Passing Bull 194 – Presumptions outside court?

 

People talk of the presumption of innocence and the legal requirement of proof beyond reasonable doubt in considering the prosecution and conviction of Cardinal Pell.

Most of the commentators are unaware of the presumption of regularity that would say that the jurors are presumed to have discharged their duties in this case in an appropriate manner.  There is a Latin tag to the effect that steps are taken to have been done correctly.  A leading authority (Thayer) refers to ‘the assumption of the existence of the usual qualities of human beings, such as sanity, and their regular and proper conduct, their honesty and conformity to duty.’  Some people may wish to bear this assumption in mind before accusing the Pell jury of being perverse or unreasonable or of not adhering to their oath.  Championing a presumption of innocence may run in both directions.  It’s just that for one reason or another, the jurors don’t usually get to be championed.

To return to the onus of proof, in a criminal case, the Crown (the accuser) bears the burden of proof.  In a civil case, the person complaining (the plaintiff) bears that burden.  If nothing happens in either case, that is the end of it.

The law recognises three standards of proof.  In crime, it is proof beyond reasonable doubt.  In civil cases, it is proof on the balance of probabilities – it is sufficient that the evidence warrants a finding that it is more likely than not that the relevant allegation has been made out.

But the law recognises a standard in between those two.  It is typically applied where a serious crime is alleged in civil cases or where an adverse finding might cost someone their job or their good name.  The criterion for drawing the line has never been adequately explained to me.  The best I have seen is that common sense suggests that you need more persuasion to hang someone for murder than you need to give them a parking ticket.

One formulation is ‘comfortable satisfaction.’  The Court of Arbitration for Sport was comfortable about applying that test in the case of the Essendon footballers – and in upholding every single allegation against them while doing so.  If you think that the worth of a proposition can be tested by looking at its negation, what might ‘uncomfortable satisfaction’ look like?  Spending a fortune on a suite up front in an Arab airline and then finding that you have a burr in your nickers?  In thirty years sitting on tribunals, where counsel sought to invoke this protection I never felt intellectually secure in seeking to apply it.  I just followed my nose.

So, when a private hearing was conducted into an allegation of abuse against Pell by former Supreme Court judge (Southwell, J), the judge, as I am informed, applied this intermediate test.  (The lawyers refer to it as Briginshaw because that was the name of the parties in the leading case in the High Court that arose from an allegation of adultery in a case that reached the High Court.)  The judge found that each side had given credible evidence, but that this was not enough to satisfy the intermediate standard of proof.  That finding was far from being an exoneration of the accused.

Well, that’s fine for the accused.  What about potential victims?  If the Church is going to be responsible for the wrongs of this man, what standard of proof should the Church apply in determining whether this man represents a risk to those who may be in his care or merely exposed to unsupervised contact with him?  When I there ask how the Church ‘should’ proceed, I am speaking of both a moral and legal obligation (or duty).

Let us look at the civil side.  If you are running a trucking company – an analogy once unhappily invoked by the cardinal – and you suspect that one of your drivers may be a risk to the public, and therefore to you and your insurers – say from drugs or alcohol or some physical disability – it would in my view be morally and legally wrong to say that you needed to be persuaded of the risk beyond the balance of probabilities before you took remedial action.  The company would be obliged to take action as soon as it appeared to it that it was more likely than not that this driver was a risk to others.

The case is a fortiori for people in positions of power who can apply undue influence over those not of the age of consent.

It looks to me therefore that the church was legally and morally wrong in not taking adequate remedial action on the Southwell report to protect those in its charge from the risk posed by this priest.  It would be quite wrong to say that the Church could not take any such action until it was satisfied of the risk beyond reasonable doubt or to a level of ‘comfortable satisfaction.’  A rule that was fair to the priest may have been anything but fair to those in his charge – it looks to have been fatal for one of them.

And the reason sounds familiar – the Church put their interests over those of their flock.  Most victims would be appalled to learn that the Church took no action against a priest who had not been exonerated on a most serious allegation.

And, if it matters, that is why so many lawyers in the neutral corner would be so uncomfortable with the rubber stamping on party lines of the appointment of Justice Kavanaugh to the Supreme Court of the United States.  It’s not just that appearances matter; the public conduct of this man showed that he was susceptible to partisan influence – it is beyond doubt that he got the job as a result of such influence – to an extent that rendered him unfit for that office.

But that is not all.  Is it right to have someone appointed to high office when there is a serious allegation against them that is unresolved?  Or that is rammed through on party lines?  Some positions are ‘Caesar’s wife’ territory – the occupant must be beyond suspicion.  Judicial office is one such office and the U S Supreme Court now has two members on it that fail that test.

The onuses and presumptions that we have been discussing are part of the law of evidence.  They are applied by law courts in the trial of issues in an attempt to ensure a fair trial.  The law does not ordinarily require or even suggest that these rules be applied elsewhere (although that part of our law called administrative law will subject some bodies to procedural obligations to protect certain rights).

You could look stupid if you sought to apply the rules of evidence in ordinary conversation – if, for example, you objected to a statement in a political debate on the ground that it was inadmissible as hearsay.  The referees in sporting contests may have an onus in awarding penalties – but how often do you hear the standard of proof being discussed?  Well, one thing is clear enough.  If you want to red card someone for rough play in a world cup final, you will require a lot more assurance than you would for calling a kid off-side in the Under 12’s.

If you told a high school teacher of rowdy teens that the students had the benefit of the presumption of innocence, you would not be believed.  And the same should apply to people in positions of trust or confidence – there any onus might lay on them to show that they have discharged their office – or at least not put it out of their power to do so.  In some instances of ‘undue influence,’ the onus is on the office holder to demonstrate the probity of an impugned transaction.  That does not happen if an issue as to the person’s probity has been left unresolved.

That appears to have been the case with Cardinal Pell.  If so, some unfortunate people have paid an awful price for this lapse of judgment.

Bloopers

Willkie Farr, which put Mr Caplan on leave after he was charged last month, announced that it has now cut ties with him. ‘At Willkie, nothing is more important to us than our integrity and we do not tolerate behaviour that runs contrary to our core values. We remain focused on our responsibilities to our clients, partners and employees,’ the firm said in a statement.

Financial Times, 6 April, 2019

With those fees, they might at least try talking English.  Do they tolerate behaviour contrary to values that don’t go to their core?  Are values like apples?  Are they, too, subject to the laws of gravity?

Here and there – The Cardinal’s Gambit

 

The controversy about the conviction of a priest for child abuse has revealed a lack of understanding of some aspects of our law.

The trial process

For us, a criminal trial is not an inquiry into truth by any means.  Unlike French or German courts, we do not engage in an inquiry after truth.  We inherited the adversarial system.  A trial involves putting some issue to the test.  In a civil action, the question is not what in truth happened, but whether the version of one side is more probable than that of the other.  The person complaining has the onus, and the standard of proof is the balance of probabilities.  In a criminal trial, the issue is not what in truth happened – we leave that to God – but whether the prosecution has proved beyond reasonable doubt that the accused committed the crimes alleged against him.  The great legal historian F W Maitland put it this way.

We are often reminded of the cricket match.  The judges sit in court, not in order that they may discover the truth, but in order that they may answer the question ‘How’s that?’….But even in a criminal case, even when the King is prosecuting, the English judge will, if he can, play the umpire rather than the inquisitor.

In our High Court, Justice Dawson said this about a criminal trial:

A trial does not involve the pursuit of truth by any means.  The adversary system is the means adopted, and the judge’s role in that system is to hold the balance between the contending parties without himself taking part in their disputations.  It is not an inquisitorial role in which he seeks to remedy the deficiencies in the case on either side.  When a party’s case is deficient, the ordinary consequence is that it does not succeed.

 

We will revisit the cricket umpire, because the analogy helps on a critical issue in this discussion.

The role of the jury

The jury is for our criminal law what our parliament is to our legislature and executive.  It is the way that we the people get to make the really big decisions that govern our lives and very freedom.  The jury is fundamental not only to our doctrine of the rule of law but to our democracy.  People who are not dewy-eyed say that the jury is a central pillar of our freedom, and the reason why we have not succumbed to revolution or dictatorship.  It follows that anyone seeking to undermine this part of our constitution should be closely watched.

Members of the jury are summoned and sworn to give a verdict on the evidence (veredictum or ‘truly said’).  This process goes back to Magna Carta in 1215.   Magna Carta provides that the Crown (the government) shall ‘not go after or send for’ any free man except by ‘the lawful judgment of his peers or by the law of the land’.  Scholars may argue about whether we are talking of legal process, or brute force, but we all know what it feels like to have government – the Crown – come after us or send for us.  And if the Crown really goes for us and wants to put us in jail, we have this right to take our stand upon our country.  We will not go to jail on the mere say-so of some bureaucrat, or even a judgment of one of Her Majesty’s justices, unless twelve of our neighbours have found that we are guilty of having committed a crime.  In the gorgeous language of old, the Crier would tell the jury that by pleading Not Guilty the prisoner ‘has put himself upon God and the country, which country you are.’

So, if you are chosen to go on a jury in Victorian court, you stand for and represent the people of the State of Victoria just as surely as does its parliament.  That right must be as precious to you as it is to the accused, since one day you might be the accused.  If you are chosen for jury duty, then, lap it up, because in that office, you are as high and mighty as any minister, justice, or prelate in the land.

We need to bear all this firmly in mind when we come to the role of judges in dealing with the verdict of us the people sitting as a jury.

The right to silence

If you are charged with having committed a crime, you do not have to say anything to the police, and you are not obliged to give evidence in court.  If you don’t, you can’t be cross-examined, or make a public fool of yourself.  There is a lot of law on what might be said in court about the exercise of that right – generally very little.  Nor would an appeal court comment on the election of the accused not to give evidence.

What is the jury to make of an accused who chooses to say nothing in court?  You know as much about this as I do.  We are not allowed to quiz jurors about what they do.

Take a hypothetical.  You are on a criminal jury.  A youngish housewife claims that she was indecently assaulted by a surgeon, a big strong man in his forties.  She gives her evidence calmly and persuasively, although she is very distressed at having to go through this.  She is cross-examined and called a liar – for hours that turn into days.  You can’t believe it, and you are looking forward to see how the surgeon goes when it’s his turn.

But he doesn’t front!  He is asking you to reject her testimony, but he won’t let you get you get even near him.  What do you think of that?  How does this sit with your notions of fairness – or fair play, even?  Why should you not accept the sworn evidence of a witness who has been tested and not broken, and which no other witness has contradicted?  He’s a big strong man, better educated than most of us, used to high office and public responsibility – why couldn’t he go in against the little house-wife who makes this complaint against him?  Have the surgeon and his expensive lawyers been just too big for their boots?

What we can say is that if the surgeon had sought to pursue that course before a disciplinary tribunal in his profession, he would have had the door slammed in his face.  With extreme prejudice.

The appeal court

If the last point was tricky, the next is downright murky.

The law says that a court of criminal appeal rehears the case, but it does not rehear the case in a way that you would understand that term.  Crucially, it does not get to see and hear the witnesses as they give their evidence.  It operates on written transcripts.  It has access to video recordings of the evidence, but they are not the same as being in the courtroom when the evidence was given.  In a case that turns on the credit of witnesses – which this case is – that is a real handicap.

