Gardener and Australian Prudential Regulation Authority
[2007] AATA 2041
•12 December 2007
Administrative Appeals Tribunal
DECISION AND REASONS FOR DECISION [2007] AATA 2041
ADMINISTRATIVE APPEALS TRIBUNAL )
) No N2006/846
GENERAL ADMINISTRATIVE DIVISION )
Re Justin Herbert GARDENER
Applicant
AndAustralian Prudential Regulation Authority
Respondent
DECISION
TribunalProfessor GD Walker, Deputy President
Date12 December 2007
PlaceSydney
DecisionThe interlocutory application is denied.
...............[sgd]...............................
Professor GD Walker
Deputy President
CATCHWORDS – Jurisdiction of the tribunal to review delegate’s ultra vires decision – tribunal’s jurisdiction stems from the applicable principles of the Administrative Appleals Tribunal Act – tribunal is not required to prejudge the outcome of its review when assessing a jurisdiction application - the invalidity of a decision under review does not deprive the tribunal of jurisdiction.
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RELEVANT ACT/S:
Insurance Act1973 (Cth): ss 24, 25, 63
Administrative Appeals Tribunal Act 1975 (Cth): ss 25, 33, 42B
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CITATIONS
Re Stephenson and APRA [2007] AATA 1577
Re VBJ and APRA [2005] AATA 642
Re Brian Lawlor Automotive Pty Limited and Collector of Customs (NSW) (1978) 1 ALD 167
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Limited (1979) 1 ALD 167, 24 ALR 307
Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services (1992) 28 ALD 50
Secretary, Department of Social Security v Alvaro (1994) 34 ALD 72
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REASONS FOR DECISION
12 December 2007
Professor GD Walker, Deputy President
Basic facts
1. On 3 May 2006, Mr Peter Kennedy, a delegate of APRA, disqualified the applicant under s 25A(1) of the Act (T pp121-122).
2. By letter dated 26 May 2006, the applicant through Piper Alderman Lawyers (Piper Alderman) sought an internal review of the decision to disqualify him pursuant to s 63(2) of the Act (T p123).
3. Piper Alderman’s letter did not set out any reasons for the request for reconsideration of the decision. In his affidavit of 21 November 2007 filed in connection with the present motion, however, Mr Simon Jacob Morris, a partner in Piper Alderman, deposed among other things that on 26 May 2006, he received a telephone call from Mr Mark Godfrey of APRA in the course of which Mr Godfrey pointed out that the request for an internal review gave no reasons for the request. Mr Morris replied that the applicant relied on the reasons set out in his response dated 24 February 2005 to APRA’s show cause letter (T pp52-80). Mr Godfrey agreed that APRA would reconsider the decision on that basis and confirmed that indication in his letter dated 26 May 2006 (T p124).
4. On 15 June 2006, another APRA delegate, Ms Susanne Tongue, wrote to the applicant confirming the disqualification decision (T pp125-147). On 7 July 2007, the applicant applied to this tribunal for review of that decision.
5. The respondent on 12 November 2007, lodged an application seeking orders from this tribunal among other things dismissing Mr Gardener’s application pursuant to either ss 25, 33 or 42B of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act), on the ground that the tribunal lacked jurisdiction to entertain the substantive application.
6. At the hearing, the applicant was represented by Mr John C Kelly SC of counsel instructed by Mr Simon Morris of Piper Alderman Lawyers, while the respondent was represented by Ms Rachel Pepper and Mr Scot Wheelhouse SC both of counsel instructed by Mr Anthony Carter of Sparke Helmore Lawyers. The documents before the tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T documents).
Applicable law
7. The Insurance Act 1973 (Cth) (the Act) provides in s 24 that a “disqualified person” must not be or act as a director, or in certain other senior managerial positions, in the insurance industry. The Australian Prudential Regulation Authority (APRA) is given the power in s 25A(1) to disqualify a person if it is satisfied that the person is “not a fit and proper person to be or to act” in the positions specified in s 24.
