Australian Indigenous Law Reporter
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Australian Indigenous Law Reporter |
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18 September 1996, Sydney
Administrative Law - Judicial review - Ministerial direction requiring
Aboriginal and Torres Strait Islander Commission not to grant
moneys to a body
not approved by 'Special Auditor' - Whether direction a 'general direction' -
Whether direction consistent with
Act conferring functions on Commission -
Aboriginal and Torres Strait Islander Commission Act 1989 ss. 6, 7(1),8, 
12 
,
14, 145, 151, 152(2)
Words and Phrases - 'general direction' - Aboriginal and Torres Strait Islander
Commission Act 1989 s 12(l)
The Aboriginal and Torres Strait Islander Commission (ATSIC) is a body corporate established by the Aboriginal and Torres Strait Islander Commission Act 1989 ('ATSIC Act'). The functions of ATSIC include the formulation and implementation of programs for Aboriginal persons and Torres Strait Islanders: subs. 7(1)(a). ATSIC is authorised to make a grant or loan of money to a body to further the social, economic or cultural development of Aboriginal persons and Torres Strait Islanders: s. 14. ATSIC is not to approve a loan or a grant of money unless it has received a written application for the loan or grant: s. 22.
Section 12(1) of the ATSIC Act directs ATSIC to perform its functions and exercise its powers in accordance with such general directions as are given to it by the Minister for Aboriginal and Torres Strait Islander Affairs.
The Minister, purporting to exercise the power given by subs. 12(1) of the ATSIC Act, issued three directions to ATSIC:
(a) A direction that ATSIC was not to make a grant or loan of money to a body unless that body provided financial information to a 'Special Auditor' (the Auditor) appointed by the Minister and 3 weeks had elapsed since the provision of the information.
(b) A direction that ATSIC was not to make a grant or loan of money to a body if the Auditor had notified ATSIC and the Minister that the body was not a fit and proper body to receive public money - subject to the Minister's discretion to permit a grant or loan to such a body.
(c) A direction that ATSIC was not to make a grant or loan of money to a body if the Auditor had notified ATSIC and the Minister that, in the opinion of the Auditor, further consideration of whether the body was a fit and proper body to receive public moneys was warranted.
Held:
The directions were not general directions within subs. 12(1) of the ATSIC Act and were of no force and effect.
[1] The second direction, restraining ATSIC from granting or lending money to a body which the Auditor had determined was not a fit and proper body, was not a general direction.
(a) Although the Minister could give a direction which set the structure for decision-making by ATSIC, the Minister could not direct ATSIC as to how it must determine the outcome of a particular application by a specific body.
Aboriginal Development Commission v. Hand (1988) 15 ALD 410, followed.
(b) The direction commanded ATSIC not to make a grant to a specific body if the Auditor notified ATSIC of the body's lack of fitness.
(c) The effect of the direction was to empower the Auditor to preclude the exercise of discretion by ATSIC in respect of a particular applicant, unless the Minister relaxed the prohibition.
(d) The direction conferred a power and discretion on the Auditor to override the discretion of ATSIC in respect of particular applicants. In so doing, the direction went beyond the description of a general direction and in some cases would have the result of requiring a particular outcome, namely, refusal of a particular application.
2. Neither the first nor the third direction was severable from the second direction. As the second direction was invalid, the other directions were also invalid.
Black CJ:
This is an application for judicial review of directions in writing given on 10 April 1996 by the Minister for Aboriginal and Torres Strait Islander Affairs ('the Minister') to the Aboriginal and Torres Strait Islander Commission ('the Commission'). The application was heard by a Full Court in the original jurisdiction of the Court pursuant to a direction under s. 20(1A) of the Federal Court of Australia Act 1976.
The Minister's directions are expressed to be 'general directions' given pursuant to s. 12 of the Aboriginal and Torres Strait Islander Act 1989 (Cth) ('the Act'). Section 12(1) of the Act implicitly confers power upon the Minister to give general directions to the Commission. It provides:
'12.(1) The Commission shall perform its functions and exercise its powers in accordance with such general directions as are given to it by the Minister in writing.'
The circumstances giving rise to this application are set out in the reasons for judgment of Tamberlin J and I need not repeat them.
There are three relevant directions, contained in the one instrument of 10 April 1996. In essence, the first direction provides that the Commission is not to make a grant or loan of money to a body unless it has made available certain financial information relating to that body to a person to be appointed by the Minister and known as the 'Special Auditor' and three weeks has elapsed since the material was made available. The substance of the second direction is that the Commission shall not make a grant or loan of money to a body if the Special Auditor has notified both the Commission and the Minister that the body is not a fit and proper body to receive public money unless, however, the Minister notifies the Commission that, notwithstanding the notification by the Special Auditor, the grant or loan should be made. The third direction provides, in substance, for a stay upon the making by the Commission of any grant or loan of money to a body when the Special Auditor has notified the Commission, and the Minister, of the Special Auditor's opinion that further consideration of whether the body is a fit and proper body to receive public money is warranted.
The issue before the Court is whether the directions given on 10 April 1996 are 'general directions' within the meaning of s. 12(1). If they are not general directions for the purposes of s. 12(1) they are invalid, it not being suggested that there was any other source of power to give them.
Although s. 12(1) contains no limitation as to the functions and powers to which a general direction by the Minister can relate, the power to give directions is subject to an important limitation resulting from the use of the word 'general': see Aboriginal Development Commission v. Hand (1988) 15 ALD 410 at 413-414 per Davies J. Moreover, the general directions that the section authorises are general directions that relate to the performance of functions and exercise of powers by the Commission.