Any trial lawyer or judge knows that the whole mood of a case can turn around in a moment with one pause or gesture of a witness – that does not show up on transcript and which may only be partially caught on video replay.  The movie was not entirely silly when it referred to the ‘vibe’.  Trial judges get very annoyed when they get castigated by appellate judges – some of whom have never conducted a jury trial – who say that the trial judge got it wrong when those appeal judges were not there in court at the time to catch the vibe.

A convicted person can appeal if the judge gets the law wrong in directing the jury.  But the law also permits an appeal court to allow an appeal if it concludes that the verdict of a jury is unreasonable or cannot be supported on all the evidence – even though there was, as a matter of law, evidence upon which the accused could have been convicted.

The statute that confers jurisdiction on the Court of Appeal says that court must set aside a verdict if ‘the verdict of the jury is unreasonable or cannot be supported having regard to the evidence’ or if ‘for any other reason there has been a substantial miscarriage of justice’ or if ‘as the result of an error or an irregularity in, or in relation to, the trial there has been a substantial miscarriage of justice’.

There are reams of law about the powers of the appellate court in dealing with a submission that a verdict is unreasonable or cannot be supported by the evidence.  It is all made by judges and it is about as easy for you – or, for that matter me – to follow as Kant’s refutation of the ontological argument for the existence of God.  But I hope that I have said enough to allow you to see the two problems in this kind of appeal that were referred to by Justice Brennan in the High Court (in a case involving a dingo):

If Ratten [a preceding case] were to be taken as requiring a Court of Criminal Appeal to set aside a conviction whenever the evidence given at the trial leaves that court with a reasonable doubt about the appellant’s guilt, the function of returning the effective verdict would be transferred from the jury to the court – a course which would at once erode public confidence in the administration of criminal justice and impose upon the court the impossible burden of retrying every appeal case on the papers.

The law is clear that the judges cannot overturn a jury verdict just because they don’t agree with it, but how bad the verdict must look before they can overturn it is about as clear as the doctrine of the real presence.

But fundamental to the case of the cardinal is that the appeal judges will not have seen the witness or heard the evidence as it was given on which the whole case turned.   They will have heard the case ‘on the papers’ with access to video replays,  but it will be difficult for appeal judges substitute their judgment for that of the people the law says must give that judgment and who are the only relevant officers of the court who have heard the critical evidence as it was given.

If you think that we are like Medieval Schoolmen asking how many angels are dancing on the point of a needle, it gets worse.  I am given to understand that by agreement between the parties, the jury in the second trial watched a replay of the complainant’s evidence in the first. That will surely lead to an argument that Court of Appeal is in the same position on the critical issue as the jury.  Only God knows what the answer may be.

May I go back to the cricket umpire?  His decisions are now subject to review by video replays and other technical aids.  The third umpire is then in a much better position than the umpire on the ground to review and test a wide range of evidence and to take his time to analyse the original decision.  In a criminal trial that turns on credit, the position is very different.  The appeal court is in a  weaker position than the jury to evaluate the evidence.  (Subject of course to what I have said about the course of this case, and I may add that many people think that TV replays in sport inflame more arguments than they settle – and you may well see a similar reaction here if this appeal were to succeed.)

It follows that in a case like this, a convicted person seeking to persuade an appeal court that the verdict of a jury was unreasonable or unsafe is standing at the foot of a  large mountain.

And that’s before you start to count the various ways that turmoil might reign if judges were seen to overturn this verdict of the people – and release a prisoner convicted of vicious crimes.

The critics of the verdict

You may then see why I and other lawyers do not accept criticism of this verdict from people who have not seen or heard the evidence on which this jury acted – after very long deliberation.

Of course, the Crown carries the burden of proof from the outset, but when the evidence is in, and a case fit to go the jury is made out, the picture shows a different complexion.  You don’t have to look far before you find in works of authority propositions like  ‘Presumptions may be looked on as the bats of the law, flitting in the twilight but disappearing in the sunshine of actual facts’ and ‘That presumptions have no place in the presence of the actual facts disclosed to the jury…is held in many cases.’

Some critics expressed surprise that a person could be convicted on uncorroborated evidence.  How many traitors, murderers, rapists, drug dealers or thieves go out of their way to ensure that a third party is present to witness their crime?

The critics appear to come in three platoons.  One is from members of the same faith who look like they are victims of a schism that the rest of us hoped had died away with the Split and the DLP.  Another is from people in high places who have associated with the prisoner and who for reasons that are beyond me are willing to give their public support to another person who was in a high place, but who  is now in jail, having been found by those representing the rest of us to be a vicious criminal.  The third platoon is that part of the media that lives off the earnings of conflict and controversy.  They are just base tarts.  Predictably enough, most come from the Murdoch stable, which is about as rational and honest on this issue as it is on climate change; and worse, that paper fairly throbs with sectarian bias.

You might also notice two things that these critics have in common.  One is that they are all infected by prejudice of one kind or another.  The other is that while the jury acted on evidence, its critics are happy to level accusations at the jury without any evidence at all.

In The Weekend Australian, Mr Gerard Henderson had a piece headed ‘Pell’s ordeal reinforces the case for judge-only trials.’  Fine, a jury convicts a priest, and Mr Henderson says that is enough to reverse 800 years of history and get rid of juries – at least for powerful and well publicised accused persons.  Big hitters should have their own law.

It must follow that Mr Henderson must think that no one in the U S can ever get a fair trial, because over there the press are not subject to the restraints imposed on them here.  There is also the lordly disdain for the intelligence of the ordinary Australians who make up our juries.  Mr Henderson says that ‘the coverage of such an event could only further harm Pell’s reputation, already damaged by years of hostile allegations…’ and he begins his conclusion with these words ‘The media’s intervention in the legal system should be a matter of real concern…..’  And that’s from a man writing in a paper which is leading the charge to get the conviction of this priest overturned.

The prejudice of Mr Henderson shows not just a lack of compassion.  It looks downright cruel.  As far as I can see, there is not one word about the ordeal of the victims.  Rather, Mr Henderson is concerned about the damage to the reputation of the prisoner.  Yes, it is frightful – but Pell has brought almost all that damage upon his own head.  What about the damage to the lives of the victims?  One boy went to find Christ and met rape, heroin, and death.  OK, let’s focus on the reputation of the man found to have been the cause of the ruin and the end of that life.

It’s as if those in the Church have learned nothing.  In the last generation or so, there has been a sea change across the western world in our attitude to crimes committed by people in power against those in their charge.  We now encourage them to come forward and we seek to support and protect them when they have the courage to do so.  We are seeking to prevent people in power ducking for cover under cover of legalism, sophistry, or, heaven help us, a power pack demonstration in place of sworn evidence.

Mr Henderson wants none of it.  He doubtless thinks that Becket was properly made a saint for keeping his priests immune from royal justice.  Indeed, on a bad day, some of the supporters of the prisoner George Pell might remind us of Donald Trump launching into Robert Mueller for conducting a witch hunt.  It could be straight out of Kafka.  The Castle has a line: ‘One of the operating principles of the authorities is that the possibility of error is simply not taken into account.’

I am sorry that this note is so long, but the issues are serious and difficult.  I have tried to stay objective, but I fear that the anger that you will have detected has got the better of me.  The phrase ‘speaking truth to power’ has become a cliché.  But now we have to accept that power speaking to falsehood has become a tawdry fact of life.

If you want to know my view, it is this.  The cardinal played his hand and lost.  Call the next case in the list.  We have spent far too much time on this case already.

Geoffrey Gibson

5 March, 2018.

HERE AND THERE – FAILED JUSTICE

 

An English barrister wrote a book called The Secret Barrister.  It is about the failings of the English justice system.  It is extremely well written by someone who obviously knows his or her way around – and by someone who can see both sides of a question and be dispassionate even where a want of passion may sound criminally cold.  The book is alarming and should be read not just by Australian criminal lawyers but by any Australian having any interest in criminal justice.

I am not sure how much of the book applies to us, but a lot of it looks very like some of the nonsense I had to put up with when I stopped doing crime – by which I mean stuff you could go to jail for, as opposed to the white collar stuff that has largely been quarantined in a no-fly zone – forty years ago.

I shall not review the book, but make two general comments and refer to three specific points.

First, as I follow the author, most of the decline has been caused by government cuts in spending and by a part of the press that is at best ignorant and at worst vicious.  The sad truth looks to be that there are no votes in courts or jails, and therefore our short-sighted governments just cave in to what is banally called ‘populism’ and we the punters get what we deserve.

If this is right – and I think it is – this is just another structural fault in our democracy – one among a growing and worrying number.  If those standing up for victims get a full whiff of any of this, they know that they will hardly have scratched the surface.  On the other hand, they may see why some older lawyers have worried about the venom – and that is what it is – of the backlash.

Secondly, the book is an entire monument to the old and simple truth that you can have all the gorgeous declarations of rights and pious statements about the progress of mankind – they all mean nothing if the system does not work on the shop floor.  Robespierre, Stalin and Hitler were as generous as all get out on promises, and brutal and lethal on their feet.

Magna Cara is routinely violated.  The author says that ‘one bald statistic stands out above all: only 55% per cent of people who have been a victim or a witness in criminal proceedings would be prepared to go through it again.’  Allowing for some fuzziness in the question, this finding suggests that the system is wholly unfit for purpose.  Part of the problem comes from adjournments and understaffed courts jamming lists to force people to settle.  I experienced this in all courts in the 70’s and nothing is better calculated to destroy faith in the system.  Justice is not just delayed – it is denied.  My impression is that the lack of faith may be greater here because I suspect we have a higher rate of successful appeals from conviction.  Whatever may be the cause, an experienced lawyer would caution any member of their family wanting to go to law over sexual assault to think long and very hard before taking a step that might involve them in misery for a very long time and perhaps all for nothing.

Then came the backlash.  Not enough attention had been paid to or protection afforded to the victims.  This was notorious around the world in complaints against churches.  So, the English police changed tack – violently.  One resolution said that it was policy ‘to accept allegations made by the victim in the first place as being truthful’.  Another said: ‘The presumption that the victim should always be believed should be institutionalised.’  This passes belief.  There is a fundamental error in the nature of the place of ‘truth’ in our process, and we have the moral equivalent of an AFL umpire going into a Grand Final between the Eagles and Collingwood wearing black and white.  (And, yes, I can recall a barrister being done for contempt for making just that analogy.)  Some nut hypnotised the English police into believing some conspiracy involving most of the government – when it blew up, the inquiry unearthed the heresy.

The author gives a very helpful comparison of the inquisitorial system.  For all its faults, and they are grievous, he prefers ours.  Why?  At bottom, we don’t trust government to do the right thing in things that count for us personally.

The chapter on sentencing is headed ‘The Big Sentencing Con.’ And con it is.  In the 1980’s I acted for banks who got sued by farmers whose farms were on the line because their bank manager had put them into foreign currency loans (Swiss Francs) that had gone bad and left them broke.  You did not need honours in jurisprudence to know which side was the less likely to lose that sort of case, but I wondered about the juristic basis of the claim.  The late Neil McPhee told me had been involved in a number of high finance cases, and that he was satisfied by the experts that there was no rational basis for predicting fluctuations in the money markets.  He said that he thought the banks were exposed because they were making public statements that could only be premised on the proposition that we could predict fluctuations in money markets.

