Federal Court of Australia

Abramov v Minister for Foreign Affairs (No 3) [2023] FCA 1340

ORDERS

THE COURT DECLARES THAT:

1.    Item 103 of s 2 of Schedule 1 to the Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Russia and Ukraine) Amendment (No 11) Instrument 2022 (Cth) is void and of no effect.

AND THE COURT ORDERS THAT:

2.    The Amended Originating Application is otherwise dismissed.

3.    There be no order as to costs, with the intent that each party bear its own costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

KENNY J

1    On 15 September 2023, the Court published reasons addressing the matters in dispute between the parties in this proceeding: see Alexander Abramov v Minister for Foreign Affairs (No 2) [2023] FCA 1099 (PJR). At the same time, the Court made the following orders:

1.    Unless a party notifies the Court in writing within 7 days of today that orders to give effect to these reasons have been agreed between them, then the parties are to file and serve submissions (limited to 2 pages) in support of such orders as they propose to give effect to these reasons, together with a minute of order, by 4 pm on 29 September 2023.

2.    Unless a party notifies the Court in writing within 7 days of today that an order as to costs has been agreed between them, then the parties are to file and serve submissions as to costs (limited to 3 pages) by 4.00 pm by 4 pm on 29 September 2023

3.    The parties have liberty to apply on reasonable notice.

2    On 29 September 2023, the parties provided the Court with a draft minute of agreed orders in the following form:

THE COURT DECLARES THAT:

1.    Item 103 of s 2 of Schedule 1 to the Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Russia and Ukraine) Amendment (No 11) Instrument 2022 (Cth) is void and of no effect.

AND THE COURT ORDERS THAT:

2.    The Amended Originating Application is otherwise dismissed.

3.    There be no order as to costs, with the intent that each party bear its own costs.

3    By email dated 10 October 2023, the Court advised the parties that it was concerned that it could not make the proposed declaration on the material presently before the Court, having regard to the High Court’s observations in Gardner v Dairy Industry Authority of New South Wales (1977) 18 ALR 55 at 69 and 71, approved in Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 582. The parties were also informed that they might file submissions in support of the proposed declaration or provide the Court with a different minute of order. On 16 October 2023, the parties were given leave to file submissions to address the Court’s concerns. Having considered the matter further, I would make the declaration and orders the parties sought.

4    The following discussion assumes that the reader is familiar with the facts and matters set forth in the reasons delivered on 15 September 2023.

Background

The Proposed Declaration

5    The effect of the Court’s reasons is that the making of the First Designation Instrument in respect of the applicant was affected by jurisdictional error. This is because the Court held that the Minister constructively failed to exercise the jurisdiction conferred on her because she failed to appreciate the discretionary nature of the power conferred by reg 6 of the Autonomous Sanctions Regulations 2011 (Cth) (“Sanctions Regulations”), and the error was a material one in the applicant’s circumstances: see PJR at [107]-[127].

6    The parties propose a declaration that they consider gives effect to those reasons, namely:

Item 103 of s 2 of Schedule 1 to the Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Russia and Ukraine) Amendment (No 11) Instrument 2022 (Cth) is void and of no effect.

7    In this circumstance, I should explain the concerns to which the Court referred in its email of 10 October 2023. There are two matters that bear on these concerns. First, while the Court held that, with respect to the applicant, the First Designation Instrument was vitiated by material jurisdictional error, the Court did not reach the same conclusion in relation to the Second Designation Instrument. The result is that, subject to any appeal, although the First Designation Instrument was ineffective from the beginning so far as the applicant is concerned, the Second Designation Instrument was not. In consequence, the applicant remains a “designated person” for Russia under reg 6(a) and “declared” under reg 6(b) of the Sanctions Regulations.

8    Furthermore, although it may not matter for present purposes, the Revocation Instrument purported to end the applicant’s status as “designated person” and “declared” under the First Declaration Instrument in September 2022, on the assumption that the First Designation Instrument was effective. The applicant did not challenge the validity of the Revocation Instrument in these proceedings. Had the First Designation Instrument been effective from the beginning, it would have been revoked by the Revocation Instrument and replaced almost immediately by the Second Designation Instrument, thereby restoring the applicant’s status as a “designated person” for Russia under reg 6(a) and as a person “declared” under reg 6(b) of the Sanctions Regulations.

