The Land and Environment Court of New South Wales recently considered what appears to be the first case in which contempt of court claims have been made against the Commonwealth: Arnold v Minister Administering the Water Management Act 2000 (No 3)  NSWLEC 56.
The case arose from legislative changes to water management and water extraction entitlements in NSW. The applicants' entitlements to extract water were significantly reduced by the Water Sharing Plan for the Lower Murray Groundwater Source 2006, made under the Water Management Act 2000 (NSW). To help existing licence-holders adjust to the changes, the NSW and Commonwealth Governments established an ex gratia payment scheme, for which the applicants were eligible.
The applicants then challenged the validity of the 2006 Plan in the Land and Environment Court. A decision was taken - although it is unclear from the judgment by whom - that payments under the ex gratia scheme would be withheld from licence-holders challenging the 2006 changes. The decision was based on a recommendation from the Groundwater Adjustment Advisory Committee - a body comprised of two NSW Government officials, two Commonwealth Government officials, two members from the NSW Irrigators Council and the chairs of the NSW Catchment Management Authorities.
The decision to withhold payment on that basis was communicated to the applicant, Arnold, by an officer of the NSW Department of Natural Resources, and in a letter to the applicants' solicitors by the Australian Government Solicitor. The applicants sought orders from the Land and Environment Court that the Commonwealth was in contempt of court on the basis that "its servants and/or agents or delegates have threatened the Applicants in these proceedings".
What did the Land and Environment Court decide?
The contempt proceedings against the Commonwealth were dismissed by Justice Biscoe of the Land and Environment Court, who held that the type of contempt alleged was criminal contempt, and that the Commonwealth was immune from criminal contempt proceedings.
In any event, he added, the applicant had not established contempt by the Commonwealth. The applicant had not proved that the officer of the NSW Department of Natural Resources was an authorised agent or delegate of the Commonwealth, nor did the content of the AGS letter reveal contempt.
What's the difference between criminal and civil contempt?
Traditionally, a distinction has been drawn between civil and criminal contempt. Justice Biscoe quoted the following explanation by the High Court in Witham v Holloway (1995) 183 CLR 525, 530-1:
"In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice… The basis of the distinction between civil and criminal contempt is said to lie in the difference between proceedings which are remedial or coercive in the interest of the private individual and proceedings in the public interest to vindicate judicial authority or maintain the integrity of the judicial process."
However, the Court went on to note that the differences were largely illusory, and endorsed the comments of Justice Deane in Hinch v Attorney-General (Vic) (1987) 164 CLR 15, 49 "that all proceedings for contempt 'must realistically be seen as criminal in nature'". Thus, in Justice Biscoe's view in Arnold, unless a statute distinguishes between the two, the distinction between criminal and civil contempt was only of historical interest following Witham v Holloway.
In any event, the proceedings in question - involving an allegation of improper pressure being applied on a litigant to withdraw from proceedings - fell within the category of criminal contempt. In light of that conclusion, Justice Biscoe considered it unnecessary to decide whether the Commonwealth is immune from civil contempt proceedings.
Commonwealth immunity from criminal contempt
Although the Crown is immune from criminal contempt proceedings at common law, the applicants argued that sections 56, 64 and 79 of the Judiciary Act 1903 (Cth) operated to render the Commonwealth liable to criminal contempt proceedings:
section 56 identifies the appropriate court in which claims against the Commonwealth in contract or tort can be commenced
section 64 provides that, in suits to which the Commonwealth is a party, the rights of the parties are to be as nearly as possible the same as in a suit between a subject and subject
section 79 operates to pick up and apply State laws "in all cases to which they are applicable" as surrogate federal laws by courts exercising federal jurisdiction.
It was argued that the Commonwealth could be made liable for contempt by a combined operation of sections 56 and 64, and section 79 picking up the contempt rules in Part 55 of the Supreme Court Rules (NSW). Part 55 sets out the process to be followed where it is alleged that a "person" is guilty of contempt of court.
Justice Biscoe rejected these arguments. First, section 56 was facultative in nature and only dealt with claims in contract and tort. Secondly, section 64, he concluded, is not intended to cover criminal proceedings. Thirdly, section 79 is procedural in nature and "cannot create a liability to criminal proceedings where that liability does not already exist". Furthermore, Commonwealth immunity could not be abrogated by State court rules. And, in any event, he thought, even if Part 55 were applicable, its general words were not to be taken as binding on the Crown.
No contempt proved on the facts anyway
Even if the Commonwealth were capable of being found liable for criminal contempt, the applicants had not established that Commonwealth officers or agents had engaged in conduct that would constitute criminal contempt. The applicants had relied upon two circumstances:
first, the information provided by the officer of the NSW Department of Natural Resources, and,
secondly, the content of the letter from the AGS.
Neither, however, was sufficient to establish conduct by a Commonwealth officer or agent constituting contempt. The officer of the NSW Department of Natural Resources was not a Commonwealth officer, and nothing suggested that he was an authorised agent or delegate of the Commonwealth. The Committee referred to in the AGS letter was not a Commonwealth entity, as there was no evidence that it was under the direction or control of the Commonwealth. Further, there was no evidence that its recommendation was binding on the person making the decision to withhold payment. Nor was there evidence to suggest that the Commonwealth had made or procured that decision.
Scope of the immunity - what about Ministers, departments, officers and agents of the Commonwealth?
In discussing the Commonwealth's immunity, Justice Briscoe was careful to limit his comments to the immunity of the Commonwealth. Ministers, departments, officers and agents of the Commonwealth were recognised as falling outside the scope of the immunity at common law. This, however, was not taken any further as the application for contempt was against the Commonwealth only.
Ex gratia payment schemes
Because of his decision on the Commonwealth's immunity, there was no opportunity for Justice Briscoe to consider whether the statements alleged to have been made with respect to payment entitlements from the ex gratia payment scheme, if proved to have been made by a Commonwealth officer, would be sufficient to constitute contempt.
Nonetheless, some care must be taken in dealing with ex gratia payments. It is surely legitimate for a government to decide that a payment is not to be made from an ex gratia payment scheme where a claimant is pursuing legal claims against the government. However, if not made carefully, statements to the effect that no payment will be made because a claimant has instituted proceedings can easily be characterised as an inducement to withdraw court proceedings. Thus, when dealing with claimants for ex gratia payments who have instituted proceedings against the government, great care must be taken in explaining the claimant's entitlements.