not seek to provide an exhaustive statement of the law then the question is whether Gummow, above n 29, 990, James Hardie & Co Pty Ltd v Barry (2000) 50 NSWLR 357, 376 [82] (Mason P); Gageler, above n 112, 186. Note Nicholas v The Queen (1998) 193 CLR 173, 232 [143] (Gummow J); Gummow, above n 29,1005. See discussion in University ofwallongong v Metwally (1984) 158 CLR 447, (Mason J). (1989) 168 CLR 340, 374. Note also discussion of the possibility in State Authorities Superannuation Board v Commissioner of State Taxation (WA) (1996) 189 CLR 253, (McHugh and Gummow JJ); Mobil Oil (2002) 76 ALJR 926, [108]-[110] (Kirby J). See discussion in Kirk, above n 210, Victoria v Commonwealth (1937) 58 CLR 618 (' Kakariki'), 630 (DixonJ), approved Telstra Corporation Ltd v Worthing (1999) 197 CLR 61,76-7 [28] (per curiam).

37 2003 Conflicts and Choice oflaw 285 there is direct inconsistency between the requirements of Commonwealth and State law. In fact, this notion overlaps with the 'covering the field' doctrine, for the question is whether the State law 'would alter, impair or detract from the operation of a law of the Commonwealth Parliament'.236 Complying with one law might detract from the intended operation of another even if it is theoretically possible to comply with both. In some cases direct inconsistency may only arise when a federal or State Rower actually is exercised, producing a conflict between two sets of legal requirements. 237 Of course, there are important differences between Commonwealth-State and State State conflicts. The Commonwealth has paramount power, and only on certain limited subject areas. The States have general legislative power within their own territory, along with some extra-territorial legislative power. The Constitution does not assign paramountcy 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 must involve a decision as to which State has the closer connection to the matter being regulated. No State can be presumed to have primacy. What constitutional basis would the suggested closer connection test have? It would not be particularly tied to s 118. On the full effect construction that provision requires that effect be given to valid applicable laws but does not resolve inconsistencies between them. The test instead is based on necessity and federalism, as informed by the rule of law. If State laws conflict then the conflict must be resolved. Outside the world of Kafka a person cannot be required by one court to obey two inconsistent legal demands. One of the demands must be inapplicable or invalid vis-a-vis that person to the extent of the inconsistency (whether one sees the result as inapplicability or invalidity is not of great moment). In identifying the appropriate means of resolution it is clearly appropriate to refer to the nature of the federal system established by the Constitution and the Australia Acts, for it is within that system that the States exist and exercise their powers pursuant to ss of the Constitution. Within that system States have power to make laws for the government of the territory within their boundaries. They also have power to make laws governing matters outside those boundaries if those matters have a real connection to their territory. The common element to these two types of power is having a connection to the government of the territory. If an assessment of paramountcy is required, it is natural and appropriate to assess the relative strengths of that connection, that is, the strength of the governmental interest in regulating a matter connected to the governance of the polity's territory. This test can be seen as an implied limitation on State powers derived from the incorporated constitutional doctrine of federalism (informed by the rule of law), a doctrine which is manifest in multiple provisions of the Constitution. 239 It thus has much the same basis as was alluded to by the High Court with respect to the limitation on State powers to make laws with extra-territorial operation Kakariki (1937) 58 CLR 618, 630 (DixonJ). Commonwealth v Western Australia (1999) 196 CLR 392, [138]-[147] (Gummow J). (1989) 168 CLR 340, 374. Cf Kirk, above n 210, Union Steamship (1988) 166 CLR 1,14 (per curiam), discussed in Part 1.3 above.

