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Bills Digest No. 150  1999-2000
Appropriation (Dr Carmen Lawrence's Legal Costs) Bill 1999-2000

The Bill is in addition to the major appropriations made annually for expenditure on the public service, social services, parliamentary departments, capital works and payments to the States⁽¹⁾. This Bill deals solely with an appropriation for Dr Carmen Lawrence's legal costs arising out of court challenges to the establishment of the Marks Royal Commission in 1995.

Marks Royal Commission

On 5 November 1992, a petition was presented to the Legislative Council of Western Australia. The petition was brought by a former senior public servant, Mr Brian Easton and tabled by Labor backbencher John Halden. Mr Easton claimed that the Official Corruption Commission had referred to police the investigation of allegations that the then leader of the Opposition, Mr Richard Court, had provided confidential documents relating to WA Exim Corporation (a State-owned enterprise of which Mr Easton was managing director) to Mr Easton's estranged wife. The petition alleged that the documents were used as evidence in divorce proceedings against Mr Easton by his former wife, leading the Family Court to believe that Mr Easton was due to receive $200,000 more than he obtained on retirement. The resulting judgment against him rendered him bankrupt.⁽²⁾

Mrs Easton committed suicide four days after the tabling of the petition.⁽³⁾ The presentation of the petition was, in the words of a Federal Court judge, "afterwards widely condemned as a shameful act".⁽⁴⁾ Mr Halden apologised to Mrs Easton's family, and Mrs Easton and Mr Court were cleared by police of any impropriety.⁽⁵⁾ Mr Easton was directed to apologise for misleading Parliament, but refused to apologise and was jailed for a week in January 1995 for contempt of Parliament.⁽⁶⁾

In April 1995, questions arose as to the participation of the then Premier of Western Australia, Dr Carmen Lawrence, in the presentation of the petition. Dr Lawrence repeatedly denied any significant prior knowledge of the petition. Former Cabinet Ministers stated that Dr Lawrence had participated in Cabinet discussion of the petition before it was presented, but Dr Lawrence continued to deny any involvement.⁽⁷⁾

On 5 May 1995, the Premier Mr Richard Court announced a judicial inquiry,⁽⁸⁾ and on 9 May 1995 the Honourable Kenneth Marks QC was appointed a Royal Commissioner to inquire into the matter of the petition.⁽⁹⁾

Proceedings relating to the Royal Commission

On 29 June 1995, Dr Lawrence commenced proceedings in the Supreme Court of Western Australia challenging the validity of the Royal Commission. The substance of her challenge was never adjudicated on, as she lost a number of preliminary applications. She was initially unsuccessful in obtaining an interim injunction pending determination of her challenge⁽¹⁰⁾, and the Royal Commission commenced on 17 July 1995. Dr Lawrence made a further application and obtained an interim injunction on 19 July 1995,⁽¹¹⁾ however this was terminated by the Full Court on 2 August 1995.⁽¹²⁾ The Royal Commission recommenced hearings on 10 August 1995. Dr Lawrence applied to the High Court for special leave to appeal against the decision of the Supreme Court of Western Australia, but was unsuccessful.⁽¹³⁾ An application to have the substantive hearing challenging the legality of the Royal Commission expedited was also dismissed.⁽¹⁴⁾

Dr Lawrence eventually gave evidence before the Royal Commission on 13 September 1995.

Commonwealth decision to pay Dr Lawrence's legal costs

The Royal Commission was an intensely political matter and also involved legal questions of the extent of Cabinet confidentiality and Parliamentary privilege. Dr Lawrence left State politics to enter the Commonwealth House of Representatives in 1994, and in 1995 was a senior Minister in the Keating government.