A power to give general directions in accordance with which a body such as the Commission must exercise powers conferred upon it by the Parliament may well fall short of permitting directions that have the practical effect of giving to another person what amounts to the capacity to veto the exercise, in a particular case, of any of the powers conferred. In my view, this will be the case where, as here, the 'veto' is exercisable by reference to that other person's own findings and opinions on a matter committed to the decision of the Commission. To give such a direction is not to give a general direction as to the exercise of a power by a body; rather, it is to take away elements of the exercise of a power that has been committed to a particular body and to commit them to a person upon whom the Parliament has not conferred the power. Although limitations on the exercise of a power can, obviously, result from the proper exercise of a power to give general directions, it is quite another thing for the limitations to be accompanied by the committal of elements of the exercise of the power to another person.
It is of course true that the Special Auditor has, relevantly, only the function of determining whether a body to whom the Commission might otherwise decide to make a grant of money is not a fit and proper body to receive public money and that the effective withdrawal of the Commission's power to make a grant flows from the operation of the second direction upon an adverse determination by the Special Auditor. The Special Auditor does not, in terms, have a power of veto but, as a practical matter, the Special Auditor's conclusion about the question of fitness to receive public money, a matter committed to the Commission in the sense that it is a matter relevant to the exercise of its power under s. 14(1) of the Act to make grants of public money, will operate as a veto if the conclusion is adverse. This, of course, is subject to the possibility that the Minister might nevertheless notify the Commission that the grant should be made.
The circumstance, however, that the Minister may effectively override the opinion of the Special Auditor that a body is not a fit and proper body to receive public money emphasises the degree to which the directions in issue in this case operate to take away powers committed by the Parliament to the Commission. Opinions about the fitness of a body to receive public money may legitimately differ and there may be subjective elements in the assessment. Moreover, unfitness today may not mean unfitness tomorrow and the extent to which a grant will achieve the statutory purpose of furthering the social, economic or cultural development of Aboriginal persons or Torres Strait Islanders is a matter for the Commission to take into account, together with other matters, in the exercise of its powers under s. 14(1).
In my view, therefore, the second direction is not a general direction for the purposes of s. 12(1) of the Act and is beyond the power implicitly conferred by that provision.
The interpretation that leads to this conclusion is supported by reference to the objects of the Act. The short title of the Act is:
'An Act to establish an Aboriginal and Torres Strait Islander Commission and an Aboriginal and Torres Strait Islander Commercial Development Corporation, and for related purposes.'
In the preamble, reference having been made to the objective of maintaining and developing policies 'that will overcome disadvantages of Aboriginal persons and Torres Strait Islanders to facilitate the enjoyment of their culture' there is a recital that it is 'appropriate to further the aforementioned objective in a manner that is consistent with the aims of self-management and self-sufficiency for Aboriginal persons and Torres Strait Islanders'. And one of the express objects of the Act, set out in s. 3(b), is:
'to promote the development of self-management and self-sufficiency among Aboriginal persons and Torres Strait Islanders...'.
The Commission was established, as a representative body, in furtherance of this and other objects. Seventeen of the members of the Commission, which consists of a Chairperson and eighteen other members, are to be persons elected under the provisions of the Act to represent zones: s. 27. Moreover, the Commission is a representative body that has a distinctive character. A person is not qualified to be appointed as a Commissioner unless he or she is an Aboriginal person or a Torres Strait Islander: s. 31(1).
In my opinion, therefore, reference to the objects of the Act points against the expansive interpretation of the power to give general directions contended for by counsel for the respondent.
In his submission on behalf of the respondent, Mr Walker SC argued that the requirement of s. 12(4) that the Minister cause a copy of any direction given under s. 12(1) to be laid before each House of the Parliament supported a broad interpretation of s. 12(1) since any direction would be exposed to scrutiny and debate in the Parliament and in the community generally. It may equally be said, however, that the obligation to cause a copy of Ministerial directions to be laid before each House of the Parliament reflects the view that any direction given under s. 12(1) is a significant matter, and thus s. 12(4) does not support a wide interpretation of the notion of 'general directions' in s. 12(1).
It remains to consider the question of severability. I agree with Sackville J that the first and third directions are subsidiary to the second direction and that the invalidity of the second direction carries with it the conclusion that the other directions are beyond power.
Tamberlin J:
This is an application brought by the Aboriginal Legal Service ('ALS') for judicial review under s. 5 of the Administrative Decisions Judicial Review Act 1977 (Cth) and/or s. 39B of the Judiciary Act 1903 (Cth).
The amended application describes the challenged decision of the respondent Minister ('the Minister') as one:
'... to direct the Aboriginal and Torres Strait Islander Commission ('ATSIC') to submit decisions in relation to funding to a delegate of the Respondent for approval.'
There is no dispute as to standing of the ALS to bring the proceedings. Nor is it contended that the issues raised by the application are hypothetical or that a declaration would serve no useful purpose.
Since the Ministerial direction, to which I refer shortly, directly affects the funding of the ALS the matter was thought to be urgent and accordingly the Court expedited the hearing. The matter was also considered to be of sufficient importance to warrant it being heard by a Full Court of this Court, in its original jurisdiction, pursuant to a direction by the Chief Justice under s. 20(1A) of the Federal Court of Australia Act 1976 (Cth).
The application seeks a declaration that the Minister does not have the power to direct the Aboriginal and Torres Strait Islander Commission ('ATSIC') as to what decisions it can make or to appoint any person to approve, deny or vary decisions of ATSIC.