38 286 Federal Law Review Volume 31 The test Deane J suggested in Breavington was 'predominant territorial nexus',241 which is a way of stating 'closer connection' but giving emphasis to territoriality in the sense of focusing on where conduct takes place. As was noted above, neither Deane J nor Gaudron J articulated developed criteria for applying these tests beyond prioritising the lex loci delicti for torts. The closer connection test should be determined by assessment of competing governmental interests rather than by a simple focus on where conduct takes place. Indeed, as noted above in Part 4.3, the two judges appeared to move away from a focus on simple territoriality, with Deane Jspeaking of having to weigh competing factors including 'what is fair and just',242 and Gaudron J accepting that 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 power to govern their territories, where particular conduct takes place may be fortuitous, as Gaudron Jaccepted. 244 The particular act or omission may also only be a minor aspect of the overall conduct with which a legal dispute is concerned (for instance where just one element of the cause of action occurred in a jurisdiction). In either case, the State where the conduct occurred may have a much weaker claim to regulate the matter than another State: for example, if the legal issue was the basis on which a contract could be terminated, and the contract and the parties were intimately linked with one State but the contract happened to be terminated in another. Moreover, a pure focus on territoriality would not resolve all issues, for the conflict might be between two laws having extra-territorial operation. However, whilst connection should be assessed on a case-by-case basis (see further below), balance of convenience type considerations such as the location of particular evidence or witnesses should not determine the constitutional question of which State's law is entitled to take priority. Although one should not articulate a firm rule of territorial paramountcy, it is certainly important to recognise the 'predominant concern' of State Parliaments with 'acts, matters and things in their respective law areas'.245 For issues where particular conduct is the most important feature, then generally the State in which that conduct occurs will be the State with the closest connection, given its strong claim to regulate what conduct takes place within its boundaries. 246 Thus negligent acts are likely to be most closely connected to the State in which they occur, and omissions connected to the area in which the non-performed actions could and should have been expected to occur. And this will be so even, for example, if all the parties and witnesses involved in a car accident happen to be in a jurisdiction somewhat fortuitously, and it would be more convenient for them to have the case heard elsewhere. Stephen Gageler, who has also proposed a full-effect construction of s 118, has suggested that conflicts between State laws should be resolved as though they were laws enacted by the same source, so that 'the general might be expected to give way to (1988) 169 CLR 41,129. McKain (1991) 174 CLR 1, 46, 53. Ibid 56. Ibid. Pfeiffer (2000) 203 CLR 503, [75], also [67] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ). Note Pacific Employers Insurance Co v Industrial Accident Commission, 306 US 493 (1939) 502 3; cf Allstate Insurance Co v Hague, 449 US 302 (1981).

39 2003 Conflicts and Choice oflaw 287 the particular and, in the extreme case of equal particularity, the earlier to the later.'247 The rules developed to deal with same-source inconsistencies are based on the premise that the one Parliament has sought to enact laws in a coherent manner, and thus that the laws must be read together so far as possible. No such premise applies to laws from 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 an issue. That another State has spoken more specifically or more recently on the subject are rather fortuitous factors. They do not provide sufficient constitutional or normative justification for a judge to disapply an otherwise valid State law. Such a test could also encourage unseemly re-enactment of laws by States in order to gain themselves last-intime status. 6.2 Applying the closer connection test Conflicts between State statutes should be resolved on a case by case basis, and not by abstract assessments of paramountcy simply by comparing the two laws (as frequently occurs under s 109).248 One cannot say in the abstract that either State had a greater right to regulate the issue, but must refer to particular facts. This approach does reduce legal certainty but is unavoidable when deciding between two legal regimes which stand 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 if it has spoken on an area then that is the final word. 249 The Commonwealth has the power to exclude State law from application with respect to its enumerated heads of power by virtue of its paramount position. The States do not have this power vis-a.-vis the general legislative powers of each other. However, this does not mean that one should ask only whether or not it is possible to obey both laws. Rather, the question should be whether the application of either law 'would alter, impair or detract from the operation' of the other. If so, a conflict situation arises and one law only should be identified as governing the particular situation. Thirdly, as Deane Jrecognised, when assessing connection some indirect assistance can be gained from the common law choice of law rules, at least insofar as they do not discriminate in favour of applying the law of the forum. 250 A key objective of the choice of law principles is to identify the legal system with which the issue (or the type of issue) is most closely connected. 251 This overlaps with the need here to identify which of two or more statutes has the closer connection to the particular issue. Thus generally the law of the place would have the closest connection to legal issues relating to immovable property, and the law of a person's domicile would frequently have the closest connection to issues of succession for movable property. Such an approach can reduce uncertainty. Fourthly, in speaking of comparing the degree of connection, the question arises of connection to what? The question is whether one assesses the connection between the whole claim and the two States (with that statutory law then applying to the whole Gageler, above n 112, 188. Note Mobil Oil (2002) 76 ALJR 926,952 [131] (Kirbyn. 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.

