Key principles to remember when interpreting and applying statutory ageements

Statutory agreements, sometimes known as ‘special Act agreements’, are agreements embodied in or specifically recognised by legislation and are a unique part of our legal landscape.

In Queensland, statutory agreements gained popularity around the 1960s in the resources sector. A reasonably well known example is the agreement authorised by the Commonwealth Aluminium Corporation Pty Limited Agreement Act 1957, commonly known as the ‘Comalco Agreement’.

The resources sector still accounts for most statutory agreements in Queensland. They exist in other contexts, particularly the gaming sector, where a statutory agreement operates in relation to each Queensland casino.

Statutory agreements often look and read like contracts. Uncertainty can arise about whether to treat them in accordance with normal contractual principles or legislative principles.

Questions that can arise include:

  • What is the legal status of the agreement – is it a contract or is it a law?
  • How does the agreement interact with other laws?
  • How can the agreement be varied?

The answers to these questions are not always obvious, in part because, historically, there have been considerable variations in the way statutory agreements and their authorising Acts have been drafted.

Legal status

When dealing with a statutory agreement, it is important to ascertain its legal status. In Queensland, the authorising Act for most current statutory agreements specifically states that the agreement has the force of law and takes effect as if it were an enactment of the authorising Act. The effect of including a provision like that in the authorising Act is that the agreement will not be characterised as a mere contract, but rather as a set of legislative rights and obligations.

There are, however, examples where an authorising Act is silent about the status of an agreement, in which case the position is not so clear. If the authorising Act approves the terms of the agreement, authorises execution of the agreement and directs the parties to perform their obligations under the agreement, the agreement might still be characterised as having the force of law. An example is the Gurulmundi Secure Landfill Agreement Act 1992, which approves the agreement, deems each party to have been authorised to enter into it and directs each party to ‘do everything that it is required to do under the agreement’.

However, if the authorising Act just approves the agreement without providing anything further, the agreement probably does not have the force of law. There are a few examples of this in Queensland, mostly concerning intergovernmental agreements, such as the Lake Eyre Basin Agreement Act 1991, which deals with management of water and related resources in part of the Lake Eyre Basin.

Even where an agreement does not have the force of law, legislative approval of it still has some effect on the agreement. For example, in circumstances where a question might arise about the validity of an agreement under normal contractual principles – such as where there is a lack of consideration – legislative approval can help to ensure that the agreement, or any actions taken under it, are valid.

Having settled the legal status of the agreement, some interesting challenges can still arise for those managing these agreements. For example:

  • questions can arise about whether, or to what extent, normal contractual principles might apply if there is a breach of the agreement, or whether principles applying to a breach of statutory duty should be applied instead
  • where decisions are made under agreements that have legislative status, those decisions might be subject to the same principles applying to decisions made under other Acts, potentially including rights of judicial review.
Interaction with other laws

Where a statutory agreement has legislative force, the terms of the agreement can override, displace or exclude the application of other legislation that might otherwise apply. Also, they can impose constraints on, for example, future executive government action without breaching the well-established rule against fettering. In contrast, other statutory agreements cannot do these things.

Unfortunately, the interaction between a provision of a statutory agreement and another Act is not always entirelyclear. For example, if the provision in the other Act was enacted after the provision in the agreement, there is a general statutory interpretation principle that provides for a later specific provision to override an earlier general provision.

However, while the provision in the other Act might have come later, there would be a good argument that the provision in the agreement is the more specific provision in relation to the parties to the agreement and its subject matter. Some authorising Acts have dealt with this problem by stating that if there is an inconsistency between the agreement and any other Act or law, the agreement prevails. Even in those cases, though, careful consideration about the precise operation of the provision in any given circumstances may still be required.

Varying statutory agreements

A common issue that arises with statutory agreements, which are usually meant to continue for a long time, is whether the terms of the agreement can only be varied if Parliament first approves it, by amending the authorising Act for example.

In Queensland, there are examples of different ways that authorising Acts permit a statutory agreement to be varied, including:

  • by a further agreement between the parties without any express requirement for the further agreement to be approved by Parliament: Cairns Casino Agreement Act 1993
  • by a further agreement that has been approved by Governor in Council: Thiess Peabody Coal Pty Ltd Agreement Act 1962
  • by a further agreement that has been approved by regulation, commonly known as a ‘Henry VIII clause' and generally to be avoided: Queensland Nickel Agreement Act 1970
  • by a further agreement that has been approved by an Act: Mount Isa Mines Limited Agreement Act 1985 and Gladstone Power Station Agreement Act 1993
  • by a further agreement corresponding to a proposed further agreement contained in a schedule to the Act: Jupiters Casino Agreement Act 1983.

Parliament also has power to decide to vary a statutory agreement in another way, for example, by deeming amendments to have been made, although it would be quite unusual for this to occur.

In cases where the variation has to be approved by an Act, either the authorising Act will have to be amended or another Act passed before the agreement can be varied. In cases where the variation has to correspond to a proposed further agreement contained in a schedule to the Act, the Act will first need to be varied to insert the proposed further agreement.

While the authorising Acts for some statutory agreements still contain other mechanisms by which those agreements can be varied, there is a trend towards requiring prior legislative action to permit statutory agreements to be varied, particularly in relation to those that are given the force of law and status of enactments.

A number of authorising Acts have been amended as recently as 2014 to replace options like ‘Henry VIII clauses’ with requirements for legislative action.

Irrespective of the terms of an authorising Act, varying a statutory agreement under the approval of an Act should also help maintain priority for the agreement if the variation is inconsistent with a provision in another Act.

It is recommended that, even if an authorising Act permits a statutory agreement to be varied in another way, caution should be exercised before relying on such a provision and appropriate legal advice should first be sought about any potential implications.

The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.

Published: 3 February 2015

Author: Brent Manning