The Government considered that:

It was apparent that Dr Lawrence would not be in a position to fund her representation before the Commission and challenges to it personally. On 8 June 1995, Cabinet decided that, although there was no governmental obligation to assist Dr Lawrence, the Commonwealth would pay the legal costs of representing Dr Lawrence in relation to the Royal Commission, and would appropriate money for that purpose.⁽¹⁶⁾

The Commonwealth has already twice appropriated money for the purpose of paying some of Dr Lawrence's legal costs. In the 1995-1996 financial year, $556,463 was appropriated for the legal costs of Dr Lawrence in relation to the Marks Royal Commission.⁽¹⁷⁾ The then Labor Government agreed to a Coalition amendment explicitly excluding the payment by the Commonwealth of her legal costs in relation to the court challenges to the Royal Commission.⁽¹⁸⁾ The appropriation also expressly required that any amount paid to Dr Lawrence by the government of Western Australia was to be deducted before the Commonwealth paid out any money.⁽¹⁹⁾ $319,927 was paid under this appropriation before it lapsed on 30 June 1996.⁽²⁰⁾

The current Coalition Government's position has been that, although it would pay the costs of Dr Lawrence's representation before the Marks Royal Commission, it would not pay the costs of her court challenges to the appointment of the Royal Commission or the costs which were ordered against her when those court challenges failed.⁽²¹⁾ The Coalition has argued that Dr Lawrence's legal costs relating to the court challenges should be paid by the Carmen Lawrence Defence Fund, which it claims was established for this purpose.⁽²²⁾

In 1996-1997, the Coalition Government appropriated $49,776 for the legal costs of Dr Lawrence "for or in relation to the Marks Royal Commission",⁽²³⁾ again excluding any amount paid to Dr Lawrence by the government of Western Australia, and the cost of the court challenges to the Royal Commission.⁽²⁴⁾

Commonwealth liability to pay costs

Because the current Commonwealth Government has consistently refused to pay Dr Lawrence's legal costs referrable to the court challenges to the Royal Commission, in 1997 Dr Lawrence's solicitors, Dunhill Madden Butler, commenced legal action against the Commonwealth seeking to recover their fees.

On 2 February 2000, Burchett J delivered judgment in favour of Dunhill Madden Butler against the Commonwealth. He reviewed the evidence of communications between senior government officials, including officers of the Attorney-General's Department, and Dunhill Madden Butler and concluded that the Commonwealth had entered into a binding contract to pay the fair and reasonable legal costs of Dr Lawrence.⁽²⁵⁾ He held that this contract covered both the hearings before the Royal Commission and the challenges to the Royal Commission.⁽²⁶⁾

Burchett J ordered that the Commonwealth pay the sum of $761,594.13 in fees and past interest,⁽²⁷⁾ plus legal costs to be agreed or taxed. Interest from 25 February 2000 is also payable, at the rate of 10.5% per year.⁽²⁸⁾

Liability of others to pay Dr Lawrence's costs

The Commonwealth argued that it would not pay Dunhill Madden Butler's fees until all other avenues of funding, in particular payment by the Western Australian Government, had been pursued in full. After Burchett J's decision, any such payments seem doubtful.

On 14 September 1995, the Western Australian Government had advised Dr Lawrence it would grant her 'limited financial assistance' in respect of her legal costs. This amount, after deducting the amount of $133,000 which Dr Lawrence owes the State in legal costs as a result of her failed challenges to the Royal Commission, stands at approximately $120,000.⁽²⁹⁾ Burchett J concluded that any obligation owed by Western Australia was owed to Dr Lawrence, not to the Commonwealth or to Dunhill Madden Butler, and the Commonwealth could not set it off against its obligation under the contract to pay Dunhill Madden Butler.⁽³⁰⁾

The Commonwealth also argued that the Carmen Lawrence Defence Fund, which may hold over $94,000,⁽³¹⁾ should contribute to Dr Lawrence's legal fees before the Commonwealth pays the remainder. The Australian Labor Party has declined to make any payment, saying that the trustees of the fund 'do not have the power to pay these funds to the Commonwealth'.⁽³²⁾ Burchett J did not make a finding as to whether Dunhill Madden Butler is obliged to accept this money in partial satisfaction of the Commonwealth's contractual obligations. However, he did mention that they may not be entitled to the money as of right, or the Defence Fund may place unacceptable conditions on receipt of the money.⁽³³⁾

Main Provisions

Proposed section 3 provides for the appropriation from the Consolidated Revenue Fund of an unspecified amount for the purpose of paying the judgment against the Commonwealth and interest after 25 February 2000. The description includes the judgment in favour of Dunhill Madden Butler, pre-judgment interest, legal costs as agreed or taxed, and post-judgment interest.