40 288 Federal Law Review Volume 31 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 out above in Part 1.2. A Victorian resident has a car accident in NSW. NSW has a law imposing statutory limits on common law damages. Let it be assumed that Victoria passes a law setting different limits on the damages payable to anyone ordinarily resident there who is injured in a car accident anywhere in Australia. The Victorian government might justify such a law by asserting that it provides a range of services and care options to accident victims, and there should be limits on the costs borne by the community (through insurance schemes) beyond this. B, a resident of Victoria, has an accident in NSW. One cannot apply both, for to apply one would be to alter, impair or detract from the operation of the other. To ascertain which law should apply, should one assess connection between the whole claim (duty, breach and damage) and the two States, or between the particular issue (damage) and the States? As argued above, in relation to tortious conduct it will generally be the case that the law of the place will have the closest connection to the subject matter, but that is not obviously true in relation 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, valid Australian laws, thus it is the result which is most closely tied to relevant constitutional imperatives. One is not attempting to tie a dispute, or a transaction, to one system of law. There is one Australian system of law at work. The issue here involves resolving a constitutional conflict between two applicable statutes with inconsistent demands on a particular issue. However, it is submitted that certainty and simplicity can be taken into account as legitimate considerations in determining whether a particular issue is more closely connected to one or other State. Certainty is, after all, an important element of the rule of law. For example, I have suggested that tortious conduct will generally have the closest connection to the place where it occurs. Given this, it would be legitimate to argue that all the consequences of tortious conduct will generally also be most closely connected to that place in the absence of some very compelling competing interest of another State, on the basis that the breach and damage are intimately intertwined and it is artificial and productive of uncertainty to separate them. On this view, the calculation of damages would generally be governed by the law of the place where the tort occurred if there were a conflict between two States' laws. Thus it should not be assumed that in the example discussed the Victorian law restricting damages necessarily would be the one with the closer connection. The court would have to assess the strength and legitimacy of the Victorian governmental claim to regulate damages payable to its residents. It would be strongly arguable that whilst the effects of tortious conduct outside Victoria can certainly be felt within Victoria (for example, potentially burdening Victoria's health or insurance system), a law restricting damages payable does not significantly mitigate this effect. 252 Therefore the NSW law might have the closer connection. A different Victorian law- say one requiring some of those damages to be held on trust by a statutory corporation and paid out only over time - might have more chance of applying. 252 Cf Goryl v Greyhound Australia (1994) 179 CLR 463, (Deane and Gaudron JJ).

