ane CATCHWORDS JUDGMENT No. wml2Z._ PH WORKERS' COMPENSATION - Entitlement To And Liability For Compensation - persons entitled to compensation - "worker" - whether contract of employment for a criminal purpose - consideration of possible offences ~ keeping a brothel - aid and abet the offence of management or conduct of a brothel - knowingly concerned in the management of a brothel - knowingly living on the earnings of prostitution - whether contract void ab initio or unenforceable - whether contract contrary to public policy Workers' Compensation Act 1951 (ACT), s6(1) Police Offences Act 1930 (ACT), s18, s23 Crimes Act 1900 (ACT), s345, s351, s477 Report of the Committee on Homosexual Offences and Prostitution 1957, par.224 (UK) Disorderly Houses Act 1751 (UK) Vagrancy Act 1901 (NSW) Police Offences (Amendment) Act 1908 (NSW) Police Offences Ordinance 1970 (ACT), para23(1)(j) Self-Government (Consequential Amendments) Act 1989 (ACT) Director of Public Prosecutions (Consequential Provisions) Act 1990 Police Offences Ordinance 1930 Prostitution (Consequential Amendments) Act 1992 (ACT), s.3 Interpretation Act 1967 (ACT), s.33F Local Government Act 1919 (NSW) Taxation (X-Rated Videos) Act 1990 (ACT) Statute of Frauds 1677 Banking Act 1959 (Cth) A v Hayden (1984) 156 CLR 532 Giorgianni v The Queen (1985) 156 CLR 473 Markulin v Drew (1993) DFC 95-140 R_v Rahme (unreported) 15 December 1993, Criminal Court of Appeal The Workcover Corporation (San Remo Macaroni Co. Pty. Ltd.) v Liang Da Ping (unreported) 30 March 1994 Pearce v Brooks [1866] LR 1 Exch. 213 Durose v Wilson (1907] 96 LT 645 Kemp v Lewis [1914] 3 KB 543 Abbott v Smith [1965] 2 QB 662; [1964] 3 All ER 762 McFarlane (1994] 2 WLR 494 Blackmore v Linton [1961] VR 354 Barrie [1978] 2 NZLR 78 R_v Peirson (1706) 92 ER 291, 2 Ld Raym 1197 R v Higginson (1762) 97 ER 806, 2 Burr 1232 Rv Tan [1983] 1 QB 1053 R v Harrison (1887) 8 LR (NSW) 57 Sibuse Pty Ltd v Shaw (1988) 13 NSWLR 98 Re Applications of Shepherd [1983] 1 NSWLR 96 Weatherall v R (1987) 75 ALR 6354 RECEIVED Gorman v Standen [1964] 1 QB 294 13 OCT 1994 O'Carroll v Potter (1928) 29 SR (NSW) 393 FEDERAL COURT OF AUSTRALIA PRINCIPAL Archbolds (Freightage) Ltd v S Spanglett Ltd [1961] 1 QB 374 Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277 Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 Upfill v Wright [1911] 1 KB 506 Seidler v Schallhofer [1982] 2 NSWLR 80 Electric Acceptance Pty Ltd v Doug Thorley Caravans (Aust) Pty Ltd [1981] VR 799 Thomas v Hansberry [1958] SASR 127 Yorke v Lucas (1985) 158 CLR 661 Johnson v Youden [1950] 1 KB 544 Wilson v Wilson Tileworks Pty Ltd (1960) 104 CLR 328 Johnston v The Commonwealth (1982) 150 CLR 331 Bird v The Commonwealth (1988) 165 CLR 1 Abinger Investments Pty Ltd v Royal George Hotel Holdings Pty Ltd (1993) 46 FCR 483 St John Shipping Corporation v Joseph Rank [1957] 1 QB 267 MARCO BARAC (TRADING AS EXOTIC STUDIOS) v HEATHER EMMA FARNELL No. ACTG 24 of 1994 Coram: Beaumont, Higgins & Carr JJ Place: Australian Capital Territory Date: 7 October 1994 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACTG 24 of 1994 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: MARCO BARAC (TRADING AS EXOTIC STUDIOS) Appellant AND: HEATHER EMMA FARNELL Respondent CORAM : BEAUMONT, HIGGINS AND CARR JJ. DATE : 7 October 1994 MINUTE OF ORDERS THE COURT ORDERS THAT: 1. Vary the orders made by the Supreme Court by adding the following declaratory order: "Declare that at all material times the respondent was a "worker" for the purposes of the Workers' Compensation Act 1951 (ACT)." 2. Appeal otherwise dismissed, with costs. Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACTG 24 of 1994 DISTRICT REGISTRY GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: MARCO BARAC (TRADING AS EXOTIC STUDIOS) Appellant AND: HEATHER EMMA FARNELL Respondent CORAM 3 BEAUMONT, HIGGINS AND CARR JJ. DATE: : 7 October 1994 REASONS FOR JUDGMENT BEAUMONT J. INTRODUCTION The respondent, Heather Emma Farnell, made application, by way of arbitration, for compensation under the Workers' Compensation Act 1951 (ACT) ("the Act"), claiming that on 5 November 1992, personal injury arising out of and in the course of her employment was caused to her as a worker employed by the appellant, Marco Barac. In her application, it was stated that a question had arisen as to whether she was a "worker" within the meaning of the Act. For the reasons he then gave, Magistrate Ward made an award which ordered and determined, in effect, that at the material time, the respondent was not a "worker" and that she was not employed by the appellant pursuant to a valid contract of employment within the meaning of the definition of "worker" in s.6(1) of the Act. By that definition, a "worker" is defined as follows: "worker" and that she was not employed by the appellant pursuant to a valid contract of employment within the meaning of the definition of "worker" in s.6(1) of the Act. By that definition, a "worker" 1s defined as follows: worker' means any person who has entered into or works under a contract of service or apprenticeship with an employer, whether the contract is express or implied, oral or in wntng, but does not include - (a) a person whose employment 1s of a casual nature and who 1s employed otherwise than for the employer's trade or business; (b) a public servant; or (c) an employee within the meaning of the Commonwealth Employees Rehabilitation and Compensation Act 1988 of the Commonwealth." The respondent appealed to the Supreme Court of the Australian Capital Territory from the order of the learned Magistrate. Miles C.J. ordered that the appeal be allowed, that the award be set aside and that the case be remitted to the arbitrator for further determination according to law. Thuis is an appeal, by leave granted, from that order. THE REASONS OF MAGISTRATE WARD In the course of the arbitration, it was submitted on behalf of the appellant that there was no case to answer because the respondent was not a "worker" within the meaning of the Act because there was no contract of service. It was said that the arrangement between the respondent and the appellant was void, illegal, contrary to public policy or prohibited by statute. The learned Magistrate accepted that submission. The reasoning of the learned Magistrate may be summarised as follows: (1) In late 1992, the respondent was employed by the appellant to work in a brothel as a "receptionist". On the morning of 5 November 1992, she arrived at the premises intending to open the brothel for business. While walking along a concrete path at the rear of the building in order to open the "studio" for business, the respondent slipped on the concrete and broke her arm. (2) His Worship described the nature of the respondent's employment in the following terms: "She began working 1n a brothel in this way: she used [to] baby-sit for two ladies. They asked her if she would like a job as a receptionist where they worked. They told her they were prostitutes °J took up the job anyway'. There was no doubt on the evidence that she knew she was working in a brothel. She used [to] open the 'studio' up, register the names of the prostitutes working that day on a day sheet, answer the telephone, 'introduce customers' to the prostitutes, register the time customers spent with a prostitute, take and keep a record of the money received by the customers for sex." (3) These activities were illegal, at least as aiding and abetting the common law offence of running of a brothel. In addition, the respondent was in breach of s.18 and, probably, s.23 of the Police Offences Act 1930 (A.C.T.). At the very least, she was "knowingly concerned in the management of a brothel. She was also probably living oft the earnings of prostitution". (By s.18 of the Police Offences Act, it is provided as follows: "18. A person who - (a) | manages or conducts a brothel; or (b) is knowingly concerned in the management or conduct of a brothel, is guilty of an offence and is punishable, upon summary conviction, by imprisonment for a period not exceeding twelve months." Section 23 of that Act provides: "23. (1) Any person who - Q) knowingly lives wholly or in part on the earnings of prostitution; (ja) mm any public place persistently solicits or importunes for immoral purposes; shall be guilty of an offence; Penalty: Imprisonment for three months. (3) Where a person 1s proved to live with, or to be habitually in the company of, a prostitute, and has no visible means of support, the person shall, for the purposes of paragraph (j) of subsection (1) of this section, unless the person satisfies the Court to the contrary, be deemed to be knowingly living on the earnings of prostitution.") (4) Notwithstanding the present decriminalisation of her conduct (a reference to the Prostitution Act 1992 (A.C.T.) which commenced on 1 December 1992), what the respondent was doing was contrary to public policy as expressed in the law proscribing her conduct - "[s]exual morality, whilst under constant attack, still remains public policy." (5) To enter into an agreement to help run a brothel is to agree to commit a crime, one of the very things prohibited as contrary to public policy. (6) The contract "had a purpose that was illegal, that is to say, that she was to be knowingly concerned in management of a brothel, as a result of which she was to be paid $10 per hour. The courts will not enforce such an agreement". (7) There was either no valid contract between the appellant and the respondent or the contract 1s void, illegal, unenforceable or contrary to public policy. THE REASONING OF THE SUPREME COURT The reasons of Miles C.J. for