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Wednesday, 4 December 1974
Page: 3122

Senator GREENWOOD (Victoria) - Mr Temporary Chairman,I did not participate in this debate yesterday afternoon but I was aware of the developments which were taking place. The Bill passed through the House of Representatives and was accepted at its second reading stage by the Opposition in this place. Now that we are in Committee and are considering clause 5, we recognise that the Government is proposing an amendment. It is the nature of that amendment which has aroused some concern from the Opposition. When progress was reported last night Senator Missen had indicated his concern about the language of the amendment proposed by the Government and what might be its possible consequences. There have been discussions in the intervening period.

I address myself to some of the problems which this Bill has raised and, in particular, which this clause and the Government's proposed amendment highlight. It is recognised that the foreign exchange control regulations have in many respects not been observed. The fact that those regulations have not been observed has given rise to this Bill. The Bill has 2 aspects. The first is that it is designed to improve the regulations under which exchange is controlled by the Reserve Bank. I would have thought that everyone would welcome the proposed changes and would accept that it is proper that we have efficient regulations which are clearly worded and which give adequate powers to achieve the purposes of exchange control.

The second aspect, however, is a vastly greater question. It is concerned with the validation of acts which have taken place in the past and giving to the agreements and arrangements which have been made by individuals and companies a lawfulness which, without validation, they may not have. This, of course, is retrospective legislation. I have a very strong antipathy to any form of retrospective legislation. One recognises that retrospective legislation may be necessary from time to time to cure defects which arise as a result of unintended effects flowing from an unexpected court decision. From time to time problems of that character necessitate action. On other occasions, a situation is seen to exist where it is felt that people are taking advantage in a wrongful way of what is a right under existing law. When retrospective legislation is introduced to cure that situation, it ought to be looked at very carefully. I think we all have had experience of the difficulties of saying that under no circumstances and with no exceptions can we agree to retrospective legislation. But I would hope that the general tenor of the approach of all parties in Australia is against retrospective legislation. For my part, I dislike it intensely and I regret that the Government has seen fit to introduce clause S into this legislation.

I believe that if people have established their rights in a pre-existing situation and if some people have taken advantage of provisions which it was not anticipated they would take advantage of, that is the way the lot should fall. I appreciate that some unmeritorious actions can be taken in those circumstances. But that is what is involved in legislation which is not faithfully observed and where one party is possibly less astute than it should be, or one party takes advantage of a situation when it was not intended or expected by the other party that that advantage would be taken. That is one aspect of this whole situation.

What the Government has sought to do by the original Bill is to validate all acts done or transactions entered into before the commencement of the legislation. The Bill says that the validity of such acts and transactions shall not be called into question in any proceedings on the ground that a provision of the Banking (Foreign Exchange) Regulations has not been complied with, but it keeps open any question of criminal prosecution. The Government's proposed amendment seeks to alter that type of qualification and to say that no act or thing done and no contract or other transaction entered into before the commencement of this Act shall be deemed to be or ever to have been invalid or unenforceable by reason only that a provision of the Banking (Foreign Exchange) Regulations has not been complied with. It seems to me that all the amendment has effectually sought to do is to say that if proceedings have been entered into, those proceedings may be continued because the exception to the proposed amendment is that the deeming ofthe validity shall not apply to any act, thing, contract or other transaction the validity of which has before 3 December 1974 been called into question for that reason in any proceedings. So if there are court proceedings at the moment those proceedings may be pursued to completion on the basis that if there was a non-compliance with the Banking (Foreign Exchange) Regulations that right is able to be preserved.

Is that a better position than the existing position? I can see some advantages. I can see many disadvantages. I feel that this is part of the problem of what must occur once one starts to engage in retrospective legislation. I would welcome the opportunity of being able to give further consideration to this matter. I do not know whether the Minister for Agriculture (Senator Wriedt) is prepared to consider standing this matter over for further consideration until, I would hope, tomorrow- I appreciate that it should not be stood over for a period longer than that- to enable these matters to be looked at. I must say that there are several matters to which my attention has been drawn since this developed as a matter of some interest.

I am wondering to what extent the general rules of private international law have been taken account of in relation to the provisions of the Bill and the amendment which is proposed to them. If, for example, an Australian creditor and a foreign debtor have a contract and the contract is guaranteed by an Australian resident, that Australian resident could be put in a most embarrassing position. In Australia, as a result of this amendment being carried, the guarantor can be required to pay the amount which he has guaranteed because the prime liability has been validated by this amendment. But if a guarantor who is required to pay, because clearly an obligation is now to be established by this validating provision, seeks overseas to recover from his principal debtor he will find that he is unable to recover because the validating provision in Australia will not apply overseas. My attention has been drawn to, and I have looked at, the Schedule to the International Monetary Agreements Act of 1947 in which quite specifically it is stated:

Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member, maintained or imposed consistently with the Agreement, shall be unenforceable in the Territories of any member.

They shall be unenforceable therefore in the United States of America. It is immaterial whether we have some procedural or deeming provision in this country which seeks to overcome the effects of that provision of what is popularly known as the Bretton Woods Agreement. Nothing was said about this matter by the Minister in his second reading speech. Nothing has been said about it in the debate. I wish the Government would explain how it is going to overcome that particular problem. Is hardship not going to be caused to some people? Are questions not likely to be asked in the future if someone, in a way that is not now anticipated, finds himself caught in a deadlock which arises as a result of this validating provision? What of the situation in which a person sues upon a debt in Australia and is able to recover a judgment in Australia by virtue of his reliance upon the provision which is being inserted in this Bill and then seeks to enforce the judgment overseas and is met by the provision of the International Monetary Agreement that one cannot enforce a judgment of that character overseas? That is an unintended result- a hardship- which is neither referred to in the Bill nor explained in anything which I have read by way of explanation of the purposes of the measure.

There are a number of other problems which I think have not really been touched on or considered either by the original provision or the proposed amendment to it. If there are several guarantors of a liability or there are several parties which may be liable in respect of a particular debt, and if some are resident within Australia and some are resident outside Australia, how are the provisions to operate in respect of those people? Are those in Australia to find themselves liable and those outside Australia not to be liable? What is the right of contribution amongst the parties? People might say that these are problems which a court can resolve in due course. I am sure that a court could, but it could work out in a way that some person bears the whole loss, being made to pay in this country and not being able to recover outside of this country. It may be that the Minister may provide an answer which is satisfying to the matters to which I am referring. If so, I will be more than satisfied. But I have not seen one in any of the material which has been put forward. For that reason, and to permit some discussion to take place in these areas, I ask the Minister, in an area in which there is no disagreement with the broad principles of the Bill, to stand over further consideration of the Bill until tomorrow. 1 would appreciate some response from him.

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