Lee J at [22] in LCM Funding Pty Ltd v Stanwell Corporation Limited [2022] FCAFC 103 comments
The conclusion that these types of litigation funding arrangements are not managed investment schemes may be thought by some as meaning such arrangements are “unregulated” and hence dangerous. But the spectre of their operation in some sort of Bir Tawil zone where no laws apply can be dismissed. Overwhelmingly, litigation resulting from such funding arrangements adopts the form of a class action. At all stages during the currency of such litigation, the Court is required to adopt a close protective and supervisory role, be alive to the interests of group members and to take steps to ensure that any class action is conducted in a way which best facilitates the just resolution of the disputes according to law and as quickly, inexpensively and efficiently as possible. Relatedly, the Court is also obliged to protect group members and manage the class action recognising that conflicts of interest, or conflicts of duty and interest, between and among representatives, group members, funders and solicitors can arise. When this is understood and appreciated, any criticism that litigation funding arrangements are “unregulated” is put into proper context.
In Alexander v Minister for Home Affairs [2022] HCA 19 Edelman J states
[180] There are four questions raised by this special case. First, is s 36B of the Australian Citizenship Act supported by a head of Commonwealth legislative power? Secondly and thirdly, is s 36B inconsistent with two asserted implied limitations upon the Commonwealth legislative power under s 51(xix) of the Constitution? Fourthly, does s 36B repose in the Minister "the exclusively judicial function of punishing criminal guilt"?
[181] As to the first question, the only head of power relied upon by the defendants to support s 36B is the power over "naturalization and aliens" in s 51(xix) of the Constitution. This raises the question of how the meaning of "alien" – a foreigner to the political community – is to be applied. On the approach of the defendants, all dual citizens fall within the aliens power. Therefore, there is power to pass a law such as s 36B of the Australian Citizenship Act simply because all the people to whom it applies are dual citizens. That would mean that, subject to any separate implied limits, the Commonwealth Parliament would have the power to strip persons like Mr Alexander of their citizenship solely because they are dual citizens. The defendants also argued that s 36B is a valid law because the Commonwealth has power in circumstances described as "repudiation of allegiance" to make non‑aliens into aliens.
182 The application of the essential meaning of "alien" that was urged by the defendants has the likely consequence that potentially half of the permanent population of Australia are aliens, being dual (or more) citizens, being born overseas, or having at least one parent who does not hold Australian citizenship. Almost by definition, something must have gone wrong in the application by this Court of the meaning of the Constitution for it to be concluded that the Commonwealth Parliament has power to legislate on the premise that potentially half of the people of the Commonwealth of Australia are foreigners to the political community of the Commonwealth of Australia.
[183] Nevertheless, the defendants' approach was only an incremental extension of the present state of the law concerning the application of the aliens power. That approach is the result of the compounding effect of a series of decisions of this Court. Those decisions have seen an imperial march of the application of the aliens power, extending it far beyond any ordinary understanding, capturing more and more members of the permanent population of the Commonwealth of Australia. At some point it will become necessary to confront the correctness of those decisions rather than tip‑toeing around them, carefully confining them by tiny exceptions, or restricting their scope by recognising implied constitutional constraints such as those raised by the second and third questions in this special case. It is not necessary to do so in this case because none of the decisions was challenged.
[184] The compounding effect of the decisions of this Court began in 1982, when this Court first held that persons who had been unconditionally absorbed into the Australian political community were still within the reach of the aliens power. From that premise, and case by case, the application of the essential meaning of "alien" – a foreigner to the Australian political community – was extended further and further to apply to persons who had less and less "foreign" connection. It might seem like only another small, incremental step to conclude that Mr Alexander is a foreigner to the Australian political community, despite his birth in Australia to two permanent members of the Australian body politic. But, with an appreciation that the decisions of this Court may have already stretched the application of alien beyond breaking point, that is a step that should not now be taken.
