Aerolineas Argentinas v Federal Airports Corporation
[1995] FCA 1126
•21 DECEMBER 1995
CATCHWORDS
FEDERAL AIRPORTS CORPORATION - functions - power to fix aeronautical charges under s 56 Federal Airports Corporation Act 1986 (Cth) - whether determination made under s56 administraive or legislative
ADMINISTRATIVE LAW - COLLATERAL CHALLENGE - whether validity of administrative decision can be challenged in proceedings for recovery of money had and received - whether validity of administrative decision made under an enactment can only be challenged in proceedings under the Administrative Decisions (Judicial Review) Act 1977 (Cth)
JUDICIAL REVIEW - whether application made in a reasonable time - principles to be applied in determining whether extension should be granted
JURISDICTION - special federal matter - proceedings transferred from Supreme Court NSW to Federal Court
Federal Airports Corporation Act, 1986 (Cth)
Administrative Decisions Judicial Review Act (1977) (Cth)
Sargood Bros. v The Commonwealth (1910) 11 CLR 258
Commonwealth v Grunseit (1943) 67 CLR 58
Arthur Yates and Co Pty Limited v The Vegetable Seeds Committee & Ors (1946) 72 CLR 37
Posner v Collector for Interstate Destitute Persons (Vic.) (1946) 74 CLR 461
Mason v New South Wales (1959) 102 CLR 108
Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51
Evans v Friemann & Ors (1981) 35 ALR 428
Ansett Transport Industries (Operations) Pty Limited v Wraith (1983) 48 ALR 500
Hunter Valley Developments Pty Limited v Cohen (1984) 3 FCR 344
Woss v Jacobsen & Anor (1985) 11 FCR 243 344
Pearce v Button (1986) 65 ALR 83
Queensland Medical Laboratory & Ors v Blewett & Ors (1988) 84 ALR 615
Comptroller-General of Customs & Anor v Kawasaki Motors Pty Ltd (No. 2) (1991) 32 FCR 243
Poletti v Commissioner of Taxation (1994) 52 FCR 154
Aerolineas Argentinas & Ors v Federal Airports Corporation (1993) 32 NSWLR 595
Cooper v Wandsworth Board of Works (1863) 14 CB (NS) 180
DPP v Head [1959] AC 83
O'Reilly v Mackman [1983] 2 AC 237
Bugg v Director of Public Prosecutions [1993] QB 473
Woolwich Equitable Building Society v Inland Revenue Commissioners (No. 2) [1993] AC 70
J.W. Hampton Jr & Co v United States (1928) 276 US 407
De Smith, Judicial Review of Administrative Action, 4th Ed
The Concept of a Legal System, 1980, Professor Raz
Delegated Legislation, 1977 Professor Pearce
Wade and Forsyth Administrative Law, 7th Ed,
Rubinstein: Jurisdiction and Illegality 1965
P.P. Craig, Administrative Law, 3rd Ed
Emery: Collateral Attack - Attacking Ultra Vires Action Indirectly in Courts and Tribunals (1993) 56 MLR 643
Committee on Ministers' Powers (the Donoughmore Committee,
AEROLINEAS ARGENTINAS AND ORS v FEDERAL AIRPORTS CORPORATION
No. NG978 of 1993
Beazley J
21 December 1995
Sydney
IN THE FEDERAL COURT OF AUSTRALIA )
) No. NG978 of 1993
NEW SOUTH WALES DISTRICT REGISTRY )
)
GENERAL DIVISION )
BETWEEN:AEROLINEAS ARGENTINAS
First Applicant
AIR CALEDONIE
INTERNATIONAL
Second Applicant
AIR FRANCE
Third Applicant
AIR LANKA
Fourth Applicant
AIR MAURITIUS
Fifth Applicant
AIR NAURU
Sixth Applicant
AIR NEW ZEALAND LIMITED
Seventh Applicant
AIR NIUGINI
Eighth Applicant
AIR PACIFIC LIMITED
Ninth Applicant
ALITALIA LINEE AEREE
ITALIANE S.P.A.
Tenth Applicant
ALL NIPPON AIRWAYS CO
LIMITED
Eleventh Applicant
ANSETT TRANSPORT INDUSTRIES
(OPERATIONS) PROPRIETARY
LIMITED
Twelfth Applicant
AUSTRALIAN AIRLINES LIMITED
Thirteenth Applicant
BRITISH AIRWAYS PLC
Fourteenth Applicant
CANADIAN AIRLINES
INTERNATIONAL LIMITED
Fifteenth Applicant
CATHAY PACIFIC AIRWAYS LTD
Sixteenth Applicant
CONTINENTAL AIRLINES INC.
Seventeenth Applicant
EAST WEST (AIRLINES)
OPERATIONS LTD
Eighteenth Applicant
P.T. GARUDA INDONESIA
Nineteenth Applicant
JAPAN AIRLINES CO LIMITED
Twentieth Applicant
K L M ROYAL DUTCH AIRLINES
Twenty First Applicant
KOREAN AIR
Twenty Second Applicant
LAUDA-AIR
Twenty Third Applicant
LUFTHANSA GERMAN AIRWAYS
Twenty Fourth Applicant
MALAYSIAN AIRLINE SYSTEM
SDN BERHAD
Twenty Fifth Applicant
MIDDLE EAST AIRLINES
Twenty Sixth Applicant
NORTHWEST AIRLINES INC
Twenty Seventh Applicant
OLYMPIC AIRWAYS S.A.
Twenty Eighth Applicant
PHILIPPINE AIRLINES INC
Twenty Ninth Applicant
QANTAS AIRWAYS LTD
Thirtieth Applicant
SINGAPORE AIRLINES LTD
Thirty First Applicant
SOUTH AFRICAN AIRWAYS LTD
Thirty Second Applicant
THAI AIRWAYS INTERNATIONAL
LTD
Thirty Third Applicant
UNITED AIRLINES INC
Thirty Fourth Applicant
AND:FEDERAL AIRPORTS CORPORATION
Respondent
CORAM:BEAZLEY J
PLACE: SYDNEY
DATE: 21 December 1995
REASONS FOR JUDGMENT
BEAZLEY J: In June 1991, the respondent made a determination under s 56 of the Federal Airports Corporation Act 1986 (Cth) (the FAC Act) imposing security charges in respect of certain aircraft landings at various Federal
airports in Australia (the June 1991 determination). The applicant airlines paid the security charges from the date of their imposition until December 1993. On 26 August 1993, the airlines commenced proceedings in the Supreme Court of New South Wales to recover these payments (the recovery proceedings). A central issue in the recovery action is the validity of the June 1991 determination.
The parties have requested the court to determine as a preliminary issue the question whether the applicants are entitled to bring the recovery proceedings without having challenged the June 1991 determination in appropriately constituted administrative law proceedings. The answer to this question depends upon whether a determination under s 56 of the FAC Act is an administrative or legislative act. If the determination is administrative in character, a further question arises under s 11 of the Administrative Decisions (Judicial Review) Act, (1975) (Cth) (ADJR Act) which prescribes the time in which ADJR proceedings must be commenced.
As the question whether the determination was an administrative or legislative act is essentially a matter of construction of s 56 of the FAC Act, it is convenient at this point to consider the provisions of that Act.
Statutory Scheme of the FAC Act
The FAC Act establishes the Federal Airports Corporation (the Corporation) as a body corporate with perpetual succession and a common seal. It may sue and be sued in its corporate name: s 5. There is to be a Board of the Corporation: s12A. The Corporation's functions include "to operate Federal airports": s 6(a); and extend to providing, or arranging for the provision of, airport security at, or in relation to, Federal airports: s 8(1)(ba). "Airport security" is defined to mean a combination of measures and human and material resources intended to safeguard the security of aircraft, persons and property at those airports: s 3. The functions of the Corporation do not extend to the provision of rescue, fire-fighting or search and rescue services relating to aircraft or of facilities for those services: s 8(2)(e). The Corporation may only perform its functions to the extent that they are not in excess of the functions that may be conferred on it by virtue of any of the legislative powers of the Parliament: s 7(1). The Corporation is to endeavour to perform its functions in the manner specified, including in a manner that ensures the safety of persons using airports: s 7(2)(b).
The Corporation may fix aeronautical charges in respect of the use by an aircraft of a Federal airport or in respect of services or facilities provided by the Corporation: s 56. It is necessary to refer to the relevant terms of the section.
"56.(1)In this section:
"aeronautical charge" means a charge for, or in respect of:
(a)the use by an aircraft of a Federal airport; or
(b)services or facilities provided by the Corporation;
and, without limiting the generality of the foregoing, includes:
(c)a charge for the landing or parking of an aircraft at a Federal airport;
(d)a charge relating to the embarkation or disembarkation of aircraft passengers at a Federal airport; and
(e)a charge relating to the handling of cargo carried on an aircraft;
...
(2)Subject to this section, the Corporation may, from time to time, make determinations fixing or varying aeronautical charges and specifying the persons by whom the charges are payable and the times when the charges are due and payable.
(2A)This section has effect subject to the Prices Surveillance Act 1983.
(3)The Corporation shall not make a determination under sub-section (2) unless it has notified the Minister of the proposed determination.
...
(5)The Minister may, within [a period of 30 days as prescribed by 56A] give notice in writing to the Corporation disapproving the proposed determination.
...