41 2003 Conflicts and Choice oflaw Conflicts between State and Territorial statutes 253 In Lamshed v Lake,254 it was held that laws made by the Commonwealth under its plenary constitutional power over the Territories (s 122) apply as binding federal laws throughout the Commonwealth, may have extra-territorial operation as an incidental part of governing the Territory, and will attract primacy over State laws under s 109 of the Constitution. 5 Laws passed by Territorial Legislative Assemblies, too, depend on the 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 may be treated as having automatic paramount status over inconsistent State laws in the event 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 not apply directly to protect the laws of the Territories. However, assuming that Territorial statutes are granted overriding status throughout the Commonwealth by s 109 and covering clause 5, this already has the effect of ensuring that full faith and credit-in the 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 much credit to Territorial laws. On the face of it, one would not be applying a 'closer connection' test in a competition between a State and Territorial law. Rather, the Territorial law would have automatic primacy if inconsistency arose in the broad s 109 sense of that notion (that is, including the 'covering the field' doctrine). There is no good policy reason why Territorial law made by local legislative assemblies should have such automatic priority. Deane J offered a resolution to the problem which is persuasive. 258 He noted that the Commonwealth had granted powers to the self-governing Territorial legislatures to make laws for the 'peace, order and good government', within certain limits, of their territories. This grant of power thus used the traditional phrase for grants of legislative power, and can be taken to manifest an intention in the Commonwealth to give the Territories legislative powers which substantially correspond to those of the States. It was therefore open to recognise an implied statutory limitation on the grants of power that corresponded to the constitutional limitation on State legislative power, namely that in the event of a competition between statutes of different provincial jurisdictions the statute would prevail which had the predominant territorial nexus (or, on my formulation, 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 to apply only when dictated by the choice of law rules In relation to conflicts between Commonwealth and Territorial laws, see Northern Territory v GPAO (1999) 196 CLR 553, [42]-[61] (Gleeson CJ and Gummow n, [219]- [223] (Kirby n.. Lamshed v Lake (1958) 99 CLR 132. Ibid 141, 146 and 148 (Dixon Cn. Cf Opeskin, above n 4, Breavington (1988) 169 CLR 41,115-6 (Brennan n, (Dawson n. Ibid Barcelo v Electrolytic Zinc Co ofaustralasia Ltd (1932) 48 CLR 391, 427-8; Wanganui-Rangitikei Electric Power Board v Australian Mutual Provident Society (1934) 50 CLR 581,

42 290 Federal Law Review Volume 31 In relation to conflicts between the statutes of two self-governing legislatures, it would be reasonable to presume that the Commonwealth intended that the law with the closer connection would prevail, regardless of which law was enacted first. A supplementary, partial solution could also lie at a lower level. It would be reasonable to presume in the absence of a clear contrary intention that, in the Australian constitutional context, Territory legislators did not intend their laws to apply in circumstances where another jurisdiction's laws had a closer connection. 6.4 Interpreting statutes and giving effect to limitations Were the full effect approach to be adopted then the issue of delimiting the reach of statutes - that is identifying what 'connecting factor' they depend upon would become more importai].t. Statutes are commonly expressed in general terms. If taken at face value such statutes would constantly apply and potentially conflict, causing the need for assessments of closer connection. Yet it has long been recognised that such generality 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 delimitation which 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 giving State and Territory laws some extra-territorial effect insofar as it means that those statutes are taken to be directed to courts outside of that jurisdiction? Secondly, what is to be done if the words in the statute do seem to be directed only to the courts of the enacting jurisdiction? In Pedersen v Young,261 Menzies J held that when a statutory limitation period is expressed in general terms then it 'must of necessity' be construed as being directed only to the courts of that jurisdiction. 262 In McKain Gaudron Jcorrectly noted that this necessity arose only if one took the view that the applicable law was and could only be the law of the forum (or the law provided by s 79 of the Judiciary Act). If s 118 of the Constitution were given a substantive operation then this assumption is no longer correct, and it is possible and appropriate to see such provisions as directed to all courts. 263 This view does not necessarily conflict with the presumption that statutes do not have extra-territorial o~eration. The main focus of that presumption is the regulation of conduct of persons. 64 Limitation statutes do not regulate conduct of persons but rather the manner in which remedies for that conduct can be sought. In any case, if the full effect approach is seen as attributing extra-territorial operation to laws it is only of a minor kind, and that operation flows as a result of the substantive effect of s 118 rather 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 occurs in proceedings in other State's courts,265 most laws can appropriately be characterised 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 Gummow JJ). Note also Stevens v Head (1993) 176 CLR 433, (Gaudron J). Re Tracey; Ex parte Ryan (1989) 166 CLR 518, 547 (Mason CJ, Wilson and Dawson JJ) and (Brennan and Toohey JJ).