On 10 April 1996, the Minister gave the following directions to ATSIC:
'Pursuant to section 12 of the Aboriginal and Torres Strait Islander Act 1989, I, John Joseph Herron, Minister for Aboriginal and Torres Strait Islander Affairs, direct that the Aboriginal and Torres Strait Islander Commission (the Commission) perform its functions and exercise its powers in accordance with the following general directions:
[1] The Commission shall not make a grant or loan of money to any body corporate or unincorporated body unless the Commission has made the body's most recent financial statements, acquittal documentation and other relevant information held by the Commission relating to breaches of grant or loan conditions available to a person to be appointed by the Minister for Aboriginal and Torres Strait Islander Affairs and known as the 'Special Auditor' and three weeks has elapsed since the relevant material was made available.' [2] The Commission shall not make a grant or loan of money to a body corporate or unincorporated body if the Special Auditor has notified the Commission and the Minister for Aboriginal and Torres Strait Islander Affairs that the body is not a fit and proper body to receive public money unless the Minister for Aboriginal and Torres Strait Islander Affairs notifies the Commission that, notwithstanding the notification by the Special Auditor, the grant or loan should be made. [3] If the Special Auditor has notified the Commission and the Minister for Aboriginal and Torres Strait Islander Affairs, within the three week period referred to in paragraph 1 above that the Special Auditor is of the opinion that further consideration of whether the body is a fit and proper body to receive public money is warranted and specifying a period of not more than three months for such further consideration, the Commission shall not make a grant or loan of money to a body corporate or unincorporated body within the period specified in the notice.'
A further explanatory addendum to the above direction was issued by the Minister on 4 June 1996 which reads as follows:
[1] I, John Joseph Herron, Minister for Aboriginal and Torres Strait Islander Affairs, direct that in relation to the General Directions I made to the Aboriginal and Torres Strait Islander Commission pursuant to
On 28 June 1996, the Minister directed that ATSIC perform its functions and exercise its powers on the basis that the directions of 10 April 1996 do not apply to the making of a grant or loan made before 1 October 1996, being a grant or loan made for a period not more than three months. This was to enable funds to be granted for the first quarter of the financial year 1996-1997.
ATSIC is a body corporate established under s. 6 of the Aboriginal and Torres Strait Islander Commission Act 1989 (Cth), ('the Act').
The preamble to the Act includes the following recitals:
'AND WHEREAS it is appropriate to further the aforementioned objective in a manner that is consistent with the aims of self- management and self-sufficiency for Aboriginal persons and Torres Strait Islanders; AND WHEREAS it is also appropriate to establish structures to represent Aboriginal persons and Torres Strait Islanders to ensure maximum participation of Aboriginal persons and Torres Strait Islanders in the formulation and implementation of programs and to provide them with an effective voice within the Australian Government; AND WHEREAS the Parliament seeks to enable Aboriginal persons and Torres Strait Islanders to increase their economic status, promote their social well-being and improve the provision of community services; ...'
The objects of the Act are set out in s. 3 which reads:
'Objects 3. The objects of this Act are, in recognition of the past dispossession and dispersal of the Aboriginal and Torres Strait Islander peoples and their present disadvantaged position in Australian society:
(a) to ensure maximum participation of Aboriginal persons and Torres Strait Islanders in the formulation and implementation of government policies that affect them; (b) to promote the development of self-management and self-sufficiency among Aboriginal persons and Torres Strait Islanders; (c) to further the economic, social and cultural development of Aboriginal persons and Torres Strait Islanders; and (d) to ensure co-ordination in the formulation and implementation of policies affecting Aboriginal persons and Torres Strait Islanders by the Commonwealth, State, Territory and local governments, without detracting from the responsibilities of State, Territory and local governments to provide services to their Aboriginal and Torres Strait Islander residents.'
Section 7(1) of the Act sets out the functions of ATSIC which include the following:
'7. (1) The Commission has the following functions:
(a) to formulate and implement programs for Aboriginal persons and Torres strait Islanders; (b) to monitor the effectiveness of programs for Aboriginal and Torres Strait Islanders, including programs conducted by bodies other than the Commission; (c) to develop policy proposals to meet national, State, Territory and regional needs and priorities of Aboriginal persons and Torres Strait Islanders;
....
(e) to advise the Minister on:
(i) matters relating to Aboriginal and Torres Strait Islander affairs, including the administration of legislation; and
(ii) the co-ordination of the activities of other Commonwealth bodies that affect Aboriginal persons or Torres Strait Islanders; (f) when requested by the Minister, to provide information or advice to the Minister on any matter specified by the Minister;
.... (j) such other functions as are conferred on the Commission by this Act or another Act; .... (o) to do anything else that is incidental or conducive to the performance of any of the preceding functions.'
Section 8 provides that the Prime Minister may for the purpose of furthering the social economic or cultural development of Aboriginal persons or Torres Strait Islanders, confer a departmental function on ATSIC. Section 12 of the Act empowers the Minister to give general directions and reads as follows:
'12. (1) The Commission shall perform its functions and exercise its powers in accordance with such general directions as are given to it by the Minister in writing.