His insight looks appropriate to our law on sentencing.  The Holy Grail is: What good does it do to lock people up?  What does punishment mean or achieve?  No one has even got close to a coherent answer that I am aware of.  Those in the know speak of ‘warehousing’ – so does the author.  The inarticulate premise is – ‘we will lock the bugger up to keep us safe and shut up the politicians and the press, and then wait for the next serve when they get out – most likely worse than when they went in.’  Warehousing is to the judiciary what kicking the can down the road is to the executive.

Then the appellate courts compound the fallacy.  By saying that four is better than six, or vice versa, they are postulating that some identifiable science underpins the whole process.  That science had not been discovered when I did Criminology in 1965, and I am not aware of its later appearance.  Nor does it help that many of the appellate judges have never set foot in a criminal court, and not one – or scarcely any – has ever met the kind of customer our Queen confronts in her courts.

According to the author, 354 prisoners died in custody in 2016.  119 were suicides.

Prisoners are largely drawn from the most damaged and dysfunctional nooks of society.  The majority have the literary skills of an eleven-year-old.  An estimated 20-30 per cent have learning difficulties….Over half of women prisoners and over a quarter of men report being abused as children.  Mental health problems exhibiting symptoms of psychosis are reported by 26% of female prisoners and 16% of men, compared to 4% of the general population.  Drug and alcohol abuse feature for the majority and 15% are homeless.  And how are these complex factors addressed?

Apparently, by judges’ composing long and boring tracts that no sane person would ever want to read that if anything just make the law more complex, and therefore worse, and that just make life so much harder for the real judges who have to try to apply these laws – and which leave about half of us swearing never to go near a court again.

The author states the issue this way.

Sentencing of offenders amounts to a giant confidence trick on the general public.  The law – decades of on-the-hoof populist legislating – is impossible to understand.  Sentences passed are often entirely out of kilter with public expectations, and the same criminal behaviour can be dealt with entirely differently in alike cases.  Worst of all, there is an inherent dishonesty arising out of a lack of clarity as to what those setting policy want to achieve.

That accords with my understanding here.  The point is serious – the legal word for ‘confidence trick’ is fraud.  That is not the word we expect to find to describe a court of law.  Nor do we expect to see the word dishonesty characterising the heart of our system to punish crime.  What we have seen is the parliament, executive and judiciary complicit for years in creating a huge minefield to perplex trial judges and prosecutors and vex and amaze litigants, victims, and witnesses – and the whole dreadful rubric is built on sand.  (And that’s the polite way to put it.)

Politicians have a lot to answer for.  So does Rupert Murdoch, whose minions spin their tripe for gelt.  (Someone should remind Mr Bolt, and his like, that the slammer is far more expensive than Eton or Geelong Grammar; and it would improve his credibility, among other things, if he spent a weekend or two in one.)  But overall, the problem is down to us as lawyers, and this book throws a steady light on our failings.

There is one light spot.  In a Crown Court in August 2016, her Honour Judge Patricia Lynch, QC, gave the prisoner eighteen months for racist abuse.  The prisoner told her Honour she was ‘a bit of a cunt.’  Her Honour was evidently less sensitive than our County Court judge who was compared to a Collingwood supporter.  She replied: ‘You are a bit of a cunt yourself.’  Atta girl, Ma’am – both barrels and in terms that the bastard can understand.  After that, the conversation went down in tone.  The bad news is that there was a regulatory inquiry.  The good news is that her Honour was cleared – after saying sorry.  The JCIO [the Thought Police] statement said: ‘Although the lord chancellor and the lord chief justice considered HHJ Lynch’s remarks to be inappropriate, they did not find that they amounted to misconduct or warranted any disciplinary sanction. [They] were of the view that the matter should be dealt with by informal advice.’  It’s just another piece in that ghastly Orwellian mosaic; no breach of the law but she gets a backhander just in case – this is known as the James Comey swipe.

As the author reminds us, Dostoevsky said that you can judge the degree of civilisation in a society by the way it treats its prisoners.  We do not even come close.

Here and there – Frontier Justice

 

Like a lot of people busy in the birth of the United States, John Marshall came from Virginia – Fauquier County between the Rappahannock and Potomac Rivers.  (It’s hard to get more American than that.)  Mary Marshall was eighteen when John was born.  She would later have fourteen more children.  John’s dad was a surveyor, as was another local called George Washington.

John Marshall fought the English beside his father.  It was in truth a brutal form of civil war.  ‘Liberty or Death’ was inscribed on their jacket, and they were armed with a tomahawk and scalping knife.  When it came to this kind of fight, the white people were content to ape people they described as savages.

John would later qualify as a lawyer.  He too would have a large family whom he provided for by giving them land and slaves.  He was intensely political, but he is remembered for serving as Chief Justice of the Supreme Court for thirty five years, a record that still stands.  Even Australian lawyers know of Marshall, C J, as the judge who affirmed that the Supreme Court could tell politicians where to get off by striking down laws of Congress that the Court found to be against the Constitution.

This story is crisply told by Richard Brookhiser in John Marshall, The Man who made the Supreme Court.  The author is a writer, not a historian or lawyer.  Given contemporary scholarship in either field, that is a huge plus.  Just tell the story and let us chase up the evidence or the law if we want to.  I am sick of acting as unpaid editor for bookish workaholics who feel the need to lay out the results of years of trawling that just obscure all that we need to know about the subject.  This book comes in at under 300 well-spaced pages, and the subject turns twenty before the book does (an achievement of Roy Jenkins on Churchill).  And the fact that the author is not a lawyer might serve to revive that wonderful old fairy tale that we should all be able to understand the law.  (That reminds me of a remark by an English judge that justice was open to all – just like the Ritz Hotel.)

The book justifies its subtitle.  Marshall brought to this new constitutional organ dignity as well as power.  He understood and acted upon the wisdom of our English ancestors that people don’t like or trust division in government.  A split in the highest court in the land is as welcome, or suspect, as a split in cabinet, or even in a political party.  Our ancestors forbade the publishing of any dissent within the Privy Council sitting in either its executive or its judicial capacity.  We preserve that doctrine for cabinet.  ‘As much as possible, Marshall made them [the justices] not six or seven men but one body.’

Marshall did so by juristic leadership, intellectual humility, and personal charm – in which Madeira played its part.  Not for him, or the people, the prima donna, or prima ballerina, or prima donna assoluta.  God only knows what the founding justices would have thought of the massive footnoted encyclopaedias scatter-gunned over the land by hugely over-resourced untouchables sealed away from the masses in a barren federal fastness.

For better or worse, the highest courts in common law countries now spend a lot time legislating.  The need for one voice then becomes imperative.  Our parliaments inflict misery and indignity on us, but not to the extent that they offer alternative, and not consistent, versions of a new law.  Yet our judicial law-makers do just that to us all the time.

There is another problem, one that is at least as bad.  You do not have to subscribe to the radical fringe of one political party to complain that we have too much law – and too much that is incomprehensible as well as suffocating.  Our judicial law-makers need to understand one simple truth.  Your decision may add to the law or it may not.  If not, you don’t need to say anything, except perhaps to apologise to the parties for putting them to an expense that has no point.  But if you are adding to the law, the odds are long that you will make it worse – either ipso facto just by adding to the volume, or because that’s just the way it is unless you are one of the All Time All Stars – and they come along about once each century.  On this point, the lawyers need to get their act together in parliament, the executive, and the judiciary.  You only have to look across the Pacific to see the awful fate that waits us if we don’t.

That I think is the point of the book, and it is a big one.  But the book gets there with lots of anecdotes that are the main reason we turn to biography.  (Why do we turn our noses up at ‘anecdotal evidence’?  Does not all evidence rest on a report of what has been perceived, just as all history resolves into parts of biographies?)

After Marshall had been on the court some time, he was joined by Joseph Story.  I have on many occasions consulted Story on equity.  He is up there juristically with Holmes, Ames and Pound – and on Kanchenjunga, the atmosphere is lofty.  Story and Marshall were very close.  Story helped Marshall bind the court.  Marshall could not have had a better man riding shotgun.  They also did comic routines.  The judges dined in a boarding house.  It was their custom to take wine only if it was raining.  Marshall would ask ‘Brother Story’ to look out the window and check the weather.  If he reported that it was sunny, Marshall would reply that ‘our territory is so large it must be raining somewhere’.  Grown men in high places who can act with that sense are doing something right.

Americans were then and are now much more attracted to oratory.  It was an art form and you got in for free.  Society came to hear the big guns.  When Dolly Madison arrived at the court with a party of ladies, counsel stopped and recapped the argument for their benefit.  Daniel Webster was a very big hitter.  In terms that only he could have found, Carlyle compared his eyes to ‘anthracite furnaces needing only to be blown…I have not traced so much of silent berserker rage in any other man.’  (I felt a bit like that with Tom Hughes in a case more than thirty years ago – and I was on his side!).  In one massive case about Dartmouth College, Webster at the conclusion of his argument, looked directly at the Chief Justice and said: ‘Sir, you may destroy this little institution; it is weak; it is in your hands….It is, sir, a small college.  And yet there are those who love it.’  In our terms, that is not something you try on at home, but two people who were there said that the room was deadly silent or in tears.

Another hotshot was Pinkney who was ‘acerbic, arrogant, and vain. He bullied opposing counsel, laced himself into corsets, and used cosmetics on his face.’  If you out to one side the underwear and make-up, we all know these people.  They commonly have a chip on their shoulder, often about their status before they rose up in the world.  Pinkney’s dad was a Tory who lost all in the Revolution.  The son started by sweeping out law offices.  When he was on the rise, he went to London to settle war claims.  He met Pitt and Fox and other greats.  He felt humiliated when these ‘Oxbridge-educated aristos’ were discussing Euripides.  He could add nothing.  ‘I resolved to study the classics’ – in other words, he would not be shamed again.

Marshall was able to champion the Constitution as the supreme voice of the people.  The high romance of its history helped him, even if much of it was invented.  (It’s harder for us.  Our founding document is in the schedule to an act of the British Parliament and Queen Victoria.)  In one case, he held that the power to tax was the power to destroy, and since the power of Congress to charter a bank was supreme, no state could claim a power that might destroy it.  States’ rights were and are much more lively there than here.  The author refers to one loaded states’ rights judge as a man of ‘strong passions and morose manners …who could not endure a superior.’  Well, we too know all about those judges, but Robert E Lee would lead his fellow Americans to pay a hideous price for his putting his state before the union.  (It is not surprising that some in the north later wanted to hang Lee and Davis.)

Marshall hated Jefferson with heat all his life and Jefferson responded in kind all his life.  (For some reason, I am not surprised that Jefferson got up some people’s noses.  The Declaration of Independence is for me full of that self-serving humbug that so troubled de Tocqueville about the American character.  The Convention did Jefferson and us a big favour by striking out the most purple passages.)  Marshall called Jefferson ‘the great Lama of the mountains.’  He had told Hamilton that Jefferson was a demagogue.

His great power is chiefly acquired by professions of democracy.  Every check on the wild impulse of the moment is therefore a check on his own power, and he is unfriendly to the source from which it flows.  He looks, of course, with an ill will at an independent judiciary.