allowing the appeal were, in essence, as follows: (A) On the issue of illegality, since the appellant bore a "Briginshaw" onus, the evidence was not sufficient to establish that the respondent was living off the earnings of prostitution. The authorities show that the statutory offence of living off the earnings of prostitution "is directed at pimps and landlords who have some continuous association with the 'industry' of prostitution and some habitual receipt of money from the earnings of prostitution". His Honour referred to ip y I p Bignold's Police Offences where the assumption "is made that the offender must be male and the view 1s expressed that the prosecution must show that the man lived with the prostitute or exercised control or direction over her". (B) Nor was the evidence sufficient "to establish that the carrying out of the [respondent's] duties as receptionist at the [appellant's] brothel meant that she was guilty of the offence of being knowingly concerned in its management, contrary to s.18 of the Police Offences Act. Not all employees in a business are concerned in its management. Management of a business 1s generally regarded as involving something in the nature of the exercise of a discretionary power of control and direction of the business. The [respondent's] duties were essentially those of a receptionist and bookkeeper There was very little of a discretionary nature in those duties. She appeared to have lacked almost completely any power to direct other employees or to control the activities carried out on the premises". Miles C.J. referred to the cases which distinguish between "working 1n a brothel and taking part in its management. In the latter situation it 1s regarded as necessary that a substantial degree of control or responsibility in the use of premises for the purpose of prostitution is proved". (C) Although the misdemeanour of keeping a brothel survives in New South Wales (see e.g. Sibuse Pty. Limited v Shaw (1988) 13 NSWLR 98; R v Rahme (unreported) 15 December 1993, Court of Criminal Appeal) there was at the relevant time nothing in the A.C.T. by way of legislation comparable to that in New South Wales, which State preserved the common law. There 1s a real question whether, as at 5 November 1992, it was a common law misdemeanour to keep a brothel in the A.C.T. His Honour observed: "Moreover, there must also be doubt about the scope of the derivative offence of aiding and abetting the substantive offence of keeping a brothel, assuming the substantive offence to have survived. If anyone were to be regarded as guilty of complicity in the substantive offence by way of aiding and abetting, 1t would surely be the prostitute who delivers the service on the premises and the customer who receives the service on the premises. Yet, there does not appear to be a case reported of a prostitute or a customer convicted of aiding and abetting the keeping of a brothel by a single act of prostitution. On the contrary, all the cases....tend towards the proposition that, apart from so-called 'street' offences, what the common law proscribes is the organization and arrangement of prostitution, or the exploitation of prostitution in the wide sense." In any event, having regard to the public ventilation and resolution in 1992 of issues relating to prostitution and the keeping of brothels in the Territory (a reference to the issue by the Attorney-General earlier in 1992 of a Discussion Paper "Issues and Policy Options in the Regulation of Prostitution in the A.C.T." and the subsequent enactment of the Prostitution Act which came into force less than four weeks after the accident), even if the respondent's duties on 5 November 1992 involved her in aiding and abetting "the all but obsolete common law offence..., justice requires that her claim to compensation not be defeated by such a moribund concept..." (D) In rejecting the appellant's reliance on the principle that a court will not, on public policy grounds, entertain a claim to enforce a mght arising from a contract for immoral purposes, including sexually immoral purposes, Miles C.J. referred again to the Attorney-General's 1992 Discussion Paper and to the provisions of the Prostitution Act. His Honour concluded that "public attitudes to sexual morality were not then (and are not now) such that the Court should refuse to recognize that contract to the extent that a worker should be denied the right to compensation that might have accrued to her upon suffering injury arising out of or in the course of that employment". THE APPELLANT'S CONTENTIONS On behalf of the appellant, it 1s submitted that the Supreme Court should not have held that the appellant had any onus, let alone a "Bnginshaw" burden of proof. To the contrary, it 1s said, the respondent bore the onus of establishing a valid contract of employment within the meaning of the statutory definition. It is also contended that once the primary facts disclosed, as they did, that the respondent was working in a brothel, the Magistrate was correct to hold that the respondent was (1) aiding and abetting the commission of the common law misdemeanour of keeping a brothel; (2) knowingly concerned in the management of a brothel contrary to s.18 of the Police Offences Act; and (3) living on the earnings of prostitution contrary to s.23(1) of that Act. In disputing the suggestion that, at the material time, these offences were "moribund", the appellant calls in aid the reasoning of the New South Wales Court of Cnminal Appeal m Rahme, above, where it was held that the common law misdemeanour of keeping a brothel remained part of the law of that State. Reliance is also placed upon the decision of the Full Court of the Supreme Court of South Australia in The Workcover Corporation (San Remo Macaroni Co. Pty. Ltd.) v Liang Da Ping, 30 March 1994, unreported, where an illegal migrant myured in the course of his employment was held not to be a "worker" for the purposes of the Workers Rehabilitation and Compensation Act (S.A.). Reference is also made to Kemp v Lewis (1914) 3 KB 543 where an arrangement made in breach of the Truck Act was held not to be a contract of employment for workers' compensation purposes. Alternatively, it is submitted that even if the respondent's contract was not for an illegal purpose, the Court should not enforce it for reasons of public policy. Attention is drawn, by way of contrast, to the provisions of s.24 of the New South Wales Workers Comnpensation legislation to the effect that an illegal contract of employment falls within the scope of that Act. It 1s said that the present contract, bemg for "purely meretricious services" in the sense explained by Young J. in Markulin v Drew (1993) DFC 95-140 (to be considered below) is against public policy and should not be enforced by a Court. CON! 10. ONS ON THE APPEAL I have difficulty accepting any of the appellant's arguments. (A) The factual nature of the respondent's duties In order to understand the issues that arise in the appeal, it will first be necessary to refer to the evidence before the learned Magistrate with respect to the nature of the respondent's duties. Her evidence, which is not disputed, was as follows: "Now, could you describe please, for tis Worship, from your starting time - what your duties were with this establishment?--- From the starting time. From when you came in to start What was the first thing you did when you came to start work?---You opened the premises, opened the doors, turned on the lights, switched off the alarm system, and then turned on all the lights. About what time of the day was that normally?---When I very first started there it was starting at 10 am but then as I became full-trme it started at 9 am. And what was the next thing you did after opening it up?---You got your day sheet out - your work sheet that had to be worked on that day, you put your name up in the left hand corner and your name also down in the right hand corner and what day it was and the date on the sheet. What else did you put on this sheet?---The jobs that were done during the day - had to go onto that sheet. Did you identify any of the persons working in the establishment on the sheet?---I put their names on the sheet, yes. And did you identify in any way the customers coming to the establishment?---They were known Just as clients, not their names. Client 1, or 2, or 3. 11. Did you record on that sheet your hours of work?---Yes, I did. And did you also record the financial information in relation to payment by customers?---That's correct. Both to the establishment?---That went on the sheet. And to the ladies who were working there?---That's right. What happened to those sheets at the end of the day, do you know?---Yes, they went into an envelope with the cash that was taken and they [were] dropped into a safe. Were you given any directions about this system of work when you went in for training?---How the system works? Yes?---Yes, I was told, that's what your traiming is, it's how the system - - - All right, who explained al] of that to you?---Elizabeth Stokes and Marco Barac. Did that later change to a regular shift?---That's correct, yes. About when was that?---I think 1t was - I'm not sure but I think it was towards the end of September. And what was that regular shift?---9am unt:l 7 pm. How many days a week?---Five days a week. And which days were they?---Monday to Friday. Now, how were you paid Ms. Farnell?---In the beginning the manageress got cheques from Marco Barac. She used to cash the cheques in and she used to bring the cash back to me. I don't know about the others, but that's how I got paid. Did that remain the way you were paid during the whole of the time you were there?