(2) Subsection (1) does not empower the Minister to give directions relating to the content of any advice, information or recommendation that may be given by the Commission to a Minister, Department of State or authority of the Commonwealth. (3) Subsection (1) does not empower the Minister to give directions relating to the content of any advice, information or recommendation that may be given by the Commission to a Minister, Department of State or authority of a State or Territory, except for the purpose of protecting the confidentiality of information given to the Commission by the Commonwealth or an authority of the Commonwealth. (4) Subject to subsection (5), the Minister shall cause a copy of any direction given under subsection (1) to be laid before each House of the Parliament within 15 sitting days of that House after that direction was given. (5) A copy of a direction laid before the Parliament in accordance with subsection (4) shall not disclose any matter the disclosure of which in that manner would be inconsistent with the views or sensitivities of Aboriginal persons or Torres Strait Islanders because that matter is sacred or otherwise significant to these persons.'
Section 14 of the Act empowers ATSIC to make grants and loans in the following terms:
'14. The Commission may: (a) make a grant of money; or (b) grant an interest in land; or (c) grant an interest in personal property; or (d) make a loan of money (whether secured or unsecured); to: (e) an individual; or (f) a body corporate ... or (g) an unincorporated body; for the purpose of furthering the social, economic or cultural development of Aboriginal persons or Torres Strait Islanders.'
Section 22 provides:
'22. The Commission shall not approve a loan, grant or guarantee under this Division unless the Commission has received a written application in the prescribed form for the loan, grant or guarantee.'
ATSIC is constituted by a chairperson and eighteen other members appointed by the Minister. Seventeen members are elected pursuant to the Act to represent various zones. Two members are chosen by the Minister and the Minister must appoint a member to be the chairperson (see s. 27).
Pursuant to s. 57 of the Act, ATSIC is funded by moneys appropriated, from time to time, by Parliament. The Minister for Finance can give directions as to the amounts in which and the times at which moneys so appropriated is to be paid to ATSIC. Under s. 61 ATSIC must prepare estimates of the receipts and expenditures of ATSIC for each financial year. ATSIC must submit estimates so prepared to the Minister by the date required. The provisions of the Audit Act 1901 (Cth) apply to ATSIC with some exceptions. Under s. 74 of the Act the Minister can give written directions to ATSIC not inconsistent with the Act or regulations, about the administration of ATSIC's finances.
Under Part II, Division 9 of the Act, provision is made for an office of evaluation and audit within ATSIC.
Part IV of the Act is concerned with the Aboriginal and Torres Strait Islander Commercial Development Corporation ('the Corporation'). This is established by s. 145 to assist and enhance Aboriginal and Torres Strait Islander self management and economic self sufficiency and to advance the commercial and economic interests of Aboriginal persons and Torres Strait Islanders.
Section 151 which relates to the power of the Minister with respect to the Corporation, states that except as expressly provided in the Act, the Minister is not empowered to direct the Corporation in relation to any of its activities. The Corporation is given a wide range of powers including power to enter into contracts; to invest; to subscribe for and purchase shares and securities and to enter into partnerships. (See s. 152(2)).
The ALS is an organisation created to promote the legal and political interests of Aboriginal people in New South Wales. In December 1995 the applicant applied for funding to provide legal services to Aboriginal people in New South Wales for 1996-1997. The applicant has received funds from ATSIC or its predecessors since 1971.
The ALS is an Aboriginal community organisation responsible for the provision of legal representation for Aboriginal and Torres Strait Islanders within specified areas in New South Wales. The ALS currently employs more than sixty persons. About 80% of the matters handled by the ALS are criminal, the remainder being civil and family law matters. The bulk of the funding of the ALS (that is, more than 95%) is received from ATSIC.
Prior to 1 December 1995, two applications for funding were lodged by ALS. The funding was recommended for approval by the Sydney Regional Council and the State Advisory Commission of ATSIC.
The parties did not lead any evidence as to the precise terms of the appointment of the Special Auditor and in particular no instrument of appointment was tendered. However, it appears from a document entitled 'Instructions for the Completion of the Reporting Package' that a large firm of chartered accountants, KPMG Peat Marwick, ('KPMG') was appointed Special Auditor by the Department of the Prime Minister and Cabinet. Another firm, Pannell Kerr and Forster was appointed as an alternate, to act in circumstances where KPMG identified a conflict of interest. The Act itself makes no reference to a 'Special Auditor'.
On 24 June 1996 Mr Jauncey, a solicitor with the ALS, became concerned with the delay in the grant of funds to the ALS and spoke with the State Manager of ATSIC. Mr Jauncey was told that funding had been endorsed by the Board of Commissioners but the matter was complicated as a result of the appointment of a Special Auditor. The State Manager then read part of the direction to Mr Jauncey.
On 26 June 1996, Mr Coe, the Chairman of ALS, wrote to the State Manager of ATSIC in the following terms:
'Re Applications for Grants by Aboriginal Legal Service Limited
I refer to previous conversations in relation to this matter and or original applications for funding for the year 1996-97. I note that it is your view that you are not able to make a decision on this matter but are only able to refer the matter for decision to the 'special auditor' appointed by the Minister. This view derives from the direction purportedly given to ATSIC by the Minister pursuant to section 12 of the ATSIC Act. It is our view that section 12 only allows the Minister to give general directions. The Minister is not entitled to impose a 'special auditor' on ATSIC or to veto decisions of ATSIC. We consider that the Minister has acted ultra vires in purporting to impose the 'special auditor' on ATSIC. If it is your view that the 'special auditor' has a valid power to direct ATSIC in relation to specific grants under any other provision of the Act or under any other valid power could you please inform us. Consequently, ATSIC is still obliged to make a decision on the application made by the ALS. I understand that such a decision was made, but implementation was deferred under the false impression that the actions of the Minister and the 'special auditor' were lawful. If that is the case it is the responsibility of ATSIC to now implement that decision. If that is not the case then ATSIC must both make a decision and implement that decision. Given the short time until the cessation of the current grant, the ALS will be obliged to seek judicial intervention unless a decision is made and/or the decision to implement that decision is also made. If no communication is received by the ALS, as to a decision having been made to continue funding of the ALS, by Midday 27 June 1996, the ALS will seek judicial review and/or prerogative relief in the Federal Court as a matter of urgency. The orders sought will include orders directing ATSIC to do all things necessary to implement any decisions already made by the Commission, including communicating such decisions to the ALS. I request that a copy of the decision made (which I understand was made at the meeting of the ATSIC Board of Commissioners last week) be made available to the ALS for the purposes of the proposed litigation should it become necessary.