Concluding Comments

The Minister for Finance and Administration, the Hon John Fahey, stated that the sum of money to be appropriated is not specified in the Bill 'due to the nature of the judgment' and because 'the amount of post-judgment interest cannot be quantified until the judgment debt is paid'.⁽³⁴⁾ Alternatively, it may be possible to set the amount to be appropriated at a suitably high level to encompass the judgment debt plus sums for legal costs and post-judgment interest, and to provide that any appropriated money which remained unspent on a certain date would lapse. Indeed, the initial appropriation in favour of Dr Lawrence's costs in the 1995-1996 financial year lapsed on 30 June 1996 without all the money having been spent.

Although appropriation cannot be left to the unfettered discretion of the executive government, it is constitutionally permissible to appropriate without specifying a certain sum, by specifying the criteria by reference to which the sum may be calculated.⁽³⁵⁾ In this case, as the criteria are specified by which the amount to be appropriated can be determined, the appropriation is valid.

The Minister for Finance and Administration also mentioned that the Commonwealth Attorney-General is seeking contributions from the Carmen Lawrence Defence Fund and the Australian Labor Party.⁽³⁶⁾ While such funds may be available, it is clear from the Federal Court's judgment that it is the Commonwealth which is bound by the contract with Dr Lawrence's former solicitors, not the Australian Labor Party.