(7)The Corporation may make a determination only if:
(a)the Minister has approved it; or
(b)the period within which the Minister may give to the Corporation a notice under subsection (5) has expired without the Minister having given such a notice.
...
(7A)The making of a determination shall be made public in such manner as the Corporation considers appropriate.
(8)Where the liability of a person to pay an aeronautical charge is not discharged within 28 days after the day on which that charge became due and payable, that person is, unless the Corporation exempts that person from the operation of this subsection in relation to that charge, liable to pay to the Corporation, by way of penalty, in addition to the amount of that charge, an amount calculated upon the amount of that charge remaining unpaid at the rate of 1.5%, or such other amount as is prescribed, for each month or part of a month for which that amount is unpaid to be computed from the day on which that charge became due and payable and to be compounded.
(9)The following amounts may be recovered by the Corporation as debts due to the Corporation:
(a)an aeronautical charge that is due and payable under this Act; and
(b)an amount payable by way of penalty under subsection (8).
(10)An aeronautical charge shall not be fixed at an amount that exceeds the amount that is reasonably related to the expenses incurred or to be incurred by the Corporation in relation to the matters in respect of which the charge is payable and shall not be such as to amount to taxation."
The Corporation's Board may make by-laws: s 72. Relevantly, that section provides:
"72.(1) The Board may make by-laws, not inconsistent with this Act or the regulations, prescribing matters:
(a)required or permitted by this Act to be prescribed by the by-laws; or
(b)necessary or convenient to be prescribed by the by-laws for carrying out or giving effect to this Act;
and, in particular, without limiting the generality of the foregoing, by-laws making provision for, or with respect to:
(c)the terms and conditions governing the provision to, or use by, any person, or class of persons, of services provided by, or facilities owned or operated by, the Corporation;
(d)charges, not being aeronautical charges within the meaning of section 56 or charges made under, or because of, a contract, a lease, a licence, or an authority, in writing under the common seal of the Corporation;"
The June 1991 determination
In June 1991, the Corporation made the following determination:
"In accordance with Section 56 of the Federal Airports Corporation Act 1986, the Federal Airports Corporation makes the following determination.
This determination shall operate on and from 1 July, 1991 and amends the determination made in March, 1991 which commenced to operate on and from 1 April, 1991.
The determination made in March, 1991 is hereby amended by inserting the following paragraphs immediately after paragraph 5 of that determination:
"5AIn addition to the charges set out in paragraphs 3, 4 and 5 above, a charge per landing at Brisbane (Eagle Farm), Sydney (Kingsford-Smith), Melbourne (Tullamarine), Adelaide, Perth, Hobart, Coolangatta, Launceston, Darwin, Alice Springs and Townsville Airports of $0.60 per 1,000 kg of aircraft weight and pro-rata for part of 1,000 kg for all fixed wing aircraft weighing more than 20,000 kg.""
The March 1991 determination, which the June 1991 determination amended, was also made under s 56 of the FAC Act, and imposed various charges upon aircraft landing at specified airports.
The purpose of the June 1991 determination was to recover the costs of providing counter terrorist first response at certain airports by the government agency, the Australian Protection Service. The airlines opposed the imposition of the security charge, considering that the Government should bear financial responsibility for the protection of airports against terrorist activities. This view was based, in part at least, on the circumstance that airlines and airline passengers are not the sole users of airports and upon the further circumstance that the government or state is likely to be the target of terrorist activity, and not any particular airline.
The applicants paid a total of $24,931,290.64 by way of charges imposed by the June 1991 determination between 1 July 1991 and 31 May 1993. Further payments were made by the airlines pursuant to charges imposed by the respondent between 30 June 1993 until 31 December 1993. The payments were not made under protest and no indication was given that there would be a legal challenge to the determination until August 1993.
Challenge to the June 1991 determination
On 26 August 1993 the applicant commenced proceedings against the respondent in the Supreme Court of New South Wales (the Supreme Court proceedings) claiming an order that the defendant repay an amount of approximately $25 million, being the monies the applicants had paid to the respondent under the June 1991 determination. The respondent contended that the claim made by the applicants was a special Federal matter within the meaning of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) and applied to have the Supreme Court proceedings transferred to this Court. On 19 November 1993, Ireland J ordered that the proceedings be transferred: see Aerolineas Argentinas & Ors v Federal Airports Corporation (1993) 32 NSWLR 595. In making the order, his Honour concluded at 617 that:
"the determination by the Corporation was...an "administrative decision made under an enactment" within the meaning of that phrase in the ADJR Act, and the proceedings envisaged under the statement of claim filed by the plaintiffs would necessarily involve "review by way of" the relief listed in s9 of the ADJR Act. I therefore find that this court does not have jurisdiction to hear the matter."
On 24 December 1993 the applicants filed a notice of motion in this court seeking an order that they be granted an extension of time to apply for an order of review of the June determination pursuant to s 11 of the ADJR Act. However, the applicant's purpose in filing the motion was to protect their position as they maintain their stance that they are entitled maintain bring the recovery proceedings without challenging the determination under the ADJR Act.
The separate question
The parties did not agree upon the precise terms of the separate question. The applicants formulated the question thus:
"In circumstances where:
(a) the Plaintiffs have paid to the Defendant certain aeronautical charges
(b) the Plaintiffs have paid the said charges periodically from July 1991 onwards
(c) the Defendant asserts that the said charges were validly imposed pursuant to a determination of the defendant made in June 1991
(d) the Plaintiffs assert that the said determination is invalid
is it legally permissible for the plaintiffs to have brought an action in August 1993 to recover the said charges, without having first obtained an order of the Court under s 5 Administrative Decisions (Judicial Review) Act setting aside or declaring void the said determination?"
The respondent contended that the real question to be determined was whether the applicants needed an extension of time within which to bring an application for an order of review of the June 1991 determination. The respondent's formulation of the separate question was:
"Can the applicant succeed in obtaining the relief they seek in these proceedings without an extension of time pursuant to s 11 of the Judicial Review Act?"
Notwithstanding these different formulations, both parties agreed that however the preliminary question was framed, the issue for determination was whether the applicants could pursue the recovery proceedings without first, or at least simultaneously, challenging the validity of the determination under properly constituted administrative law proceedings. For this purpose it was necessary to decide, in the first instance, whether a s 56 determination involved the exercise of legislative or administrative power.
If such challenge is a pre-requisite to the determination of the recovery proceedings, there is no dispute that the appropriate proceedings are for an order for review under the ADJR Act.
Counsel for the applicants submitted that two further questions arise on the determination of the separate question. First, even if the determination was properly characterised as delegated legislation and the result of an exercise of legislative power, was it susceptible to review under the ADJR Act? Secondly, upon the assumption that the determination is of an administrative character, did the ADJR Act operate to
eliminate the possibility of challenging the validity of a decision of an administrative character, either directly or collaterally, other than by proceedings under the ADJR Act ?
Was the June 1991 determination legislative or administrative in character?
It is generally said that the starting point for the determination of whether a provision or rule is of a legislative or administrative nature is to ask whether the provision or rule is of general application, in which case it is likely to be legislative, or whether it prescribes the application of a general rule to a particular circumstance, in which case it is likely to be administrative: see Committee on Ministers' Powers 1932 (the Donoughmore Committee). This general norm is expressed by De Smith, Judicial Review of Administrative Action, 4th ed at 71 in these terms:
"[A] distinction often made between legislative and administrative acts is that between the general and the particular. A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases; an administrative act cannot be exactly defined, but it includes the adoption of a policy, the making and issue of a specific direction, and the application of a general rule to a particular case in accordance with the requirements of policy or expediency or administrative practice."
This distinction is well recognised. In J.W. Hampton Jr & Co v United States (1928) 276 US 394 at 407, the United States Supreme Court stated:
"The true distinction, therefore, is, between the delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an authority or discretion as to its execution, to be exercised under and in pursuance of the law."
This test has been applied in Australia. It was referred to by Williams J at first instance in Commonwealth v Grunseit (1943) 67 CLR 58 at 66, and by Latham CJ at 82 on appeal. It was again referred to by Williams J in Arthur Yates and Co Pty Ltd v The Vegetable Seeds Committee & Ors (1946) 72 CLR 37 at 54.
In Commonwealth v Grunseit the question arose whether the provisions of a regulation of the National Security (Aliens Service) Regulations No39-1942, was of an executive or legislative character. Latham CJ stated at 82 that:
"The general distinction between legislation and the execution of legislation is that legislation determines the content of a law as a rule of conduct or a declaration as to power, right or duty, whereas executive authority applies the law in particular cases."
However, as Latham CJ noted in Arthur Yates, the distinction is one that is easy to state but is sometimes difficult to apply. His Honour stated at 66:
"...where a law gives power to some person or body to give directions in order to put the law into operation, it is not always a simple matter to apply the distinction [between legislative and administrative acts].
Persons using the highways must obey the directions of traffic constables, and they may be punished for failing to do so. But no one could say that the constable makes
a law when he stops traffic or orders it forward. A military officer may give orders to soldiers under his command, an employer may give "lawful orders" to his employee, a court may give directions to parties in relation to proceedings before it. None of these orders or directions are laws, though disobedience to any of them produces legal consequences."