...'
ATSIC replied by letter dated 27 June 1996, which reads:
'... Dear Mr Coe, I refer to your letter of 26 June 1996 to Mr Donnelly, NSW State Manager of ATSIC. I confirm that the Commission has made a decision that the NSW Aboriginal Legal Service be afforded a first quarter release in 1996/7 ... The requirements of the Minister's General Directions have had no impact on the decision by the Commission. However the implementation of the Commission's decision is subject to the General Directions issued by the Minister on 10 April 1996. Action is now being taken to provide the Special Auditor with the required documentation for the Special Audit to be undertaken. The Commission is now considering the response by the NSW ALS to the show cause letter issued by the Commission. Any decision by the Commission on further funding to the NSW ALS would be contingent on, among other things, a satisfactory response to the show cause letter. Yours sincerely ...'
The question for the Court to determine is whether the directions notified on 10 April 1996 are within the power conferred by s. 12(1) of the Act. More specifically, the issue is whether the April directions come within the expression 'general directions'. The two later directions are consequential on the validity of the April directions.
In order to decide this matter it is not necessary, nor is it appropriate, to approach the question with any presumption that the power to give directions should be read down so as not to unduly encroach on any reserved discretionary powers of ATSIC.
The question on this application is a narrow one in that it is purely one of interpreting the words used in s. 12(1). The section refers to 'general directions' and not simply to 'directions'. It is therefore necessary to give content to the adjective 'general'. On a normal and literal reading the word is one which is used in contradistinction to 'particular', 'precise' or 'specific'.
A similar but not identical question was considered by Davies J. in
Aboriginal Development Commission v. Hand (1988) 15 ALD 410. That case
concerned a proposal by the respondent Minister to form ATSIC, which at that
time was proposed to be established to take
over functions performed by the
Aboriginal Development Commission. The Aboriginal Development Commission was
established by the Aboriginal Development Commission Act 1980 (Cth). The
Aboriginal Development Commission's function, in that case, was to further the
economic and social development of Aborigines
in a number of respects. It had
statutory power to co-operate with other persons and organisations and to
collect information. The
Minister gave directions to the applicant, expressed
to be pursuant to
s. 11 of the Aboriginal Development Commission Act
(Cth), as follows:
'(1) The Commission shall co-operate with the Minister for Aboriginal Affairs, the Department of Aboriginal Affairs and all other bodies in respect of which the Minister has Ministerial responsibility in relation to the proposed reorganisation of the Department and other bodies in respect of which the Minister has ministerial responsibility required to facilitate the formation of the proposed Aboriginal and Torres Strait Islander Commission. (2) The Commission shall provide to the Minister, the Secretary of the Department or the Chairman of the Aboriginal and Torres Strait Islander Commission Task Force such information as they may reasonably require from the Commission to facilitate the formation of the Aboriginal and Torres Strait Islander Commission. ....'
Section 11(1) of the Aboriginal Development Commission Act 1980 (Cth) was in identical terms to s. 12(1) of the Act presently before the Court.
It was submitted by the Aboriginal Development Commission in that case that the direction to co-operate was invalid. Davies J held that the direction was a 'general direction' within the meaning of s. 11(1). He said at 414:
'... The adjective 'general' indicates that the direction must be one which is not directed merely to a particular case or to a particular decision but is one to be applied generally. In this respect, a general direction is similar to a binding guideline. It sets the structure of activity or decision making. However, both a guideline and a general direction may be more or less specific having regard to the terms which it uses and the concept which it conveys. ...
Section 11(1) is an ample provision and reflects the point that, though the Commission is a statutory authority of the Commonwealth, the Minister has overall control of and responsibility for it. (Emphasis added).'
At 415, he said:
'Direction (2) is a general direction for it is not directed to a decision in a particular case or even to the content of views which may be expressed by the Commission or by members or staff of the Commission. The direction is no more than a direction as to a course of activity which is empowered by s. 9. The direction gives more detail and specificity to the general power, but that is of the nature of a general direction. A general direction may require the Commission to undertake an activity of a specified character. What a general direction may not do is direct its attention to a specific case arising for decision before the Commission.' (Emphasis added)
A direction given in the context of 'co-operation' and requiring the provision of information to assist in the formation of a statutory body is different from a direction given in the context of deciding an application for funding, such as the present.
In the area of ministerial control of discretion there is an important distinction between a guideline and a direction as to the exercise of such a discretion. The distinction is not always clear cut. In some instances what are referred to as 'guidelines' are in effect mandatory directions as to the outcome. See Smoker v. Pharmacy Restructuring Authority [1994] FCA 1487; (1994) 53 FCR 287 at 300-301 on the important distinction between a guideline and a direction in relation to the exercise of such a discretion.