43 2003 Conflicts and Choice oflaw 291 in substance as stating the law on a particular topic rather than being specifically directed to binding courts which have to apply the law. However, these points do not solve the problem if the terms of a statute are expressly directed to the courts of the enacting jurisdiction. For instance, the Northern Territory Act at issue in Breavington provided that 'no action shall lie in the Territory' in the relevant circumstances. If this statute were simply applied according to its strict terms then it would not be applied by courts of other jurisdictions (leaving aside potential reliance on cross-vested jurisdiction).266 A constitutional question arises of whether the enacting legislature is capable of limiting the application of its statutes in this way. But before reaching that issue, there is another question of whether the enacting legislature should be taken as having intended that limit to apply. To give substantive operation to s 118 would represent a significant change in approach, and it is not one that legislatures would have contemplated in enacting such provisions. 267 Further, the substantive operation of s 118 would be significantly limited if such incidental statutory restrictions were to be given literal effect. In any case, such limitations were generally not taken to prevent the laws being applied by other courts under the principles of private international law. For these reasons, as a matter of statutory construction, there should be a presumption that such usages are not intended to prevent other courts giving effect to the statutes unless there is a clear manifestation of a positive policy to restrict the courts in which relevant rights, duties or powers can be given effect. Of course, this presumption may have to bow to other construction considerations, such as the presumption of legislating within constitutional limits. Further, the presumption relates only to civil matters; there are distinct reasons supporting a presumption the opposite 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 some discussion in the joint judgment in Pfeiffer of the perplexing issues which arise when powers or jurisdiction are allocated by a statute to a particular court or tribunal, and a court in a different State or Territory has to decide whether it can exercise those powers or jurisdiction. Kirby Jlabels this an issue of 'procedural enforceability'.268 The majority state that applicants to a court must take 'the procedures and remedies of that court as they are', and 'cannot ask that the courts of the forum adopt procedures or give remedies of a kind which their constituting statute do not contemplate'.269 Prima facie, the majority continued, 'if the statute law of a State or Territory provides for a remedy at the hands of a specialist tribunal, and not through the courts, the remedy will be one that can be enforced only in that tribunal.'270 A parallel issue can arise when a court exercises federal jurisdiction, such as when the Federal Court exercises accrued jurisdiction. This issue was considered by the High Court in ASIC v Edensor Nominees Pty Ltd. 271 The majority there held that in matters of federal jurisdiction a State cannot withdraw jurisdiction from where it has been 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.

44 292 Federal Law Review Volume 31 allocated by the Constitution or federal law. 272 Where powers are allocated to a particular court by State law then those powers must also be open to other courts exercising federal jurisdiction, for otherwise 'the operation of federal jurisdiction might readily be stultified'.273 Very limited exceptions to this principle were recognised. The matter might be one which could not appropriately be dealt with in federal jurisdiction, for example if it involved the exercise of non-judicial power. 274 The statute may be structured in such a way that the exercise of a power by a particular court is in fact a necessary precondition for legal efficacy of, say, an agreement, and without that precondition the agreement could not relevantly be the subject of a dispute. 275 The same stultification point might be made about courts exercising non-federal jurisdiction. The question, then, is whether there is some equivalent constitutional imperative protecting the ability of State courts to decide matters involving the laws of other States. No doubt parties must take interstate courts as they find them and procedural limitations have to be accepted. The question of applying the laws of another State or Territory can only arise if there is a controversy properly justiciable in that court. The issue here arises when interstate courts are quite capable of hearing the matter and providing appropriate relief. Minds can reasonably differ on whether s 118 should be taken to prevent a State from providing that certain statutory rights or obligations can be litigated only in certain specific courts of its own. A State might have a quite legitimate reason for wishing to limit the courts which can hear matters. It may wish to ensure that judges have specialist knowledge, or it may wish to preserve the integrity and consistency of the body of caselaw relating to the statute's interpretation and application. The Commonwealth has excluded State courts from hearing administrative law cases against it,276 presumably reflecting a view that such governmental matters are not appropriately heard by courts created by another polity. Yet if such limitations are given effect then there may be some deviation from the principle of uniformity of legal consequences. In the end it seems inappropriate to require a State or Territory to extend the reach of its laws into litigation in other jurisdictions. A crucial element of the argument for the full effect approach is the achievement of an integrated, uniform system of law. But the 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 that regard be paid that is greater than was hoped for or intended. Further, for reasons set out below, there are good reasons to restrict criminal prosecutions to the courts of the enacting 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 the courts in which relevant rights, duties and powers can be given effect then s 118 should not be seen as overriding this provision Ibid 588 [59], 593 [72] and [77] (Gleeson CJ, Gaudron and Gummow JJ), 612 [137] and 614 [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 [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.