---No, no, after Elizabeth Stokes left, I was given cash. I never received cheques. And how were you - was the cash in anything when it was given to you, was it in a pay ship?---It was just in a white envelope and tt 12. was different envelopes each time." MR CROWE: Now, after you started working on the regular daytime shift, did you continue working those hours?---Yes, I did. I think we had got to - in the course of your day after you filled out the work sheet, what were your duties from then on during the course of the day, what was the next thing you had to do?---Clean the studio. Yes, what did that involve?---Vacuuming - that wasn't everyday but was from time to time. Of what did the studio consist? Could you describe the studio?--- Six bedrooms - - - Did that include cleaning the bedrooms that you referred to?---The girls actually did clean their beds, did their own beds. J vacuumed the rooms and made sure their showers were clean. Did you have a work station where you - - -?---Yes, I did. Where was that?---It was a desk at the front of the establishment as you walked in the front door. Was there a telephone at that desk?---Two telephones. And during the course of the day did you use those telephones?--- Yes. What for?---Answering the phones to clients ringing to find out which lady was available today. And what did you do when somebody rang 1n?---I described the ladies that were on. Their age, their name and their age. And if a customer wished to make a booking would you do anything about it?---I wouldn't write it on anything, no, the customer would just say that he could come over to the studio. All right. Did you do anything else at that desk you have described? When a customer came in, for example, did you have 13. any duty in relation to the customer?---I had to answer the door, let the customer, show him to the waiting room, that was my job and then if the customer went to the room with one of the ladies, then she had to bring the money to the desk. Did you record anything about the transaction?---Yes, it was recorded, yes. And where was that recorded?---On a day sheet. Is that the day sheet you have spoken of?---Yes." (B) The legal issues As has been noted, these facts were really common ground. There are, however, a number of questions of law which arise in the appeal. (a) Wast act ora cri | purpose? In my opinion, there was no evidence of criminality on the part of the respondent. It 1s convenient to consider this question in separate stages. (i) The common law misdemeanour of keeping a brothel In Rahme, above, the Court of Criminal Appeal (Grove, Campbell and James JJ.) followed the opinion of the majority (Priestley and McHugh JJA) in Sibuse, above) that the common law offence of keeping a brothel was part of the law of New South Wales. Grove J. said in Rahme that the correctness of this opinion had been endorsed by the pattern of legislation in that State, a pattern which, as Miles CJ noted, had not been repeated in the Territory. 14. In Rahme, the appellant had been convicted of the common law offence of keeping a brothel. The trial Judge gave the jury a direction that the Crown had to prove that the accused was "either carrying on his own business...or that he was the person managing the premuses.. [T]o 'manage' means taking an active part in the running of the business, suggestive of control; not merely the doing of routine duties " In upholding this direction, Grove J. referred to the reasoning of his Honour Judge Chapman in Abbott v Smith [1965] 2 QB 662 and to the decision of the New Zealand Court of Appeal in Barrie [1978] 2 NZLR 78. In Abbott v Smith, it was held that there was no case to answer on a statutory charge of assisting in the management of a brothel. The appellants (mother and daughter) occupied a ground floor room in a dilapidated mansion which had been converted into single-room apartments. The evidence tendered was that the mother had, on occasion. unlocked the front door to the building to admit women who were also tenants in the building, one of whom was a known prostitute. As Grove J. pointed out, the explanation given by Judge Chapman in that case, which was similar to that given by the trial Judge in Rahme, attracted no adverse comment when the case was later discussed by the Queen's Bench Division in Donovan v Gavin [1965] 2 QB 648. Judge Chapman referred to Durose v Wilson [1907] 96 LT 645, where a porter of premises, who used to wait in the street outside the premises and admit occupants, was convicted of 15. "being wilfully a party to the continued use of the premises as a brothel". Judge Chapman (in considering s.33 of the Sexual Offences Act 1956 (U K.) making it an offence for a person to keep a brothel, or to manage, or to act or assist in the management of a brothel) said (at 665-6): "What I have to consider is whether there 1s evidence from which it can fairly or reasonably be inferred that Sarah Abbott, on the dates in question, was managing a brothel, or that Kathleen was assisting in the management of a brothe]. What is required, in my view, 1s some sort of evidence indicating the taking of an active part in the running of the business as a business, something suggesting control. In Gorman v Parker ... Lord Parker C.J. said: The mere fact that a woman participates in the activities being conducted in the brothel does not make her a person assisting in the management of a brothel.' Still less does it make her one of the managers I do not say that only a person in the position of a director, or a representative or agent of a director, can be a manager, but there must, as I see it, be something a cut above purely menial or routine duties." Judge Chapman noted that the accused received no remuneration and distinguished Durose v Wilson on the basis that, unlike the porter there, Mrs. Abbott had no power to evict undesirable tenants. In Barrie, it was held that to establish that a person keeps or manages a brothel it 1s essential to prove that that person has control or a share of control over the brothel. A prostitute who merely works in the establishment and is not part of the management cannot be labelled a keeper. In Barrie, several appeals were dealt with. The accused Hull unsuccessfully appealed against a conviction for the statutory offence of assisting 16. in the management of a brothel. His role was described in evidence by a police officer as follows (at 80): "I asked him what his involvement was at Palm Springs. He said he started working there about Sept 1977. He said he acted as manager on the nights of Monday, Tuesday, Friday and Sunday. He said he worked 6 pm to midnight. He said he got paid $10 a mght. He said he got the job because Ron Astrella was huis brother-in-law. I asked him what his duties were at Palm Springs while he was working there. He said to see the parlour was operated properly, to see the girls were not troubled by clients who are sometimes affected by liquor. He said he accounts for the money paid by clients and balances back with the job cards that were put in by the girls. ] asked him what knowledge he had of extras being supplied at Palm Spnngs. He said he knew the girls working at Palm Springs supplied extras for money in the form of sex to some of the clients. He said he knew the money the girls got for extras they kept half and gave the other half to him, to balance with the job cards. He said he did not arrange the extras, the girls did that, he just knew it was going on and collected the money the chents paid." Cooke P. said (at 80-1) that these statements, in particular the reference to seeing that the parlour was operated properly, made the charge of assisting in the management of the brothel "perfectly appropriate". As to the statutory charge that Mrs. Barrie had kept a brothel, the trial Judge summanised the allegations against her as follows (at 81): "There is evidence that the accused was carrying on prostitution in these rooms - she managed and controlled what went on in those rooms when she had a customer there - she selected her customers, or at least, had the power to refuse extras in the case of the 17 year old; she described the type of extras she was prepared to supply; she set the price and she collected the money and kept half of it - she received no wages as such." 17. Cooke P. said (at 81-2): "{The] dictionary definitions indicate the meaning of 'keeps' in s.147. In short, control or a share of control over the brothel 1s essential to constitute a person a keeper. Similarly a person does not 'manage' the brothel unless he or she takes part in its control. The shade of difference between keeping and managing 1s that the former term is more apt for the owner of the business and the latter for a delegate conducting it for him. The test of control of the business, or words to that effect, runs through many cases in this and simular fields .. In R v Mickle ... Bain J. applied it in holding that a prostitute who merely worked 1n a massage parlour and was not part of the management could not be labelled a keeper. We regard that case as rightly decided. In Police v Alien ... White J adopted as a test of keeping whether the woman '1is shown to have exercised a degree of control in the use of the premises for these purposes'. We agree with this also, provided that the degree of control 1s substantial, as may well be imphcit in the Judge's words. That case seems to have been concerned with a smaller establishment than the one in the present case, and it is possible that the defendant there did have a managerial role. It should not be regarded as a decision of general application. In