New South Wales Land and Housing Corporation v Navazi
[2013] NSWCA 431
•12 December 2013
Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: New South Wales Land and Housing Corporation v Navazi [2013] NSWCA 431 Hearing dates: 27/11/2013 Decision date: 12 December 2013 Before: Basten JA at [1];
Barrett JA at [7];
Leeming JA at [8]Decision: 1. Appeal allowed.
2. The orders made on 12 June 2013 be set aside, and in lieu thereof, Mr Navazi's amended summons be dismissed.
3. Mr Navazi to pay the Corporation's costs at first instance and on appeal.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: ADMINISTRATIVE LAW - judicial review at common law - decision under Housing Act 2001 to cancel rental rebate retrospectively - whether investigation under s 58 conducted - nature of "investigation" required by Housing Act - whether necessary to have regard to weekly income - whether error in relying on ownership of other residential property - construction of Ministerial policy - Housing Act 2001 (NSW), s 57, 58
ADMINISTRATIVE LAW - delegation and agency - Carltona principle - Housing Act authorises delegation and authorisation of agent - investigation and decision authorised - Housing Act 2001 (NSW), ss 6, 15Legislation Cited: Housing Act 2001 (NSW), s 15, s 57, s 58, s 6(3)
Housing Amendment (Tenant Fraud) Act 2008 (NSW)
Independent Commission Against Corruption Act 1988 (NSW)
Police Integrity Commission Act 1996 (NSW)
Supreme Court Act 1970 (NSW)Cases Cited: Australian Crime Commission v OK [2010] FCAFC 61; 185 FCR 258
Carltona Ltd v Commissioner of Works [1943] 2 All ER 560
Dalton v NSW Crime Commission [2006] HCA 17; 227 CLR 490
Klein v Domus Pty Ltd (1963) 109 CLR 467
Minister Administering the Crown Lands Act v New South Wales Aboriginal Land Council [2009] NSWCA 352; 117 LGERA 56
Minister for Immigration and Citizenship v Li [2013] HCA 18; 87 ALJR 618
O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1
Plaintiff M61/2010E v Commonwealth of Australia [2010] HCA 41; 243 CLR 319
Re Patterson; Ex parte Taylor [2001] HCA 51; 207 CLR 391
Rich v Australian Securities and Investments Commission [2004] HCA 42; 220 CLR 129
Sinkovich v Attorney General of New South Wales [2013] NSWCA 383
Taciak v Commissioner of Australian Federal Police [1995] FCA 650; 59 FCR 285
Wallaby Grip Limited v QBE Insurance (Australia) Ltd [2010] HCA 9; 240 CLR 444Texts Cited: Aronson and Groves, Judicial Review of Administrative Action (5th ed, 2013) Category: Principal judgment Parties: New South Wales Land & Housing Corporation (appellant)
Ali Navazi (also known as Nowronzali Navazihakani) (respondent)Representation: Counsel:
JD Smith; V McWilliam (appellant)
G Johnson SC; P Bambagiotti (respondent)
Solicitors:
NSW Department of Family and Community Services (Housing NSW) (appellant)
Salvos Legal Humanitarian (respondent)
File Number(s): 2013/113064 Decision under appeal
- Jurisdiction:
- 9111
- Citation:
- [2013] NSWSC 138
- Date of Decision:
- 2013-04-04 00:00:00
- Before:
- Rothman J
- File Number(s):
- 2012/201252
Judgment
BASTEN JA: For some years the respondent, Mr Ali Navazi, was a tenant of the appellant Land and Housing Corporation ("the Corporation") and in receipt of a rental rebate. In March 2010 an officer in the Department of Housing determined that the respondent's rental rebate should be cancelled, retrospectively from June 2003. The respondent challenged the validity of that decision by proceedings for judicial review brought in the Common Law Division of the Court. The primary judge (Rothman J) held that the decision should be quashed, primarily on the ground that the Corporation had no power to cancel the rental rebate without conducting an investigation under s 58 of the Housing Act 2001 (NSW) for the purpose of determining the weekly income of the respondent; a task which he held had not been undertaken: Navazi v New South Wales Land & Housing Corporation [2013] NSWSC 138. The Corporation has appealed from that decision.
For the reasons given by Leeming JA, the appeal should be allowed and orders made as proposed in his judgment.
As Leeming JA explains, the parties approached the operation of s 57 of the Housing Act (set out at [27] below) on the basis that it imposed a jurisdictional precondition to the exercise of the power to grant, vary or cancel a rental rebate, which operated in every case. Because the investigation provided by s 58 is directed to determining the weekly income of the person, whereas it may readily be envisaged that a person may be ineligible on other grounds, it is at least arguable that s 58 does not operate in all cases. In any event, the two sections, read together, should not be construed to impose any more restrictive condition than that explained by Leeming JA. The statute imposed no express parameters on the extent of the "investigation", the content of which will clearly depend upon the circumstances of the individual case. There is no basis to imply any legal constraint beyond the purpose identified in s 58. Nor need the purpose of determining weekly income be the sole or dominant purpose of the inquiry.
The primary judge considered that the investigation should reach a conclusion as to the weekly income of an applicant for, or recipient of, a rental rebate. The implication of such a requirement would be that the statute precludes the refusal of an application, and the variation or cancellation of a rental rebate once granted, except on the ground of weekly income (albeit at an unspecified level). Again, there is no reason to read the statute so restrictively.
