The Bond case and what next Law Reporter

The high court throws another spanner in the works.

When the High Court of Australia held that the Federal Court of Australia did not have power under the cross-vesting rules in the decision of Re Wakim in 1999 it created an enormous problem for the administration of corporate law in this country.

It was felt by the States that the problem could be overcome by bolstering the role of the State Supreme Courts. Indeed, each of the States passed legislation to cope with the problem thrown up by the disappearance of the Federal Court jurisdiction.

The Edensor case, which has now gone on appeal to the High Court of Australia and which in effect saw the Full Federal Court rule that a finding by Merkel J in the Federal Court that certain activity on the part of two companies breached the Takeover Code of the Corporations Law was not effective (because the Federal Court did not have power in the relevant area) has created further problems. There are supposedly a number of cases that may be the subject of the same uncertainty on the part of the Federal Court in progressing the administration of the law.

Now, however, the High Court has gone one step further. In Bond v The Queen ((2000) 33 ACSR 563) the High Court of Australia has confirmed the approach taken in Byrnes v R ((1999) 164 ALR 520) in ruling that certain prosecution action taken by the Commonwealth Director of Public Prosecutions may be ineffective. It will be unnecessary, for the purposes of this note, to go into the details of Byrnes' case. It is sufficient to deal with Bond's case and the potential consequences that case has exposed in arguments before the High Court in the current case of The Queen v Hughes (arguments before the High Court completed - decision pending). The facts of Bond v The Queen are taken from the Butterworths report of the case.

An indictment was presented against the appellant (Alan Bond) in the Supreme Court of Western Australia. It charged him with a number of counts of offences against the law of Western Australia. The indictment was signed by the Deputy Director of Public Prosecutions of the Commonwealth. The appellant pleaded guilty to two counts on the indictment, following which he was sentenced to terms of imprisonment on each of the two counts. The total effective sentence imposed was four years. The Director of Public Prosecutions of the Commonwealth (the Commonwealth DPP) filed a notice of appeal against the sentences imposed. The Western Australian Court of Criminal Appeal allowed the appeal and resentenced the appellant such that the total effective sentence was seven years. The appellant was granted leave to appeal to the High Court. The appellant contended that the Commonwealth DPP did not have the power or authority to institute the appeal against sentence.

Section 17 of the Director of Public Prosecutions Act 1983 (Cth), which was relevant to the matter, provided that: "Where a member of the staff of the Office, with the consent of the Attorney-General, holds an appointment to prosecute offences against the laws of a State, the member may institute and carry on, in accordance with the terms of the appointment, prosecutions for such offences." Six members of the High Court (Callinan J did not sit in this case) held that Bond's appeal should be allowed. It ruled that the authority or power given to certain persons under the Director of Public Prosecutions Act (section 17) were distinct actions - it was not appropriate for the Director of Public Prosecutions to institute appeals in this case - the particular appeal, if any, had to be brought by other persons. Accordingly, the appeal brought by the Commonwealth DPP was invalid and Bond's jail term was reduced and he was released.

It is unnecessary, for the purposes of this note, to go into the implications of the Bond decision. What it indicated is that the High Court has confirmed it earlier approach in Re Wakim that it would take a very technical black letter law approach to legislation which was responsible for the administration of corporate law in this country. In this case, of course, we are dealing with the freedom of an individual and similarly, in the case of The Queen v Hughes (currently awaiting a High Court decision) raises similar questions. Those are matters that any court will regard as critical and the editor has no quarrel with that approach. Indeed, it is an important principle of our jurisprudence that such an approach is necessary. What is worrying, however, is the underlying arguments that flow from these decisions - namely that the Commonwealth and States do not have the relevant power, or have failed to find the right formula for the exercise of the relevant power, to create a comprehensive package of legislation to ensure that we have effective Corporations Law.

We do not know what the High Court will decide in The Queen v Hughes. What is critical in a more general way is what the implications of that decision will be for the future administration of corporate law. In the arguments before the High Court it became clear that many of the judges were concerned about the fragility of the package of legislation (which has been in place now for nearly 10 years) which established the Australian Securities and Investments Commission, and the operation of our law in this area. If that is to be destroyed as a result of critical arguments in this litigation then Australia, its laws, and its reputation are all at risk.

This writer believes, as do many others, that the High Court did not have to rule in Re Wakim as it did. It could have upheld the cross-vesting legislation as the High Court before it in the split decision of Gould v Brown had done. The floodgates were only slightly opened by Re Wakim; they appear to have been further opened up by Bond v R, and by the acceptance of various arguments in The Queen v Hughes. The dam may be completely breached.

In Early Warner I comment on the potential solutions.

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