[185] Although s 36B cannot validly apply to persons simply on the basis that they are dual citizens, and would not have applied to Mr Alexander at the time of his birth, the aliens power does permit the Commonwealth Parliament to legislate, as it did in s 36B of the Australian Citizenship Act, in relation to non‑aliens who act in a manner that has been described as a repudiation of their allegiance to Australia. The aliens power permits the Commonwealth Parliament to legislate in relation to some people who were not aliens in extreme cases where circumstances or conduct are capable of making them into aliens. One such circumstance is where a person's conduct is so wrongful and extreme that it can be judged to be inconsistent with continuing membership of the political community. That is the effect of s 36B, so, subject to any other constitutional limits, s 36B would therefore be valid. ...
[187] It has been suggested that the aliens power resembles legislative powers conferred by the Constitution on the Commonwealth Parliament to make laws with respect to a legal status, such as bankruptcy, trade marks, and marriage, rather than resembling legislative powers conferred by the Constitution with respect to physical things, like lighthouses, lightships, beacons, and buoys. There are grave difficulties with the creation of separate constitutional principles within s 51 according to those classes concerned with physical things and those concerned with legal status on the basis that the former "are fixed by external nature" and "cannot well be extended".
[188] All of the powers in s 51 are expressed by words which convey meaning, with the meaning anchored in its essence, at the appropriate level of generality, by the contemporary understanding at Federation. That meaning is ideational. It is not confined to categories of physical things or legal status. Indeed, numerous powers might even derive the essence of their meaning from both. For instance, fisheries in Australian waters beyond territorial limits are concerned with both physical things and legal status. So are bills of exchange or promissory notes. The custody and guardianship of infants concerns both people and legal status, and so does "the influx of criminals". Further, just as the application of the essential meaning of words that describe a legal status can change, so too a power that appears limited to purely physical things, such as a lighthouse, lightship, beacon, or buoy, might arguably extend to things never contemplated in 1900 but which are within the same concept, fulfilling the same purpose, such as global positioning system software for seafarers.
[189] Although there is no warrant for creating new and separate constitutional categories within s 51, the character of a s 51 power can still influence the interpretation of the power, particularly where the character reveals a purpose of the power. But one matter must be common in the interpretation of every power in s 51. It is an axiom of constitutional law in Australia that "[t]he validity of a law ... cannot be made to depend on the opinion of the law‑maker": "a stream cannot rise higher than its source". Hence, no power in s 51 of the Constitution, whether in relation to legal status or not, is with respect to a subject matter that is determined by the opinion of the Commonwealth Parliament. The Parliament is not empowered to make laws based solely on the criterion that, in its opinion, the law is with respect to a status of bankruptcy, trade marks, or marriage.
[190] In the context of bankruptcy, the legislative power is ample but it extends only "to regulate all matters which fairly fall within that subject". The power is constrained by reference to the "essential feature ... that provision is made for the appropriation of the assets of the debtor and their equitable distribution amongst [their] creditors, and for the discharge of the debtor from future liability for [their] existing debts".
[191] In the context of trade marks, it has been emphasised that "[i]f the thing is not of itself within the meaning, an Act of Parliament cannot make it so". If the Parliament were to enact legislation dealing with a matter which did not have the "essential qualities" or "common attributes" of a trade mark, it would not be "in essence a species within the language of the legislative powers" and would "amount to an attempt to amend the Constitution by a process not sanctioned by the Charter".
[192] In relation to passing laws dealing with the personal relationships that are the consequences of the marriage power, it has been observed that, "[s]o far as they can be regulated by law without impairing the essence of marriage", laws about the consequences of marriage, such as cohabitation, would "properly be called laws with respect to marriage". The power "does not support a law which so regulates the incidents of marriage as to impair the essence of marriage". In other words, "[t]he term marriage bears its own limitations and Parliament cannot enlarge its meaning". An exercise of "constitutional interpretation of the marriage power would be an exercise in hopeless circularity if the Parliament could itself define the nature and incidents of marriage by laws enacted in purported pursuance of the power". ...
Avoiding absurdity
[196] In an apparently innocuous statement in the joint judgment in Chetcuti v The Commonwealth, four members of this Court said that it was a "settled understanding" that "the aliens power encompasses both power to determine who is and who is not to have the legal status of an alien and power to attach consequences to that status". If read literally, that statement would be a radical new theory of interpretation of constitutional heads of power.