Finally, the respondent sought to rely upon an argument which the primary judge did not need to address, concerning the validity of the "delegation" of authority to the decision-maker. There is a statutory power of delegation conferred on the Corporation, but there is no need to rely on that concept to justify the authority of the decision-maker to act as she did. It is clear that she had authority of the Director-General, in accordance with s 6(3) of the Housing Act, as explained by Leeming JA.
Where a statute confers power on a corporation or officer, without a power of delegation, the seniority of the officer, the nature of the power and the potential frequency for its application, may lead to the conclusion that Parliament did not intend that the power could only be exercised by the repository personally, but could act through agents, usually being other officers in the public service. This principle of statutory interpretation is known as the Carltona principle, by reference to Carltona Ltd v Commissioner of Works [1943] 2 All ER 560 in which its operation was explained: see generally Aronson and Groves, Judicial Review of Administrative Action (5th ed, 2013) at [6.130]-[6.150]. Even where a specific power of delegation is contained within the relevant statute, the other considerations may nevertheless give rise to the inference that designated decision-makers could act through agents. The terms of s 6(3), providing that, quite apart from the power of delegation, the acts of the Director-General or a person acting with the authority of the Director-General are taken to have been done by the Corporation, constitute a statutory recognition and application of the Carltona principle. For the reasons given by Leeming JA, the respondent's contention to the contrary was not made good.
BARRETT JA: As Leeming JA's discussion of the statutory provisions makes plain, the power to cancel a rental rebate cannot lawfully be exercised unless a process of investigation to determine weekly income of relevant persons has been undertaken but, bearing in mind the purposes for which the rental rebate provisions and the cancellation power exist, the considerations relevant to the due exercise of the power are not confined either to matters discovered upon such investigation or to matters pertaining to income. The orders that his Honour proposes should be made for the reasons he gives.
LEEMING JA: The appellant is established under the Housing Act 2001 (NSW) (Act). The Act refers throughout to the appellant as the "Corporation", and these reasons will do likewise. One of the Corporation's main functions is making available subsidised public housing. It leased premises to the respondent, Mr Ali Navazi, in Brookvale from 1995, after modifying them to suit him (Mr Navazi is described variously in the evidence as a paraplegic and a functional quadriplegic, and is wheelchair bound).
For many years Mr Navazi had applied for, and has received, a rental subsidy from the Corporation. In support of those applications he declared his income as a Centrelink disability support pension. Mr Navazi's wife receives a carer pension, which was also declared. At no time was any additional income declared. At no time did Mr Navazi declare an interest in any other real property.
When Mr Navazi applied for rental subsidy, he was asked to state his income and his assets. For the latter, the earliest application form in evidence asked "Do you, your spouse or anyone in this application own or part own any property including a house, unit, land or commercial property"; Mr Navazi ticked the "no" box. On application forms in 2006 and 2007 he was asked "If you or your household members have assets (eg land, savings, property, investments, shares) that are not shown in the table above, please include them in the space provided below". Nothing was recorded in that section of the form. Immediately below that section, and immediately above his signature, the form stated:
"I declare that the information above, which will be used to calculate my rental subsidy, is true and complete. I understand that if any household members or income have been left out, the Department may cancel my subsidy and I may have to pay the full Weekly Rent under my tenancy agreement for the entire period of the subsidy. I understand also that the Department reserves the right to cancel any subsidy which it may have granted at any time where it has reason to believe that the information provided is incomplete, inaccurate or misleading."
Section 69(1) of the Act makes it an offence wilfully to make a false statement or representation to obtain or claim from the Corporation a rental rebate, or to deceive any officer or employee of the Corporation in relation to obtaining a rental rebate.
On 3 February 2009 an investigator in what was described as the Tenant Fraud Unit received a referral in relation to a telephone call alleging that the respondent owned 11 properties with his friend Mr Mohammed Djavad Zaree. The caller did not wish her identity to be revealed. She claimed that she rented a property from them. The investigator found that the respondent and Mr Zaree had acquired a property at Dee Why in June 2003 for a purchase price of $326,000, which property had been subject to a registered mortgage to National Australia Bank Ltd and was sold in January 2008, for $355,000. She also found that the respondent and Mr Zaree had purchased another property in Brookvale in January 2004 at a price of $685,000, which was subject to a registered mortgage to Westpac Banking Corporation, and she obtained from the complainant a copy of her residential tenancy agreement with Mr Navazi and Mr Zaree.
In his 1995 tenancy agreement with the Corporation, the respondent was known as Ali Navazi. He told the Corporation in 2001 that his name was Nowronzali Navazihakani. However, the Dee Why property was bought and sold, and the Brookvale property bought and let to the complainant, using the name Ali Navazi.
In the middle of 2009, Ms Alison Morgan, then the Acting Manager of the Tenant Fraud Unit, took over the matter. She wrote to the Commissioner for Fair Trading stating that the Unit had received an allegation that the respondent was a joint owner of property and might be receiving rental income from it which had not been declared to the Corporation, as a result of which he might be receiving a housing benefit to which he was not entitled. She referred to the offence-creating provisions of s 69 and s 69A of the Act, and said that the Corporation was authorised to undertake an investigation pursuant to s 58. She requested information relating to the renting of the Dee Why and Brookvale properties. The response included that a rental bond of $980 had been lodged in 2006 and refunded in 2009 at the Dee Why property, and that bonds in the amount of $1,140 had been lodged and refunded between 2001 and 2006 in relation to the Brookvale property.