9    In the above circumstances, the Court was concerned about the availability of declaratory relief because it was uncertain that the proposed declaration would produce consequences for the parties. If such consequences were not foreseeable, then it was doubtful whether the Court could (or, perhaps, should) grant the relief: see JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity Doctrines & Remedies (5th ed) p 625.

10    In Gardner, Mason J (with whom Jacobs and Murphy JJ agreed) affirmed that declaratory relief would be unavailable where a proposed declaration would produce no foreseeable consequences. Gardner concerned a challenge by a number of dairy farmers to four “rearrangements” of milk quotas made by the respondent Authority. A majority of the High Court (Mason, Jacobs and Murphy JJ; Barwick CJ and Aickin J dissenting) held that the first three rearrangements were valid. All members of the Court concluded that the fourth rearrangement was valid. After setting out his reasons for the latter conclusion, Mason J (Jacobs and Muphy JJ agreeing) stated (at 69) that, even if the first three rearrangements had been invalid (as the minority held), he would not have granted the declaratory relief sought in respect of those three rearrangements because they were no longer legally operative. Mason J explained (at 69) that:

The rearrangements were no longer in operation when the appellants commenced their proceedings. They had been superseded by the fourth rearrangement which had been set up under the auspices of amending legislation. It was not contended that the appellants, had their argument been correctly founded, were entitled to damages or other consequential relief. All that was suggested was that the Executive might in some undefined way initiate administrative or legislative action which would improve the lot of the appellants and persons in the appellants’ position. It is one thing to say that declaratory relief will be granted against the Executive or a statutory authority in relation to existing rights and transactions. It is quite another thing to say that it should be granted in respect of past transactions under legislation which has been repealed or amended when the court's declaration will produce no foreseeable consequences for the parties.

11    This passage was cited with approval in Ainsworth, at 582, where Mason CJ, Dawson, Toohey and Gaudron JJ said:

… declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have “a real interest” and relief will not be granted if the question is “purely hypothetical”, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen” or if “the Court’s declaration will produce no foreseeable consequences for the parties”.

Of course, the circumstances in Ainsworth were not of that kind. In Ainsworth, the respondent Commission tabled a report in Parliament which was defamatory of the appellants; and the Court held that, in so doing, the Commission had denied them procedural fairness. The Court made a declaration to that effect, rejecting the Commission’s submission that a declaration should not be made because the report had no legal operation. Plainly enough, there were practical consequences for the appellants flowing from the impugned report in the nature of reputational damage; and a declaration could properly be made to redress the harm done to the appellants’ reputations.

The Parties’ Submissions

The Applicant’s Submissions

12    The applicant submitted that the proposed declaration would produce foreseeable consequences for the parties for three reasons, and that therefore the proposed declaration should be made.

13    First, the applicant submitted that the proposed declaration was “necessary to protect the utility of [his] appeal rights, by allowing his appeal to focus solely on the instrument in respect of which his challenge was unsuccessful at first instance”. He submitted that, if the declaration was not made, he would “once again bear the onus of persuading the Full Court [on appeal] that the First Designation Instrument was [] vitiated by jurisdictional error”, notwithstanding that his submissions to this effect had been accepted by the Court at first instance. He submitted:

The first instance proceeding concerned the validity of two instruments: the First Designation Instrument and the Second Designation Instrument. This Court concluded that the decision to make the First Designation Instrument was affected by jurisdictional error ... The effect of declining to make the proposed declaration is that there would be no order formally giving effect to that conclusion. That would have the consequence that, although success on an appeal would invalidate the Second Designation Instrument, it would still leave in place the First Designation Instrument if no declaratory relief were granted in respect of it. ...

The applicant submitted that the making of the proposed declaration avoided such “anomalous and unreasonable consequences”.