In Arthur Yates, the Vegetable Seed Committee established under the National Security (Vegetable Seeds) Regulations made orders directed to all vegetable seed merchants, prohibiting the sale of various specified vegetable seeds, except with the approval of the committee. The regulations provided that an order could be made, directed to any person, or person specified in the order, or to persons generally. It was held that the regulations put the Committee in complete executive control of the business of growing and selling vegetable seeds and that the orders were administrative directions given in the exercise of a power conferred by law.
Dixon J stated at 84:
"The power to make the orders forms part of the total authority given to an administrative organisation of a subordinate character."
His Honour previously noted at 79 that if it was necessary to adhere to the:
"old dichotomy of non-judicial governmental power into executive and legislative ... it would be probably necessary to dissect the power and allot some of its content to one head and some to the other".
However, his Honour considered that such dissection might only be necessary for limited or specific purposes, for example, for compliance with the statutory requirement that legislative provisions be tabled before Parliament. See also Crowe v The Commonwealth (1935) 54 CLR 69; Minister for Industry and Commerce v Tooheys Ltd (1982) 60 FLR 325 at 331; Hamblin v Duffy (1981) 55 FLR 228.
However, the general norm referred to in the authorities and by the commentators is only a starting point for determining whether an act is legislative or administrative in character. Professor Pearce: Delegated Legislation, 1977 has noted that the norm is open to justifiable criticism but can be of some assistance. See also Professor Raz, The Concept of a Legal System 1980. Gummow J also referred to the inadequacy of the principle in Queensland Medical Laboratory & Ors v Blewett & Ors (1988) 84 ALR 615 at 633-4, noting that it was not an essential attribute of a "law" that it formulated a rule of general application.
Much of the difficulty of characterisation arises from the fact, as was recognised in Arthur Yates that legislative, executive and judicial functions often have overlapping features, and the bodies primarily entrusted to carry out one function may also legitimately carry out a function primarily vested in one of the other bodies. Thus, legislative power may be reposed in the executive: see Constitution, Chapter 1; Victoria's Stevedoring & General Contracting Co Pty Limited & Meakes v Dignan (1931) 46 CLR 73 at 100-101; Queensland Medical Laboratory v Blewett; and generally Pearce Delegated Legislation 1977. As Fox ACJ said in Evans v Friemann & Ors (1981) 35 ALR 428 at 433:
"It has, in fact, proved very difficult, virtually impossible, to arrive at criteria which will distinguish in all cases the three concepts [of administrative, legislative and judicial action]. They at times overlap ... Sometimes the category into which an act or function will be placed will be decided in part on historical considerations or on the source of power or the nature of the body to which it is given. In the judicial sphere, there are many incidental functions, essentially of an administrative nature, and even of a legislative nature which are regarded as being within the judicial power of the Commonwealth, because they are incidental to, or incidents of, the exercise of judicial power. Many administrative tribunals are, to a greater or less extent, required to act judicially. Parliament has a power to try and punish for contempt of the Parliament."
Further, at 434 as his Honour observed, relevantly for the point in issue in this case:
"In the[ADJR Act the] characterization of the activity remains necessary. There can be little doubt that the trichotomy [of administrative, legislative and judicial acts] is intended to be maintained...and that decisions properly to be regarded as of a legislative or judicial nature are excluded."
Gummow J made the same point in Queensland Medical Laboratory & Ors v Blewett & Ors. In that case, his Honour defined the primary characteristic of executive activity as the maintenance and execution of the laws enacted by the legislature, a function enshrined in s 61 of the Constitution.
On the other hand, his Honour identified control by the Parliament as a fundamental characteristic of legislative power reposed in the Executive. Professor Pearce in Delegated Legislation for his part states (at para 63) that publication is a fundamental requirement of a legislative act. It should be noted that in the case of Commonwealth delegated legislation, both control by Parliament and publication is required by the provisions of the Acts Interpretation Act 1901 (Cth).
Similarly, the Full Court of the Federal Court (Bowen CJ, Northrop and Lockhart JJ) in Minister for Industry and Commerce v Tooheys Ltd (1982) 60 FLR 325 stated at 331, after outlining the general rule:
"The distinction between legislative and administrative acts is referred to in many cases. It is unnecessary to discuss them in detail. The distinction is essentially between the creation or formulation of new rules of law having general application and the application of those general rules to particular cases: Commonwealth v Grunseit; Hamblin v Duffy [(1981) 50 FLR 308] and de Smith's Judicial Review of Administrative Action (4th ed), p.71"
Their Honours continued:
"The proposition that by-laws are essentially legislative in character is unsound. The appropriate categorization of by-laws is determined by their context and subject matter. They are not clothed with a legislative character merely because they are called "by-laws". ... The capacity of by-laws, like regulations, orders and rules, to assume either a legislative or an administrative character, is well recognized."
As noted above, the primacy of control by the Parliament of legislative functions reposed in the executive is referred to by Gummow J in the Queensland Medical Laboratory Case at 634, where his Honour stated:
"The delegation of legislative authority has most frequently been effected by reposing a regulation-making power in the Governor-General in Council. Decisions under an enactment by the Governor-General in Council (whether the decisions are legislative or administrative in character) are excluded from the definition of decisions to which the ADJR Act applies: Attorney-General (NT) v Minister for Aboriginal Affairs (1987) 16 FCR 267 at 271-4; 73 ALR 33."
It was submitted that in this case, the June 1991 Determination created a new rule of conduct depending on circumstances or considerations which were not specified in the enabling Act and was thus legislative in character. Further, it was submitted that the determination bore all the hallmarks of a legislative provision. First, it had indiscriminate application to any airline falling within its terms. Secondly, the determination was not expressed to operate for any specified time. It operated until varied or revoked. Thirdly, s 56 contained a specific procedure for notification to the Minister and for Ministerial disapproval of the determination. Fourthly, there were mandatory publication requirements, although the method of publication was not prescribed. Fifthly, the determination, of its own force, created enforceable rights and obligations. Sixthly, s 3 of the ADJR Act, by its terms, recognised, that an enactment can be an instrument, including rules, by-laws and regulations. Finally, in the normal course of an administrative determination, it would be expected that the rules of natural justice would apply. In the present case, there was no provision in the FAC Act which required the application of natural justice to a s 56 determination.
Counsel for the respondent acknowledged that the fact that the legislature has not seen fit to specify the amount of charge, the persons who may be charged, the manner of charge or the means of recovery of the charge gave to the determination some features of a legislative act. However, he submitted that the true nature of the charge imposed by the determination was a fee for services provided by the airport owner which was not typically a legislative act.
The fact that the June 1991 determination purported to impose a fee for service is not of itself determinative of its true nature. In my opinion, upon a proper construction of s 56, any determination made thereunder is administrative. In the first place, a determination made under the section is not subject to disallowance by Parliament. The right of disapproval in the Minister does not constitute control by the Parliament. Nor is notification in the Gazette a precondition for any by-law coming into effect: cf s 72(4) FAC Act in relation to regulations made under the FAC Act. Further, a determination made under s 56 is subject to two types of executive control. The first, and perhaps most telling is that any determination made under s 56 is subject to the Prices Surveillance Act 1983 (Cth). That Act applies in relation to the supply of goods or services by a Commonwealth authority. The Prices Surveillance Authority is given the function of inquiring into matters relating to the prices for the supply of goods and services and reporting to the Minister in respect of such inquiries, in accordance with the terms of the Act. It would be a unique breed of legislative act which was subject to the control of such a body. The second form of executive control is that of the Minister, which as I have stated above, is conceptually different from control by the Parliament as is required in the case of a legislative act performed by the executive: subss 56(3), (4), (5), (6), (6A), (7), (7AA), (7AB). In my opinion, these factors lead to the conclusion that a determination made under s 56 is administrative in character.
It is not necessary therefore to consider the second issue raised by the applicant, namely whether, if the determination was legislative in character, it was nevertheless susceptible to review under the ADJR Act. However, it is necessary to determine whether the applicants are entitled to bring their common law proceedings without directly challenging the determination under the ADJR Act.
Collateral challenge
Counsel for the applicants submitted that even if the determination was administrative in nature, the applicants were still entitled to pursue the recovery proceedings,
independently of bringing any administrative review proceedings. Counsel for the respondent submitted that the scheme of the ADJR Act was such that collateral challenge was not permitted. The question whether collateral challenge is available in respect of a decision for which an order for review may be sought has not been decided in Australia.
Under the ADJR Act, upon the application of a person aggrieved, certain decisions, conduct and failures to make decisions may be reviewed by the Federal Court: ss 5, 6 and 7. A "decision" for the purposes of the Act is defined to mean a decision of an administrative character made, proposed to be made or required to be made, as the case may be, whether in the exercise of a discretion or not, under an enactment: s 3.
The ADJR Act not only invests the Federal Court with the jurisdiction to hear and determine applications made under the Act, it also withdraws jurisdiction from State courts to review matters which fall within: ss 5, 6 or 7; Schedule 1 of the Act; and decisions made by or conduct engaged in by an officer of the Commonwealth: s 9. "Review" for the purposes of s 9 means review by way of the grant of an injunction, the grant of a prerogative or statutory writ or the making of an order having the same or similar nature or effect to any such writ, or the making of a declaratory order: s 9(2).
Pursuant to s 10(1)(a), the right of an aggrieved person to seek a review of a decision is in addition to and not in derogation of:
"any other rights that the person has to seek a review, whether by the Court, by another court or by another tribunal, authority or person, of that decision..."