Ms Morgan wrote three letters to Mr Navazi. The first two, dated 26 October and 17 November 2009, referred to an investigation concerning alleged breaches of s 69 and s 69A of the Act and stated that if the offences were proved "you may have been receiving a housing benefit to which you are not entitled". They advised that a contravention might result in serious and/or criminal sanctions being imposed, including up to three months in jail and a fine of up to $2,200. Each of the first two letters stated:
"Specifically, the investigation concerns the following issues:
1. That you failed to notify Housing NSW that you had jointly purchased property (Lot 3/SP1214) at XXXXX X, Dee Why in June 2003, and that this property was sold in January 2008.
2. That you failed to notify Housing NSW that you received rental income from the property at XXXXX X, Dee Why between June 2003 and January 2008.
3. That you failed to notify Housing NSW that you had jointly purchased property (Lot 37/35184) at XXXXX X, Brookvale in January 2004.
4. That you failed to notify Housing NSW that you have received rental income from the property at XXXXX X, Brookvale since January 2004.
5. That you signed Application for Rental Subsidy forms on the 8th October 2004, 8th June 2006 and 11th May 2007 in which you falsely ticked the 'no' box to question number 7 that asks Do you, your spouse, or anyone in this application own or part own any property including a house, unit, land or commercial property?"
In each letter, Mr Navazi was invited to participate in an interview, which would "allow you the opportunity to provide any relevant information about this matter". However, the letters said:
"You DO NOT have to attend this interview if you wish to retain your right to silence. If you choose not to attend this interview Housing NSW will continue to investigate this matter without the benefit of the information you may otherwise have provided".
Two letters in similar terms were sent because it appeared that the respondent was out of Australia until early November 2009.
The third letter, dated 1 December 2009, was a response to the respondent's request for further time. It again invited his participation in an interview and again advised that he did not have to attend. Ms Morgan then stated:
"At this stage we have evidence that indicates that you have failed to notify Housing NSW that you have jointly owned properties in Brookvale and Dee Why since June 2003, and that you have been receiving rental income from these properties. Without evidence from you to refute these allegations Housing NSW will cancel the rental rebates you have received since this time. This will result in a significant debt being placed upon rental account (approximately $90,000). This action is also likely to result in the termination of your tenancy, and could also result in a criminal prosecution against you for breaches of Section 69 of the Housing Act 2001.
Before this matter is progressed any further I would again like to offer you the opportunity of coming in to our office in Dee Why, Ashfield or Sussex Street in the City for an interview. Each of these offices is accessible for wheelchairs. This interview will allow you the opportunity to provide any relevant information about this matter."
An interview was scheduled, after Mr Navazi had obtained representation from the Northern Area Tenants' Service. The proposed interview was postponed at Mr Navazi's request for two weeks, and ultimately did not proceed.
On 12 February 2010, Ms Morgan produced a document described as a "Final Investigation Report", which was a five page document accompanied by some 161 pages of primary documents. It is plain from its terms that Ms Morgan considered each of the five matters identified in her letters of 26 October and 17 November 2009 to be established. By way of example, the evidence collected supportive of the allegation that Mr Navazi had received rental income from the Brookvale property included:
- the application for tenancy completed by the complainant, which referred to a rental of $245 per week
- the residential tenancy agreement for that property, which referred to rent being payable at $490 per fortnight
- a bond lodgement advice and Centrelink rent certificate (the bond was in the amount of $980, ie, four weeks' rent).
The report also referred to the property acquisitions and disposal, the applications for rental subsidy completed by Mr Navazi in which he had denied owning any property, the history of the investigation and the respondent's declining to attend interviews or provide any further information, and a history of his tenancy.
The report contained seven recommendations. Four were directed to the "Client Service Team", and three to the "Legal Services Branch":
"Recommended actions - Client Service Team
1. It is recommended that Mr Navazihakani immediately have his rental subsidy cancelled and he return to paying market rent.
2. It is recommended that Mr Navazihakani's rental subsidies be cancelled back to the date he purchased the first property, 23 June 2003.
3. Action be taken in the CTTT to end the tenancy.
4. Reasonable time is provided to Mr Navazihakani to arrange suitable alternative accommodation in light of his health issues and the fact that he needs accommodation that is accessible for his wheel chair.
Recommended actions - Legal Services Branch:
1. Consideration be given to referring the matter to the DPP for prosecution under the Crimes Act owing to the length of time the fraud has continued (almost 7 years) and the quantum of the fraud (estimate approximately $90,000).
2. If this is not possible, action be taken to charge Mr Navazihakani under Sect 69(2) for the previously six months of rental subsidies fraudulently claimed.
3. Action be taken under Section 72B to place a registration of debt on the property xxxxxx Brookvale, to ensure HNSW can recover the debt owed."