God only knows what wan thoughts those words might arouse in a Chief Justice who every day might be called to check ‘the wild impulse of the moment’ of a president who makes Jefferson look like a Trappist monk on industrial strength sedatives.

Nor was Jefferson found wanting.  ‘Marshall makes history descend from its dignity, and the ermine from its sanctity’.  Jefferson spoke of the ‘slipperiness of the eels of the law’ and decisions ‘hanging inference on inference, from heaven to earth, like Jacob’s ladder.’  And we lawyers need to remember which side in this fight will get the popular vote – even putting to one side what is softly called ‘the base.’

Some of the stories look apocryphal, but they throw light nevertheless.  James Kent was a very learned judge in New York.  He had idolized Hamilton.  Aaron Burr was another figure larger than life.  He had killed Hamilton in a duel and would go on to dabble in treason.  When Kent saw Burr in the street, his Honour permitted himself the loud observation that Burr was a scoundrel.  Burr, the author tells us, ‘answered suavely’ that his Honour’s opinions were ‘always entitled to the highest consideration.’

And so it went on.  Jefferson died on the fiftieth anniversary of his Declaration.  Marshall kept going, although some prima donnas made a splash in the pool.

Every February, the same justices came to Washington, roomed at the same hotel, drank the same wine rain or shine, and followed Marshall’s lead regardless of their own party affiliation.

It was a colossal achievement.  Marshall would be followed by Taney.  The Dred Scott decision would sanctify the Original Sin of the Republic.  Marshall had wrestled with the ugly notion that ‘conquest gives a title which the courts of the conqueror cannot deny’.  It would take the genius, and the murder, of Abraham Lincoln and the blood of 600,000 Americans to begin to erase the infamy of slavery.  Lincoln referred to Dred Scott in his first inaugural.  Taney sat behind him looking like a ‘galvanized corpse.’

When Marshall died, he had been on the court for nearly two generations.  From 1812 to 1823, the personnel on the court had not changed.  The only comparable period would come in 1994 to 2005.

Eight years after the death of Marshall, his friend Justice Story said that such men ‘are found only when our need is the greatest.’  History suggests that his Honour then uttered a great truth.  But the author is surely right to refer to another tribute.  Marshall had been a life-long member of the Richmond Quoits Club.  (I gather that they threw horse shoes.)  This was a very sensible and convivial body for a very sensible and convivial man to belong to.  There was a flat ban on any talk about religion or politics, but the members did not mind a drink.  When Marshall died the members resolved that he was irreplaceable and that the club should always have one less member.  I don’t know whether this gesture founded the tradition of retiring the number of a great player – like Babe Ruth – but it was a charming gesture on behalf of America to a very great American.

HERE and THERE – ROSCOE POUND and THE SPIRIT OF THE COMMON LAW

 

The United States of America have produced some great jurists – scholars of the common law and what we call jurisprudence.  In the end, their work may verge on idolatry.  There is likely to be a touch of alchemy at the fringe of every great field knowledge or applied technique.  Occasionally even the bounds of logic get pushed.  But the work of these great thinkers and writers of the law is vital to the bloodstream of what we call the common law.

Roscoe Pound was not born into learning.  He was born just after the end of the American civil war and he died in the same year that the Olympic Games were held in Tokyo.  His parents were true pioneers in the west.  At one time or another he was a scholar (and that’s not a dirty word in America), generalist, professor, dean, reformer, and, perhaps most importantly, a trial lawyer.  He had three degrees, including a Ph D in Botany, but he never took a law degree.  Toward the end of the 19th century, he fought many cases as a trial lawyer before cow-punching juries in Nebraska.  Later he served as a Commissioner of Appeals in the Nebraska Supreme Court.  He wrote a very influential article for the ABA on ‘The Causes of Popular Dissatisfaction with the Administration of Justice.’  His trial experience left him with a distaste for ‘forensic gladiatorial show.’  He wanted the ideals of the common law to be relieved from the ‘yoke of crudity and coarseness which the frontier sought to impose.’  He then taught at Harvard where he was Dean for twenty years.

He had a mighty written output, but all his work is informed by his time at the Bar.  It is difficult to imagine Oliver Wendell Holmes before a Nebraska jury, but is easy to imagine him in deep philosophical discourse with Roscoe Pound.  Pound concluded his preface to The Spirit of the Common Law this way:

When the lawyer refuses to act intelligently, unintelligent application of the legislative steamroller by the layman is the alternative.

The first chapter is ‘The Feudal Element’.

In the sixteenth century, when the Roman law was sweeping over Europe and superseding the endemic law on every hand, the common law stood firm.  Neither the three R’s, as Maitland called them, Renaissance, Reformation, and Reception of Roman law, nor the partial reversion to justice without law under the Tudors shook the hold of our legal tradition.  In the seventeenth century, it contended with the English crown and established its doctrine of the supremacy of law against the Stuart kings.  In America, after the Revolution, it prevailed over the prejudice against all things British, which for a time threatened a reception of French law….

Pound makes a passing reference to elected judges and says:

A system of law-making through judicial empiricism calls for much more in a judge than popularity, honest mediocrity, or ignorant zeal for the public welfare may insure.

That is elemental – but too many elected officials don’t see it.

More on feudalism.

While the strict law insisted that every man should stand upon his own feet and should play the game as a man without squealing, the principal social and legal institution of the time in which the common law was formative, the feudal relation of lord and man, regarded men in quite another way.  Here the question was not what a man had undertaken or what he had done, but what he was.

Here is the distinction made by Sir Henry Maine in Ancient Law between contract and status.  It is fundamental to our history, as is the role of contract.

Then comes ‘Puritanism and the Law’.  In America, the puritans had the numbers.

What is peculiar to Anglo-American legal thinking is an ultra-individualism, an uncompromising insistence upon individual interests and individual property as the focal point of jurisprudence…..Two main factors may be recognised, namely, the emancipation of the middle class and Protestantism.

Further on:

The early history of New England furnishes abundant applications of the idea that covenant or compact – the consent of every individual to the formation and the continuance of the community – was the basis of all communities, political as well as religious.

Just look at the covenant that God made with his chosen people.

In ‘The Courts and the Crown’, Pound looked at the celebrated conference between James I and my Lord Coke.  His trial-bred realism allowed him to see the flip side.

Thus the Sunday-morning conference between King James and the judges, which is the glory of our legal history, led in the nineteenth century to constitutional doctrines that for a time enabled a fortified monopoly to shake its fist in the face of the people, and defy investigation or regulation.

We get more of an attitude that would not have gone down well with most donors to Ivy League universities.

…the fact remains that the present state of the law operates unequally and invites oppression and lawlessness.  No rich man has been subjected to the third degree to obtain proof of violation of anti-trust or anti-rebate legislation, and no powerful politician has been so dealt with in order to obtain proof of bribery or graft.  The common-law right of the accused poacher became the natural right of the accused magnate and entrenched in the bill of rights, shows how legal machinery may defeat its own ends when one age conceives it has said the final word and assumes to prescribe unalterable rules for time to come.

A glance at our jails since the Great Financial Crisis shows that that problem has just got worse.

Under ‘The Pioneers and the Law’:

A pioneer or a sparsely settled rural community is content with and prefers the necessary minimum of government.

This is how this remarkable man concludes this great book.

For through all vicissitudes, the supremacy of law, the insistence upon law as reason to be developed by judicial experience in the decision of causes, and the refusal to take the burden of upholding right from the concrete ‘each’ and put it wholly upon the abstract ‘all’ have survived.  These ideas are realities in comparison whereof rules and dogmas are ephemeral appearances.  They are so much part of the mental and moral makeup of our race, that much more than legal and political revolutions will be required to uproot them.

This book should be read by any lawyer who has what I may call faith.  It should also be read by those historians and philosophers who stubbornly refused to acknowledge the central role played by contract in the development of our laws and of our constitution.

And there’s a bonus – across the 216 pages of this mighty book, there is not one bloody footnote.

So, a man from the back-blocks of the West is generally ranked at the top level of jurists across the common law world – and he got there without a law degree but after running hard cases before outback juries.  He did a lot of work for railroad companies.  He would lose those. Juries did not like big corporations.  One day, when the railroad company had brought the suit, he won!  Someone got one of the jurors in a bar in the capital of Nebraska.  The conversation went something like this.

What happened?

Well, that judge tried to trick us.

How?

He said that the railroad company was the plaintiff.  We know the railroad companies are always the defendant.  So, we came back with a good verdict for the plaintiff – to shove it right up the railroad company.

They don’t often teach you that kind of stuff at Harvard.  Roscoe Pound knew all about it.

Passing bull 145 – Bull about independence

 

What does it mean to be independent?  The Shorter Oxford English Dictionary says: ‘Not depending upon the authority of another; not in a position of subordination; not subject to external control or rule; self-governing, free.’  The root of the condition is not being dependent.  What does that mean?  ‘To be contingent on or conditioned by.’

Can I retain a lawyer to examine my affairs and then express an opinion on them that can be presented to a third party, say a government office, as independent?  Let us say that I am the only source of instructions to the lawyer; that I am solely responsible for paying the lawyer; and that the lawyer stands in a position of trust and confidence to me such that they cannot have an interest or duty that conflicts with their duty to me.  They are all typical incidents of the relationship between lawyer and client.

If you look at the definitions set out above, you will see immediately that there are difficulties, to put it softly, in my retaining a lawyer to present to a third party an opinion, however called, that is in any sense independent.  The lawyer depends on my authority, is subordinate to me (unless I want break the law), is subject to my control and rule and their opinion will be wholly contingent upon or conditioned by my instructions – and payment for services rendered.

So, when AMP and its lawyers, Clayton Utz, purported to present to a government agency, ASIC, a report or opinion of Clayton Utz that was in any way independent, they were chancing their arm, again to put it softly, but in cricket terms.  The accounts in the press of the evidence before the Royal Commission suggest that their stratagem was doomed from the inception.

AMP could at any time have stopped the retainer and the process.  The letter of instruction from the Chair of AMP asked to be notified of any ‘findings’ that mentioned members of the board or executive team.  What does this mean except ‘You are free to say what you like – unless we don’t like it’?  The wording is at best unfortunate.  Lawyers are not usually retained to give a ‘report’ or conduct an ‘investigation’.  They are certainly not there to make ‘findings’.  They give an opinion based on the instructions they receive.  Part of that opinion may relate to the findings that may be made by the court or other body that has the power to make them.

So, the problem was there from the start.  The evidence I have seen does not reveal the extent to which this firm had acted for AMP.  I gather it was substantial.  The relationship was obviously close.  The in-house counsel was a former partner of the firm.  He liaised with the partner handling the matter to get a result satisfactory to AMP.  One report says that he asked for the final say over the wording.  The Chair was also actively involved, so we know where the buck stops here.  She was also involved in protecting the name of the former CEO, who was paid $8.3 million.  Another high executive was protected.  The firm provided at least 25 drafts to the client, and the company now admits misleading ASIC on at least 25 occasions.  It is preposterous to suggest that the final document was in any sense independent.  It was an elaborate cover-up.

The law firm owed obligations of trust and confidence to the corporation.  According to its website, the firm expresses that obligation as follows.