the present case the indictment in its plain meaning alleges - and rightly so - that the premises operating under the name of Palm Springs Massage and Sauna were a brothel. The brothel consisted of the whole set of rooms operated under the trade name. It was an integrated business. ... The arrangement between the controllers of the business and this appellant was that she would work there, m common with a number of other young women, and pay over to the management half her takings. She and the other girls, whether receiving wages or not, were merely working in a business organised and controlled by others. In our opinion there was no evidence that she participated in the control of the brothel. She was not a 'keeper' and in that respect the indictment was misconceived - as 1s confirmed by the fact that the proprietor (or one of the proprietors) was indicted for managing, whereas in truth as a proprietor of the business he was not a mere manager but a keeper." In my opinion, the remarks made of Mrs. Barrie's position were 18. applicable in the present case. The respondent was neither the keeper nor the manager of a brothel at common law. She merely worked in a business controlled and operated by others. Her duties were of a routine kind, not involving control of the operation in any substantial sense. Her role was only a passive one without any responsibility for the solicitation of business. But it 1s said on behalf of the appellant that, even if the respondent was not criminally liable as a principal offender, she aided and abetted, or was knowingly concerned 1n, the offence of management of a brothel [see the Crimes Act 1900 (A.C.T.) s.345]. In my opinion, even if it be assumed that those who organised and controlled the business were liable as principal offenders, it has not been shown that the respondent aided and abetted, or was knowingly concerned in, any such offence. In Blackmore v Linton [1961] VR 374, O'Bryan J. said (at 377): "In R v Coney ... Hawkins J said that to constitute an aider and abettor some active steps must be taken by word or action with intent to instigate the principal or principals. Encouragement does not of necessity amount to aiding and abetting unless he intends by his expressions, gestures or actions to signify approval. By that passage his Lordship undoubtedly meant that the defendant's actions must be intended to instigate or encourage the committal of the principal offence. ... [I]f you say that a person who, being present when an offence is committed, intends by his actions to encourage its commission must also intend thereby to facilitate its commission. In such a case the charge preferred against the abettor is one of a crime committed in the execution of a common purpose with the principal offender and not foreign to it." (Emphasis added) In my view, 1t cannot be said that, in performing her routine duties, the respondent instigated or encouraged those in control to keep or manage a brothel. A similar approach was taken by the High Court to an associated provision, s.351 of the Crimes Act, in Giorgianni v The Queen (1985) 156 CLR 473. Gibbs CJ said (at 479-80): "The very words used in s351, and the synonyms which express their meanings - e.g. help, encourage, advise, persuade, induce, bring about by effort - indicate that a particular state of mind 1s essential before a person can become liable as a secondary party for the commission of an offence, even if the offence 1s one of strict hability. In United States v Peoni ... Judge Learned Hand referred to various statutory and common law definitions of 'accessories, by which he meant secondary parties, and in a passage cited by Bright J. in Lenzi v Miller ... went on to say: It will be observed that all these definitions have nothing whatever to do with the probability that the forbidden result would follow upon the accessory's conduct; and [that] they all demand that he in some sort associate himself with the venture, that he participate in it _as_in something that he wishes to bring about, that he seek by his action to make tt succeed. All the words used - even the most colourless 'abet' - carry an implication of purposive attitude towards it." (Emphasis added) In other words, the person charged as a secondary party should in some way be 'lmked in purpose with the person actually committing the crime .... R v Russell. per Cussen ACJ." It follows, I think, that the respondent did not aid or abet that offence. 20. It has also been held by the High Court, applying Giorgianni, that, for present purposes, the phrase "knowingly concerned" should be similarly construed (see Yorke v Lucas (1985) 158 CLR 661). In my view, both the San Remo Case, above, and Kemp v Lewis, above, may be distinguished for our purposes. In San Remo, King CJ referred to the specific prohibition of employment in s.83(2) of the Migration Act 1958 as follows: "Where a person who 1s an illegal entrant performs any work in Australia without the permission, in writing, of the Secretary, the person commits an offence against this subsection." It was accordingly held that the contract of employment relied upon was prohibited by statute and that, on the true construction of the statute, it was intended that the contract be rendered void and unenforceable for the reasons given by Gibbs ACJ in Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410. But in the present case, there is, in my view, no statutory prohibition upon a person undertaking work of the routine kind carried out by the respondent, even if done in a brothel. Other functions, particularly those involving control of the operations, and living off their earnimgs, may be prohibited, but that is a different question. 21. In Kemp v Lewis, the applicant, a quarryman, was accustomed occasionally during hay harvest to assist a farmer in the evening 1n getting in his crops. He did not receive any money payment for his services, but the farmer gave him beer and sometimes a supper when the work was over. While thus engaged in carrying hay he fell from the top of a load and was injured, and thereby incapacitated for work. It was held that such an informal arrangement which, in any event was in breach of the Truck Acts, did not constitute a contract of service for workers' compensation purposes. However, there was no such informality about the agreement between the present parties. As has been noted, the respondent was periodically remunerated for the work 1n cash for her services. In the result, even if it be assumed in the appellant's favour that the evidential onus had shifted to the respondent on this aspect, I am of the opinion that the respondent was not criminally liable, either principally or secondarily, for the common law offence of keeping a brothel. (ii) The statutory offence of management or conduct of a brothel As has been seen, the terms of s.18(a) of the Police Offences Act are similar, in principle, to the common law offence of keeping a brothel. Although s.18(b) also picks up the case of a person being knowingly concerned in the management or conduct of a brothel, this is not very different, in principle, 22. from a charge of aiding and abetting or being knowingly concerned in the commission of the common law offence. It follows, I think, that the reasoning to support the conclusion that the respondent was not liable, as a primcipal or otherwise, for the common law offence, is equally applicable in the present context. (iii) The statutory offence of knowingly living on the earnings of prostitution Although the evidence discloses that the respondent was paid by the appellant for her work, there is no suggestion that her entitlement to remuneration was to be conditional upon the successful operation of the business or that her earnings were to be sourced, in any exclusive sense, out of the revenue generated by the conduct of the business. When this and the nature of the respondent's duties are taken into account, it is clear that this offence has not been made out so far as the respondent was concerned. (b) Was the contract contrary to public policy? In A v Hayden (1984) 156 CLR 532, Mason J. said (at 559): "The refusal of the courts to enforce contracts on grounds of public policy is a striking illustration of the subordination of private right to public interest. The problem is one of formulating with any degree of precision the criteria or the circumstances which will justify a court in refusing to enforce a contract on the ground that there is a countervailing public interest amounting to public policy. The difficulties in ascertaining the existence and strength of an identifiable public interest to which the courts should give effect by refusing to enforce a contract are so formidable as to require that they 'should use extreme reserve in holding such a contract to be void as against public policy, and only do so when the contract 1s 23. incontestably and on any view inimical to the public interest', to use the words of Asquith L.J. in Monkland v Jack Barclay Lid. ..." In what way may it be said that the making, or the performance, of the respondent's contract of employment was inimical to the public interest? What aspect of the public interest 1s involved here? Is the mischief, against which the common law and statute law is directed, the exploitation of women or is it something else? If we put aside the special case of the need to protect minors, it would appear that the real mischief aimed at 1s the protection of the public from solicitation in this connection. In McFarlane [1994] 2 WLR 494, the appellant hved as man and wife with a woman who offered sexual services tor reward and pocketed the reward