Ms Morgan sent a memorandum enclosing her Final Investigation Report to the Acting Area Director Northern Suburbs. Mr Navazi relied on the emphasis given in it to undeclared property ownership in support of his submission that the power to cancel his rental rebate was not enlivened. Ms Morgan's letter stated that the Tenant Fraud Unit had been investigating a matter of undeclared property ownership against Mr Navazi. She referred to the four recommendations directed to the Client Service Team, and added:
"The matter has also been referred to Legal Services Branch for them to pursue criminal action against Mr Navazihakani and to consider an action under Sect 72B to place a statutory charge on the property owned by Mr Navazihakani in order to recover the debt owed to HNSW. In order for this to happen the debt will first need to be raised on his account.
The hard copy T-file and investigation file (HOA/15455) are with [Legal Services Branch]. I have attached scanned copies of the proof of property ownership which should be all you need to cancel the subsidies."
A briefing note was prepared recommending the course proposed by Ms Morgan. The briefing note was approved by the Acting Area Director Northern Suburbs and "actioned" to Ms Kathy Roil, General Manager Central Sydney Division. The decision the subject of these proceedings was ultimately made by Ms Roil in these terms:
"Cancellation of subsidy approved. Please ensure appropriate notification is made to the tenant regarding this course of action so that he understands that this will happen and what this will mean for his arrears."
Ms Roil's decision was communicated to Mr Navazi by letter from Ms Morgan dated 29 March 2010, relevantly in these terms:
"Following advice received from your legal adviser (Maggie) from Legal Aid at Manly, by telephone on 3 February 2010 I understand that you do not wish to provide any information to Housing NSW concerning this matter. Accordingly I have made the following recommendations to the Area Director:
1. That your rental subsidy be cancelled as you currently do not meet the eligibility requirements (as you are a joint owner of property), and
2. That your rental subsidy be retrospectively cancelled from June 2003 (the date on which you first purchased property).
These recommendations have been accepted and your rental subsidy has been cancelled. You will be advised in writing of the exact details of your new rent and the debt that has ensued. You are able to appeal this decision if you wish, and I have enclosed a copy of the information sheet related to the appeals process."
Mr Navazi exercised his rights of internal review and appeal, but nothing turns upon that for present purposes. The Court was told that the internal appeal had no basis in statute, and the litigation was conducted at trial and in this Court on the basis that the only decision which affected the rights and liabilities of the parties was that made by Ms Roil on or about 24 February 2010 and notified on 29 March 2010.
In two other respects the parties confined the issues for determination. The Corporation said that no argument would be raised by it by reason of delay or any other discretionary matter, and his Honour acceded to that course. For his part, Mr Navazi confined his claim to jurisdictional error in the purported cancellation decision. It follows that no claim was advanced at trial, or an appeal, based on error of law on the face of the record, and in particular, it is unnecessary to determine what in fact the "record" is; cf Sinkovich v Attorney General of New South Wales [2013] NSWCA 383 at [75], or whether Ms Roil is a "tribunal" for the purposes of s 69(4) of the Supreme Court Act 1970 (NSW).
Part 7 of the Act
Part 7 of the Act applied, relevantly, to tenants renting public housing, such as Mr Navazi. Section 55 empowers a tenant to make application to the Corporation for a weekly rebate of rental. The application may be granted after making an investigation under s 58, and is to be determined in accordance with guidelines approved by the Minister. Section 57 and s 58, which are critical to the appeal, are in these terms:
"57
Cancellation or variation of rental rebate
(1)
The Corporation may, after conducting an investigation under section 58, vary or cancel any rental rebate granted under this Part.
(2)
The Corporation is to determine the date (being a date occurring before, on or after the making of the determination) on which the variation or cancellation has effect or is taken to have effect.
(3)
The Corporation is to give notice in writing to a tenant of any decision to vary or cancel any rental rebate being received by the tenant and is to include in the notice the date on which the variation or cancellation takes effect or is taken to have effect.
(4)
If the Corporation reduces or cancels a tenant's rental rebate under this Part with effect from a preceding date, the Corporation may, by notice in writing to the tenant, require the tenant to pay to the Corporation:
(a)
an amount equal to any rental rebate or part of a rental rebate received by the tenant on or after the date that the variation or cancellation took effect to which, because of the variation or cancellation, the tenant was not entitled, and
(b)
interest (at the rate prescribed under section 101 of the Civil Procedure Act 2005 in respect of unpaid judgments) on any outstanding amount under paragraph (a) from a date specified in the notice, being a date not earlier than the date on which the notice is issued to the tenant.
(5)
Any amount (together with interest) referred to in subsection (4) that is unpaid may be recovered by the Corporation as a debt in any court of competent jurisdiction.
58
Investigation of application
(1)
The Corporation may make an investigation to determine the weekly income of:
(a)
a person who is an applicant for, or a recipient of, a rental rebate under this Part, and
(b)
any other resident of the house in which that person resides.
(2)
The Corporation may require a person who is an applicant for, or a recipient of, a rental rebate under this Part to produce such evidence as the Corporation thinks fit of the person's weekly income and of the weekly income of any other resident of the house in which that person resides."
It is convenient to make four points immediately. First, the Corporation confined its submissions to s 57 as the sole source of power. Accordingly, there is no occasion to consider whether there may be an alternative source of power to support the cancellation of the respondent's rental rebate.
Secondly, both at first instance and on appeal it has been common ground that the power to vary or cancel rental rebate in s 57(1) depended upon the Corporation conducting an investigation under s 58.