Our key obligation:  We will perform the work with professional skill and diligence acting as your independent legal advisers.  We will act solely in your interests in any matter on which you retain us unless you ask us also to act for other parties in that matter.  We will not perform work for you if factors such as a conflict of interests prevent us from accepting your instructions.

There may be legal difficulties displacing that obligation.  But how can those obligations of loyalty or fidelity stand against an obligation to give an ‘independent report.’  At what point does the lawyer say: ‘If I carry out my retainer according to its terms, you the client will suffer damage’?   How does the law firm escape discharging that duty consistently it carrying out its key obligation?

The press reports are full of exclamations of shock.  People expressing shock are naïve.  Professional people commonly submit drafts of opinions to clients for a variety of reasons, some more pure than others.  ASIC used to do with people under investigation.  This Royal Commission will submit draft findings to targets.

What is shocking here is that a major corporate and a major law firm thought that such a crude stunt was worth a try on.  In other words, they thought that they had a better than sporting chance of convincing ASIC that what it was receiving was ‘findings made in an independent report.’  Heaven help us if AMP and its lawyers were right about that.  Is the reputation of ASIC so low in the business and legal fraternities?  Does AMP not know that the cover-up is usually worse than the original crime?

We cannot the comparison with ball tampering.  What is worse – the brazenness of the original act of cheating, or the inanity of the attempts to cover it up?

Bloopers

‘To both survive and succeed as Prime Minister in the coming months, Turnbull has to change.  If he is to lead the Liberal Party and defeat Bill Shorten and Labor at the next election, Turnbull has to develop a more political character or be prepared to take advice from those who have one.’

Dennis Shanahan, The Australian, 9 April 2018

What did we do to warrant such perpetual banality – about opinion polls, no less?

 

Industry super fund Cbus has been ordered to apologise to more than 300 of its members after the Australian Privacy Commissioner found it breached their privacy.’

Australian Financial Review, 12  April 2018

Am I alone to wonder about ordering someone to apologise?  What if they are in fact not sorry when they say they are?

Here and there – How taxing it is

Part II

[This is the second part of a piece on the current debate on refunding tax credits.]

Secondly, the relevant law has been in place since 2000.  Very many people have conducted their affairs on the footing of that law.  As I said, this law is no mere wheeze.  I should here disclose that you are now talking to a paradigm case of a target of the proposed change.  My superfund is invested entirely in public companies that issue fully franked dividends.  No other course even comes close for my purposes – I see cash as pure waste.  I believe that my fund will support me, but if the income of the fund is reduced by 30 per cent as a result of this proposal, I will have to look seriously at the alternatives.

There is a well-established principle of our general law that if one party to an arrangement makes a representation that the other party relies on to their detriment, then the law will restrain the party making the representation from resiling from it.  Although I am prejudiced, that law seems to me to meet my case – and doubtless that of many thousands of others who have arranged their affairs in good faith in reliance upon the good faith of government.

We cannot preclude parliament from changing the law, but we can seek to hold politicians to their promises.  When the present government sought to legislate against retired fundholders about two years ago, I was struck by the vehemence of the opposition that came from members of the government’s own party.  Lawyers I respect said that the proposed legislation was retrospective.  I have some difficulty with that as a matter of law – but I have far less difficulty in envisioning some people feeling betrayed.  People were expressly invited to conduct their affairs on the ground chosen by government and now, in the middle of the game so to speak, the government wants to change the rules.  That is not fair – and as between parties subject to the general law, it would not be allowed.

Thirdly, the relevant law is horribly complex and looked at by most people, including most lawyers, with a blend of disgust and horror.  Whatever else may be said about the proposal, it will not ‘reform’ the law in the sense of making it better or clearer.  It will add another complication and inducement to people to get advice on how to beat it.  Those who clip the ticket – there are far too many of them – will be thrilled to bits.  The suspicion of government, and the system, will get worse – particularly if the proponents say that they are targeting the wealthy, or, worse, those who don’t vote for them anyway.  (That way lies the vice of Donald Trump.)  No one wants to see superannuation, something this country has done well, as what Alan Kohler calls ‘an object of political contest’ – or, put bluntly, a till to be tickled.  People who have worked hard and paid their taxes, and then followed the government’s advice and request to look after their own retirement, so relieving ongoing taxpayers, will justifiably resent and react to a government that seeks to go back on its word.  It’s no comfort to be told that a different party is in government – that’s like a company saying it can walk away from a contract because there is a new board of management.

My conclusion – which I agree is biased – is that although the proposal is justifiable on the theory of the original reform, it is at best unfortunate that its burden falls on the those who currently receive less income, and it is downright wrong unless the government moves to exempt or protect those who for about a generation have planned their retirement on the footing that the government of the Commonwealth of Australia can be trusted to keep its word.

We do, after all, have a long history of suspicion about tax and our parliaments.  In the book referred to I said:

In 1799, England was at war with revolutionary France.  France was then led by Napoleon Bonaparte, a man of military genius and unlimited ambition – and on the first count alone, he was a much more dangerous threat to England than Adolf Hitler would be.  The war was ruinously expensive.  How was the British government to fund it? 

William Pitt had become Prime Minister at the age of twenty four.  He was a leader of great authority, but the English parliament had been feisty about tax from its inception.  The national touchiness on revenue goes back at least as far as Magna Carta of 1215.  The American colonists had revolted over taxation – in the form of the Stamps Act – less than a quarter of a century ago.  (Ironically, France went bankrupt helping the Americans against their old enemy England and this bankruptcy had led to the Revolution and to the ascension of Bonaparte.  This could be the ultimate historical example of the cost of living beyond your means.)

Then the Prime Minister made a shocking proposal that was understandably denounced as ‘inquisitorial’.  He proposed a tax on incomes!  In the name of heaven, was no property to be sacred?  Well, it was just an emergency war-time measure.  It had to be – it was assessed at the demonic and confiscatory rate of two shillings (now, ten pence) in the pound (10%)! 

England went on to win the war – but not until Waterloo in 1815.  (Had England not won, we might be having this conversation in French.)  And some historians think that the victory of England owed more to revenue than naval or military successes.  But income tax reappeared, and has stayed, and it will be with us forever.  The only real change is that the law is more than ten times as long.  And it all started with an interim, emergency wartime measure.

Here and there – How taxing it is

[This is very long and difficult in parts, but there are many conflicting views out there, and it is hard to find a logical account of the relevant law and the proposed changes to it.]

Part I

If I shine shoes for a living – that is to say, for money – the law says that the income I derive will be taxed.  The tax is called income tax.  If I pay someone to do the shoe shining, or a buy a shoe shining business, the law says that any profit I derive will be subject to income tax.  The people that I pay to shine the shoes will have to pay income tax.  What I pay them is part of the cost of the business.  But the profit of the business is subject to one tax only.  I am the only person getting the benefit of the profit, and I am the only person who pays tax on the profit.

But the position is different if instead of my employing people in my business, I incorporate the business – that is to say, if I form a company to conduct the business.  The position is different because the law imposes income tax on the company for any profit that it makes.  Any profit that is passed on to those who own the business of the company – the shareholders – is arrived at after making allowance for the payment of the corporate tax.  If the company then distributes the after tax profit to shareholders in the form of dividends, the law says that those dividends are income in the hands of the shareholder.  As income they are liable to the personal income tax of the shareholder.

Since that personal income is only derived after allowing for the corporate tax paid by the company, the shareholder’s income has been twice reduced by a liability to income tax, the corporate and the personal taxes.  This leads to unhappiness and a sense of unfairness.  (Of course, big businesses, like BHP or Telstra, result in myriads of other taxes being paid – the income tax of the employees, payroll tax, sales taxes on plant and machinery, and so on, but we can put all that to one side.)

In a book about superannuation, which is still in preparation, I said:

Prior to the Hawke/Keating government, investors in shares in companies had been subject to double taxation.  Prior to declaring a dividend on its profit, a company has paid corporate tax on that profit.  The corporate rate is 30%.  Then the dividend was taxable as income in the hands of the shareholder.  If he or she was paying tax at 50%, they had lost at least 80% of the value of the return on their investment as a result of this double taxation.  The government legislated to ensure that the taxpayer only paid the one amount of tax. 

But the government went further for dividends received by superannuation funds.  The law says that if a super fund receives a dividend from a company that has paid the company tax, and issued the dividend ‘fully franked’, the fund will get a credit for the tax paid by the company. 

The result is that you add about 30% to the value of the dividend in your hands.  6% becomes 8% (rounding off.)  While you need to be careful about allowing tax considerations to dictate how you do business, you need to bear this treatment of dividend income of super funds firmly in mind.  This is no mere wheeze.  This law is fundamental to the way that this nation has legislated for its future.  It does for example bear on the attraction of foreign equity.  European and American companies traditionally return much lower dividends than Australian companies – and you do not get the benefit of these tax credits.

As I follow it, and the thread is not easy to pick up, the relief from double taxation in the first place was limited to a credit on tax otherwise payable by the person receiving the dividend (provided, of course, that the dividends were issued ‘fully franked’).  Then a government of a different colour (that of Howard/Costello) changed the law, in the year 2000, to allow for cash credits to be paid to super funds that had no income tax to pay.

There is now a proposal by the other party – the one that introduced the reform – to take the law back to that made by made by the Hawke/Keating government and to stop allowing the payment of cash credits.  The Howard/Costello changes have been broadly criticised, if not condemned, as a profligate buying of votes in the form of what is called middle class welfare during boom times, and that it is time the government stopped paying perks that we no longer afford.  I can follow all that, but the proposal, as it seems to me, is open to the following observations.

First, if the object is to save revenue, which the government can then redistribute, then the people taking the hit will be those earning less rather than those earning more.  This is because the whole point of the change is to stop paying cash refunds to those who earn less than the fundholders who can apply refund credits to income they otherwise earn.  If that is right, it is an unusual exercise in redistribution to commence by putting a burden on those who receive less than those who are better off.  I refer to what Alan Kohler said in The Weekend Australian.

But the problem is that conceptually, there is no difference between cash not paid and cash received, to the party at either end; franking credit cash refunds are not a loophole but an equalisation, between those who pay 30 per cent tax or more and those who happen to pay less, mainly because they earn less.  Drawing a line between the elimination of tax that would otherwise be paid but is not because 30 per cent tax has already been paid on that money, and rebating it as cash refund is arbitrary, illogical and discriminatory.

In the same paper, Terry McCrann said:

In terms of the structure and integrity of imputation, it is irrelevant of whether the credit is less than or exceeds any other net tax payable by the shareholder.  More simply, the company has paid ‘too much’ tax on behalf of those shareholders with marginal rates of less than 30 per cent.  The refund is effectively exactly the same as normal refunds of too much personal tax paid by a taxpayer.

Is the answer to those objections that if the person receiving the dividend does not have to pay tax on it, then the issue of double taxation does not arise for that taxpayer on that dividend – and the cash refund has been paid to deal with an anomaly or inequity which in truth does not exist?  The revenue is boxing at a shadow.  The Latin phrase is cadit quaestio (the issue does not arise, or is dead)To go back to my starting sample, if I do not pay tax on the dividend I receive from the shoe shine company, there is no double tax for me to be relieved of.  That is why this proposal hits lower earners.