14    Second, the applicant submitted that the proposed declaration would “redress the harm done to [his] reputation by the making of the First Designation Instrument”. He submitted that the damage to his reputation was caused by certain public statements made by the Minister on the day she made the First Designation Instrument: see PJR, [99]-[105]. Referring to Ainsworth and other authorities and Moodie v Racing Integrity Commissioner [2017] VSC 693 in particular, the applicant contended that this was sufficient to justify the making of the proposed declaration. The applicant submitted that the possibility that he may also have suffered reputational damage by reason of the Second Designation Instrument (which survived legal challenge) did not preclude the making of the proposed declaration, because the reputational damage associated with the First Designation Instrument could not be equated with any reputational damage associated with the Second Designation Instrument, since only the First Designation Instrument was the subject of the Minister’s prejudicial statements.

15    Third, the applicant submitted that the proposed declaration should be made because “at all material times” he had had standing to seek the proposed declaratory relief “by reason of the First Designation Instrument explicitly operating in relation to him in a manner that directly and adversely affected his legal rights and obligations”. The applicant submitted that “[t]he failure of his challenge to the Second Designation Instrument… does not affect his standing to seek, or his interest in seeking, that relief, nor does it affect the adverse consequences of the First Designation Instrument in relation to his legal rights and obligations”.

The Minister’s Submissions

16    The Minister submitted that the Court should conclude that the proposed declaration would produce foreseeable consequences for the parties. The Minister submitted that the proposed declaration would have foreseeable consequences because of “the prospective nature of the Revocation Instrument”. That is, in the Minister’s submission, “[t]he legal effects of the First Designation Instrument, in the period prior to the Revocation Instrument, were not removed by the revocation”. This was, so the Minister submitted, the basis on which the applicant’s challenge to the First Designation Instrument was capable of being heard and determined. The Minister further submitted that the proposed declaration will produce foreseeable consequences as to the applicant’s rights “in the period during which the First Designation Instrument operated”. In this connection, the Minister contended that the legality of any dealings the applicant may have had during that period would depend on the validity of the First Designation Instrument. Thus, so the Minister submitted:

Prohibited dealings extend to those which “indirectly” make an asset available “for the benefit of” a designated person and strict liability applies (reg 14). The width of the prohibitions means that it is foreseeable that the First Designation Instrument concretely affected the applicant’s rights, as well as the rights of third parties who might even unknowingly have indirectly made an asset available for the benefit of the applicant.

17    Accordingly, in the Minister’s submission, there was sufficient utility in a declaration; and further, that “discretionary considerations weigh in favour of making the declaration at least so that the Court’s finding of invalidity is not rendered unappealable”.

consideration

18    First, I accept the Minister’s submission that the First Designation Instrument was effective from 8 April 2022 until 21 September 2022, when the Revocation Instrument came into effect. It follows, so it seems to me, that the proposed declaration may produce foreseeable consequences affecting the applicant’s rights in that period. For example, as previously noted (at PJR [21]), reg 14 of the Sanctions Regulations prohibited an asset being directly or indirectly made available to, or for the benefit of, a designated person, other than as authorised by a permit under reg 18. I accept that, as the Minister submitted, the breadth of this prohibition means that it is foreseeable that the First Designation Instrument affected the applicant’s rights, as well as the rights of third parties. Similarly, given the broad terms of reg 15, it is foreseeable the First Designation Instrument operated to affect the applicant’s as well as others’ rights.

19    This is sufficient, so it seems to me, to overcome my concerns about making the proposed declaration in the present case. It is unnecessary to address the other submissions advanced in support of the declaration. Accordingly, I would declare that:

Item 103 of s 2 of Schedule 1 to the Autonomous Sanctions (Designated Persons and Entities and Declared Persons – Russia and Ukraine) Amendment (No 11) Instrument 2022 (Cth) is void and of no effect.

20    Further, I would order that the Amended Originating Application is otherwise dismissed; and that there be no order as to costs, with intent that each party bear its own costs.

Associate:

Dated:    3 November 2023