45 2003 Conflicts and Choice oflaw Criminal law Criminal law has traditionally been treated separately from civil law in relation to questions of conflicts of law. In criminal actions the prosecuting party is usually a manifestation of the polity itself, acting to vindicate the interests of the community. Further, criminal law provides for consequences substantially different from those associated with civil remedies, most notably deprivation of liberty. Enforcement of any foreign 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 enforcement has been seen as something which should be left to that community, and the sharper potential consequences of criminal prosecutions have made forum courts more squeamish about giving effect to foreign public policy.277 Moreover, the potential consequences of criminal proceedings make issues of fairness to the defendant more important, thus it is good policy for prosecutions to take place only in the jurisdiction where the alleged crime occurred so that evidence is more readily obtainable. This policy is reflected in s 80 of the Constitution, which requires that trials of federal offences take place in the State where the offence was committed. For these types of reasons it has regularly been stated that there is a presum~tion that 'crime is local',278 and that the rules of private international law do not apply. 79 However, a construction of s 118 of the Constitution which ignored criminal law should be rejected. The text contains no such limitation, and were it intended it would and should have been expressed. The same arguments of principle relating to the desirability of one legal result apply to this area, perhaps with even greater force than in the civil arena. In Lipohar the plurality accepted that the section did apply to criminal law in stating that it gave a 'constitutional footing' to the double jeopardy doctrines of autrefois acquit and autrefois convict. 280 The question, then, is how s 118 would apply to criminal law on a full effect construction. The first issue is whether it would require that prosecutions for breach of one State's laws could be pursued in the courts of another State. It would not. The presumption against extra-territorial operation operates with particular strength in the criminal sphere. 281 There would and should be a strong presumption that grants of criminal jurisdiction to courts are intended to be exclusive to those courts, that grants of 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 that prosecutors are only authorised to prosecute for offences against the laws of their own State. These presumptions would be rebuttable. As the cooperative corporate regulatory schemes illustrated, there may be good reason for different jurisdictions to provide by mutual legislation that offences under one jurisdiction's law can be Note the quotation from Glanville Williams in Mark Leeming, 'Resolving Conflicts between State 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, [104]-[108] (Gaudron, Gummow and Hayne JJ), approved Pfeiffer (2000) 203 CLR 503, 521 [25] (Gleeson CJ, Gaudron, McHugh, Gummow and 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).