in advance, never intending to provide the service. He was convicted of living on the earnings of prostitution, contrary to s.30 of the Sexual Oftences Act. In dismissing an appeal agaynst conviction, tt was held that the essence of prostitution was the making of an offer of sexual services for reward and it was immaterial that the person making the offer did not intend to perform them and did not in fact do so; and that, accordingly, a man who lived off the earnings of ~ a woman who offered sexual services, took the money and then reneged on the offer lived on the earnings of prostitution. Lord Taylor CJ said (at 499): 24. "Mr. Carne also submits that the mischief against which section 30 of the Sexual Offences Act 1956 1s directed is the exploitation of women. Here, the appellant was not exploiting Miss Josephs sexually, only dishonestly. However, if Mr. Carne's argument were right, the mischief aimed at in other statutes requiring proof of prostitution would not be defeated. There have been a number of statutes, from the Vagrancy Act 1824 through Town Police Clauses Act 1847 up to and including the Street Offences Act 1959, whose object has been to prevent the nuisance of women soliciting and offering sexual favours in public places. If 1t were a defence to soliciting for prostitution under section 1 of the Act of 1959 that the accused woman was acting as a 'clipper' and not a 'hooker,' proof of such offences would be extremely difficult. It would be necessary to prove not merely the offer of sexual services in a public place, but that the services were actually provided, or were at the time of the offering intended to be provided. The mischief being simply the harassment and nuisance to members of the public on the streets, the distinction between 'clippers' and *hookers' is immaterial. We have no doubt that the ruling of the judge was both robust and correct, to adopt the phrase used by Mr. Carter-Manning in his submission. For a man to live ott the earnings of a woman who offers sexual services, takes the money and then reneges on the offer, if she does, is in our view to live off the earnings of prostitution, or, as it used to be termed, immoral earnings. Indeed, most people would consider such earnings doubly immoral." In the present case, as has been noted, there was no suggestion of solicitation so far as the respondent was concerned. In Pearce v Brooks [1866] L.R. 1 Exch. 213, a prostitute was sued by a coach-builder for the hire of a brougham. The hiring was made in the knowledge that she was a prostitute and that the brougham would be used by her, as it was, as part of her display to attract men. It was held that the plaintiffs could not recover. 25. Pollock C.B, said (at 217-8): "I have always considered it as settled law, that any person who contributes to the performance of an illegal act by supplying a thing with the knowledge that it is going to be used for that purpose, cannot recover the price of the thing so supplied. If, to create that incapacity, it was ever considered necessary that the price should be bargained or expected to be paid out of the fruits of the illegal act (which I do not stop to examine), that proposition has been overruled by the cases I have referred to, and has now ceased to be law. Nor can any distinction be made between an illegal and an immoral purpose, the rule which is applicable to the matter is, Ex turpi causa non oritur_actio, and whether it 1s an immoral or an ulegal purpose in which the plaintiff has participated, 1t comes equally within the terms of that maxim, and the effect 1s the same; no cause of action can arise out of either the one or the other." (Emphasis added) In my opinion, having regard to the routine character of the respondent's duties, this decision may be distinguished here. If there 1s any illegal or immoral conduct, it would be wrong to characterise the respondent as a participant in it. The participants, m the above sense, were those who organised and controlled the business and not persons merely employed to perform routine functions. As has been noted, the appellant relies upon the reasoning mm Markulin v. Drew, above. There, in a claim made in contract or alternatively under the Family Provision Act 1982 (N.S.W.), Young J. referred (at 76,723) to the distinction drawn, in public policy terms, between contracts with "purely meretricious purposes" and those which "are intended to regulate stable extra- marital relationships". His Honour was of the opinion (at 76,724) that a defence 26. of illegality would succeed if a common prostitute sought to enforce a contract of the former kind. But in considering the Family Provision Act claim, Young J. said (at 76,730-1): "The answer to the question as to whether the fair and reasonable person in the community would consider that the deceased ought to have made provision for the plaintiff should be answered affirmatively..." In my view, if there 1s a rule of public policy to be applied in this area, it should be used to deteat claims made by the principals in the affair, rather than claims made against the principals by the workers, especially when, as here, the worker 1s making a statutory claim for workers' compensation in the present circumstances. It would be an unjust outcome tt, by shooting the Messenger as it were, those who conducted the business should be able to set up a defence that their own immoral purposes, carried on for their own profit, may be relied on to avoid liability to a worker performing routine duties when the worker is injured in the course of her duties. For a court to permit a claim for compensation to be defeated because of the immoral character of the activities of the employer's business would, in my view, be entirely without merit. Put differently, such a defence 19 itself contrary to the public interest in ensuring that claims for workers' compensation are dealt with fairly and equitably. The defence should be rejected (cf. Tinsley v Milligan [1994] 1 A.C. 340 per Lord Browne-Wilkinson at 377; and see the discussions by Hugh Stowe, "The 'Unruly 27. Horse' has Bolted: 'Tinsley v Milligan", (1994) 57 MLR 441 and Nelson Enonchong, "Illegality: The Fading Flame ot Public Policy", (1994) 14 Oxford J Legal Stud 295; and as to the position in Canada, see John Arnold Epp, "The Supreme Court of Canada Restricts Ex Turp1 Causa" [1994] 110 L.Q.R. 357]. ORDERS PROPOSED In the result, 1 would propose that the appeal be dismissed with costs, although I would vary the orders made by adding a declaration that the respondent was a "worker" within the meaning of the Act. Although, in strictness, the matter proceeded on the facts before the arbitrator on a prima facie basis only, it 1s now accepted by both parties that there 1s no dispute about the relevant primary facts. In those circumstances, it 1s desirable that an appropriate declaration should be made. I certify that this and the preceding twenty-six (26) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Beaumont. Associate a b7oeeca [VIPUL Dated "J, 10.9% IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY GENERAL DIVISION No. ACTG 24 of 1994 ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: MARCO BARAC (TRADING AS EXOTIC STUDIOS) Appellant AND: HEATHER EMMA FARNELL Respondent CORAM: BEAUMONT, HIGGINS and CARR JJ DATE: 7 October 1994 REASONS FOR JUDGMENT HIGGINS J I have had the opportunity of reading the reasons for judgment of Beaumont J and of Carr J. The foundational question in this appeal is whether the respondent's contract of employment was tainted by illegality. On this issue, Miles CJ considered that it was not proved to the requisite standard that the respondent's conduct in carrying out her duties constituted any offence. Hence it was not demonstrated that the respondent's contract of employment was tainted by illegality. Beaumont J has concluded positively that the conduct of the respondent did not constitute a criminal offence. Hence her contract of employment was not tainted by illegality. Carr J has concluded that there was evidence that the conduct of the respondent did involve the commission of a criminal offence. The relevant criminal offence identified by his Honour was either, aiding the appellant in the management of a brothel, or aiding the appellant to keep a common brothel. However, Carr J also concluded that although the contract of employment might to that extent be tainted by illegality, neither statute nor public policy required that the contract be regarded as void. Consequently, it was cognisable for the purposes of the Workers' Compensation Act 1951 (ACT) (the Workers' Compensation Act). COMMON LAW OFFENCE OF KEEPING A BROTHEL It is important to note at the outset that prostitution, per se, was not an offence under the laws of England. The position was summarised in the Report of the Committee on Homosexual Offences and Prostitution 1957, par. 224 (UK) in the following terms: Prostitution in itself 1s not, in this country, an offence against the criminal law. Some of the activities of prostitutes are, and so are the activities of some others who are concerned in the activities of prostitutes. But it is not illegal for a woman to "offer her body to indiscriminate lewdness for hire," provided that she does not, in the course of doing so, commit any one of the specific acts which would bring her within the ambit of the law. So far as the Australian Capital Territory is concerned, it received the law of New South Wales as at 1 January 1911. New South Wales received the law of England, as at 1828. In each case, the reception was limited to laws capable of so applying at the relevant time. The laws