8. Persons who have been disqualified, or are otherwise affected by a reviewable decision of the treasurer or APRA, are given certain rights to seek review of such decisions by s 63, which relevantly provides:
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Review of certain decisions
(1)…
(2)A person affected by a reviewable decision of the Treasurer or APRA who is dissatisfied with the decision may, by notice in writing given to the Treasurer or APRA, as the case may be, within the period of 21 days after the day on which the decision first comes to the notice of the person, or within such further period as the Treasurer or APRA, as the case may be, allows, request the Treasurer or APRA, as the case may be, to reconsider the decision.
(3)There shall be set out in the request the reasons for making the request.
(4)Upon receipt of the request, the Treasurer or APRA, as the case may be, shall reconsider the decision and may, subject to subsection (5), confirm or revoke the decision or vary the decision in such manner as the Treasurer or APRA thinks fit.
(5)Where the Treasurer or APRA, as the case may be, does not confirm, revoke or vary a decision before the expiration of the period of 21 days after the day on which the Treasurer or APRA received the request under subsection (2) to reconsider the decision, the Treasurer or APRA shall, upon the expiration of that period, be deemed to have confirmed the decision under subsection (4).
(6)…
(7)Applications may be made to the Administrative Appeals Tribunal for review of decisions of the Treasurer and decisions of APRA that have been confirmed or varied under subsection (4).
(8)…
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The respondent’s submissions
9. The respondent, which was the applicant on the jurisdiction motion, submitted that the tribunal’s role is to determine on the basis of the material before it, whether the respondent’s decision to confirm the disqualification determination is the correct or preferable decision. In so doing, it stands in the shoes of the decision-maker and considers all evidence anew, taking into account the relevant statutory provisions and any legal precedent. The tribunal is not vested with a general discretion to circumvent or supplant or otherwise vary the clear terms of the legislation. Its decision must correspond with the power from which the decision emanates. The internal review procedure created by s 63(2) of the Act requires an applicant for a review of a disqualification decision to put forward, at the time of the request, reasons for that review (s 62(3)). It does not allow an applicant merely to insist that the respondent prove that it had a proper basis for its decision to disqualify.
10. The basic and essential requirement for a valid reconsideration of the original decision to disqualify is the supply of reasons for the reconsideration in the request, under s 63(2).
11. In turn, the jurisdiction of this tribunal under s 63(7) depends on the existence of a state of facts, namely a valid reconsideration of the reviewable decision.
12. The supply of reasons is a precondition for the exercise of the power to review and the requirement for reasons cannot be waived by the respondent. Further, contrarily to the decision in Re Stephenson and APRA [2007] AATA 1577, the reasons accompanying the request made under ss 63(2) and (3) of the Act must relate back to the original disqualification or reviewable decision. That was the principle expressed by Deputy President Forgie in Re VBJ and APRA [2005] AATA 642.
13. As reasons have not been provided, Mr Wheelhouse SC submitted, APRA’s reconsideration decision was a nullity, which therefore left the original disqualification decision standing.
14. Consequently, he said, this tribunal lacks jurisdiction to deal with the substantive application, either because the lack of a valid confirmation meant that a pre-condition for jurisdiction set out in s 63(7) had not been satisfied, or because this tribunal stands in the shoes of APRA when APRA was carrying out its own reconsideration and would therefore dismiss the application because the pre-condition requiring the supply of reasons had not been satisfied.
15. The tribunal’s and the full court of the Federal Court’s decisions in Re Brian Lawlor Automotive Pty Limited and Collector or Customs (NSW) (1978) 1 ALD 167 and Collector of Customs (NSW) v Brian Lawlor Automotive Pty Limited (1979) 1 ALD 167, 24 ALR 307 had no application because the tribunal is here dealing with different legislation containing a specific grant of power to consider the decision anew. Brian Lawlor is of no assistance because it deals with administrative power at large, not in a statutory framework. The tribunal must perform its role in the context of a particular legal structure. No waiver by an APRA officer of the requirement for reasons would be effective to confer jurisdiction on the tribunal. The power to reconsider had not been properly invoked and there was no escape from the precondition by approaching the AAT: Salemi v Minister for Immigration and Ethnic Affairs (No 2) (1977) 14 ALR 1, 4; Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services (1992) 39 FCR 225, 232-233.