This is how Judith Sloan seeks to explain the argument for the Howard/Costello change to the law in The Australian.

If an individual earns more than $180,000 a year, the marginal income tax is 47 per cent, including the Medicare levy.

When that individual receives dividends from a company issuing fully franked dividends, the tax on the dividends is 17 per cent – 47 per cent minus the 30 per cent already paid.

When an individual earns less than $18,200 and pays no tax, then the individual receives a cash refund of 30 per cent.  This is only fair.  Without cash refunds, the effect on very low income earners would be a tax on 30 per cent of dividends.

I cannot follow that.  All income received as dividends is subject to 30 per cent tax.  If the dividend is not taxable in the hands of a taxpayer because he or she earns so little, that taxpayer needs no protection from double taxation.  The payment has only borne tax once.

My problem may be with the link to imputation.  I am familiar with the notion of a ‘progressive tax’, but to frame a law predicated on the need to look after those who are not so well off looks to me to come dangerously close to what some call ‘identity politics.’  A state-acquired El Dorado is not something we associate with The Australian.  It could lead to heart attacks at the IPA, and a call-out of the Minutemen at the Tea Party.  Just think of it – in the name of ‘equity’ or ‘fairness’, the government gives away money to those investors who have made less profit than others.  This would have brought tears to the eyes of the late Californian oligarch Chief Justice Rose Bird or a Russian oligarch wolfing down his black caviar in Siberian exile.  Nor should we forget that the word ‘imputation’ is itself pregnant with fiction – it is as intellectually respectable as ‘deemed’ – or ‘derivative.’

[To be continued.]

Here and there – Anthony Trollope on laws and morals

 

The 1982 BBC TV series The Barchester Chronicles was and is outstanding television.  The cast was what is called ‘stellar’ – Donald Pleasance, Nigel Hawthorne, Alan Rickman, Geraldine McEwan and Susan Hampshire.  It was based on two novels by Anthony Trollope about the affairs of the Church of England in a small cathedral town in Victorian England.

The first part comes from the novel The Warden.  Mr Harding (Donald Pleasance) is a saintly figure of a vicar.  By the grace of his bishop, he holds the position of Warden of a hospital for poor old men under a charitable trust that goes back to the middle ages.  The position is now worth 800 pounds a year – a very large amount of money then.  By contrast, the old inmates are not nearly as well off.  A crusading doctor and an ambitious journalist decide to take the issue on.  They tell the inmates that most of the money should go to them.  It all depends on the interpretation of the ancient will that set up the trust.

The good Mr Harding feels very uneasy about all this.  In today’s language, the ‘optics’ are not good.  But his archdeacon (Nigel Hawthorne), who is also his son in law, and the son of the bishop, is determined to uphold the privileges of the church.  When it comes to the legal defence of the church, money is no problem.  The archdeacon instructs the church’s solicitors to brief the nation’s leading lawyer, the Attorney-General Sir Abraham Haphazard to advise.  The resulting advice leads to the issue of the novel.  It is an issue that some of our clergy and their lawyers may well have benefited from pondering.

Since the legal action that the crusaders had launched related to a charity, the plaintiff may well have been the Crown in what is called a relator action.  We can put that to one side, because nothing turned on it.  But there was a legal issue about the defendants.  The action was against Mr Harding, who ran the hospital, and Mr Chadwick, who looked after the books.

As I follow it, Sir Abraham advised that the action would be likely to fail on two counts.  First, they had sued the wrong people.  The defendants should have been the church corporation, or the relevant chapter of the church – or ‘the bishop he thinks would be the surest shot; but even there we could plead that the bishop is only visitor, and that he has never made himself a consenting party to the performance of other duties.’  Secondly, the advice was that Messrs Harding and Chadwick were merely paid servants and that it was not up to the court to query their allotted stipend.

I may say I have some difficulty with both propositions.  As to the first, at the beginning of chapter 16, the action is described as ‘The Queen on behalf of the Wool-carders of Barchester v Trustees under the will of the late John Hiram.’  As to the second, as Mr Harding said immediately, ‘that can hardly be a just arrangement’ if he could allot what salary he liked to himself leaving the twelve poor inmates no redress.  Nevertheless, the book proceeds on the footing that the legal effect of this advice is that the action will very likely fail.

Well, you can imagine the Trumpian glee with which the archdeacon received this advice.  But most people, in or outside the law, would regard these points as technical or procedural rather than going to the merits of the case.  (They resemble the kind of point I was obliged to take in defending the most unpopular TV repair man Melbourne had seen – the problem was the people loathed him so much that they made errors in the way they trumpeted the justice of their cause.)

The author says of the archdeacon:  ‘Success was his object, and he was generally successful.’  Mr Chadwick was also a hard-head.  ‘The point is so nice, as Sir Abraham says, that you would force them into fifteen thousand pounds’ cost before they could bring it to an issue! And where’s that sum of money to come from?’  This is what some call the sporting theory of justice; what others call trial by ambush – the archdeacon is firmly against telling the other side of the trap they are walking into; and you don’t often hear what Americans call an 800 pound gorilla being as candid as that – although we all know of large corporations who will not blush to play the role of a bully.  (One newspaper made an art form of trying to beat plaintiffs into submission by taking arid points of pleading.)

To the objections raised by Mr Harding, the position of the archdeacon is as follows.

Oh, well, all that’s nothing to the question; the question is, whether this intruding fellow, and a lot of cheating attorneys and pestilent dissenters, are to interfere with an arrangement which everyone knows is essentially just and serviceable to the Church.  Pray don’t let us be splitting hairs, and that amongst ourselves, or there’ll never be an end of the cause or the cost…..

What a question for a man to ask!  But it is like you – a child is not more innocent than you are in matters of business.  Can’t you see that if we tell them that no action will lie against you…that we will be putting weapons into their hands, and be teaching them how to cut our own throats?….

God bless my soul.  How odd is it that you will not see that all we are to do is to do nothing; why should we say anything about the founder’s will?  We are in possession; and we know that they are not in a position to put us out: surely that is enough for the present….

What about the abuse that Mr Harding is getting from the press?

You owe to the church of which you are a member and a minister to bear with this infliction, however severe it may be: you owe it to my father, who instituted you to support his rights; you owe it to those who preceded you to assert the legality of their position; you owe it to those who come after you, to maintain uninjured for them that which you received uninjured from others; and you owe to us all the unflinching assistance of perfect brotherhood in this matter, so that upholding one another we may support our great cause without blushing and without disgrace.

This Churchillian address is masterly writing by Trollope.  But the press gets wind of the point, and unloads on the Warden.

We understand that a plea has been set up which will be peculiarly revolting to the minds of English churchmen….Such a plea would doubtless be fair, if anyone questioned the daily wages of a bricklayer employed on the building, or the fee of the charwoman who cleans it; but we cannot envy the feeling of a clergyman of the Church of England who could allow such an argument to be put in his mouth.

If this plea be put forward, we trust Mr Harding will be forced as a witness to state the nature of his employment; the amount of work that he does; the income which he receives, and the source from whence he obtained his appointment.  We do not think he will receive much public sympathy to atone for the annoyance of such an examination.

The tormented Warden goes to see Sir Abraham.  Unless the Warden is assured about his legal entitlement to the money, he will resign.  ‘Sir Abraham began seriously to doubt his sanity.’

My dear sir, nobody now questions its justice.

Yes, Sir Abraham, one does question it – the most important of all witnesses against me – I question it myself.  God knows whether or no I love my daughter; but I would sooner that she and I would both beg, than that she should live in comfort on money which is truly the property of the poor…..I cannot boast of my conscience, when it required the violence of a public newspaper to awaken it; but now that it is awake, I must obey it.

Sir Abraham thinks this is ‘sheer Quixotism.’  The archbishop is in despair at the obduracy of his father in law.  (In the TV series, the bishop remarks that the Warden is prone to outbreaks of Christianity.)  But when the laws of England clashed with the conscience of the Warden, the conscience won.

There is no need to state the relevance of all this to weighty issues in our public forums (including issues before at least two royal commissions.)  But I may refer to some aspects of our laws.

First, it has always been the law in Australia, since it derived from a statute of Elizabeth I and the law arrived here with the first fleet, that an alienation of property made with intent to defraud creditors is voidable at the instance of any person prejudiced by it.  (This is now s.172 (1) of the Property Law Act, 1958.)  We don’t know how much time was spent by lawyers acting for James Hardie or some church entities looking at this law, but it is surprising how many people think that such provisions are only to be found in insolvency laws.  They’re wrong.  Like the laws of charity, they go back to the time of Good Queen Bess and the Spanish Armada.

Secondly, taking technical points that go against the merits or justice of the case may have forensic consequences.  In Charlick v Foley Brothers (1916) 21 CLR 249, Sir Isaac Isaacs tried an action about the sale of goods.  There was a substantive defence – a denial of any completed agreement.  There was also a technical defence – that the agreement was not evidenced in writing as required by a seventeenth century law called The Statute of Frauds.  It is worth setting out a lot of the judgment of the court.

The Statute of Frauds or its local equivalent is frequently the means of protecting a person from fraud or from the consequences of a transaction into which he has been hastily drawn.  It is couched in general terms, and applies no doubt, so far as legal effect is concerned, to such a bargain as the present.  But in practice a great mass of business rests upon the word of the parties, or upon quite informal memoranda, sufficiently understood by the parties, but not sufficient to satisfy the Statute of Frauds.  And in practice these understandings are faithfully recognized.  Where a great mercantile firm in substance invites its customers to dispense with the formalities of written contracts, and to rely upon the business honesty and fidelity of the firm to the pledged word of its responsible agents, it is distinctly dishonourable to repudiate a transaction so entered into upon the ground that the customer was simple enough to place reliance on anything short of a written undertaking duly signed.  And in my opinion it is not the duty of any legal adviser to compromise the honour and reputation of such a client, contracting in those circumstances, by placing on the record a defence of that nature without fully explaining it, and pointing out its full meaning and effect, and the probable consequences of the defence in case the event turns on a question of credibility.  If the law is explained and the true position indicated, then, if the client instructs his adviser to set up the strict legal defence, let it be done; but then the client runs the risk of being regarded as personally untrustworthy should the circumstances assume the appearance that they do in this case.

The facts before me rest so much upon the opinion I have to form of the personal integrity of the plaintiff and the defendants’ managing director, Mr. Foley, that I felt bound to specially ask Mr. Foley his own individual view of that particular defence in this case.

I was not surprised, but extremely gratified, to hear him as a business man express his own view that to succeed on that plea, if a definite bargain were really found to have been made, would not have been honourable. Had he said the contrary, I should have doubted his honesty in other directions. Even as it is, as he said he nevertheless left the matter to his advisers’ discretion, it to some extent weakened his other declaration. But on the whole I accept his personal statement as sincere.

[His Honor then dealt with the facts of the case, and decided them in favour of the defendants, holding that the contract made was conditional, and concluded:]

As the plaintiff fails on that substantial point, I see no reason to depart from the ordinary rule as to costs. If he had succeeded on this point, and had failed only on the defence of the Statute of Frauds, I should have made the direction as to costs accord with my view as to the propriety of that defence.

Those views might shock some legal or commercial people nowadays, but perhaps it is time they were given more game time.