It is settled law that an authority entrusted with a discretion should not, in purported exercise of its discretion, act under the dictation of another body or person. See De Smith, Woolf and Jowell, Judicial Review of Administrative Action, (1995) 5th ed, at 373-4. The authors say:
'... it is enough to show that a decision which ought to have been based on the exercise of independent judgment was dictated by those not entrusted with the power to decide, ... ... in some contexts the policy of a Minister ... may be a relevant factor in weighing those considerations; but this will not absolve them from their duty to exercise their personal judgment in individual cases, unless explicit statutory provision has been made for them to be given binding instructions by a superior, ...'
The authors refer to the decision of the Court of Appeal in Laker Airways Ltd v. Department of Trade [1976] EWCA Civ 10; [1977] QB 643. See especially the observations of Lord Denning MR as to the difference between guidance and directions at 699-700; H W R Wade, Administrative Law (1988) 6th ed at 369-370 as to directions from an outside body as to the exercise of a discretion, and an article by I Zamir, Administrative Control of Administrative Action, 57 California Law Review, 1969, 866 at 899-901, where he discusses control by way of direction.
Generally, but provided due regard is paid to the nature, scope and purpose of the Act and the context in which the power is placed, it would be open for the Minister under s. 12(1) to give a direction as to matters which must be taken into account by ATSIC. Also subject to these qualifications it would be open to the Minister to set up a procedural process which should be followed before a decision is made. Indeed, although perhaps more arguably, it may be within power to give directions as to priorities to be considered or applied when allocating funds. However, the section would not extend to issuing a command to ATSIC as to how it must determine the outcome of a particular application by a specific body. This latter statement accords with the reasons of Davies J in Aboriginal Development Commission v. Hand (supra).
Determination of the question whether the present directions are within s. 12(1) requires an examination of the nature and effect of the April directions. The directions are given with respect to the function of the making of a grant for the purpose of furthering the social, economic and cultural development of Aboriginal persons or Torres Strait Islanders, pursuant to s. 14 of the Act.
The first direction operates at a stage in the process of allocation of funds when ATSIC is about to decide that it will make a grant to a specific identified body. This is apparent as the direction aims to ensure that ATSIC, prior to the grant, provides documents and information, as to the conduct of the applicant body, to the Special Auditor. The prohibition is directed to delay a pending or anticipated decision to make a grant to this particular body until such time as the Special Auditor has been given the information and material referred to in the direction.
In addition to the furnishing of information and material, ATSIC is enjoined not to make a grant to the body under consideration until three weeks have expired. No doubt this is to ensure that there is a sufficient time for proper consideration to be given by the Special Auditor to the information furnished.
The direction does not specify or indicate the qualifications, experience or other characteristics or requirements by reference to which the Special Auditor is to be selected.
There is an express prohibition in this direction on a grant or loan of money to the applicant body, in respect of which information has been furnished in accordance with the first direction, where the Special Auditor has notified ATSIC and the Minister that the body under consideration by the Special Auditor is not a fit and proper body to receive public money.
By this direction the Minister commands ATSIC, once the procedure of obtaining information has been completed and there has been consideration of that information, not to make a grant to a specific body if the Special Auditor notifies ATSIC and the Minister of the body's lack of fitness.
This is to be contrasted with a situation where the direction requires ATSIC to take into account whether the body is objectively a fit and proper body to receive public money. The present case is not one where the direction is that the loan or grant shall not be made to a body that is in fact not a fit and proper body. The prohibition imposed by this direction is that there shall be no grant or loan to a body which the Special Auditor subjectively considers is not a fit and proper body. This is implicit in the reference to notification. This is quite different from setting down objective guidelines which ATSIC must consider, because it constricts the power and discretion of ATSIC to such a degree that it can only make a grant to an applicant, which in the opinion of the Special Auditor, formed on an unspecified grounds, is fit to receive public moneys.
In effect, the entity designated as a Special Auditor, is given power to preclude an exercise of discretion by ATSIC in respect of a particular applicant, unless the Minister considers in his unfettered and absolute discretion, that it is appropriate to relax the prohibition.
With respect to the use of subjective satisfaction, rather than the prescription of objective criteria, see HWR Wade, Administrative Law, 6th ed, 1988 at 445ff.
It is not expressed as a requirement that ATSIC be satisfied that the recipient is fit and proper but rather the direction calls for the formation of an opinion by an entity, interposed by the direction between ATSIC and the applicant, which determines on unspecified grounds whether the applicant is fit and proper.
It is submitted for the Minister that the direction when read as a whole sets up a procedural process designed to apply to proposed grants generally and that this general procedure has to be followed in making any determination in a specific case. Further, it is said that, in their nature, all general directions must ultimately have a specific effect in a particular case but this does not prevent them being properly described as general directions.
However, the directions in this case travel beyond the setting up of a general process and confer a power and discretion on the Special Auditor to override the discretion of ATSIC in respect of particular applicants. In so doing, the direction goes beyond the description of a general direction and in some cases has the result of requiring a particular outcome, namely, refusal of the particular application.
Accordingly, direction 2 cannot be described a 'general direction' within the meaning of s. 12(1) and therefore is beyond power.
Direction 3 is simply procedural and consequential and is based on the earlier two directions.
Section 12(5) of the Act requires a copy of any general direction which has been given to be tabled and laid before each House of Parliament within 15 sitting days. It is said that this provides an important safeguard to ensure that the directions are reviewed as they are given the widest publicity and are exposed to political comment and debate. While the directions are not disallowable instruments within the meaning of s. 46A of the Acts Interpretation Act 1901, (Cth), the requirement does provide a significant practical safeguard.