16. The source of the tribunal’s jurisdiction in the present case is s 63(7) of the Act, not s 25 of the AAT Act. It is clear from s 63(2), which requires that the notice requesting reconsideration be in writing, that the reasons required by s 63(3) cannot be partly in oral form as in this case. VBJ states the position correctly in that regard and Stephenson was wrongly decided. Neither delegate in this case had accepted that the applicant's letter of response to the show cause notice constituted the supply of reasons. The provisions of s 63(3) must have clear work to do, as they are in the legislation and are expressed in mandatory terms.
17. The reconsideration regime established by s 63 is much clearer than the legislation considered by the High Court in Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 355. A clear obligation is imposed on applicants by s 63(3) of the Act and the use of the word “shall” makes it clear that there is no discretion in the matter. The obligation to supply reasons is be contrasted with the 21-day time limit allowed in s 63(2), which the treasurer or APRA has the power to extend. Parliament’s clear intention from the legislation is that the supply of reasons is an essential preliminary to the exercise of the statutory power in s 63(2). The real question is thus whether the reconsideration power was validly invoked, not whether the original decision had been confirmed or varied, Mr Wheelhouse concluded.
Consideration
18. Neither Stephenson nor VBJ considered the legal question whether the applicant’s failure to comply with his statutory obligation to give reasons deprived this tribunal of jurisdiction to entertain an application for review of the decision in question. As Mr Kelly SC pointed out, both cases turned on findings of fact and both cases held, on somewhat different grounds, that sufficient reasons had been given.
19. The respondent’s motion in this case raises a fundamental question concerning the tribunal’s jurisdiction, namely whether the (assumed) fact that the decision under review was ultra vires, or otherwise a nullity, deprives the tribunal of jurisdiction to review it.
20. That question is normally considered to have been settled by the decisions of the tribunal and the full court of the Federal Court in Brian Lawlor. In the Tribunal’s decision, President Brennan J rejected the argument that a decision made by the Collector of Customs without authority should be treated as a nullity and was therefore not a “decision” that could be reviewed by the tribunal. President Brennan J had this to say:
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Where a decision is made beyond power, the legal effect which the decision-maker seeks to achieve is denied; but that says nothing as to whether the decision may be reviewed, quashed, or otherwise affected by order of a court or of an appeal tribunal. … Where "decision" is used in the provisions of the Administrative Appeals Tribunal Act relating to a right to apply for review, it is referring to a decision made in fact, and not to the effect which the decision may have under the power in the intended exercise of which it was made (1 ALD at 180).
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21. On appeal, Bowen CJ and Smithers J substituted the now-accepted concept of “purported exercise” rather than “intended exercise” of a power. Brian Lawlor was reaffirmed by full Federal Courts in Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services (1992) 28 ALD 50 and in Secretary, Department of Social Security v Alvaro (1994) 34 ALD 72. In those cases, the courts made it clear that the tribunal has jurisdiction to hear an appeal, not only where the decision was defective, but also where the decision-maker was not empowered to make it.
22. In Alvaro, von Doussa J explained that:
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The person or tribunal to whom application for each of the reviews was made had jurisdiction to undertake that review so long as the preceding decision-maker had made what purported to be a decision in exercise of powers conferred by the Act affecting the interests of the person seeking review. It mattered not whether the ground of complaint made about the preceding decision was merely that it is wrong on the merits, or that in law it was not an effective decision because it was made by someone without authority, or in excess of authority, or for improper purposes, or was vitiated through procedural irregularity such as a failure to accord natural justice.
The purpose of a review provided for by the Act is to allow the reviewing authority to correct error and substitute a new decision where error is detected. … (34 ALD at 78)
23. The respondent submitted that Brian Lawlor was of no assistance in the present case because it dealt with administrative power at large, not in a statutory framework. In this case, that framework is supplied by s 63 of the Act. The source of the tribunal’s jurisdiction is s 63(7), not s 25 of the AAT Act, Mr Wheelhouse said.