concerning brothels and prostitution were undoubtedly so applicable. In R v_ Peirson (1706) 92 ER 291, 2 Ld Raym 1197 it had been held that whilst it was no offence at common law to be a "bawd", it was an offence for a "bawd" to keep a "bawdy-house". The general definition attributed to Sir Edward Coke (n6, 37-8 supra) was that a brothel or bawdy-house was: ++.a form of disorderly house, the keeping whereof is a public nuisance not only in respect of its endangering the public peace by drawing together dissolute and debauched persons; but also in respect of its apparent tendency to corrupt the manners of both sexes. See also R v Higginson (1762) 97 ER 806, 2 Burr 1232. As recently as the case of Rv Tan [1983] 1 QB 1053 the Court of Appeal held that premises upon which prostitution was conducted constituted a "disorderly house". There was some legislation enacted in the United Kingdom in 1752 and 1781 (5 Geo II, c.36 and 1 Geo III, c.49) in respect of disorderly houses. Section 8 of the Disorderly Houses Act 1751 (UK) deemed certain persons to be a "keeper" of a disorderly house if they acted as if they were a "keeper" of a disorderly house. However, those Acts did not substantively affect the nature or content of the common law offence. The case of R v Harrison (1887) 8 LR (NSW) 57 involved an alleged common law offence of keeping "a common, ill-governed and disorderly house and brothel". It was noted that a brothel was a sub-species of "disorderly house". It is implicit in that decision that, as at 1887, the common law offence of keeping a brothel was accepted as having been received as part of the law of England applying in New South Wales. It follows that the common law offence formed part of the law of the Territory until its repeal shortly after the respondent's injury at work. The Vagrancy Act 1901 (NSW), as amended by the Police Offences (Amendment) Act 1908 (NSW) created summary offences of "holding" a house frequented by prostitutes and of permitting prostitution on premises. Those Acts were not inconsistent with the continued survival in New South Wales of the common law offence of keeping a disorderly house. In my opinion that offence, being part of the law of New South Wales as at 1 January 1911, became part of this Territory's received law: see also Sibuse Pty Ltd v Shaw (1988) 13 NSWLR 98, 112 per Priestley JA and Re Applications of Shepherd [1983] 1 NSWLR 96 per Yeldham J as to the position in New South Wales prior to 1 January 1911. SUMMARY OFFENCE OF MANAGING A BROTHEL Various other summary offences were created by that Ordinance relating to prostitution. In relation to keeping a brothel, s.18 provided: Any person who keeps or manages or acts or assists in the management of a brothel shall be guilty of an offence. Penalty: Imprisonment for twelve months. That offence, in my view, included conduct which would have amounted to the common law offence of keeping a brothel. It also embraced conduct involving managing or assisting in the management of a brothel. That section was repealed by the Police Offences Ordinance 1970 (ACT). In place thereof the following was enacted: 18. A person who - (a) Manages or conducts a brothel; or (b) is knowingly concerned in the management or conduct of a brothel, is guilty of an offence and is punishable, upon summary conviction, by imprisonment for a period not exceeding twelve months. By the same amending Ordinance a new provision, s.19B, was inserted. It provided: A prosecution for an offence against section 18, 19 or 19A of this Ordinance shall not be inatituted except with the consent of the Attorney-General or a person authorized by the Attorney- General to give consent for the purposes of this section. In 1989, pursuant to the Self-Government (Consequential Amendments) Act 1989, the relevant Territory Minister was substituted for the (Commonwealth) Attorney-General. The provision was repealed entirely in 1990 by s.3 of the Director of Public Prosecutions (Consequential Provisions) Act 1990. Section 19 provided grounds for the termination of a lease if a person, being a lessee, was convicted of an offence against s.18 in respect of the premises to which the lease related. This latter provision was, in my view, plainly inconsistent with a proposition that such a lease was, in any event, void or voidable if the demised premises were used for the purposes of a brothel. As a matter of history, no consent has ever been given under s.19B. OFFENCE OF LIVING ON THE EARNINGS OF PROSTITUTION Living on the earnings of prostitution does not seem to have been a common law offence. It was not created in the UK until 1898. It applied only to male persons being aimed at pimps, ponces and bullies. The Vagrancy Act 1901 (NSW) was amended by the Police Offences (Amendment) Act 1908 (NSW) so as to create a similar offence in the State of New South Wales. That offence also became part of the law of the Australian Capital Territory on 1 January 1911. Those Acts were expressly repealed by the Police Offences Ordinance 1930: now the Police Offences Act 1930 (ACT) (the Police Offences Act). That Ordinance provided for a similar offence. There was, by the Police Offences Ordinance 1970, an amendment to paragraph 23(1)(j) to make the offence of living on the earnings of prostitution "gender neutral". The offence had previously applied only to male persons. However, the conduct proscribed by the offence was not altered in its content by that amendment. For the reasons expressed by Miles CJ in the decision appealed from, with which Beaumont J has expressed agreement, I do not consider that statutory offence to be relevant to the present matter. Those various provisions remained in force in the Australian Capital Territory until 1 December 1992 when they were repealed. This was less than a month after the accident suffered by the plaintiff on 5 November 1992. Section 3 of the Prostitution (Consequential Amendments) Act 1992 (ACT) made provision that: Any offence at common law relating to prostitution, including keeping a brothel or common bawdy house, ceases to have any force or effect in the Territory. In my view, that provision was intended to remove any doubt as to whether those common law offences were to continue to be part of the law of the Australian Capital Territory. There was no obvious inconsistency between s.18 of the Police Offences Act and the common law offence of keeping a brothel. The offence at common law was an indictable misdemeanour, whereas s.18 created a summary offence. Section 33F of the Interpretation Act 1967 (ACT) would prevent punishment under both laws for the same conduct but does not deny their co-existence. It would follow that there had been up to 1 December 1992 no implied repeal of the common law offence by reason of the enactment of similar summary offences. Such a conclusion is consistent with the decision of this Court in Weatherall v_R (1987) 75 ALR 635. There is, in my view, no meaningful distinction between the offence of being "knowingly concerned" in the management of a brothel as proscribed by s.18(b) of the Police Offences Act and that of aiding and abetting the commission of the common law offence of keeping a brothel. As has been noted by Beaumont J, the commission of the offence of aiding and abetting the "keeping" of a brothel requires the taking of an active part in the running of the business, doing something suggesting control of the course of the business, not purely menial or routine duties: see Abbott v Smith [1964] 3 All ER 762; Gorman v Standen [1964] 1 QB 294. NATURE AND EFFECT OF THE CONDUCT OF THE RESPONDENT Insofar as it was an issue as to whether the respondent's duties were merely "menial or routine" then, as her evidence was unchallenged, it was open to the Supreme Court on appeal to have formed a view about the legal nature or effect of those duties as the respondent had described them without being bound by his Worship's conclusion at first instance that the respondent was, in effect, the "madam" of the brothel in question. Only insofar as the respondent was engaged by the brothel's keeper or manager to perform duties that were not "menial" or "routine" could she be regarded, in my view, as having offended against s.18(b) or having aided and abetted the commission of the common law offence. Had the respondent done no more than keep records, bank takings, engage cleaners or the like, I would conclude that her duties were "routine" or "menial" in that sense. However, she effectively received clients, made appointments for them with prostitutes and thus acted as a facilitator for the acts of prostitution which she was well aware were occurring on the premises. It seems to me to follow that she might, had she been prosecuted, have been lawfully convicted of an offence against s.18(b), or of aiding and abetting her employer, the brothel keeper, in the commission of the common law offence apparently being committed by the latter. In this respect, without endorsing the view that there is or needs to be a distinction between "aiding" and "abetting", I agree with Carr J. It is, of course, unlikely that the respondent would have been prosecuted. She could not have been prosecuted for the common law offence without her consent in a court of summary jurisdiction: Crimes Act 1900, s.477. An indictment would have required the active involvement of the Director of Public Prosecutions (the DPP) or the Attorney-General: Director of Public Prosecutions Act 1990 (ACT). In any event, the DPP could have taken over and terminated any summary prosecution whether in respect of the common law offence or for a summary offence. CONSEQUENCES OF ILLEGALITY I