Thirdly, it may be seen that the text of s 58 reflects the two roles it performs: an investigation prior to the granting of a rental rebate (hence the references to "an applicant for") and an investigation prior to the variation or cancellation of a rental rebate previously granted (hence the references to "a recipient of").
Finally, the power to "require" production of evidence conferred by s 58(2) makes no attempt to displace privileges such as that against self-incrimination. Nor for that matter is there any sanction to enforce compliance. Although "require" is a natural word to describe a compulsive power (cf Dalton v NSW Crime Commission [2006] HCA 17; 227 CLR 490 at [50]), that is not the nature of the power conferred by s 58(2). There is no power to compel the provision of any information. Still less does the section abrogate privileges against self-incrimination or exposure to penalties. Neither party suggested to the contrary. Although the "right to silence" is better described as a privilege or immunity: Australian Crime Commission v OK [2010] FCAFC 61; 185 FCR 258 at [38]-[43], Ms Morgan was correct in substance when writing to Mr Navazi to advise that he had a "right to silence" and did not need to participate in the interview she proposed. It will be seen below that the limitations upon the Corporation's power play an important part in identifying the nature of the precondition to the exercise of power under s 57(1).
The reasoning of the primary judge
There can be no doubt that the Corporation had conducted an investigation. However, Mr Navazi contended, and the primary judge accepted, that the precondition to the exercise of the power to cancel, "after conducting an investigation under section 58", was only satisfied if (a) the investigation was to determine the weekly income of Mr Navazi, and (b) the investigation had concluded. The primary judge found, on the evidence before him, that the Corporation not only had not determined Mr Navazi's weekly income, but also that it had not investigated in order to determine his weekly income: at [71]. Instead, his Honour found:
"The investigation that was conducted, whatever was its subjective intent, was not an investigation 'to determine the weekly income of Mr Navazi'. The investigation was not an investigation under s 58 of the Housing Act."
Consequently, his Honour found that the s 57(1) power had not been enlivened.
Secondly, his Honour concluded that the power under s 57(1) could not be exercised without regard being had to the respondent's weekly income, if his weekly income was capable of ascertainment. In other words, the primary judge found that if it were capable of ascertainment, the respondent's weekly income was a mandatory relevant consideration, the failure to have regard to which vitiated the exercise of the power: at [74]-[77].
Thirdly, his Honour criticised reliance by the Corporation on the fact that the respondent owned and had let property. His Honour referred to a policy document which included the following:
"Tenants who own or have a Share in Real Estate
If a tenant (or their partner) owns or has a share in a property that could provide a viable alternative to public housing or a SAS tenancy they will not get a rent subsidy. Housing NSW expects them to live in that property or to sell the equity in the property to meet their housing needs.
If a tenant or their partner is leasing the property to another person they are not eligible for a rent subsidy (irrespective of the rent earned).
Any income generated by the property will be treated as non-statutory income in cases where the tenant or their partner only has a part share in the property. In this circumstance Housing NSW will only assess the part share of property income.
Housing NSW may not consider the property, its value or any income generated by it for the subsidy assessment where the property is:
in an isolated location
an extremely run-down dwelling
overseas
tied up in a legal dispute and income cannot be generated from it.
If another household member owns or has a partial share in a property in Australia, Housing NSW will treat this as an asset unless an income is derived from the property. The tenant may receive a rent subsidy and the value of the property is included in assessment of the household's income and assets.
Where a client has an interest in a block of land we do not consider this in their rent subsidy assessment."
His Honour noted that there was no evidence that the Corporation had investigated or determined whether the property owned by the respondent could have provided a viable alternative to the public housing that was provided. His Honour considered that the focus in the investigation and decision upon the ownership of other property was insufficient - his Honour said (at [95]-[96]):
"Moreover, it is clear that mere ownership, without more, of property does not disentitle a tenant from receiving a rebate. The property owned must be suitable alternative accommodation. Again, giving the statute a construction that achieves harmonious goals, the cancellation of a rebate cannot be occasioned by the mere ownership of property, unless that property is suitable alternative accommodation.
To the extent that the Corporation has taken into account the ownership of property in the way already described, it has asked itself the wrong question and taken into account a consideration that is irrelevant and wrongly constrained the exercise of power or discretion it was undertaking."
By its appeal (which was as of right, because Mr Navazi's debt which was created by the decision exceeded $100,000), the Corporation challenged each of his Honour's conclusions. His Honour also referred to, but did not need to decide, two related questions relating to delegation. Mr Navazi had submitted that there was no valid delegation of authority either upon the officers of the Corporation making the s 58 investigation, or upon Ms Roil who purported to exercise power pursuant to s 57(1). By notice of contention, he sought to uphold the judgment on those bases.
I respectfully disagree with each reason given by his Honour to invalidate the decision to cancel Mr Navazi's rental subsidy. I address each in turn, before turning to delegation and agency.