24. But Brian Lawlor involved the scope of the Controller’s powers under the Customs Act 1901 (Cth) and was thus dealing with a statutory framework, though not one embodying an express reconsideration procedure. In any event, nothing in their Honours’ respective reasons suggests that their views on the question of jurisdiction turned on the particular statutory provisions in issue. On the contrary, as will be shown more fully below, their Honours were concerned to dissipate doubts about the tribunal’s jurisdiction by stating a general principle and by pointing out the purpose of the legislation and the inconvenience of the alternative approach.
25. Further, it is impossible to see how s 25 of the AAT Act could not be part of the basis for the tribunal’s jurisdiction in the present case. That section declares that an enactment may provide that applications may be made to the tribunal for the review of decisions made in the exercise of powers conferred by that enactment. Section 63(7) precisely answers the description of such an enactment, providing as it does that applications may be made to the tribunal for review of decisions of the Treasurer and APRA that have been confirmed or varied under s 63(4). The tribunal’s jurisdiction to hear the application thus stems from both those provisions together, not simply from s 63(7).
26. The respondent also relies on certain passages in Brian Lawlor. Mr Wheelhouse, referring to the remarks of Smithers J at page 340, submitted that even if the decision under review were a nullity, a review by the tribunal could conclude that it was indeed a nullity. The effect of Bowen CJ’s observations (at p317) was that even if the tribunal has jurisdiction, that would only put it in the position of the delegate reconsidering the disqualification decision, who lacked the power to carry out the reconsideration because the power had not been validly invoked. If the tribunal were to hear the application, it would be in the same position as the tribunal in Hospital Benefit, which, the Full Federal Court concluded, had incorrectly failed to entertain the applicant's point that the minister lacked the power to make the declaration in issue (39 FCR at 232).
27. Those passages all make it clear, however, that the invalidity of the decision under review does not deprive the tribunal of jurisdiction. Their Honours are saying no more than that in arriving at the correct and preferable decision, the tribunal can and must consider whether the decision under review was made without power, if that has been raised as an issue. Bowen CJ makes the point quite clear in this passage:
… When the applicant asserted the decision was legally invalid due to absence of power, he was mistaken in describing this as a “Jurisdictional point”. The Tribunal had jurisdiction and was entitled to determine the legal question raised before it (24 ALR at p317).
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28. The conclusions expressed by President Brennan J in Brian Lawlor illustrate in more concrete terms the working of the process:
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For these reasons, I hold that the Collector in deciding to revoke the applicant's licence acted beyond the powers conferred by s78 of the Customs Act but in the intended exercise of powers which he wrongly conceived to be vested in him by that section; that he nonetheless made a decision which is a reviewable decision; that this Tribunal should review the decision and set it aside because it was made beyond power; and that the Tribunal should substitute its own decision that no action be taken purporting to revoke the applicant's licence.
The Tribunal's decision will be in these terms (1 ALD at 181-182).
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29. The correctness of that approach stemmed from the tribunal’s statutory function:
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Part of the Tribunal's function in securing sound administration consists in confining the administrator to the powers conferred upon him and to the lawful mode of exercising those powers; and the effectiveness of the Tribunal's function would be grievously weakened if it were impotent to check excesses of power.
Yet a literal construction of the phrase "made in the exercise of powers conferred by an enactment" in s 25(1) would exclude the availability of the Tribunal's remedies from those decisions or parts of decisions which a court would hold to be outside the decision-maker's powers. It is manifestly inconvenient to deny the Tribunal's remedies to correct an error affecting an administrative decision merely because the error would lead a court, if the matter were litigated, to hold that the decision was invalid (1 ALD at 177-178).