assume, therefore, that, in carrying out her duties as receptionist in the appellant's brothel the respondent was, at the date of her injury, aiding and abetting the appellant in the keeping of the brothel or was "knowingly concerned" in the Management of it. The commission of these offences did not necessarily have the effect that the respondent's contract of employment was void ab initio. Of course, the contract of employment, insofar as it required the respondent to perform services constituting any such offence, would not have been capable of enforcement by either party. An example of a contract being held unenforceable by reason of illegality is O'Carroll v Potter (1928) 29 SR (NSW) 393. That case involved a building erected in contravention of an Ordinance made pursuant to the Local Government Act 1919 (NSW). A contract, even though unenforceable, still exists in law. For example, monies paid pursuant to an unenforceable agreement still lawfully belong to the recipient. If a statute creating an offence expressly or implicitly prohibits any contract involving the commission of that offence, then that contract may be regarded as vold ab initio. An example of such a contract is to be found in Kemp v Lewis [1914] 3 KB 543 and The Workcover Corporation (San Remo Macaroni Co Pty Ltd) v Liang Da Ping unreported, Full Court, SA, 30.3.94. There is no such intention evident from the terms of the Police Offences Act. Indeed, the prohibition on prosecutions without the fiat of the Attorney-General, even though since repealed, coupled with the tolerance by relevant governmental agencies of the existence of brothels in certain industrial areas, clearly indicates that neither the legislature nor the executive has regarded contracts which facilitate the conduct of a brothel to be prohibited by statute. The conditional avoidance of a lease over premises in respect of which a person has been convicted of managing a brothel, as provided by s.19 of the Police Offences Act, is also consistent with that view. In truth, the only valid objection is that the contract not only involves the commission of a statutory offence or a common law offence, but is also contrary to public policy. It does not, therefore, matter whether the illegality relied on in this matter arises from the commission by the respondent of a statutory or a common law offence. Illegality does not necessarily affect the enforceability, in any relevant sense, of an agreement which involves the commission of an offence. In Archbolds (Freightage) Ltd v_ S Spanglett Ltd [1961] 1 QB 374, the use of an unlicensed van to carry goods not only was considered not to render the contract of carriage void, it was held that it did not render that contract unenforceable. As Lord Wright said in Vita Food Products Inc v Unus Shipping Co Ltd [1939] AC 277, 293: «.«. the rule by which contracts not expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only, and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds. More recently, in Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410, the High Court, per Mason J with whom Aickin J agreed, said (429): There is much to be said for the view that once a statutory penalty has been provided for an offence the rule of the common law in determining the legal consequences of the commission of the offence is thereby diminished... A statute will not usually be regarded as showing by implication an intention to interfere with the rights, remedies and ordinary incidents of the law of contract. Nor is the common law to be regarded as intending such a consequence unless public policy demands it. It was submitted that there was also a common law prohibition on contracts such as the present. This was said to derive from public policy. It was submitted that contracts which promote sexual immorality are contrary to public policy. There has, however, been some shift in opinion in relation to that aspect of public policy. For example, in the early case of Upfill v Wright [1911] 1 KB 506, a lease of a flat for the purposes of furthering an illicit sexual relationship was held illegal and unenforceable. That case may be compared with the more recent case of Seidler v Schallhofer [1982] 2 NSWLR 80, in which a purchase of property jointly by a de facto couple for the purposes of use in furthering their "illicit" sexual relationship was held to be untainted by any illegality to be derived from public policy. It is unlikely that contracts to hire x-rated erotic videos would now be held void or unenforceable for illegality based on such a rule of public policy. Particularly is this so having regard to the legislative recognition of that trade for revenue purposes in the Taxation (X-Rated Videos) Act 1990 (ACT). For an agreement involving illegal conduct to be regarded as void or unenforceable, that illegal conduct needs to be characterised as sufficiently serious for public policy to require that result. Otherwise, it will be essentially unaffected by that illegality: see Electric Acceptance Pty Ltd v Doug Thorley Caravans (Aust) Pty Ltd [1981] VR 799, 810 per Brooking J. A contract, even if tainted by illegality, may well be enforceable. The illegality in question might be severable. In that case, only that part of the agreement which was or gave effect to the illegality would be unenforceable. In this case, whilst it might have been unlawful for the respondent to perform some duties on behalf of the appellant, it was not unlawful for her to perform other duties. A contract might be entirely unenforceable as between the parties but retain its character as 14 - a contract remaining in force for purposes other than enforcement inter partes. Contracts unenforceable by reason of non-compliance with the Statute of Frauds 1677 provide an obvious analogy. I agree with Beaumont J and Carr J that no public policy reason exists to deny this respondent's claim for compensation. The expression "contract of service" in the Workers' Compensation Act may, therefore, include contracts which are merely unenforceable or voidable for illegality even if it does not include those which are wholly void for illegality. I agree with the orders proposed by Beaumont J. I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgement of his Honour Justice Higgins. Associate: Date: 4 CTOBER, ITY IN THE FEDERAL COURT OF AUSTRALIA ) AUSTRALIAN CAPITAL TERRITORY ) DISTRICT REGISTRY ) ) GENERAL DIVISION No. ACTG 24 of 1994 ON APPEAL FROM THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY BETWEEN: MARCO BARAC (TRADING AS EXOTIC STUDIOS) Appellant AND: HEATHER EMMA FARNELL Respondent CORAM: BEAUMONT, HIGGINS AND CARR JJ. DATE: 7 October 1994 REASONS FOR JUDGMENT CARR J. I have had the advantage of reading the reasons for judgment of Beaumont J. I agree with the orders proposed by him and, save for one matter, I agree with his reasons. The matter upon which I differ is that I consider that although the evidence shows that the respondent did not manage a brothel, she did, in my opinion aid the appellant to commit either the statutory offence of managing or conducting a brothel or the common law offence of keeping a brothel, or both. I do not think that she abetted him in the management of the brothel. Nor do I think that she was knowingly concerned in (my emphasis) the management or conduct of the brothel. The expression "aid and abet" does not appear in s.345 of the Crimes Act 1900 (A.C.T.) ["the Crimes Act"]; those words are used disjunctively in the alternative. The following passage appeared in the "Plain Language" column prepared by the Law Foundation Centre for Plain Legal Language at the The following passage appeared in the "Plain Language" column prepared by the Law Foundation Centre for Plain Legal Language at the University of Sydney Law Schoo! and published in the Law Society Journal September 1993 at p.28: "The word 'aid' derives from Old French aider and Latin adjutare meaning to help or assist 'Abet' comes onginally from Old French abeter meaning 'to lure on, entice' and bourer meaning 'to encourage or set on' and the Saxon bedan and beteren 'to stir up or excite an anmmal'." [References cited] While I do not consider that the evidence shows that the respondent lured on, enticed, encouraged, set on, stirred up or excited the appellant to manage the brothel, she did in my opinion aid the appellant in his management of the brothel in the sense of helping or assisting himy see Thomas v. Hansberry [1958] SASR 127 at p.129 and the cases there mentioned. I appreciate that the ordinary meanings of some of the words "aids, abets, counsels or procures" overlap and that sometimes those words are used in particular combinations - see Gtorgianni v. The Queen (1985) 156 CLR 473 at p.480. In my opinion, the appellant's work involved her in accessorial liability pursuant to s.18(a) of the Police Offences Act and s.345 of the Crimes Act. It is quite clear from the evidence that the respondent knew that a brothel] was being conducted on the premises, that the appellant was the propnetor and a manager of the brothel and her duties were to assist (in the manner described in Beaumont J's reasons for judgment) the manager or managers of that brothel. So far as any necessary intent is concerned, the respondent had knowledge of all essential! facts: Giorgianni at p.479; Yorke v. Lucas (1985) 158 CLR 661 at p.667. The latter case 1s authority for the proposition that it does not matter whether the respondent knew that the facts constituted an offence - see also Johnson v. Youden [1950] 1 KB 544 at p.546 per Lord Goddard CJ: "If a person knows all the facts and 1s assisting another person to do certain things, and it