Finally, lawyers should remember the general warning that Sir Owen Dixon gave about lawyers as gladiators – the type made for the archdeacon – and to recall their obligation to act in the overall interests of the client.

….I return to the basal principles which should govern the conduct of counsel.  He must keep steadily before him the duty of doing all he legitimately can in the true interests of his client….it is the true interests of his client that he must safeguard or consult and that is a more extensive duty than to use his best exertions in the conflict in the arena.  After all, he is his client’s counsel and the name signifies a good deal more than a forensic gladiator.  (Professional Conduct’ in Jesting Pilate, Melbourne, 1965, 134.)

My sense is that through either failure of nerve or want of professional judgment, too many lawyers forget these precepts, and strive to go along with the hymns nominated by the archdeacon – with ungodly consequences on all sides.

The 1982 BBC TV series The Barchester Chronicles was and is outstanding television.  The cast was what is called ‘stellar’ – Donald Pleasance, Nigel Hawthorne, Alan Rickman, Geraldine McEwan and Susan Hampshire.  It was based on two novels by Anthony Trollope about the affairs of the Church of England in a small cathedral town in Victorian England.

The first part comes from the novel The Warden.  Mr Harding (Donald Pleasance) is a saintly figure of a vicar.  By the grace of his bishop, he holds the position of Warden of a hospital for poor old men under a charitable trust that goes back to the middle ages.  The position is now worth 800 pounds a year – a very large amount of money then.  By contrast, the old inmates are not nearly as well off.  A crusading doctor and an ambitious journalist decide to take the issue on.  They tell the inmates that most of the money should go to them.  It all depends on the interpretation of the ancient will that set up the trust.

The good Mr Harding feels very uneasy about all this.  In today’s language, the ‘optics’ are not good.  But his archdeacon (Nigel Hawthorne), who is also his son in law, and the son of the bishop, is determined to uphold the privileges of the church.  When it comes to the legal defence of the church, money is no problem.  The archdeacon instructs the church’s solicitors to brief the nation’s leading lawyer, the Attorney-General Sir Abraham Haphazard to advise.  The resulting advice leads to the issue of the novel.  It is an issue that some of our clergy and their lawyers may well have benefited from pondering.

Since the legal action that the crusaders had launched related to a charity, the plaintiff may well have been the Crown in what is called a relator action.  We can put that to one side, because nothing turned on it.  But there was a legal issue about the defendants.  The action was against Mr Harding, who ran the hospital, and Mr Chadwick, who looked after the books.

As I follow it, Sir Abraham advised that the action would be likely to fail on two counts.  First, they had sued the wrong people.  The defendants should have been the church corporation, or the relevant chapter of the church – or ‘the bishop he thinks would be the surest shot; but even there we could plead that the bishop is only visitor, and that he has never made himself a consenting party to the performance of other duties.’  Secondly, the advice was that Messrs Harding and Chadwick were merely paid servants and that it was not up to the court to query their allotted stipend.

I may say I have some difficulty with both propositions.  As to the first, at the beginning of chapter 16, the action is described as ‘The Queen on behalf of the Wool-carders of Barchester v Trustees under the will of the late John Hiram.’  As to the second, as Mr Harding said immediately, ‘that can hardly be a just arrangement’ if he could allot what salary he liked to himself leaving the twelve poor inmates no redress.  Nevertheless, the book proceeds on the footing that the legal effect of this advice is that the action will very likely fail.

Well, you can imagine the Trumpian glee with which the archdeacon received this advice.  But most people, in or outside the law, would regard these points as technical or procedural rather than going to the merits of the case.  (They resemble the kind of point I was obliged to take in defending the most unpopular TV repair man Melbourne had seen – the problem was the people loathed him so much that they made errors in the way they trumpeted the justice of their cause.)

The author says of the archdeacon:  ‘Success was his object, and he was generally successful.’  Mr Chadwick was also a hard-head.  ‘The point is so nice, as Sir Abraham says, that you would force them into fifteen thousand pounds’ cost before they could bring it to an issue! And where’s that sum of money to come from?’  This is what some call the sporting theory of justice; what others call trial by ambush – the archdeacon is firmly against telling the other side of the trap they are walking into; and you don’t often hear what Americans call an 800 pound gorilla being as candid as that – although we all know of large corporations who will not blush to play the role of a bully.  (One newspaper made an art form of trying to beat plaintiffs into submission by taking arid points of pleading.)

To the objections raised by Mr Harding, the position of the archdeacon is as follows.

Oh, well, all that’s nothing to the question; the question is, whether this intruding fellow, and a lot of cheating attorneys and pestilent dissenters, are to interfere with an arrangement which everyone knows is essentially just and serviceable to the Church.  Pray don’t let us be splitting hairs, and that amongst ourselves, or there’ll never be an end of the cause or the cost…..

What a question for a man to ask!  But it is like you – a child is not more innocent than you are in matters of business.  Can’t you see that if we tell them that no action will lie against you…that we will be putting weapons into their hands, and be teaching them how to cut our own throats?….

God bless my soul.  How odd is it that you will not see that all we are to do is to do nothing; why should we say anything about the founder’s will?  We are in possession; and we know that they are not in a position to put us out: surely that is enough for the present….

What about the abuse that Mr Harding is getting from the press?

You owe to the church of which you are a member and a minister to bear with this infliction, however severe it may be: you owe it to my father, who instituted you to support his rights; you owe it to those who preceded you to assert the legality of their position; you owe it to those who come after you, to maintain uninjured for them that which you received uninjured from others; and you owe to us all the unflinching assistance of perfect brotherhood in this matter, so that upholding one another we may support our great cause without blushing and without disgrace.

This Churchillian address is masterly writing by Trollope.  But the press gets wind of the point, and unloads on the Warden.

We understand that a plea has been set up which will be peculiarly revolting to the minds of English churchmen….Such a plea would doubtless be fair, if anyone questioned the daily wages of a bricklayer employed on the building, or the fee of the charwoman who cleans it; but we cannot envy the feeling of a clergyman of the Church of England who could allow such an argument to be put in his mouth.

If this plea be put forward, we trust Mr Harding will be forced as a witness to state the nature of his employment; the amount of work that he does; the income which he receives, and the source from whence he obtained his appointment.  We do not think he will receive much public sympathy to atone for the annoyance of such an examination.

The tormented Warden goes to see Sir Abraham.  Unless the Warden is assured about his legal entitlement to the money, he will resign.  ‘Sir Abraham began seriously to doubt his sanity.’

My dear sir, nobody now questions its justice.

Yes, Sir Abraham, one does question it – the most important of all witnesses against me – I question it myself.  God knows whether or no I love my daughter; but I would sooner that she and I would both beg, than that she should live in comfort on money which is truly the property of the poor…..I cannot boast of my conscience, when it required the violence of a public newspaper to awaken it; but now that it is awake, I must obey it.

Sir Abraham thinks this is ‘sheer Quixotism.’  The archbishop is in despair at the obduracy of his father in law.  (In the TV series, the bishop remarks that the Warden is prone to outbreaks of Christianity.)  But when the laws of England clashed with the conscience of the Warden, the conscience won.

There is no need to state the relevance of all this to weighty issues in our public forums (including issues before at least two royal commissions.)  But I may refer to some aspects of our laws.

First, it has always been the law in Australia, since it derived from a statute of Elizabeth I and the law arrived here with the first fleet, that an alienation of property made with intent to defraud creditors is voidable at the instance of any person prejudiced by it.  (This is now s.172 (1) of the Property Law Act, 1958.)  We don’t know how much time was spent by lawyers acting for James Hardie or some church entities looking at this law, but it is surprising how many people think that such provisions are only to be found in insolvency laws.  They’re wrong.  Like the laws of charity, they go back to the time of Good Queen Bess and the Spanish Armada.

Secondly, taking technical points that go against the merits or justice of the case may have forensic consequences.  In Charlick v Foley Brothers (1916) 21 CLR 249, Sir Isaac Isaacs tried an action about the sale of goods.  There was a substantive defence – a denial of any completed agreement.  There was also a technical defence – that the agreement was not evidenced in writing as required by a seventeenth century law called The Statute of Frauds.  It is worth setting out a lot of the judgment of the court.

The Statute of Frauds or its local equivalent is frequently the means of protecting a person from fraud or from the consequences of a transaction into which he has been hastily drawn.  It is couched in general terms, and applies no doubt, so far as legal effect is concerned, to such a bargain as the present.  But in practice a great mass of business rests upon the word of the parties, or upon quite informal memoranda, sufficiently understood by the parties, but not sufficient to satisfy the Statute of Frauds.  And in practice these understandings are faithfully recognized.  Where a great mercantile firm in substance invites its customers to dispense with the formalities of written contracts, and to rely upon the business honesty and fidelity of the firm to the pledged word of its responsible agents, it is distinctly dishonourable to repudiate a transaction so entered into upon the ground that the customer was simple enough to place reliance on anything short of a written undertaking duly signed.  And in my opinion it is not the duty of any legal adviser to compromise the honour and reputation of such a client, contracting in those circumstances, by placing on the record a defence of that nature without fully explaining it, and pointing out its full meaning and effect, and the probable consequences of the defence in case the event turns on a question of credibility.  If the law is explained and the true position indicated, then, if the client instructs his adviser to set up the strict legal defence, let it be done; but then the client runs the risk of being regarded as personally untrustworthy should the circumstances assume the appearance that they do in this case.

The facts before me rest so much upon the opinion I have to form of the personal integrity of the plaintiff and the defendants’ managing director, Mr. Foley, that I felt bound to specially ask Mr. Foley his own individual view of that particular defence in this case.

I was not surprised, but extremely gratified, to hear him as a business man express his own view that to succeed on that plea, if a definite bargain were really found to have been made, would not have been honourable. Had he said the contrary, I should have doubted his honesty in other directions. Even as it is, as he said he nevertheless left the matter to his advisers’ discretion, it to some extent weakened his other declaration. But on the whole I accept his personal statement as sincere.

[His Honor then dealt with the facts of the case, and decided them in favour of the defendants, holding that the contract made was conditional, and concluded:]

As the plaintiff fails on that substantial point, I see no reason to depart from the ordinary rule as to costs. If he had succeeded on this point, and had failed only on the defence of the Statute of Frauds, I should have made the direction as to costs accord with my view as to the propriety of that defence.

Those views might shock some legal or commercial people nowadays, but perhaps it is time they were given more game time.

Finally, lawyers should remember the general warning that Sir Owen Dixon gave about lawyers as gladiators – the type made for the archdeacon – and to recall their obligation to act in the overall interests of the client.

….I return to the basal principles which should govern the conduct of counsel.  He must keep steadily before him the duty of doing all he legitimately can in the true interests of his client….it is the true interests of his client that he must safeguard or consult and that is a more extensive duty than to use his best exertions in the conflict in the arena.  After all, he is his client’s counsel and the name signifies a good deal more than a forensic gladiator.  (Professional Conduct’ in Jesting Pilate, Melbourne, 1965, 134.)

My sense is that through either failure of nerve or want of professional judgment, too many lawyers forget these precepts, and strive to go along with the hymns nominated by the archdeacon – with ungodly consequences on all sides.