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30. His Honour went on to detail the cost and inconvenience of adopting a different approach:
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If a literal construction of s25(1) were adopted, the non-fulfilment or non-observance of the conditions governing the valid exercise of powers would go without correction by the Tribunal. Further, its remedies would be excluded if the decision-maker took irrelevant considerations into account in exercising a discretion or used his discretion to thwart or run counter to the policy of the statute (Padfield v Minister of Agriculture and Fisheries [1968] AC 997), or, misunderstanding the nature of the matter for his decision, failed to decide it (Green v. Daniels (1977) 13 ALR 1) or did not act fairly in exercising his power (Heatley v Tasmanian Racing and Gaming Commission (1977) 14 ALR 519). The inconvenience of this construction would appear even more manifest if the invalidity should appear only in the course of a hearing before the Tribunal. Then the Tribunal, perceiving the injustice done by the excess of power, would be constrained to send the applicant away without remedy, comforting him with the advice that if he should bring proceedings in a court of competent jurisdiction to challenge the validity of the decision, and if the court should determine the issues in the same way as they appeared to the Tribunal, the decision would be held invalid, and the applicant might then expect that the decision-maker should start again and, provided the decision-maker did not make a similar error, a fresh unfavourable decision could be brought up for review before the Tribunal once more. It seems absurd that immunity from review could be secured by proof that the decision-maker's exercise of power so far miscarried as not to be a valid exercise of the power at all (1 ALD at 178).
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31. On appeal, Smithers J made it clear that the question of jurisdiction in such cases did not turn on the particular structure of the legislation empowering the decision under review, or on general administrative law principles, but principally on the nature and objects of the AAT Act:
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It is a possible view that the Tribunal lacks jurisdiction to review a decision which there is simply no power to make, but has jurisdiction whether there is conditional power to make such a decision whether or not the condition is satisfied. However, in the light of the observations following, it is my opinion that the solution of the problem is not to be found in the division of unauthorized decisions into those two categories. Rather it is to be found in the nature and objects of the Administrative Appeals Tribunal Act and in particular in the construction of the terms in which reviewable decisions are defined in ss 25 and 26, and the Schedule to that Act (24 ALR at 332).
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32. His Honour concluded that the AAT Act had to be construed as giving the tribunal jurisdiction to review invalid decisions:
… But to construe the Act as providing for the review of only such errors would leave untouched those administrative acts which are invalid and legally ineffective for one reason or another, but were performed in the course of action falling within the general purposes of a statute. To my mind such a situation would not be compatible with the objective of the Administrative Appeals Tribunal Act. If administrative decisions are to be subjected to review in the course of good government exclusion from review of decisions made without power would remove from review those decisions most in need of review. … (24 ALR at 335).
33. Bowen CJ was of the same opinion:
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The context of the Act appears to me to point against the adoption of interpretation (a) [that the tribunal could review only legally effective exercises of power]. The Act is clearly intended to give a person whose interests are affected by an administrative decision an effective appeal, free of technicalities, against that decision on questions of fact and of law: see ss 25, 27, 28, 31, 33, 42 and 44. The adoption of interpretation (a) would remove the most significant area involving questions of law from the jurisdiction of the Tribunal. It would render the appeal in many cases useless. … (24 ALR at 314).
34. It is thus clear that the respective judgments in Brian Lawlor do not rest on the particular structure of the empowering provisions in the Customs Act or on the general law, but on a purposive construction of the AAT Act. I therefore conclude that the principles stated in Brian Lawlor, and the subsequent cases that have adopted and elaborated them, govern the present application.
35. The respondent’s argument, it seems to me, asks the tribunal on a jurisdiction application to prejudge the outcome of its review. One possible outcome of that review might be that the tribunal could reach the conclusion that, for one reason or another, the original disqualification decision stands, but it is neither necessary nor appropriate to express a view on that at this stage. All that the tribunal need decide for the purposes of the present application is whether or not it has jurisdiction to entertain the substantive application. I conclude that it has.
36. The interlocutory application is denied.
I certify that the 36 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President
Signed: ....................[sgd]....................................................
R. Wallace, AssociateDate/s of Hearing: 26 November 2007
Date of Decision: 12 December 2007
Solicitor for the Applicant: Mr S Morris, Piper Alderman
Counsel for the Applicant: Mr JC Kelly SC
Solicitor for the Respondent: Mr A Carter, Sparke Helmore
Counsel for the Respondent: Mr S Wheelhouse SC and Ms R Pepper
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