[197] If the statement in Chetcuti were read literally and without qualification, it might support an assumption that a constitutional alien is no more than the antonym of a statutory citizen. If that were true, then s 51(xix) would confer an unconstrained power on the Parliament to choose its own criteria for citizenship and thereby determine who is an alien and attach consequences to that alienage. Applied to other powers, this reasoning would mean that the Parliament could make laws to divest the assets of Croesus among his creditors on the basis that the Parliament determined for itself the meaning of bankruptcy, irrespective of the essential features inherent in the constitutional meaning of bankruptcy. The Parliament could "define 'trade mark' as including a will, and enact that no will shall be valid unless registered as a trade mark", contrary to "universal agreement in the laws of every part of the British Empire" at the time of Federation concerning "certain essentials founded in the origin and very nature of a trade mark". Or the Parliament could pass laws in relation to the merger of corporations, or forced, non‑consensual unions, on the basis of its own determination of what a marriage is, thus enlarging that meaning beyond its constitutional essence as "a consensual union formed between natural persons in accordance with legally prescribed requirements" and bearing certain characteristics.
[198] The statement quoted above from the joint judgment in Chetcuti should not be read as rejecting a century of hornbook constitutional law. Rather, and consistently with the acknowledgement in the previous paragraph in Chetcuti that a law of the Parliament might need to be disapplied to the extent of "constitutional overreach" by treating "all non‑citizens as aliens", the statement in Chetcuti should be understood as saying no more than that the Commonwealth Parliament has power to set the criteria for who will, and who will not, be a statutory alien and the consequences of that, provided always that the exercise of that power is within the boundaries of the constitutional concept of "alien". In oral submissions, the defendants quite correctly accepted that position, conceding that the aliens power "cannot be used to treat, as an alien, someone who cannot answer that description on the ordinary understanding of the word".
[199] The ordinary understanding of the word "alien" – its essential meaning – is simple and well‑established in this Court. At a reasonably high level of generality, which recognises the state of flux at lower levels of generality of the common law of alienage at the time of Federation[, an alien is a foreigner or outsider to the political community of the Australian body politic. The difficult question is how that ordinary understanding of "alien" is to be applied.
[200] On the submission of the defendants, the application of alien extends to people who have any of the following characteristics, each of which involves some "foreign" element: (i) the person has dual citizenship; (ii) the person was not born in Australia; or (iii) at birth, the person had one or more parents who were not an Australian citizen. It is likely that these slight foreign connections describe more than half of the Australian population; the first criterion alone involves close to half of the Australian population and the second and third criteria together likely involve a similar proportion. On the defendants' submission, therefore, potentially half of the Australian population are aliens within the meaning of the Constitution and can therefore be treated in that way by legislation.
[201] It is not to the point that it might be thought to be extremely unlikely that the Parliament would ever legislate to impose the consequences of alienage, potentially including deportation, upon half of Australia's population. The identification of the extreme reach of the power on the submissions of the defendants is not to propose an absurd or distorting possibility. Rather, the extreme reach of the power, over more than half of the population of Australia, and the infinite range of possible laws over those persons, or groups of them, which would be within the scope of the power illustrate the difficulties with the proposed interpretation.
[202] The submission of the defendants was, nevertheless, a carefully devised formulation of the application of the essential meaning of "alien" which respected a line of authority in this Court since 1982. The extreme effect of the submission is only an incremental extension of a series of problematic decisions in this Court. Those decisions have developed the law to a point where the question that is asked of s 51(xix) is no longer which people are aliens. The question that is now asked is usually couched in the euphemism of "the Pochi limit to the aliens power". But that "limit" is not some outer extreme within which Parliament has free rein. Rather, it is an absolutely orthodox requirement that the aliens power be applied in accordance with its meaning. As the application of the aliens power has strayed further and further from its essential meaning, the question has become how to identify which categories or groups of people are not aliens. And as the groups of people who are not aliens have come to be treated as diminishingly smaller, the answer to that question has not been readily forthcoming.
[203] This case is not the appropriate vehicle to consider the extent to which it is possible to unwind some, or all, of the arguable errors in the decisions of this Court. But, in order to address the submissions of the parties on the first issue in this special case, it is necessary to identify where potential missteps may have occurred in order to explain why the aliens power should not extend any further to dual citizens born in the same circumstances as Mr Alexander.