Here and there – The appetite for revenge – Punishment as a measure of despair

 

If I kick a dog, it will want to bite me.  If you hit me, I will want to hit you back.  Our instinct is not to forgive those who trespass against us, but to trespass against them.  Our instinct leads us to seek revenge.  That’s one of those instincts that we share with animals.  The Oxford English Dictionary has this for ‘revenge’:

The act of doing hurt or harm to another in return for wrong or injury suffered; satisfaction obtained by repayment of injuries.

We might fairly say that our law was born and shaped to control our instinctive need to take revenge.

We need to look first at what the original wrong or trespass was.  Oliver Wendell Holmes said in this in The Common Law:

It is commonly known that the early forms of legal procedure were grounded in vengeance.  Modern writers have thought that the Roman law started from the blood feud, and all the authorities agree that the German law began in that way.  The feud led to the composition, at first optional, then compulsory, by which the feud was bought off…..Vengeance imports a feeling of blame, and an opinion, however distorted by passion, that a wrong has been done.  It can hardly go very far beyond the case of a harm intentionally inflicted: even a dog distinguishes between being stumbled over and being kicked.

Later, Holmes said that our laws dealing with wrongs and crimes all ‘started from a moral basis, from the thought that someone was to blame.’  A ‘law which punished conduct which would not be blameworthy in the average member of the community would be too severe for that community to bear’.

It follows that the punishment must be measured by the level of blame of the offender.  Holmes referred to the view that at least one purpose punishment is to deter the criminal and others from committing similar crimes.

Thus the punishment must be equal, in the sense of proportionate to the crime, because its only function is to destroy it.  Others, without this logical apparatus, are content to rely upon a felt necessity that suffering should follow wrongdoing.

Holmes saw in this emotional imperative ‘the notion that there is a mystic bond between wrong and punishment.’  That was very different to the view ‘that the infliction of pain is only a means to an end’, namely, deterrence.

Well, in the year of grace 2017, we prefer the deterrent view to a ‘felt necessity’ or ‘mystic bond’ that wrong-doing must lead to suffering, but we still feel a need to have our basic moral standards and our personal safety vindicated by the law.  We tend to lump the latter under the heading of ‘retribution’, meaning repayment.  How you distinguish retribution from revenge is a question that is a little too metaphysical for my taste.  Of the three factors mentioned by Holmes – revenge, deterrence, or retribution – only deterrence looks to be capable of being tested empirically.  We would now add reform or rehabilitation – that too may be capable of at least some measurement.

But on any view, the punishment must fit the crime.  Otherwise, as Holmes said, we contravene the teaching of Kant – and I think of Jesus – that every person has their own dignity or worth, and that we as a community must not treat a person as a thing, or merely as the means to an end.

For present purposes, at least three other conditions must in my view be met when we as a community seek to punish one of our members as a criminal.

First, since the law has taken vengeance from the victim and family, the punishment must be inflicted by and under the law, and not by the victim – or by the mob.  Secondly, the punishment must be adjudicated according to the rule of law.  We are all equal before the law, even cardinals of a church or magistrates of a court, and we can only be deprived of our rights by a judgment given after due process and by a court sitting according to law.  Finally, since the law inflicts the punishment on behalf of the community, the community must accept responsibility for ensuring that the punishment is that which has been ordered by the court – and no more.  So, when criminals were flogged, the community assumed some responsibility for ensuring that the punishment did not lead to the death of the criminal.  So now, if our law requires that a criminal be deprived of their liberty by imprisonment as a punishment, we as a community have the responsibility to ensure that the deprivation of liberty is the only punishment that the court has ordered – and not that the criminal is raped or murdered or bashed into a vegetative state.

(I may say that all of this discussion is predicated on the notion that our law of punishment has a basis in logic that underwrites the very considerable legal industry that expounds it at such length.  I was not able to detect such a logical basis when I studied Criminology in 1965, and I have not seen it since, despite having sat on tribunals over thirty years where the issue passed blithely over my head.  To say that a sentence of eight years conforms to logic or theory better than one of four or six to me resembles awarding points for difficulty to the Beatitudes.  But that is a discussion for another day.)

A recent edition of The Saturday Paper had the following story.  Robin Irvine worked a 12 hour shift in a coal mine.  Driving home, above the relevant speed limit, he failed to see a woman cyclist, a mother and a wine-maker, in time.  The collision killed her.  There were no drugs or alcohol involved.  It looked like a case of fatigue.  Irvine was devastated by the consequences of his actions.  He was charged with negligent driving causing death.  The court was told he was experiencing ongoing psychological issues from his involvement in the death.  A pre-sentence report said Irvine would benefit from supervision and counselling and that he was eligible to undertake community service.

The magistrate, who was known as ‘Fierce Pearce’, did not adjourn to deliver sentence.  He sentenced Irvine to twelve months imprisonment.  That is very rare for this kind of offence.  Irvine’s lawyer was in shock.  He asked for bail pending appeal.  The police did not oppose bail, but the court refused it.  (It is not clear to me who first used the term ‘flight risk,’ or what evidence there was of such a risk.  What is clear is that it would have been ludicrous to suggest that Irvine should have been held in custody pending the hearing of the charge.)

Irvine was taken to a high security prison that houses serious criminals and that has a history of assaults on prisoners.  With the assistance of other prisoners, a violent twenty year old prisoner bashed and stomped on Irvine, and left him in a vegetative state.  After two years in rehab, Irvine lives with his mother who has to look after him.  The state allowed him $5000 compensation as the victim of a crime.  In the trial of the prisoner for assault, the Crown could offer no motive.  Irvine and his wife are divorced.  He and his mother have been sent to hell.  According to the report, Magistrate Pearce will retire this year at the age of 71.

Not just we lawyers, but all Australians should be sick at heart over this outrage.  If there is a God worth worshipping, his will has been flouted in what mortals should call a crime against humanity.  If you look at the principles I have sought to set out, each one of them has been violated.

I first ask whether the hearing gave due process.  Was this one of those old time magistrates who say ‘I’m the sheriff in this town, and it’s my way or the high way.’  I’ve seen courts like that.  You wonder why you bothered to turn up.  The decision has been taken before you get to your feet, and it’s rule by a man, and not by the law.  But that is just surmise, so I put it to one side.

What is not matter of surmise is the impropriety and unfairness of the sentence of imprisonment.  According to the press report:

Statistics maintained by the NSW Government show that of the 65 cases [on this charge] dealt with between 2013 and 2016, only two people were jailed. A large percentage received non-conviction orders, the most lenient sentence available.

On that basis, it is nigh on impossible to support the sentence of imprisonment in this case.  And the magistrate must have known the records which made his sentence improper and likely to be set aside on appeal.

It is that which makes his refusal of bail not just capricious and unreasonable, but arbitrary and cruel.  That is a complete repudiation of the rule of law.  And, again according to the report, this magistrate had form for this form of cruelty.

In 2010, 13 men who had been jailed by Pearce had their sentences quashed.  When District Court judge Garry Neilson came to the case of Ian Klum, he wept when told Klum had been bashed to death at Grafton jail while awaiting the outcome of his appeal against a sentence for the offence of driving while disqualified.  Magistrate Pearce had refused an application by Klum for bail pending his appeal.

The judicial arm of government therefore behaved dreadfully in this case.  Then both it and the executive arm surrendered all care by putting Irvine straight into this kind of prison at Wellington.  This is what the press report says:

Wellington houses around 500 inmates, some of them violent offenders or gang members moved from other jails across the state to isolate them….

Bashings and sexual assaults are a regular occurrence in Australian jails, yet individual offences feature little in public discussion.  If Irvine had been beaten this way in Kings Cross on a Saturday night, his assault would have been front page news.  Yet his maiming in a place where the state was responsible for his wellbeing slipped by without any media attention or scrutiny.

Our jails, dangerous places at the best of times, are shockingly overcrowded.  The state’s 37 correctional facilities were built to accommodate 11,000 prisoners.  Current figures show more than 13,000 inmates, and the number has been rising.

In 2015 the Minister for Corrective Services approved two-person cells being used to accommodate three inmates.  In January this year it was reported that assaults on prison premises had increased by 37 per cent over the past two years.

Let me go back to revenge, and our instinctive reaction to seek revenge – which it is a hallmark of a civilised community to seek to contain.  We are, we hope, beyond the stage of the ‘felt necessity that suffering should follow wrongdoing’ as being a sufficient justification for punishment in general or for a particular sentence.  The punishment must fit the crime and we musn’t use real people for target practice.

Anyone who believes that a stint in Wellington, or any other such place, will send the inmate out a better man is wilfully delusional.  So, in my view, is anyone who believes that community security can be improved, either measurably or at all, by increasing the time that convicted criminals spend in jail.  Isn’t the truth rather that most prisoners will come out worse than they went in?  As I understand it, overseas experience says that this problem is worse in terrorist cases, and that the time that terrorists spend in jail just hardens them up to do better next time.  If that’s the case, trying to contain terrorism by holding terrorists in jail for longer terms is about as sensible as trying to lasso a herd of elephants with spaghetti.

What I see rather is that the courts are just taking some of the worse offenders out of circulation for a time – because in the absence of any alternative form of punishment, no one has thought of a better idea.  It’s like an expensive form of cold storage.  In the name of heaven, who would want to be found within the same state as the man who maimed Irvine when he gets out?  He looks to me to be a homicidal maniac now.  Will he not just get worse in the psychopathic Gehenna that is called Wellington?  If our security were paramount, wouldn’t they just throw away the key?

Well, if all that is the most rational account that we can give of punishment, how far have we moved from the instinctive need for revenge?  How far removed am I on this from my dog?  If we see imprisonment as a pis aller, a last resort, I am reminded of some remarks by an Anglican divine, J M Thompson, about a French terrorist, Maximilien Robespierre, that punishment is a measure of despair.

He could, indeed, read men’s minds, but he could not judge their characters; so he could make them think what he thought, but he could not make them do what he wanted.  Faced, as every preacher of a difficult creed is faced, sooner or later, by the problem of unbelief, he was too small-minded to forgive and yet powerful enough to punish.  But punishment is a measure of despair.  It may cause conformity; it cannot produce conviction

But why, then, have jail terms kept increasing and with them our prison populations?  The answer, I think, is that governments have acceded to the demands of parts of the press to increase the terms of jail sentences.  Those demands are not couched as rational arguments founded on evidence of the application of a given theory of punishment.  Rather, they derive from a mystic bond between crime and punishment, the belief that wrongdoers should suffer pain.  That is to say, they derive from our instinct for revenge.  And these demands are not made from a felt need to improve our community.  They are made in pursuit of profit by business people whose adherence to either sense or evidence can go clean out the window where there’s a dollar to be made.

So, we have governments responding to irrational dictates from the press to put more people in jail and to keep them there longer, and then completely failing to see that those jails properly serve the governments’ purpose.  You end up with the frightful and unjust tragedy suffered by Robin Irvine and his mother.  And you wind up with the suspicion that we have fallen this low at the behest of the mob and their chosen organs in the press.

No nation that is so governed can call itself civilised.

As for us lawyers, I think we need to answer the question put by Dietrich Bonhoeffer:

We have been silent witnesses of evil deeds; we have been drenched by many storms; we have learned the arts of equivocation and pretence; experience has made us suspicious of others and stopped us being truthful and open…Are we still of any use?