"Review" for the purposes of s 10 is defined, in s 10(3) to include:
"a review by way of reconsideration, re-hearing, appeal, the grant of an injunction or of a prerogative or statutory writ or the making of a declaratory or other order."
In Bannister v See (1982) 42 ALR 78, Toohey J stated at 81, in regard to s 31 of the Repatriation Act 1920 (Cth):
"The term 'review' is not one of precision. It may, as in the notion of judicial review of administrative action, subject an administrative decision to scrutiny by a court on a variety of grounds including error of law, excess of power and breach of the rules of natural justice. That is the sense in which it is used in the Administrative Decisions (Judicial Review) Act itself."
However, in Woss v Jacobsen (1985) 11 FCR 243, his Honour recognised that the meaning of "review" in s 9(2) was more limited than this and that the word was used differently in s 9(2) and s 10. His Honour stated at 252:
"In s 9(2) the definition selects, for relevant purposes, proceedings by way of the grant of a prerogative or statutory writ or proceedings that may lead to the making of an order of the same or
similar nature or having the same or similar effect. The comparison is with the nature or the effect of a review by way of the grant of a prerogative writ."
After referring to s 10(3), his Honour continued at 253:
"It is apparent that the sort of review removed from a court of a State by s 9 is more limited than the sort of review that may lead to the Federal Court declining to exercise its jurisdiction under the Judicial Review Act."
Davies J was of the same view, emphasising at 261 that the ADJR Act was concerned with the legality of the decision under review and not whether the correct decision was made.
The remedies available under the ADJR Act are discretionary: s 16. The orders which the Court may make are:
(a)an order quashing or setting aside the decision, or a part of the decision, with effect from the date of the order or from such earlier or later date as the Court specifies;
(b)an order referring the matter to which the decision relates to the person who made the decision for further consideration, subject to such directions as the Court thinks fit;
(c)an order declaring the rights of the parties in respect of any matter to which the decision relates;
(d)an order directing any of the parties to do, or to refrain from doing, any act or thing the doing, or the refraining from the doing, of which the Court considers necessary to do justice between the parties."
There have been a number of decisions as to the scope of the
remedies available under s 16: see Johns v Australian Securities Commission & Ors (1993) 178 CLR 408; Park Oh Ho v Minister for Immigration and Ethnic Affairs (1988) 20 FCR 104. However, it is not in contention that the applicants would not be entitled to an order for the recovery of money under s 16(1)(d). Accordingly, it is not necessary to consider that aspect further.
It is clear from these sections that the ADJR Act provides a scheme for review of administrative decisions which fall within the Act. In doing so, it withdraws certain jurisdiction from the State courts: s 9. It recognises other avenues of review: s 10, and thus is not an exclusive means of review of federal administrative action. However, there is no provision in the act which deals directly with the issue in contention - namely whether a collateral challenge to an administrative decision is possible. It is thus necessary to consider the circumstances in which the general law has allowed collateral challenge, and to then determine, in the light of that, whether collateral challenge is available having regard to the scheme of the ADJR Act.
Historically, collateral challenge was rooted in the doctrine of ultra vires. At one time, the remedy for enforcement of a judgment outside jurisdiction was a civil action for trespass to the person or property. In those cases, if an authority had overstepped the boundaries of its jurisdiction, it "had to bear the consequences of disregarding [those] limits": (see
Emery: Collateral Attack - Attacking Ultra Vires Action In directly in Courts and Tribunals (1993) 56 MLR 643 at 652. See also Rubinstein Jurisdiction and Illegality 1965 at 55). However, no such action lay for the enforcement of a judgment within jurisdiction, albeit that the judgment was in some way erroneous: see the Marshalsea Case (1612) 77 ER 1027.
The remedy of certiorari developed in the 17th century to provide redress for erroneous decisions within jurisdiction. However, by the beginning of the 18th century, certiorari had emerged as a general remedy for jurisdictional defects: (see Rubinstein at 68; Emery at 652). Rubinstein points out that as early as 1670, some statutes contained privative clauses, prohibiting the quashing by certiorari of the decisions of certain public authorities. The courts responded by holding that certain types of defects previously treated as errors within jurisdiction were then to be regarded as outside jurisdiction: see Ex Parte Bradlaugh (1878) 3 QBD 509; Rubinstein at 72; Emery at 652. The consequence was that the notion of jurisdiction was expanded so as to extend the ambit of direct attack by way of seeking the remedies of certiorari, prohibition, mandamus or declaration. Emery observes at 653 that these developments in respect of direct attack were "reflected on the collateral attack front in two main ways". First, tort liability of persons exercising judicial functions continued to be governed by a restricted notion of jurisdiction akin to the pre-18th century limited meaning. Secondly, the success or failure of damages actions against
public authorities generally came to turn largely upon considerations other than the existence of want of jurisdiction. In cases where want of jurisdiction or ultra vires was a constituent of liability, that issue could be determined collaterally, that is, in the civil proceedings: see Cooper v Wandsworth Board of Works (1863) 14 CB (NS) 180; 143 ER 414.
Wade and Forsyth: Administrative Law, 7th Ed state, at 321, that as a general rule invalidity may be raised in any proceeding where it is relevant. In other words, administrative action may be subject to collateral challenge. They cite, amongst other cases, DDP v Head [1959] AC 83 as an example. In that case, the conviction of a person accused of carnal knowledge of a woman certified as mentally ill was quashed as it was established that the woman's detention was invalid.
Wade and Forsyth state, however, that collateral challenge is not available in the following situations: (i) where an order is made within jurisdiction but vitiated by mere error on its face (although they state this rule is now obsolete); (ii) where a statutory remedy, such as a right of appeal is the only remedy available; and (iii) where it would be contrary to the scheme of the act to allow the validity of an order to be disputed collaterally, for example, in enforcement proceedings: see R v Davey [1899] 2 QB 301; and (iv) where there is some unknown flaw in the appointment or authority of some officer or judge. Wade and Forsyth argue that there may be good grounds for disallowing collateral challenge in cases of breach of the principles of natural justice, not only because it may be directly personal to the individual concerned but also because it would be confined to direct proceedings against the authority or tribunal in an application for certiorari, a declaration or for damages based on annulment of the order.
Rubinstein describes collateral attack at 37-38 as follows:
"Any legal dispute in which the validity of any decision is at stake constitutes an attack upon this decision. Any such dispute which is not taken in proceedings specially designated by law for the purpose of having such a decision set aside, reversed, or modified, constitutes a collateral method of attack. In other words, that which is not direct is collateral."
Rubinstein states that where the existence or non-existence of an act which purports to have legal consequences is relevant to a particular dispute, the issue is examinable, even where the disputed decision lies within the exclusive jurisdiction of another court or tribunal: see Duchess of Kingston's Case (1776) 1 Leach 146; 168 ER 175. However, he confines the availability of collateral attack to decisions or acts made without jurisdiction and which are therefore a nullity. He states, at 36, that where collateral challenge is available:
"The court...does not sit as a reviewing court and cannot enter into the legality of the decision challenged. It can only examine whether such decision exists: (see Wilkins v Hemsworth (1838) 7 Ad.&E. 807 per Coleridge J); in other words, it may examine the question of jurisdiction."
Rubinstein is critical of the decision in DPP v Head. In that case, the "error" which made the confining order bad was that the affidavits and certificates on which the order rested had not been filled in properly. It was held that the defects constituted error on the face of the record and was thus sufficient to defeat the prosecution's case. Lord Tucker stated at 103 (Reid LJ and Somervell of Harrow LJ concurring):
"if it is shown and admitted, as in the present case, that on the face of the documents produced and received in evidence without objection the detention was illegal, the whole basis of the subsection [constituting the offence] and the presumption of defectiveness goes and the prosecution must fail".
His Lordship did not discuss the question whether this defect went to jurisdiction and thus vitiated the order. Rubinstein argues that there was nothing in the section creating the crime of carnal knowledge which made the validity of the original consignment an indispensable element of the offence. Rubinstein points out, at 47, that in collateral proceedings, the question is not whether redress against the impugned act ought to be forthcoming but whether the resulting act has any validity. On this approach, he supports as correct the decisions in Bushell v Timson [1934] 2 KB 79 and Baldwin v Gurnsey [1949] 1 KB 102. In Bushell v Timson a plaintiff succeeded in an action for restitution of property sold under execution of an award made under the workers' compensation legislation as (per Charles J at 84):
"no such opportunity [for avoiding execution] was given, no application for leave to issue execution was made, and the plaintiff had no opportunity to show cause to the contrary ... There was therefore a sale under an execution which was non-existent in law, and the sale was in its inception void."
In Baldwin v Gurnsey, collateral challenge was refused as it was not shown that the registration of certain premises, which had the effect of excluding the operation of the Rent Restriction Acts (UK), had been made without jurisdiction. See also R v Judge Pugh Ex; P. Graham [1951] 2 KB 623.
