Legal experts have backed the Abbott government's view it had no liability for the $1 billion clean-up of Mr Fluffy asbestos homes, which has pushed the ACT budget into its largest-ever deficit.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The federal minister responsible for the asbestos issue, Eric Abetz, said in October the 1991 memorandum of understanding signed by the Commonwealth and ACT governments had expired and "was of no consequence", leaving the ACT to foot the bill despite the written agreement to share all costs of the clean-up into the future.
George Williams, a barrister and University of New South Wales Gilbert and Tobin Centre for Public Law director, said the High Court would probably have rejected an ACT government claim to enforce the agreement.
"First, by their nature, such agreements tend to imply that no enforceable legal obligations have been assumed," he said.
"Second, the High Court has indicated that it will not typically enforce intergovernmental agreements between governments in the Australian federation.
"It has tended to view these as being political agreements that are not susceptible to legal sanctions."
Professor Williams said the reference to an expiry was not at the heart of the legal issue, with the memorandum not enforceable at any time.
Then chief minister Katy Gallagher said on several occasions last year the memorandum, committing the Commonwealth to pay for two-thirds of the cost of the clean-up, was not a legal document and hoped it would instead put moral pressure on the Commonwealth to contribute.
Accepting the $1 billion loan offer on October 28, Ms Gallagher did, however, refer to advice about a potential court action against the Commonwealth.
If the ACT had pursued the question of legal responsibility, the Commonwealth would have fought the claim, the dispute would have dragged out and the territory would not have been guaranteed to win, she said.
A Queen's counsel at the NSW Bar, who asked not to be named, said there was clear High Court precedent against holding a government to a binding agreement, let alone a memorandum.
Chief Minister Andrew Barr confirmed in a budget update last month the asbestos clean-up was expected to leave the government about $400 million out of pocket, contributing to the record $770 million deficit for 2014-15.