Endnotes

1. See the Appropriation Act (No. 1) 1999-2000, Appropriation Act (No. 2) 1999-2000, Appropriation (Parliamentary Departments) Act 1999-2000.
2. McGeough, Paul 'Double Trouble: Probes Snare Lawrence and Court' The West Australian, 6 November 1992; Humphries, David 'WA Leaders both under investigation' Sydney Morning Herald, 6 November 1992; Irving, Mark 'Lawrence, Court cleared by police' The Australian, 7 November 1992.
3. Meertens, Grace and Quekett, Malcolm 'OCC Chief breached oath: Labour' The West Australian, 4 December 1992; 'The history of the affair' The West Australian, 6 May 1995.
4. Vass v Commonwealth of Australia [2000] FCA 47 (2 February 2000) at [2] per Burchett J.
5. 'The history of the affair' The West Australian, 6 May 1995. Indeed, some reports suggests Mr Court was cleared by police (possibly two years) prior to the tabling of the petition, Meertens, Grace and Quekett, Malcolm 'OCC Chief breached oath: Labour' The West Australian, 4 December 1992; 'Unfinished business', Sydney Morning Herald, 14 April 1995, Walker, Jamie 'The Easton Affair' Australian, 18 April 1995, Irving, Mark 'Two sides of a tragedy', Australian, 15 April 1995.
6. 'The history of the affair' The West Australian, 6 May 1995; 'Unfinished business', Sydney Morning Herald, 14 April 1995.
7. See generally, Wilson, Nigel and Dodson, Louise 'Keating goes to defence of Lawrence' Financial Review, 18 April 1995; Grattan, Michelle, Wilcox, Innes and Graham, Duncan 'Lawrence faces more questions' The Age, 14 April 1995; McGeough, Paul 'Crisis deepens around health minister' Sydney Morning Herald, 14 April 1995; 'Clouds of doubt linger over former premier's involvement' West Australian, 15 April, 1995.
8. Egan, Colleen and Taylor, Lenore 'Official warns Court over inquiry into Easton affair' Australian, 6 May 1995; O'Malley, Sandra 'Judicial probe vital: parents' West Australian, 6 May 1995; O'Malley, Sandra and Loxle, Steven 'Easton probe a risk, says Cowan' West Australian, 6 May 1995; Willox, Innes 'Bid by PM to blunt inquiry' The Age, 6 May 1995; McGeough, Paul 'Lawrence faces Easton inquiry' Sydney Morning Herald, 6 May 1995.
9. Graham, Duncan and Farouque, Farah 'Victorian picked for Easton inquiry' The Age, 10 May 1995; Wilson, Nigel 'WA Premier appoints Royal Commissioner' Financial Review, 10 May 1995; Egan, Colleen, 'Retired judge to head Easton inquiry' Australia, 10 May 1995; "Contempt and the WA Inquiry" Sydney Morning Herald, 11 May 1995.
10. Unreported decision of the Supreme Court of Western Australia, Steytler J, 10 July 1995.
11. Unreported decision of the Supreme Court of Western Australia, Heenan J, 19 July 1995.
12. Unreported decision of the Full Court of the Supreme Court of Western Australia, 2 August 1995.
13. Unreported decision of the High Court of Australia, 14 August 1995.
14. Unreported decision of the Supreme Court of Western Australia, Steytler J, 25 August 1995.
15. Evidence given by the then Labor Attorney-General, Michael Lavarch, Vass v The Commonwealth [2000] FCA 47 (2 February 2000) at paragraph [3].
16. Cabinet minute of 8 June 1995, recorded in Vass v The Commonwealth [2000] FCA 47 (2 February 2000) at paragraph [5].
17. Division 807 of Schedule 2 of the Appropriation Act (No 4) 1995-1996.
18. Subsection 4(3) of the Appropriation Act (No 4) 1995-1996. See the Hon Daryl Williams QC, Attorney-General, Question without notice, House of Representatives, Hansard p. 756, 12 February 1997.
19. Subsection 4(1) of the Appropriation Act (No 4) 1995-1996.
20. The Hon Daryl Williams QC, Attorney-General, Question without notice, House of Representatives, Hansard p. 756, 12 February 1997.
21. The Hon Daryl Williams QC, Attorney-General, Question without notice, House of Representatives, Hansard p. 756, 12 February 1997.
22. The Hon Daryl Williams, QC, Attorney-General, Question without notice, House of Representatives, Hansard p. 14448, 16 March 2000. See also The Hon Daryl Williams QC, Attorney-General, Question without notice, House of Representatives, Hansard p. 756, 12 February 1997.
23. Division 807 of Schedule 2 of the Appropriation Act (No 4) 1996-1997.
24. Subsection 4(3) of the Appropriation Act (No 4) 1995-1996.
25. Vass v The Commonwealth [2000] FCA 47 (2 February 2000) at paragraph [14]. He rejected the Commonwealth's argument that any such contract would be void by virtue of the Parliamentary Entitlements Act 1990, saying that the matter did not concern any Parliamentary entitlement of Dr Lawrence, rather a Cabinet decision to pay her legal costs because of the importance of the issues involved, at paragraph [18].
26. Ibid., at paragraph [7].
27. This comprises $515,661.67 for Dunhill Madden Butler's fees and $245,932.46 in interest up to 25 February 2000, Vass v Commonwealth of Australia [2000] FCA 234 (25 February 2000) at paragraph [4].
28. Section 52 of the Federal Court of Australia Act 1976, Order 35 rule 8 and Order 62 subrule 45(4) of the Federal Court Rules.
29. Vass v Commonwealth of Australia [2000] FCA 47 (2 February 2000) at paragraphs [10] and [28].
30. Ibid., at paragraph [29].
31. Ibid., at paragraph [27]. It could be as high as $100,000, The Hon John Fahey, Minister for Finance and Administration, Second Reading Speech, House of Representatives, Hansard p. 14823, 6 April 2000.
32. The Hon Daryl Williams, QC, Attorney-General, Question without notice, House of Representatives, Hansard p. 14448, 16 March 2000. See also The Hon John Fahey, MP, Question without notice, House of Representatives, Hansard p. 14741, 5 April 2000; 'No appeal against Lawrence legal bill', Canberra Times, 23 March 2000.
33. Vass v The Commonwealth [2000] FCA 47 (2 February 2000) at paragraph [27].
34. The Hon John Fahey, Minister for Finance and Administration, Second Reading Speech, House of Representatives, Hansard p. 14823, 6 April 2000.
35. Northern Suburbs General Cemetery Reserve Trust v The Commonwealth (1993) 176 CLR 555 at 582 per Brennan J, 600 per McHugh J.
36. The Hon John Fahey, Minister for Finance and Administration, Second Reading Speech, House of Representatives, Hansard p. 14823, 6 April 2000.

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11 April 2000
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