(a) An investigation under section 58 was conducted
It is wrong to construe s 57 on the basis that the investigation it contemplates must have a single purpose. An "investigation" is merely a series of inquiries and analysis directed to a particular topic. It is to be contrasted with a decision as to the action to be taken on the basis of the facts ascertained: Taciak v Commissioner of Australian Federal Police [1995] FCA 650; 59 FCR 285 at 294 (Sackville J). There is no reason why an investigation may not have multiple characters and multiple purposes, and, to paraphrase what was said of legal proceedings in Rich v Australian Securities and Investments Commission [2004] HCA 42; 220 CLR 129 at [35] (original emphasis), "That [an investigation] may bear several characters does not deny that it bears each of those characters". There is no reason why its nature might not change as it proceeds - an investigation which commenced on the basis that there had been an alteration in a person's financial circumstances might midcourse become an investigation into fraud. The reverse is also possible: an investigation into suspected fraud may transmute into one involving innocent mistake.
There is no support in the text of the statute, which is concise and leaves much unstated, for a narrow meaning to be given to what is an "investigation". The nature of the Act is such that often the investigations will involve relatively small amounts of money, for s 55 requires there to be an investigation under s 58 in every case before a grant of rental rebate is made. It is obvious that many or most of the thousands of "investigations" will be short and informal. The Act may be contrasted with the formal investigations by bodies such as the Police Integrity Commission and the Independent Commission Against Corruption, whose legislation confers compulsive powers, and imposes reporting obligations (see Police Integrity Commission Act 1996 (NSW), ss 23-66 and s 96 and Independent Commission Against Corruption Act 1988 (NSW), ss 20-52 and ss 73-79). In short, the statutory text (particularly its generality and the absence of compulsive powers) seen in its context (hundreds or thousands of investigations) compels the conclusion that something relatively informal will amount to an "investigation under section 58".
An investigation by a body such as the Corporation may involve inquiries relying on no statutory power. One such inquiry may be speaking with a complainant. It may also involve the limited powers conferred by s 69B to obtain information from various registers including those relating to real property and motor vehicles. In any investigation, there will come a time when further inquiries and analysis are unlikely to result in useful additional information. The results are then likely to be recorded in a document. Here, that document was the Final Investigation Report.
Although it may seem self-evident, it should be said that the character of a written report following an investigation has nothing to do with the subjective states of mind of the persons involved in it, save perhaps in an exceptional case (say, where there is an allegation of sham or bad faith). In the present case, what Ms Morgan or anyone else thought he or she was doing between February 2009 and February 2010 was irrelevant to determining the character of the investigation. The evidence led by the Corporation was inadmissible on that issue, although admitted, and the cross-examination which ensued was likewise irrelevant.
Ms Morgan's Final Investigation Report reflects an investigation which had multiple purposes. One aspect, which was probably the dominant aspect, was the allegation and finding of fraud, leading to recommendations to the Legal Services Branch. An applicant for rental rebate who wilfully makes false statements about his or her assets might commit a fraud upon the Corporation, within the scope of s 69, irrespective of anything to do with the applicant's weekly income.
However, another aspect of the investigation which resulted in the Final Investigation Report was Mr Navazi's weekly income. The investigation uncovered abundant evidence that Mr Navazi was receiving a share of $245 per week from the complainant. It uncovered abundant evidence that the nature of that income was rent, pursuant to the lease which he and Mr Zaree had granted of the residential property they owned. Ms Morgan's Final Investigation Report summarised and attached the primary documents relevant to that issue.
True it is that the investigation did not in fact determine Mr Navazi's weekly income. But one important aspect of the investigation was directed to the receipt of rental income, and indeed some primary evidence of that income was obtained.
It is not a precondition to the exercise of the cancellation power that the investigation result in a definite answer as to the person's weekly income. At one stage Mr Navazi appeared to submit that there could not be an "investigation to determine the weekly income" unless there was in fact a determination of weekly income. That submission must be rejected, because the words "to determine the weekly income" refer to a purpose (which for reasons earlier stated need not be the only purpose), as opposed to the fulfilment of that purpose. In the present case, the weekly income of Mr Navazi was not determined, but nothing turns on that given that Mr Navazi refused to be interviewed, and the Corporation has very limited powers of compulsion.
Mr Navazi submitted that more could have been done. He submitted that merely having obtained some information as to a tenant's income was something less than "an investigation to determine [his] weekly income", and that what was required for a s 58 investigation was that the Corporation had made "a real effort to ascertain his weekly income, and that [had been] taken as far as it can reasonably be taken in the circumstances". For example, he submitted that inquiries could be made of banks as to the cost of servicing the mortgages on the properties. It should be said immediately that there is no suggestion in the evidence that any additional material information would have been obtained by further inquiries. But the answer to Mr Navazi's submission is that the Act imposes no precondition upon the exercise of s 57(1) power as to the exhaustiveness and duration of an investigation. The Act leaves all those matters uncircumscribed. Putting to one side an "investigation" where there was no bona fide attempt to obtain information, there is no reason to imply a minimal standard of diligence or success which must be attained before there is an "investigation under section 58".
One purpose of the investigation which resulted in Ms Morgan's Final Investigation Report was determining Mr Navazi's weekly income. Accordingly, there was an "investigation under section 58". That suffices to reject the primary judge's first basis for invalidating the decision to cancel.