P.P. Craig: Administrative Law, 3rd Ed states that the distinction between direct and collateral attack can be approached in two ways. It can be taken to refer to the form of remedy sought, or it may be determined by the scope of review given by the remedy. Under the first approach, a direct attack would be one where the administrative order was sought to be impugned. If the second approach was adopted, collateral proceedings would be those in which only the nullity of the decision was at issue. Craig notes that whichever approach is adopted, collateral attack will only be an option where the defect alleged is jurisdictional. He states, at 448, that error of law on the face of the record could not be impeached collaterally but only by way of certiorari. He states however that this limitation on the scope of collateral attack is of less importance given the
expansion in the scope of jurisdictional error and the consequential demise of error of law within jurisdiction
Emery states, at 647, that there are two possible meanings of collateral challenge. First, a public law issue may be said to be collateral if it arises in proceedings not specially designed to resolve such an issue. Thus, if a litigant seeks to impugn the validity of a particular official act or decision in proceedings designed for a purpose other than to secure the setting aside, reversal or modification of such act or decision, it may be said that a collateral attack has been mounted. This is the meaning ascribed to collateral attack by Rubinstein (see Emery, at 647).
The second meaning derives its basis from O 53 of the Supreme Court Rules (UK). I deal with the second meaning below.
Emery concludes that the issue of vires or jurisdiction may be raised by any party to a civil or criminal proceeding where the outcome of the proceeding depends upon those issues. He observes that the original basis for the doctrine of jurisdictional error has long since vanished. Further, he states that the content of the doctrine of vires has changed beyond recognition such that, speaking broadly, it today encompasses all varieties of error of law: see R v Hull University Visitor; Ex P Page [1992] 3 WLR 1112 at 1122.
However, he observes at 664: "[t]he English law on collateral attack is flawed by uncertainties and
inconsistencies, and lacks a basis in sound principle.
Collateral challenge is not available for merely procedural defects. In Bugg v Director of Public Prosecutions [1993] QB 473 at 500 it was held that a defendant charged with breach of a by-law could not, by way of defence within the criminal proceedings, argue that the by-law was ultra vires because of non-compliance with a procedural requirement in the making of the by-law. It was held that although substantive invalidity could be raised by way of defence, procedural invalidity could be raised only on a separate application for judicial review. The reasons for this include: (i) that an issue of substantive invalidity can be settled without evidence, whereas evidence would be required to establish procedural invalidity; (ii) a party interested in maintaining the by-laws may not be a party to the proceedings; and (iii) different evidence in different cases could produce different outcomes. However, as Emery points out, similar arguments could be raised in the case of substantive invalidity. Their Lordships did not categorise procedural invalidity as being properly an excess or abuse of power. However, their Lordships included Wednesbury unreasonableness within procedural invalidity. Thus, even on the court's categorisation of 'substantive' and 'procedural' in Bugg, irregularity and confusion may arise.
I have referred above to Emery's second meaning of collateral challenge. According to this view, a public law issue would be collateral only if it was not the central issue in the proceedings in question: see Wandsworth LBC v Winder [1985] AC 461. This approach however is dictated by the procedural changes introduced by O 53 of the Supreme Court Rules (UK). Strictly, therefore, the second meaning of collateral challenge is not relevant to Australian law. However, as the applicants relied upon some of the English authorities decided after the introduction of O 53, I should deal briefly with them.
The seminal case is O'Reilly v Mackman [1983] 2 AC 237. There the House of Lords held that it was an abuse of process of the Court to permit a person, seeking to establish that a decision of a public authority infringed rights to which he was entitled to protection under public law, to proceed by way of an ordinary action. In determining that it was an abuse of process, Diplock LJ said at 280-281:
"The public interest in good administration requires that public authorities and third parties should not be kept in suspense as to the legal validity of a decision the authority has reached in purported exercise of decision-making powers for any longer period than is absolutely necessary in fairness to the person affected by the decision."
However, his Lordship added, at 284-285, the following caution:
"...Order 53 does not expressly provide that procedure by application for judicial review shall be the exclusive procedure available by which the remedy of a declaration or injunction may be obtained for infringement of rights that are entitled to protection under public law ... Accordingly, I do not think that your Lordships would be wise to use this as an occasion to lay down categories of cases in which it would necessarily always be an abuse to seek in an action begun by writ or originating summons a remedy against infringement of rights of the individual that are entitled to protection in public law."
Nevertheless, his Lordship considered, at 285, that:
"...as a general rule [it would] be contrary to public policy, and as such an abuse of the process of the court, to permit a person seeking to establish that a decision of a public authority infringed rights to which he was entitled to protection under public law to proceed by way of an ordinary action and by this means to evade the provisions of Order 53 for the protection of such authorities."
although the general rule might not operate:
"particularly where the invalidity of the decision arises as a collateral issue in a claim for infringement of a right of the plaintiff arising under private law."
In Wandsworth LBC v Winder, Fraser LJ considered (at 508) that the vires issue was not "truly collateral" because "it is the whole basis of the respondent's defence and it is the central issue which has to be decided."
There have been attempts to narrow the operation of O'Reilly v Mackman. In Roy v Kensington and Chelsea Family Practitioner Committee [1992] 1 AC 624 the House of Lords held that a claim to pay, even though governed by statutory regulations and by a
discretionary decision of the committee, was essentially a matter of private law and enforceable by ordinary action, free from the constraints of judicial review. In adopting that view, the House of Lords approved the statement of Robert Goff LJ in Wandsworth LBC v Winder at 480 that:
".. I find it difficult to conceive of a case where a citizen's invocation of the ordinary procedure of the courts in order to enforce his private law rights, or his reliance on his private law rights by way of defence in an action brought against him, could, as such, amount to an abuse of the process of the court".
In Roy, Lord Lowry postulated two possible interpretations of O'Reilly v Mackman. If the decision was interpreted broadly, judicial review of a public law decision was only required when private law rights were not at stake. The alternative approach was that all such proceedings must be by judicial review, subject only to some exceptions where private law rights were involved. Lord Lowry, without deciding, expressed his preference for the broad approach. His Lordship stated that the broad approach was both traditionally orthodox and consistent with the Pyx Granite principle. In Pyx Granite Co Ltd v Minister of Housing and Local Government [1960] AC 260 it was held that an individual's recourse to the courts for the determination of rights is not to be excluded except by clear words. Lord Lowry considered that this principle extended not only to "barring a subject from the Courts but against excluding him from a particular mode of procedure." The House of Lords made it clear in Roy that it made no difference whether the private right was asserted in attack or in defence.
Decisions such as Roy demonstrate that, notwithstanding Order 53, a collateral challenge will be allowed even if proof of a public law matter is an integral part of the action as a whole: see Craig at 559; see also Lonrho plc v Tebbit [1991] 4 All ER 973. But, as Emery observes at 654, since O'Reilly the question of the jurisdiction of other courts to entertain collateral attack in ordinary civil proceedings has not been squarely considered. Rather, it has been lost or concealed behind the abuse of process question raised by O'Reilly v Mackman. Thus, notwithstanding the reference to these cases in the course of argument, they are not of great assistance for the matter in issue here. Greater assistance is obtained from the pre- O 53 cases.
As the commentators to whom I have referred above, Rubinstein and Emery in particular, demonstrate, the English law on the subject of collateral challenge is not entirely consistent. However, the following may be said. Collateral challenge to administrative decision making is well steeped in English law. The principle which governs the availability of collateral challenge is jurisdictional error. Collateral challenge is not available for procedural defects.
The inconsistencies in the English cases arise from the following. First, notwithstanding the principled approach based on jurisdictional error propounded by Rubinstein, Emery and Craig, the oft-cited case of DPP v Head was a case of error of law on the face of the record. Secondly, although there would appear to be general agreement that procedural defects may not be challenged collaterally, the scope of jurisdictional error as opposed to what constitutes procedural defect is not clear. Contrary to the views expressed in Bugg v DPP, the commentators do not accept, and I am of the view correctly so, that Wednesbury unreasonableness is a mere procedural defect. Thirdly, and whilst overall the decisions following the introduction of O 53 are not of assistance, I am of the opinion that the House of Lords' view in Roy that collateral challenge is available both in attack and defence, has general application and is not confined to the considerations which govern collateral challenge under O 53.
The law in Australia on the availability of collateral challenge is sparse. Aronson and Franklin: Review of Administrative Action describe the notion of collateral challenge at 211 as follows:
"From the private person's ability to ignore the official status of unauthorised public acts comes the notion of "collateral challenge". An official's action is subject to collateral challenge when its official existence is challenged not in a suit with only that challenge as its object, but in a case in which the illegality of the action must be assumed or established in the context of some other argument."
Aronson and Franklin state collateral challenge is only
available in the case of patent invalidity: see Posner v Collector for Inter-State Destitute Persons (Victoria) (1946) 74 CLR 461 where Dixon J stated at 483:
"When there has been a failure of the due process of law at the making of an order, to describe it as void is not unnatural. But what has been said will show that, except when upon its face an order is bad or unlawful, it is only as a result of the construction placed upon a statute that the order can be considered so entirely and absolutely devoid of legal effect for every purpose as to be described accurately as a nullity. Modern legislation does not favour the invalidation of orders of magistrates or other inferior judicial tribunals and the tendency is rather to sustain the authority of orders until they are set aside and not to construe statutory provisions as meaning that orders can be attacked collaterally or ignored as ineffectual, if the directions of the statute have not been pursued with exactness."