46 294 Federal Law Review Volume 31 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 some form as between States. The next issue deals with a situation where the laws of two States regulate the one instance of conduct. Criminal actions, too, can cross borders or have effects across boundaries. Here, as generally, three questions arise. Do both statutes, properly construed, apply to the conduct? As interpreted, do the statutes conflict? If they conflict, 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 to conduct which crosses boundaries. Further, as noted above in Part 2.1, the plurality's view in Lipohar that the relevant law area for common law offences is the whole of Australia will often mean that conduct in breach of the common law will be triable in a number of States or Territories. The two laws might provide for offences with different elements, with different defences, and/or with different penalties. It one sense it may be undesirable that one piece of conduct should be capable of prosecution in different jurisdictions, perhaps with slightly different laws. Thus Mark Leeming has suggested that cross-territorial crime 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 which differ only slightly, and which can be prosecuted at different times. Different jurisdictions are entitled to choose the content of their regulations, and each has a distinct legitimate interest in seeking to vindicate its community interests. An example of such interests is the case of Brownlie. 286 A NSW body prosecuted a Queensland farmer for polluting NSW waters by spraying chemicals on his farm on the Queensland side of the Barwon River (being the NSW-Queensland border), which then ran off into the river. There was a similar Queensland law regulating pollution of waters, in somewhat different terms. The NSW Court of Appeal upheld the conviction. NSW plainly had a legitimate constitutional and normative interest in regulating the conduct, 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; it does not choose one law over another. No inconsistency arises simply from the fact that two States prohibit the same type of conduct in slightly different ways. That is simply a manifestation of two slightly different decisions of public policy, as is to be expected within the different polities within the federation. Nor is there any inconsistency per se between two State laws which apply to one piece of conduct in the same way (that is, where there is an offence with the same Note Dempster v National Companies and Securities Commission (1993) 9 WAR 215 (Full Supreme 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 For example, Criminal Law Consolidation Act 1935 (SA) s 5C, as applied in Lipohar. See discussion in Matthew Goode, 'The Tortured Tale of Criminal Jurisdiction' (1997) 21 Melbourne University Law Review 411, See Leeming, above n 277, (1992) 27 NSWLR 78.

47 2003 Conflicts and Choice oflaw 295 elements in each jurisdiction). Even if the two laws create different penalties for the same offence, this need not be seen as an inconsistency. For the reasons given at the beginning of this section, a law dictating penalty could and should be construed, prima facie, as directed only to the courts of its own jurisdiction. There is then no inconsistency. 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 the rule of law principle that what is not forbidden is permitted. 288 The defendant also expressly invoked Deane J's views about giving effect to legal silences. The latter approach should be rejected for the reasons given above. As to the former, that principle is not apposite. In the Brownlie type of situation there is a valid and applicable law which forbids the conduct, it is just from another component part of the one legal system. Ultimately the question of whether there is an inconsistency is a matter of statutory interpretation. And as argued above, the 'covering the field' doctrine should not be applied in assessing inconsistency between State laws, which makes it less likely that State laws will be taken to conflict. Inconsistency would arise in this situation, however, were the Queensland law to have gone further than merely prohibiting certain conduct, and actually positively authorised non-prohibited conduct to take place, for example by providing a licence to engage in the relevant conduct. A conflict would exist because Queensland law would positively authorise what NSW law forbids. The defendant in Brownlie argued that this was the case, but the Court of Appeal found that the information before the Court fell short of establishing this proposition. 289 If that position had been established, then the Court would (on the full effect approach) have had to resolve which law had the closer connection 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 for the person to be liable to prosecution for the same offence in another State. 290 The question of whether the particular conduct fell within the particular legal norms would have already been determined, and giving full faith and credit to the 'judicial proceedings' might be seen as giving this determination constitutional protection. This view does not flow from any inconsistency between the laws of the two States, but rather from the inconsistency of judgments. That is not a topic it is necessary to discuss here. 6.6 Illustrations In Part 1.2, above, four examples were set out. The first involved a car accident in NSW caused by a resident of Queensland, injuring a resident of Victoria. NSW had a law restricting the damages recoverable for accidents occurring in NSW. On the full effect approach the restrictions in this Act are valid and applicable, and would be applied regardless of where the injured party sued within Australia (1992) 27 NSWLR 78, 85 (Gleeson CJ). AV Dicey, Introduction to the Study ofthe Law ofthe Constitution (8 th ed, 1915) (1992) 27 NSWLR 78, 82-3 (Gleeson en. (1999) 200 CLR 485,532-4 [116]-[120].