(b) Weekly income is not a mandatory relevant consideration
Contrary to Mr Navazi's submission, there is no basis to conclude that the exercise of power under s 57(1) was vitiated unless regard had been had to the person's weekly income, if that income was capable of being ascertained. The mandatory relevant consideration found by the primary judge is not express, and there are a number of reasons why it would not be implied. First, what does "capable of ascertainment" mean? If his Honour meant "capable of ascertainment" including by the exercise of compulsive powers, then a recipient of rental rebates could frustrate the exercise of the power to cancel merely by not co-operating; that cannot be the proper construction. If his Honour meant reasonably capable of ascertainment, having regard to the limited powers of the Corporation, then his Honour has by implication imposed a constraint upon the exercise of the power by reference to a contestable standard. As was made plain when the appeal was heard, Mr Navazi claimed and the Corporation denied that more inquiries should have taken place. This too is an unlikely implication of something failure to have regard to which vitiates the exercise of power.
Secondly, where as here the mandatory relevant consideration is not express, it falls to be implied from the subject matter, scope and purpose of the Act. All are antithetical to an implied constraint upon the power. Why, when it is a criminal offence wilfully to deceive the Corporation to obtain a rental subsidy, would the power of cancellation be conditioned upon a determination of weekly income?
But on the construction for which Mr Navazi contends, the power to cancel would not in those circumstances be available, although the Corporation could at the same time prosecute the recipient under s 69 and even obtain a conviction. Mr Navazi's construction is not supported by the legislative subject matter, scope or purpose.
Thirdly, it is common ground that an investigation under s 58 is a precondition to the exercise of the s 57(1) power. It may readily be implied from the language of the subsection that the decision maker is required to consider what has emerged from that investigation before exercising the power. That more general mandatory relevant consideration tells against the existence of the narrower mandatory relevant consideration for which Mr Navazi contends.
(c) No error in relying on ownership of property
Finally, the primary judge said that it was an irrelevant consideration to have had regard to the fact that Mr Navazi owned other property in exercising the power under s 57(1). I respectfully disagree.
First, the power in s 57(1) is conferred in unfettered terms, save only that it be exercised after conducting an investigation under s 58. It is an instance of that class of broadly worded and undefined discretionary powers described by Dixon CJ in Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473, to which Hayne, Kiefel and Bell JJ referred in Minister for Immigration and Citizenship v Li [2013] HCA 18; 87 ALJR 618 at [67]:
"We have invariably said that wherever the legislature has given a discretion of that kind you must look at the scope and purpose of the provision and at what is its real object. If it appears that the dominating, actuating reason for the decision is outside the scope of the purpose of the enactment, that vitiates the supposed exercise of the discretion. But within that very general statement of the purpose of the enactment, the real object of the legislature in such cases is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case."
It is for the Corporation to determine administratively, in the exercise of a broadly worded power, how it will allocate its resources.
Secondly, the Ministerial policy relied on by Mr Navazi cannot create an irrelevant consideration regard to which vitiates the exercise of power. Only if the Act expressly or impliedly provides that an exercise of power is invalid if regard is had to a particular subject matter can this ground be made out. Neither regulations nor guidelines can be used to construe an Act: Wallaby Grip Limited v QBE Insurance (Australia) Ltd [2010] HCA 9; 240 CLR 444 at [21].
Thirdly, the policy does not bear the meaning given to it by the primary judge. The policy is not confined to ownership of residential property which is a viable alternative to public housing. The policy speaks of an expectation "to live in that property or to sell the equity in the property to meet their housing needs" (emphasis added). The natural meaning of the policy is that owners of residential property do not qualify for rental rebates. If the property is not suitable for the owner's own residential needs, the policy is that the value of the property is to be used to meet the person's housing needs.
The primary judge placed reliance on the definite article in the policy statement "If a tenant or their partner is leasing the property to another person they are not eligible for a rent subsidy"; his Honour considered that that was to be confined to a reference to the property earlier mentioned "that could provide a viable alternative to public housing". But a "viable alternative to public housing" may be provided in various ways - directly, by residing in the other property (if it is suitable) or indirectly, by selling it or letting it (if it is not). A natural reading of the policy is a statement that one viable alternative to public housing is selling or letting unsuitable residential property and using the proceeds for accommodation.
For those reasons, all of the grounds relied upon by the primary judge are to be rejected.
Delegation and Agency
Delegation is distinct from agency: Plaintiff M61/2010E v Commonwealth of Australia [2010] HCA 41; 243 CLR 319 at [68]. The act of a delegate is the delegate's own act; that of an agent is treated in law as the act of the principal. It has long been accepted that a statutory regime may permit an agent's actions to be attributed to the principal. Commonly, in its application to power conferred in terms up on Ministers and senior officers, this is called the "Carltona principle", after Carltona Ltd v Commissioners of Works [1943] 2 All ER 560.
Sections 6 and 15 of the Act maintain the distinction between delegation and agency. Section 6(3) of the Act expressly invokes agency:
"Any act, matter or thing done in the name of, or on behalf of, the Corporation by the Director-General, or with the authority of the Director-General, is taken to have been done by the Corporation."
In contrast, s 15(1) confers a power of delegation upon the Corporation.
The presence of those separate provisions within the Act confirms that there can be no implication in this legislative regime from the existence of a power to delegate that the Carltona principle, based on agency, has been displaced. A power to delegate does not necessarily exclude the existence of an implied power to act through the agency of others: Re Patterson; Ex parte Taylor [2001] HCA 51; 207 CLR 391 at [176], although it is a factor which makes the operation of the Carltona principle less likely: Minister Administering the Crown Lands Act v New South Wales Aboriginal Land Council [2009] NSWCA 352; 117 LGERA 56 at [62]. But s 6(3) removes the need to consider whether agency has been impliedly displaced in this statute.