Thus, to the extent that there is any law on the subject in Australia, it is consistent with the statements of the English commentators' views that collateral challenge is available where there is jurisdictional error. However, the statements of the English commentators, especially in relation to jurisdictional error, have to be read with some care in the Australian context. In Craig v South Australia (1995) 131 ALR 595, the High Court dealt with the availability of certiorari to impugn a decision of an inferior court. In doing so, it dealt with the question of jurisdictional error.
Their Honours differentiated between jurisdictional error by an inferior court and jurisdictional error in the case of a tribunal. Notwithstanding the differences, they stated that in Australia the distinction between jurisdictional error and error within jurisdiction had not been abolished. Their Honours confirmed that an administrative tribunal lacked authority to either authoritatively determine law or to make an order or decision other than in accordance with law: In re Racal Communications Ltd [1981] AC 374 at 383. If an administrative tribunal falls into error of law which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to make an erroneous finding, or to reach a mistaken conclusion, there will be a jurisdictional error of law.
There is a separate line of authority which is useful to consider on the question whether collateral challenge is available. This line of authority relates to recovery of an overpayment of taxes or charges from a government authority. It has long been held that such monies wrongly extracted "colore officii" are recoverable. In Sargood Bros. v The Commonwealth (1910) 11 CLR 258, O'Connor J said at 276:
"Where an officer of Government in the exercise of his office obtains payment of moneys as and for a charge which the law enables him to demand and enforce, such monies may be recovered back from him if it should afterwards turn out that they were not legally payable even though no protest was made or question raised at the time of payment. Payments thus demanded colore officii are regarded by the law as being made under duress."
Windeyer J in Mason v New South Wales (1959) 102 CLR 108 examined the basis of the "colore officii" principle. His Honour stated at 139:
"The phrase "colour of office" is an old one....Extortion was a common law misdemeanour, defined by Coke as 'the taking of money by any officer, by colour of his office, either where none at all is due, or not so much is due, or where it is not yet due.'"
In Mason, the plaintiffs had paid, under protest, for licences to carry on their trade as interstate carriers at a time when it was well known that the State Transport (Co-ordination Act 1931 (NSW) (the Licensing Act), which purportedly authorised the State to demand the license fees, was to be challenged before the Privy Council: see Hughes and Vale Pty Ltd v The State of New South Wales & Ors (1954) 93 CLR 1. The Privy Council held the Licensing Act was invalid as infringing s 92 of the Commonwealth of Australia Constitution Act 1901 (the Constitution) in so far as it applied to persons operating vehicles in the course of, and for the purposes of, interstate trade or to vehicles whilst so operated. After the Privy Council's decision, the plaintiffs commenced proceedings against the State of New South Wales for money had and received. The High Court held that the payments were not made voluntarily, but under compulsion, and therefore the plaintiffs were entitled to recover the amount claimed as money had and received.
There are significant differences in the judgments of the majority. Dixon CJ and Windeyer J each concluded that the plaintiffs apprehended that, if they did not obtain permits, their vehicle would be stopped and seized under powers conferred by the Act. Accordingly, each found that the conditions for an ordinary claim for duress of goods were satisfied: (Dixon CJ at 115, 117, Windeyer J at 145-146). Dixon CJ doubted, at 116, whether the law to be applied was the law relating to the recovery of moneys by one subject from another paid in consequence of a demand lacking lawful justification. His Honour held, however, at 117, that it was enough to entitle the plaintiffs to recover:
"...if there be just and reasonable grounds for apprehending that unless payment be made an unlawful and injurious course will be taken by the defendant in violation of the plaintiff's actual rights."
More significantly for the present case was the way in which Dixon CJ dealt with the William Whiteley line of authority. In William Whiteley Ltd v The King (1909) 101 LT 741 it was held that duties wrongly demanded under the Revenue Act 1869 (UK), and paid, were not recoverable because they were not paid under duress. The right to recover the duties and any penalties in legal proceedings, (there being no right of distraint), was considered to be insufficient to constitute duress. Dixon CJ said at 117:
"I have not been able completely to reconcile myself to the view that if the weight of a de facto governmental authority manifested in a money demand is not resisted although it is incompatible with s.92 the money belongs to the Crown unless the payment was the outcome of the actual threatened or apprehended withholding of something to which the payer was entitled or the actual threatened or apprehended impeding of him in the exercise of some right or liberty. But English authority seems now to say that moneys paid to the Crown as and for taxes cannot be recovered from the Crown upon its turning out that the moneys were not exigible
notwithstanding that they were demanded by the Crown, unless the circumstances were such that they would be recoverable as between subject and subject, exempli gratia as involuntary payments or payments made under a mistake of fact. See William Whiteley v The King..."
Dixon CJ observed that "however this may be" the plaintiffs were entitled to recover.
Kitto J (at 126,127,129) considered that the Act, with its penalties and powers of seizure, was coercive in itself. Menzies J was of the same view. He held that the payments were not made voluntarily. They were paid under compulsion.
His Honour considered that the right of compulsory seizure distinguished this case from William Whiteley. His Honour further stated at 133:
"To put it bluntly, the charges were unlawfully exacted. Cases such as...Hooper v Exeter Corporation (1887) 56 LJQB 457...show that money paid in such circumstances is recoverable."
In Hooper v Mayarand Corporation of Exeter (1887) 56 LJQB 457 Coleridge CJ stated at 458:
"...the principle has been laid down that, where one exacts money from another and it turns out that although acquiesced in for years such exaction is illegal, the money may be recovered as money had and received, since such payment could not be considered as voluntary so as to preclude the recovery."
In Bell Bros Pty Ltd v Shire of Serpentine-Jarrahdale (1969)
121 CLR 137, the High Court allowed restitution as of right in respect of royalties paid under a condition attached to a licence to excavate gravel. The by-law in question had already been declared invalid by the High Court: see Marsh v Shire of Serpentine- Jarrahdale (1966) 120 CLR 572. In that case, the plaintiff had brought an action claiming a declaration, inter alia, that the by-law was beyond power. That question was removed to the High Court pursuant to s 40 of the Judiciary Act 1903 (Cth). The High Court made a declaration that the by-law was invalid and granted an injunction restraining the Shire from requiring payment of the fee sought for the issue of the licence. The Court, (Kitto J, with whom Barwick CJ and Menzies J agreed), applied the colore officii principle and allowed restitution as of right in respect of royalties made under a condition attached to a licence to excavate gravel. In that case, although the licensing scheme was lawful, the shire had no authority to exact payment in respect of the volume of gravel excavated.
Mason and Bell are not directly in point in this case as, in each, the validity of the taxing or charging statute had already been determined in other, albeit unrelated, proceedings. However, they are authority that, in certain circumstances, a plaintiff may recover monies paid under an illegal statute. The law as to the restitutionary recovery of moneys has been the subject of judicial elucidation in recent years. Relevant for present purposes is the House of Lords decision in Woolwich Equitable Building Society v Inland Revenue Commissioners (No. 2) [1993] AC 70 and the High Court's decision in Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd (1994) 182 CLR 51. It should be noted immediately that neither case involved a collateral challenge.
In Woolwich, the plaintiff, in judicial review proceedings, had challenged the validity of certain taxing regulations and also sought recovery of the taxes paid as money had and received together with interest (the recovery proceedings). The taxing regulations were held (both at first instance and on appeal) to be null and void. The Revenue repaid the amount of tax paid, with interest from the date of the first instance decision. The question of entitlement to interest from the date of payment of the tax remained in issue. The House of Lords held the plaintiffs were entitled to interest.
In Royal Insurance, mandamus was sought against the Commissioner requiring her to exercise her duty under s 111 of the Stamps Act 1958 (Vic) to refund the monies which had been overpaid. Shortly after the proceedings were commenced, the Commissioner recognised that there had been an overpayment. However, there was recognition in each of the judgments in the High Court that the restitutionary principles governing recovery of money paid under a mistake of law was relevant to the question whether the Commissioner should have exercised her discretion to refund the overpaid taxes under s 111.
Mason CJ stated at 66:
"...the grant of the discretionary power to refund an overpayment should not be regarded as authority to refuse a refund which a taxpayer is entitled to recover according to the principles of the general law. It is necessary then to ascertain how Royal's claim to recover stands under the law of restitution."
Mason CJ, at 67, refers to the High Court's earlier decision in David Securities Pty Limited v Commonwealth Bank of Australia (1992) 175 CLR 353 where the Court said at 378:
"the payer will be entitled prima facie to recover moneys paid under a mistake if it appears that the moneys were paid by the payer in the mistaken belief that he or she was under a legal obligation to pay the moneys or that the payee was legally entitled to payment of the moneys. Such a mistake would be causative of the payment."
Mason CJ continued (in Royal Insurance) at 67:
"The belated recognition in David Securities that moneys paid away as a result of a causative mistake of law are recoverable enables us to discard some of the complications associated with the old law governing the recovery of moneys paid as and for taxes which were not due and payable because causative mistake of law was not thought to be a sufficient basis of recovery. Recovery was permitted only in cases in which money was exacted under an unlawful demand by a public authority where the payment was made under a mistake of fact or under compulsion of some kind. The relevant principles have been examined by this Court in Sargood Bros. v The Commonwealth and Mason v New South Wales, and, very recently, by the House of Lords in Woolwich Equitable Building Society v Inland Revenue Commissioners."
Brennan J approached the matter by a direct consideration of the duty cast upon the Commissioner by s 111. Dawson J at 100 referred to David Securities, stating that if the common law, rather than s 111 governed the obligation to make the refund, a refund would be required.