48 296 Federal Law Review Volume 31 The second example involved the same set of facts, but with a Victorian statute setting different compensation levels for any car accident victim who was ordinarily resident in Victoria. A direct inconsistency arises between the NSW and Victorian laws as both purport to regulate the particular issue of damages in this case. The conflict is to be resolved by the closer connection test. Minds can reasonably differ on which law would 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 the tortious conduct are intertwined, and most appropriately dealt with by the law of the place 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 law of Western Australia would declare it invalid, but that State's law was not selected as the proper law of the contract. On the full effect approach the Western Australian law would be applied regardless of the parties' selection of the governing law. The fourth illustration involved the same issue, but with a competing statutory regime of South Australia which provided for the licensing of internet sales of cigarettes. 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 let us say the goods were sold into Western Australia. South Australia has a legitimate governmental interest in regulating the activities of businesses based in its territory. But the relevant conduct related to the importation of cigarettes into Western Australia. The conduct crossed the boundary, and cannot simply be located in either jurisdiction. The effects of the sale would be felt in Western Australia, not South Australia, and a State has a strong interest in regulating conduct and effects having a direct impact within its territory. For that reason the Western Australian law would have 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 the Constitution would directly produce the same result. 291 That provision certainly manifests a similar recognition of dominant governmental interests. For cigarettes sold other than in Western Australia, South Australia would have a closer connection to the conduct of businesses based in South Australia. Another example worth examining is a person suing for defamation. For any publication with national reach it is common to claim damages for the damage done throughout Australia. On the view of the plurality in Lipohar, incidentally, one would be 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 full effect approach, as now, any particular State or Territory statutory defences or limitations would apply in relation to the publication and damage suffered within that jurisdiction. 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 given effect in relation to the limitation on damages. As for the replacement remedy, the question would be whether the forum court had the capacity to grant such a remedy under 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 Section 113 provides as follows: 'All fermented, distilled, or other intoxicating liquids passing into any State or remaining therein for use, consumption, sale, or storage, shall be subject to the laws of the State as if suchliquids had been produced in that State.'

49 2003 Conflicts and Choice oflaw 297 ",' Tasmania. Plaintiffs must take the forum court as they find it. The same result would flow under present common law rules. What if the Tasmanian law was expressed in terms such as this: '[n]o compensation shall be recoverable for loss or damage suffered anywhere in Australia from a defamatory statement published anywhere in Australia'? The preliminary question is to construe the scope of this provision. It could be taken to limit the ability of Tasmanian courts to award damages for loss suffered both there and elsewhere in Australia. This would probably be a valid law, for Tasmania is not obliged to provide a forum for the resolution of interstate disputes, and may define the remedies available in its own courts. In relation to other courts, and taking account of the presumption that a law is not intended to have extra-territorial reach (in regulating external conduct etc), and the additional consideration that it could not be valid unless restricted in some 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 within Australia? Such a law would be unconstitutional unless some real connection to Tasmania could be established. It also might be characterised as an invalid interference in the affairs of the courts of other States. What if the statute provided that 'this Act only applies to claimants ordinarily resident in Tasmania'? The statute would then have a real connection to Tasmania and would probably be valid. Then, on the full effect approach, it would have to be applied throughout Australia by any court hearing a defamation claim from a Tasmanian resident. This may seem a surprising and undesirable result. But such an over-reaching law is unlikely to be passed, would cause interstate political controversy, and might be capable 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. The orthodox narrow approach fails to pay due fealty to the text and its place in the Constitution, and is premised on an anachronistic view of interstate relationships within Australia. The approach proposed by Deane J, and also Wilson and Gaudron JJ, does not sufficiently recognise the legitimate interest of States and Territories in passing laws with extra-territorial operation, may be difficult to apply to areas of law other than tort, supplies no clear criteria for disputes where two jurisdictions have territorial connections, will produce uncertainty in relation to such disputes, and supplies no clear criteria for identifying areas of law where two States or Territories can both regulate an issue. There are disadvantages, too, in adopting the full effect approach examined here. It may increase complexity and uncertainty compared to the orthodox view, and it may lead to some over-application of statutes. It also may lead to a rather rigid and inflexible approach. On the other hand, the practical significance of these problems can be overstated. And the full effect approach to s 118 reflects the natural meaning of its terms, gives real effect to its apparent purpose, is consonant with fundamental doctrines of the rule of law, parliamentary supremacy and representative democracy, and recognises the legitimate claims of States and Territories to regulate connected matters beyond their own borders.