While the above consideration may be borne in mind, it is of peripheral relevance only and does not affect the outcome in the present case.
I have considered whether parts of the April directions are severable. However, having regard to the interdependence of the directions and the central importance of direction 2, the effect of a determination that direction 2 is invalid means that both directions must fall.
Direction 1 requires the furnishing of documents to the Special Auditor and the lapse of a period of time while the Special Auditor considers the material furnished. This becomes unnecessary if direction 2 is invalid.
Direction 3 is plainly consequential on the efficacy of direction 2 and cannot be severed and is therefore also invalid.
The amended application seeks a declaration that the Minister does not have power to direct the Aboriginal and Torres Strait Islander Commission as to what decisions it can make or to appoint any person to approve, deny or vary decisions of the Aboriginal and Torres Strait Islander Commission.
In my view, a general declaration in such wide terms is not appropriate. The
appropriate order is that the directions given by the
Minister on 10 April 1996
are not 'general directions' within the meaning of s. 12(1) of the
Aboriginal and Torres Strait Islander Commission Act 1989 (Cth) and are
therefore invalid because they are beyond power.
The respondent should pay the applicant's costs.
Sackville J
The facts have been set out in the judgment of Tamberlin J. It is not necessary to repeat them.
The
issue in this case is a narrow one. It is whether the direction given by the
Minister to the Aboriginal and Torres Strait Islander
Commission ('the
Commission'), on 10 April 1996, is a 'general direction' for the purposes of s.
12(1) of the Aboriginal and Torres Strait Islander Commission Act 1989
(Cth) ('the Act'). If it is not, the direction is invalid, since the power
implicitly conferred on the Minister by s. 12(1) is confined to 'general
directions given to [the Commission] by the Minister in writing'.
In
my opinion, Mr Walker SC, on behalf of the Minister, correctly submitted that
the question cannot be resolved simply by applying
a presumption that the
phrase 'general directions' in s. 12(1) should be read down, in order to
preserve to the Commission a pre-determined zone of autonomous decision-making,
free from Ministerial
interference. It is true that the objects of the Act
include promoting the development of self-management and self-sufficiency among
Aboriginal persons and Torres Strait Islanders: s. 3(b). The statutory objects
also include ensuring maximum participation by Aboriginal persons and Torres
Strait Islanders in the formulation
and implementation of government policies
that affect them (s. 3(a)). But the power to make general directions, which s.
12(1) implicitly confers on the Minister, necessarily requires the Commission
to exercise its own powers and perform its own functions
in conformity with
those general directions. To that extent the Commission's decision-making
autonomy is circumscribed. Moreover,
as Mr Walker pointed out, the Act provides
other mechanisms for Ministerial controls over the expenditure of the
Commission. These include the requirement in s. 67(5) of the Act that the
Commission is not to exceed specified limits in spending on matters covered by
estimates approved by the Minister.
Nonetheless,
the question remains as to whether the particular direction given in the
present case is a general direction for the
purposes of s. 12(1) of the Act. In
Aboriginal Development Commission v. Hand (1988) 15 ALD 410 (FCA/Davies
J.), at 413-414, Davies J. accepted that there is a distinction between an
unfettered Ministerial discretion to give directions and
a power to give
'general directions'. As his Honour said (at 414), the adjective 'general'
indicates that the direction:
'must be one which is not directed merely to a particular case or to a particular decision but is one to be applied generally. It sets the structure of activity or decision-making.'
In some cases the dividing line will not be difficult to draw. For example, a Ministerial direction requiring the decision-maker to accept or reject an application for funds made by a specified applicant could hardly be described as a 'general direction'. In other cases, however, the classification of a direction as general or otherwise will not be quite so straightforward.
The starting point is the language of the direction in question. The terms of the direction in the present case are as follows:
[1] The Commission shall not make a grant or loan of money to any body corporate or unincorporated body unless the Commission has made the body's most recent financial statements, acquittal documentation and other relevant information held by the Commission relating to breaches of grant or loan conditions available to a person to be appointed by the Minister for Aboriginal and Torres Strait Islander Affairs and known as the 'Special Auditor' and three weeks has elapsed since the relevant material was made available.
[2] The Commission shall not make a grant or loan of money to a body corporate or unincorporated body if the Special Auditor has notified the Commission and the Minister for Aboriginal and Torres Strait Islander Affairs that the body is not a fit and proper body to receive public money unless the Minister for Aboriginal and Torres Strait Islander Affairs notifies the Commission that, notwithstanding the notification by the Special Auditor, the grant or loan should be made.
[3] If the Special Auditor has notified the Commission and the Minister for Aboriginal and Torres Strait Islander Affairs, within the three week period referred to in paragraph 1 above that the Special Auditor is of the opinion that further consideration of whether the body is a fit and proper body to receive public money is warranted and specifying a period of not more than three months for such further consideration, the Commission shall not make a grant or loan of money to a body corporate or unincorporated body within the period specified in the notice.'
Paragraph 1 of the direction imposes what might be characterised as a procedural requirement. It forbids the Commission from making a grant to a body unless the Commission makes available that body's most recent financial statements and documentation relating to breaches of grant conditions to the 'Special Auditor', and three weeks has elapsed since the material is made available. Paragraph 2 goes further. It forbids the Commission from making a grant to a body if the Special Auditor has notified the Commission and the Minister that the body 'is not a fit and proper body to receive public money'. This is subject to the Minister's power to notify the Commission that, despite the Special Auditor's notification, the grant should be made. The circumstances in which the Minister might override the Special Auditor's notification (which, by hypothesis, certifies that the body is not fit and proper to receive public money) are not elucidated.