There are other cases in Australia where there has been judicial comment which recognises that collateral challenge may be available. In Comptroller-General of Customs & Anor v Kawasaki Motors Pty Ltd (No. 2) (1991) 32 FCR 243, the Full Court of the Federal Court held that the procedure to recover overpaid customs duty, provided for by s 167 of the Customs Act 1901 (Cth), represented the only method whereby an action for recovery of overpaid Customs duty could be brought where there is a dispute between the owner and the Collector as to liability or matters affecting liability. It held that the section operated to exclude the availability of any alternative common law remedy. However, in coming to that conclusion, Hill and Heerey JJ stated at 258:
"While monies paid voluntarily under a mistake of law will generally not be recoverable (see...David Securities v Commonwealth Bank of Australia (1990) 23 FCR 1 at 33-37) it is, however, well established that amounts exacted by a public official colore officii may be recovered, at least where some element of coercion is involved in the demand for the payment. For present purposes it may be assumed...that, in the absence of a provision such as s 167, the respondent would, in the circumstances of the present case, have been entitled to recover the Customs duty overpaid in an action at common law."
This passage must now be read in the light of the High Court's
decision in David Securities. Subject to this, the passage recognises the availability of a common law action for monies paid pursuant to an illegal provision of a statute or pursuant to an illegal demand made under a statute.
There are statements in Pearce v Button (1986) 65 ALR 83
which also support the availability of collateral challenge. In that case, the question arose as to whether the retention of goods by customs authorities was susceptible to challenge under the ADJR Act where the lawfulness of the seizure had been conceded. It was held that no challenge was available under the Act and the Act itself provided for the retention of lawfully seized goods. However, Lockhart J said at 95:
"It is the evident scheme of the Customs Act that once goods have been lawfully seized the person who claims to be their owner or entitled to their possession may recover them by appropriate proceedings in the courts. Doubtless, the lawfulness of the seizure may be challenged in those proceedings and the question whether the goods were forfeited goods may be investigated. But once the lawfulness of the seizure is conceded, as it is here ... and once it is recognised that the Customs Act does, and indeed must for its proper operation, permit the retention of lawfully seized goods in the hands of the Customs authorities until they have been dealt with by due processes under or recognised by the Customs Act, the retention of the goods by the Customs authorities in the meantime is not susceptible to challenge."
Counsel for the applicants also referred to Spence v Teece & Ors (1982) 41 ALR 648 where the applicant attacked the validity of the regulation under which the determination was made. However, as counsel for the respondent pointed out, that case was brought under the ADJR Act.
Conclusion
I am of the opinion that, notwithstanding the scheme of the ADJR Act, collateral challenge remains available in Australia for jurisdictional error. There are a number of reasons why this should be so. First, the principle of collateral challenge has long been recognised in English law. Secondly, it has been recognised in Australia: Posner v Collector for Interstate Destitute Persons (Vic.). Thirdly, it has always been the law in Australia that moneys demanded "colore officii" may be recovered. Fourthly, the law is now settled in Australia that moneys paid under a mistake of law are recoverable: David Securities. Fifthly, there is a clear statement by Mason CJ in Royal Insurance that a consequence of the development of the law of restitution is that the complications of the "colore officii" principle may be discarded. Sixthly, the ADJR Act does not provide an exclusive mode of administrative review. Finally, the ADJR Act has also deprived the state courts of jurisdiction in respect of the review of federal administrative decision making. However, it has done so notwithstanding that such decisions may not be reviewable under the ADJR Act: see Poletti v Commissioner of Taxation (1994) 52 FCR 154 at 158.
It is true that the ADJR Act has had a major impact on administrative law in this country. Its rationale is to provide a quick means of review of administrative decisions to which the Act applies. To allow collateral challenge could make a serious inroad into this. In addition, the fact that relief under s 16 of the ADJR Act is discretionary, is arguably a factor favouring the view that collateral challenge ought not be allowed. However, it is difficult to accept that under an invalid administrative decision, such as this determination, a government agency could continue to extract large sums of money without some legal recourse by the affected parties, even if, for some reason, a s 16 remedy might have been refused as a matter of discretion.
Thus, whilst there are factors which indicate that collateral challenge ought not be available, I do not consider that they are sufficient to displace the long established principles relating to collateral challenge.
Neither party addressed the limits to collateral challenge in the case of it being found to be permissible. Nor did counsel analyse the claims made by the applicant in the Statement of Claim from the point of view of jurisdictional error. Clearly, some at least of the allegations raised in the Statement of Claim amount to jurisdictional error. However as neither party argued this aspect of the matter I consider that I should hear submissions from counsel as to how they wish to proceed.
Extension of Time
If I am wrong in relation to the collateral challenge point, it would be necessary to determine whether the applicants should be permitted to bring the ADJR application at this time. I consider that it is appropriate that I deal with this question, although I have found that a decision within the purview of the ADJR Act may be collaterally challenged for jurisdictional error.
The applicants filed an application under the ADJR Act as a protective measure, should it be determined that they are not entitled to bring the recovery proceedings without having challenged the June 1991 determination in administrative law proceedings. The ADJR application was brought over 2 years after the determination was made. The background to making the determination and the bringing of the ADJR proceedings is relevant to the question whether the ADJR proceedings have been brought in the time prescribed by the ADJR Act.
Up until 1988, the Australian Federal Police was the authority responsible for community policing and counter terrorism responses at Federal airports. No charge was imposed upon users of the airports for the provision of this service. During 1988, this activity was removed from the Australian Federal Police's functions. In its place, the Government expanded the role of the Australian Protective Service from that of guards at embassies and Commonwealth buildings, to include counter terrorist first response at airports.
This change was discussed with the airlines. Some of the airlines protested at the proposed cost recovery for the provision of the service. As early as 14 September 1988, Qantas wrote to the Deputy Prime Minister in the following terms:
"As a matter of principle, Qantas believes community policing and anti-terrorist tactical response costs at airports should not be construed to be a "user charge" on airport operators, airlines or airline passengers but must be considered in the large context as no different to such services afforded to other sectors of commerce, industry or transport modes."
The letter urged the Government to continue to provide funding for the cost of the provision of the security services, which it saw as a service rendered to the community at large. Australian Airlines Limited wrote in a similar vein at about the same time. The Board of Airline Representatives of Australia (BARA) urged the same case throughout 1989.
On 16 February 1990, the Department of Transport and Communications entered into a memorandum of understanding with the Australian Protective Service in relation to the provision of security services at designated airports. The memorandum provided for the manner of payment for the security services to be provided by the Australian Protective Service.
In a news release dated 21 August 1990, the Minister for Transport and Communications announced that there would be cost recovery for the airport security provided by the Australian Protective Service. Although the manner of
recovery had not been determined, the news release stated that:
"the Government believes they should be met either by the aviation industry or by the individuals who benefit from the service. "
Communications between the Department, the Minister and various airlines continued through 1990. In mid-February 1991, the Minister for Transport and Communications advised interested parties that the Government had decided to make airport operators responsible for the counter-terrorist presence, overall access control and security of the airside areas of airports. He advised that under these arrangements, which were to take effect from 1 July 1991, airport operators would be responsible for recovering the costs of the counter terrorist presence. They were further advised that the Australian Protective Service would be retained to provide the counter terrorist presence until 1 July 1992 and that the matter would be reviewed over the succeeding 12 months, to determine arrangements after that.
This advice prompted various responses from interested airlines and parties. The details of those responses are not important, save to say that individual airlines raised with the Government the question of cost recovery. The Government responded by advising that the decision to recover costs was fully consistent with its overall approach that users of services should pay.
On 11 June 1991, the respondent advised the airlines in the following terms:
"Following a directive from the Federal Government, the responsibility for counter terrorist security will on and from 1 July 1991 be transferred to airport operators including the Federal Airports Corporation (FAC). The additional cost of this security is estimated at $12.8 million in the first year. The FAC is to be responsible for administering and recovering the security costs.
After extensive consultation a proposed Determination has now been prepared and forwarded to the Minister and the Prices Surveillance Authority."
The terms of the proposed Determination were set out and the airlines were advised that the charge would be "revenue neutral" and would only recoup the cost of providing the security service.
Meanwhile the correspondence continued. For example, on 18 June 1991, AITA wrote to the Department requesting that the Government reconsider the decision to recover the security charge. Mr Cardone, the executive director of BARA also wrote and protested at the decision to make the proposed determination.
The determination was made on 30 June 1991. On 23 July 1991, the Minister wrote to BARA, advising that
"options for recovering costs through a passenger related charge were examined, but considered unsuitable either on legal grounds or because of significant additional administrative costs."
The Minister stated he had been advised that as a result of discussions between the respondent and the major airlines in respect of the charge to be levied and methodology to be employed in determining the charge, it was agreed that
"for technical and legal reasons, costs for the counter terrorist presence should be recovered through a weight-related aeronautical charge".
They were advised that the Prices Surveillance Authority had endorsed the charges.
On 9 August 1991, Ansett wrote to the Minister advising that so far as Ansett was concerned, as it had agreed with the respondent as to the level of service and the rates which were to be paid for those services, it did not intend to make any payment for the provision of security services for the fiscal year 1991/1992 above and beyond those amounts. It advised that it proposed to continue to monitor the provision of service and again advised that it continued to contest the necessity of the service.