turns out that the doing of those things constitutes an offence, the person who Is assisting 1s guilty of aiding and abetting that offence." It is necessary at this stage to pause and consider the matter of the common law misdemeanour of keeping a common brothel or in the alternative aiding and abetting or aiding or abetting the keeping of a common brothel. Assuming, without deciding, that at the relevant time there existed in the Australian Capital Territory the common law misdemeanour of keeping a common brothel it is quite clear that the respondent was not guilty of such a crime. I tefer to the reasons of Beaumont J. and would only add that the element of "keeping" seems, On the authorities, to require a degree of proprietorship which is totally absent in this matter. For similar reasons as outlined above, it would appear that assuming the existence of the common law misdemeanour, the appellant would be an accessory at common law. It would seem that at common law the words "aids and abets" are read distributively. I should add that the circumstances were such that it would have been highly unlikely that the respondent would have been prosecuted. Apparently it was the policy of the Director of Public Prosecutions in the Austrahan Capital Territory that no prosecution would take place in respect of prostitution unless aggravating circumstances were involved. Aggravating circumstances included the presence of drugs, minors or aliens, being in a residential area or being associated with organised crime; see Michael Moore M.L.A., "The Politics of Vice: Regulation and Policy Making in the Australian Capital Territory", Australan Institute of Criminology Conference Proceedings, Vol. 14 at p.205. There was no suggestion of any such circumstances in the present matter. In essence, the appellant's argument 1s as follows: 1. The appellant and the respondent entered into a contract of employment; 2. The performance of that contract involved the respondent in committing an offence (aiding the appellant to manage, conduct or keep the brothel), 3. By reason of the above the contract 1s void; and 4, Being void, that contract cannot for the purposes of the Workers' Compensation Act be regarded as a contract. In my view, there 1s a flaw in that reasoning. There is no question in this matter of seeking to enforce the contract in any manner whatsoever. The question 1s whether it is not permissible to characterise the arrangements between the appellant and the respondent as a contract for the purposes of the definition of a "worker" within the meaning of s.6(1) of the Workers' Compensation Act? The respondent's rights do not arise from the contract but are granted by statute provided that the respondent falls within the definition of a "worker". In my view, the word "contract" in the phrase "... contract of service or apprenticeship with an employer ..." was used only as part of a mechanism to distinguish between an employee and a person providing services pursuant to a contract for services. Whether there is a contract or not does not appear to be of particular importance because the contract may be "... express or implied, oral or in writing ...". What the appellant has done 1s to make a contract in the course of aiding the appellant in his management, conduct or keeping of a brothel. So far as any statutory offence was concerned she aided the commission of the offence proscribed by s.18 of the Police Offences Act. The contract required the respondent to carry out various routine tasks none of which by virtue of their nature (opening up the premises, keeping time sheets, receiving customers, making appointments and cleaning the premises) can be characterised as criminal per se either on their own or cumulatively. However, if I am correct in my conclusion above, they caused the respondent to have committed an offence because she knowingly assisted the appellant to breach s.18 of the Police Offences Act and perhaps commit the common law misdemeanour described above. There seems to me to be justification for applying the underlying principles reflected in the decision of the High Court of Australia in Yango Pastoral Company Pty Lid v. First Chicago Australia Ltd (1978) 139 CLR 410. In that case documents securing a loan were held to be entorceable even though the lender, at the time when the loan was made, was carrying on the business of banking contrary to certain provisions of the Banking Act 1959 (Cth). In my view, nothing in the Police Offences Act compels this Court to impute to the Parliament of the Australian Capital Termtory an intention to prohibit the making of the contract which was made between the appellant and the respondent. Nor, in my opinion, was the making of this contract prohibited at common law. There 1s no need to consider the question of its enforceability. I note that the expression "a law of the Territory" 1s given an inclusive definition in the Crimes Act. Again, assuming without deciding, that "a law of the Territory" includes the common law, it may be that the respondent by aiding the appellant to commit the common law misdemeanour of keeping a common brothel attracted further criminal liability by virtue of s.345 of the Crimes Act. That accessorial liability is thus statute-based and again I see nothing in the Crimes Act which requires imputing to parliament an intention to prohibit a contract of the kind that was made between the appellant and the respondent. I should stress that I am only considering the question whether the contract was illegal to the extent that it should not be characterised as being a contract for the purposes of the definition in s.6(1) of the Workers' Compensation Act. It is not necessary to consider whether the performance of that contract was prohibited as a matter of law or whether it would have been unenforceable. Insofar as the argument that the contract had no exstence because it was illegal and void 1s based on the decisions in Workcover Corporation (San Remo Macaroni Co Pty Lid) v. Liang Da Ping (unreported 30 March 1994, Full Court of the Supreme Court of South Australia) and Kemp v Lewis (1914) 3 KB 543 I would reject the argument for the reasons set out in Beaumont J's reasons for judgment. It must be remembered that workers' compensation legislation is to be construed beneficially: see the reference in the judgment of Fullagar J. in Wilson vy, Wilson Tileworks Pty Ltd (1960) 104 CLR 328 at p.335 to: ".. the established principle that, where two constructions of a Workers' Compensation Act are possible that which 1s favourable to the worker should be preferred." See also Johnston v. The Commonwealth (1982) 150 CLR 331 at pp.342- 343 and Bird v. The Commonwealth (1988) 165 CLR 1 at pp.6, 9. Even an agreement which is void and unenforceable is not wholly ineffectual. It may, for example, cause a propnetary interest to pass to a party: Abinger Investments Pty Ltd v. Royal George Hotel Holdings Pty Ltd (1993) 46 FCR 483. If I am wrong in my conclusions above and the contract made between the appellant and the respondent 1s void for illegality, I would construe the word "contract" in s.6(1) as extending to a contract made between an employer and an employee, which although void for illegality at common law involved such a technical and insigmdficant tlegality as presented itself in this matter. I appreciate that a line may have to be drawn between those contracts of service which involve such a degree of illegality as not to be construed as contracts recognised by the Workers' Compensation Act and those whose performance involve only technical breaches of the law. As a general rule, it should not be too difficult to draw that line and reconcile the interests sought to be protected both by workers' compensation wy legislation and the criminal law. I would see such an approach as consistent with the reasoning in the Yango Pastoral Company case, while acknowledging that that case concerned only a statutory offence. As Devlin J. (as he then was) observed in what is still one of the leading cases in this area of law, St. John Shipping Corporation v. Joseph Rank [1957] 1 Q.B. 267 at pp.288-289: "It may be questionable also whether public policy 1s well served by driving from the seat of judgment everyone who has been guilty of a minor transgression " For these reasons on this aspect of the matter and otherwise for the reasons given by Beaumont J, I agree with the orders proposed by him. I had prepared the above reasons in draft before I had the advantage of reading the reasons for judgment of Higgins J. As the foregoing indicates, I agree substantially with those reasons. I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment of Justice Carr. Associate: Ki Berk Date: $2 Sertemsarn 1454 Counsel for the Appellant Mr D Campbell Solicitors for the Appellant Scott Sheils & Glover Counsel for the Respondent Mr R Williams QC with Mr R Crowe Solicitors for the Respondent Pamela Coward & Associates Date of Hearing 28 June 1994 Date of Judgment 7 October 1994 * JUDGES' CHAMBERS 5 FEDERAL COURT OF AUSTRALIA GPO BOX 1548 Sy AUSTRALIA, - CANBERRA ACT 2601 10 October 1994 Records Clerk Library and Information Services Principal Registry Federal Court of Australia Queens Square SYDNEY NSW 2000 Dear Madam FEDERAL COURT JUDGMENT Please find enclosed a copy of the judgment in the matter of Marco Barac (trading as Exotic Studios) v Heather Emma Farnell - ACT G 24 of 1994 together with disks from Beaumont, Higgins and Carr JJ | would be grateful if you would return the disks to the respective chambers when you have finished with them Yours faithfully fb (Mrs) JUDITH BREEN Secretary to Justice Higgins Encl