Mr Navazi's notice of contention challenged the lawfulness of both the inquiry under s 58 and also the cancellation decision under s 57(1). But those two exercises of administrative power are quite different things, and should be addressed separately.
(a) Ms Morgan was authorised to conduct the s 58 investigation
There must be thousands of s 58 investigations (one for each person who applies for and is granted a rental rebate under ss 55 and 56), none of which involves any coercive power nor takes away an existing right of any tenant. Additionally, there will be a further s 58 investigation whenever it is proposed to vary or cancel a rental rebate under s 57. A review of the evidence demonstrates the magnitude of the problem of tenant fraud and confirms that the investigations were authorised and engaged the deeming provision in s 6(3).
The evidence disclosed that in March 2007 there were "currently over 150 active tenant fraud investigations underway". A briefing note to the Director-General stated:
"Given the volume of work ... it has now become necessary to allocate additional resources to the investigation and resolution of these tenant fraud matters."
It was proposed to create two new temporary positions "to manage the ongoing workload of tenant fraud investigations". In April 2008 the Director-General approved the appointment of Ms Morgan to a temporary position as "Project Director" to "get the amnesty completed and the new fraud policies and procedures implemented". (The Housing Amendment (Tenant Fraud) Act 2008 (NSW) had conferred additional powers to detect, investigate and prosecute fraud by tenants; it was this Act which inserted the provisions which Ms Morgan's Final Investigation Report proposed be invoked against Mr Navazi, namely, ss 69B and 72B. The "amnesty" referred to in relation to Ms Morgan's appointment was that inserted as item 18 of Sch 3 of the Housing Act, whereby a person could avoid prosecution under those provisions by notifying the Corporation of the conduct constituting the offence before 1 October 2008.)
A briefing note dated February 2009 stated that "Over 1,300 matters are currently being investigated by the Client Service Teams and investigators in the [Tenant Fraud Unit] and the [Legal Services Branch]" and "An average of 30 allegations per week of tenant and applicant fraud are still coming to the [Tenant Fraud Unit] from the HCC Fraud & Corruption hot line." The same briefing note recommended that the Director-General extend Ms Morgan's position until 30 June 2009. The Director-General approved the recommendation on 27 February 2009.
There can be no doubt that Ms Morgan's function to investigate pursuant to s 58, including investigations which might enliven the power to vary or cancel rental rebates, was expressly authorised by the Director-General. Even in the absence of the briefing papers referred to above, given the nature and scale of the issue, a court would readily find, aided if necessary by the presumption of regularity, that Ms Morgan was authorised to undertake the investigations she was undertaking. Accordingly, Ms Morgan's investigation and Final Investigation Report answers the description of something done on behalf of the Corporation with the authority of the Director-General. Section 6(3) deems it to have been done by the Corporation.
(b) Ms Roil was empowered to cancel Mr Navazi's rental rebate retrospectively
Mr Navazi's written and oral submissions attached importance to a written delegation to certain officers to "Approve cancellation of rebate subsidy" but which carried a qualification, "Up to 6 months". Mr Navazi took the point that there was no evidence to establish that the General Manager Central Sydney Division was in the administrative reporting line above one of the (relatively junior) positions authorised by the delegation. Were it necessary to do so, I would infer that Ms Roil was, and that therefore she had delegated authority to exercise power under s 57(1). The more substantive submission was that even if that were so, on the ordinary reading of the delegation, Ms Roil (and every officer excluding the Director-General) lacked delegated authority under s 57(2) to backdate a cancellation by more than six months.
Nevertheless, taking Mr Navazi's argument at its highest, the absence of a delegation says nothing as to whether Ms Roil was acting on behalf of the Corporation with the authority of the Director-General, which is sufficient to engage s 6(3). In O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 at 20 and 30, Mason J referred to "administrative necessity" and Wilson J referred to "the necessity in modern government for the shared performance of duties short of delegation". There is no sound reason to find that the Act required all cancellation decisions involving a backdating for a period in excess of six months to be undertaken by the Director-General; the material referred to above suggests that such decisions may be very numerous. The process by which Ms Morgan's report was reviewed and approved by two officers within the department before being presented to Ms Roil supports the inference that the exercise of power was reserved for the more senior officers and that Ms Roil, the General Manager for the Central Sydney Division, was authorised by the Director-General to exercise the power.
Mr Navazi submitted that there was no evidence of practical necessity, but the evidence referred to above refutes that submission. He also submitted that there was no legal foundation for the operation of the Carltona principle; to the contrary, the principle is recognised by the presence of s 6(3), and in the administration of functions involving relatively small amounts of money amongst thousands of tenants in public housing, there is every reason for the principle to operate.
Orders
I propose that the appeal be allowed, the orders made on 12 June 2013 be set aside, and in lieu thereof, Mr Navazi's amended summons be dismissed. Mr Navazi advanced at first instance each of the submissions wrongly accepted by the primary judge, and sought to maintain them on appeal. He should pay the Corporation's costs at first instance and on appeal.
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Decision last updated: 13 December 2013
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