By 16 August 1991, the Department of Transport and Communications had prepared a draft paper on counter-terrorist first response arrangements and this was the subject of communication between BARA and the individual airlines. On 18 December 1991, the Minister advised BARA that it was proposed to retain the services of the Australian Protective Service. On 17 February 1992, BARA again wrote to the Minister stating that it was the industry's view that community policing and counter terrorist first response costs should not be construed as a "user charge". Mr Cardone sought a meeting with the Minister to further discuss the matter. The Minister refused indicating that he thought there was little point in further discussion. However, correspondence seeking to have the issue reviewed or discussed continued up until April 1993.
Mr Cardone, the executive director of BARA gave evidence that advice was sought from solicitors concerning the counter terrorist first response charge in about December 1992. He said, however, that he assumed that member airlines were paying the security charge from July or August 1991. He said that he was not aware that payments could be made under protest. He said that as soon as they had been given legal advice that payments should be made under protest, that had been done. He said that until that point it had not occurred to him that the airlines should be paying under protest.
Time within which ADJR application must be brought
Section 11 of the ADJR Act provides that an application for review must be filed within the prescribed period. The "prescribed period" for the purposes of s 11(1) is defined in s 11(3). In the case of a decision which is notified in writing, the application must be made not later than 28 days after the day on which a document setting out the decision is furnished to the applicant. In the case where no time is prescribed for the making of an application for review, the
court may refuse to entertain an application if the court is of the opinion that the application was not made within a reasonable time after the decision was made: s 11(4).
In this case, there is no evidence that the applicants were advised in writing that the determination had been made. Rather, it appears that they were advised that the determination was to be made. Thereafter, the charges were levied on a monthly basis. In those circumstances, it appears that s 11(4) governs the making of the application.
Section 11(4) provides:
"Where:
(a)no period is prescribed for the making of applications for orders of review in relation to a particular decision;
...
the Court may:
(c)In a case to which paragraph (a) applies - refuse to entertain an application for an order of review in relation to the decision referred to in that paragraph...
...
if the Court is of the opinion that the application was not made within a reasonable time after the decision was made."
Section 11(5) is also relevant. It directs the Court to take into consideration, in forming its opinion under s 11(4):
"(a)the time when the applicant became aware of the making of the decision..."
In this case, the applicants became aware of the making of the decision at least in July 1991 when the charges were first levied.
In Worthley v Australian Securities Commission (1993) 114 ALR 524, the Full Court stated at 529:
"Section 11(4) differs from s 11(3) in that a person seeking review of a decision is entitled to bring an application to the court at any time. The application can not be regarded as incompetent because it was made outside the time prescribed by s 11(1)(c). However, the court may, pursuant to s 11(4), refuse to entertain the case, notwithstanding that the application is already on foot, if it forms the opinion that the application was not made within a reasonable time after the decision was made.
...
No doubt many of the matters relevant to the exercise of discretion under s 11(4) would be relevant to the exercise of discretion under s 11(1)(c). However, the matters relevant will not be precisely the same."
The factors relevant to an extension of time under s11(1)(c) are well settled. The court has a broad discretion in determining whether to grant an extension of time, unconstrained by any particular consideration such as the existence of "special circumstances": Hickey & Ors. v Australian Telecommunications Commission (1983) 47 ALR 517; Wedesweiller & Ors v Cole & Ors. (1983) 47 ALR 528; Pozniak v Minister for Health & Ors. (Burchett J, 14 March 1986, unreported). Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 from 348ff, without in any way denying the broad discretion vested in the court, expounded a number of general considerations which might guide the court in the exercise of that discretion. These considerations include:
Prima facie, proceedings commenced outside the period prescribed will not be entertained (Lucic v Nolan (1982) 45 ALR 411 at 416). An acceptable explanation of the delay must be given and there must be factors that show it is fair and equitable in the circumstances to extend time: (Duff v Freijah (1982) 62 FLR 280 at 485; Chapman v Reilly unreported (Federal Court of Australia, Neaves J, 9 December 1983 at 7).
Whether the applicant has taken action, including non-curial action, which makes it apparent that the decision is contested and that the matter was not finally concluded: Doyle v Chief of Staff (1982) 42 ALR 283 at 287); Douglas v Allen (1984) 1 FCR 287 with Lucic at 414-415 and Hickey v Australian Telecommunications Commission (1983) 48 ALR 517 at 519. The reasons for this distinction are not only the "need for finality in disputes" (see Lucic at 410) but also the "fading from memory" problem referred to in Wedesweiller v Cole (1983) 47 ALR 528.
Whether there is any prejudice to the respondent: see Doyle at 287, Duff at 484-485, Hickey at 525-527 and Wedesweiller at 533-534; although the mere absence of prejudice is not enough to justify the grant of an extension: Douglas, Lucic at 416, Hickey at 523. Public considerations may be relevant in this context: (Lucic, Hickey). A delay which may result, if the application is successful, in the unsettling of other people (Ralkon Agricultural Co Pty Ltd v Aboriginal Development Commission (1982) 43 ALR 535 at 550), or of established practices (Douglas) is likely to prove fatal to the application.
The merits of the substantial application: Lucic at 417, Chapman at 6.
6.Whether there is a real question to be litigated: Darwin Broadcasters Pty Ltd v Australian Broadcasting Tribunal and Anor (1990) 21 FCR 524 at 533-4.
Counsel for the applicants submitted that the airlines had always made it known that they disagreed about payment of the security charge. Further, they did not realise that they had a legal means of challenge open to them until December 1992 and this was not confirmed by counsel until 1993. It was submitted that this case should not be characterised as one where the applicants "sat on their rights" because the possibility of there being an application under the ADJR Act did not occur to the applicants until a significantly later point in time.
The question arises, however, as to the extent the respondent should be disadvantaged by the fact that the applicants did not seek legal advice, or take some action such as payment under protest sufficient to alert the respondent that there was, at least potentially, a challenge to the validity of the determination. Counsel for the respondent submitted that the applicants should not be penalised as it was a reasonable view to take that the appropriate proceedings were those which were in fact commenced in the Supreme Court. The relevant limitation period for bringing those proceedings was 6 years.
Counsel for the applicant submitted that there was no real prejudice to the respondent in the delay as, if the end result was that the respondent was required to repay the applicants the money paid pursuant to the Determination, all that happened in this case is that one Government agency, the respondent, had paid monies to another Government agency, the Australian Protective Service. It was also submitted that the recovery of the sum of $25,000,000 in a total revenue of approximately $430,000,000 was not such as to impose hardship upon the respondent.
Counsel for the respondent submitted that an extension of time should not be granted or alternatively, I should exercise my discretion under s 11(4) not to permit the applicants to bring the proceedings. He submitted that in the first place, the amount levied and paid is substantial. Secondly, the payments have not been made under protest, and there had been no assertion that the security charge was not authorised, or that it was invalid, or that the obligation to pay it was in any way disputed until August 1993. Further it was submitted that it was not appropriate to categorise this as a case of one government agency paying monies to another. It was submitted that the respondent was set up under its own Act as a commercial enterprise.
It was submitted that the mere fact that the applicants continued to complain about the imposition of the charge was not sufficient to alert the respondent to the possibility that the applicants would bring a legal challenge to the charge. Further, it was submitted that to the extent that the applicants had protested about the imposition of the charge, much of that protest was directed either to the Minister or to the Department and was not with the respondent. He submitted that it could not be assumed that that material was brought to the attention of the respondent.
Notwithstanding the delay in the commencement of the proceedings in this Court, I do not consider "that the application was not made within a reasonable time after the decision was made" within the meaning of s 11(4). The applicants commenced the recovery proceedings 2 years into a 6 year limitation period. That time could not be considered unreasonable in respect of those proceedings. The question of whether they were entitled to take those proceedings without having challenged the determination in administrative law
proceedings, although determined against them, was not free of legal difficulty. Indeed, there is no authority directly on the point in Australia and there are inconsistencies in the English decisions in this area. The matter is a substantial one, involving important questions of law and large sums of money. However, the amount in question has to be viewed relatively from the respondent's point of view. It is not such a substantial portion of the respondent's overall budget that the proceedings ought not now be allowed to be brought. Further, it is important to keep in mind the statement of Mason CJ in Royal Insurance to which I have referred above.
It a serious matter for a government authority to retain a tax or charge which has been wrongly or invalidly extracted. There may of course be considerations whereby an authority is entitled to retain such moneys. These are also referred to by Mason CJ in Royal Insurance. I am of the opinion that a government agency ought not to be protected from review of a decision in respect of such a serious matter notwithstanding the delay in this case. This is particularly so when it is borne in mind that the limitation period for the substantive recovery proceedings is 6 years. In all the circumstances, I would not exercise my discretion under s 11(4).
I certify that the preceding 61 pages
are a true copy of the Reasons for Judgment
of the Honourable Justice Beazley.
Associate:
Dated: 21 December 1995.
APPEARANCES
Counsel for the Applicant: Messrs Campbell QC and Sullivan
Solicitors for the Applicant: Messrs Middletons Moore & Bevin
Counsel for the Respondent: Messrs A Robertson & Priestly
Solicitors for the Respondent: Messrs Mallesons Stephens Jaques
Dates of hearing: 4 April 1995
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