Clearly enough, paragraph 2 of the direction is intended to prevent the Commission from making a grant to a particular organisation in circumstances where the Commission otherwise would make, or is contemplating making, a grant under s. 14(1) of the Act. Section 14(1) empowers the Commission to make a grant of money to a body corporate or unincorporated body 'for the purpose of furthering the social, economic or cultural development of Aboriginal persons or Torres Strait Islanders'. Any proposed grant to a body corporate or an unincorporated body can be made only if the Commission forms the view that it will serve the specified purpose. The Commission is also bound to exercise its power under s. 14(1) in accordance with any written decision-making principles which it has formulated pursuant to s. 22(1) of the Act: see s. 22(2).
The effect of the Ministerial direction is that, if the Special Auditor gives the notification contemplated by paragraph 2 in relation to a particular body, the Commission cannot make a grant to that body. This is so regardless of what view the Commission forms about the importance of the grant to further the purpose specified in s. 14(1). Furthermore, the body is ineligible to receive a grant regardless of the Commission's view (as will presumably be the case) that the grant complies with the decision-making principles and that the body is an appropriate recipient of public moneys.
The fact that the Ministerial direction overrides the judgment of the
Commission does not of itself establish that the direction
is other than a
'general direction' for the purposes of s. 12(1). It is necessary to consider
the way in which the direction operates and, in particular, the process by
which a body becomes ineligible
to receive a grant from the Commission. The
ineligibility of the body flows from a process having the following
characteristics:
' the relevant judgment is made, not by the Commission, but by the Special Auditor;
' the judgment requires the Special Auditor to assess the qualities (or lack of them) of a particular body;
' the judgment is to be made, not by reference to measurable or objective criteria (such as whether the body has filed audited accounts), but by the Special Auditor's assessment of the fitness and propriety of the particular body to receive public money.
In my opinion, a direction which operates in this way cannot be classified as a general direction relating to the Commission's functions and powers. It is true that the direction establishes a procedure which can be applied to more than one potential recipient of a grant from the Commission. But the procedure contemplates that a decision-maker, other than the Commission, will determine that a specific body is ineligible to receive a grant, by reason of a finding that the potential grantee is a fit and proper body to receive public money.
There is little doubt that the power to give a general direction encompasses a direction requiring the Commission to take into account certain factors (not outside the scope of the Act) in making grants. An example is a direction requiring the Commission to consider whether a potential recipient of a grant has complied with specified standards of financial accountability. I am also prepared to assume, without deciding, that the Minister can validly give a direction preventing the Commission from making grants to bodies that fail, for example, to comply with minimum objective standards of financial accountability or reporting.
But the direction in the present case is different. In my opinion, its vice is
that it confers on a particular decision-maker (not
being the Commission) a
power to render a particular body ineligible to receive a grant, because of a
judgment made by the decision-maker
about the fitness and propriety of that
particular body to receive public money. It is not a direction that sets the
structure for
decision-making by the Commission. It establishes a procedure for
a third party to make decisions about the eligibility of individual
bodies, by
reference to a judgment formed about each body. The fact that the Special
Auditor might exercise the power in relation
to more than one potential
recipient of a grant from the Commission does not make the direction a general
one within the meaning
of s. 12(1) of the Act.
The Statutory Objectives
In my view, this conclusion is consistent with the objectives of the Act. As I
have said, the question of construction cannot be resolved by assuming the
existence of a predetermined zone of autonomous
decision-making reserved to the
Commission. Equally, however, the phrase 'general direction', as used in s.
12(1) , takes its content having regard to the scope and purpose of the
legislation of which it forms part: cf. Water Conservation and Irrigation
Commission (New South Wales) v. Browning [1947] HCA 21; (1947) 74 CLR 492, at 502-505, per
Dixon J; O'Sullivan v. Farrer [1989] HCA 61; (1989) 168 CLR 210, at 216- 217, per Mason
CJ, Brennan, Dawson and Gaudron JJ.
I have previously referred to the express objects of the Act. It is, in my
opinion, appropriate to take those objects into account in determining whether
a direction can be classified as 'general'
and therefore as authorised by s.
12(1) of the Act. The express statutory objects are to promote self-management,
self-sufficiency and participation by Aboriginal persons and Torres
Strait
Islanders. These strongly suggest that caution should be exercised before
classifying as 'general' a direction establishing
a procedure for a third party
to declare individual bodies ineligible to receive grants from the Commission,
especially where the
third party is to exercise a judgment as to whether the
particular body is fit and proper to receive public money.
Severability
Mr Walker submitted, without elaborating the point, that the paragraphs of the direction were severable and that the invalidity of paragraph 2 should not lead to the invalidity of paragraphs 1 and 3. In my view both paragraphs 1 and 3 are subsidiary to paragraph 2 and contemplate the existence of the Special Auditor's power to notify the Commission that a particular body is not a fit and proper body to receive public funds. I think that the invalidity of paragraph 2 carries with it the conclusion that paragraphs 1 and 3 of the Ministerial direction must also fall.
Relief
Mr Corr conceded that the declaratory relief sought in the application was not
framed appropriately. A declaration should be made
that the Ministerial
direction made by the Minister for Aboriginal and Torres Strait Islander
Affairs on 10 April 1996 is not a general
direction for the purpose of s. 12(1)
of the Act and is of no force or effect. The Minister should pay the
applicant's costs.
See also (1996) 139 ALR 577. l
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