Passenger Transport Board v Bell; Bell v PTB No. Scciv-01-40, Scciv-01-953

PASSENGER TRANSPORT BOARD v BELL & ZARKO
BELL & ZARKO v PASSENGER TRANSPORT BOARD & YELLOW CAB GROUP PTY LTD
[2001] SASC 309
Full Court: Doyle CJ, Perry and Bleby JJ

DOYLE CJ There are two matters before the Full Court. The first matter is an action instituted in this Court which raises the question of whether the Passenger Transport Board (“the PTB”) had power, under the provisions of the Passenger Transport Act 1994 (“the Act”) to enter into a certain agreement with Yellow Cab Group Pty Ltd (“Yellow”). Under this agreement Yellow operates a “Centralised Booking Service” (“a CBS”) for taxis.
The second matter before the Court is an appeal against a decision of the District Court. The appeal raises the question of whether the District Court Judge was right in setting aside a decision made by the PTB to suspend two taxi licences issued by the PTB under the Act. The District Court Judge set aside the PTB decision because, in his view, a reasonable bystander might apprehend that the PTB might not bring an impartial mind to the question that the PTB had to decide, when it considered the suspension of the licence, because of the financial arrangement between the PTB and Yellow found in the agreement just referred to. The financial arrangement, and the agreement, were treated by the Judge as relevant to the decision made by the PTB to suspend the taxi licences.
Although it was the appeal which first came to this Court, it is convenient to consider the question of the validity of the agreement first. The reason for this is that if the agreement is not valid, it seems likely that the decision of the PTB would have to be set aside anyhow, because the decision of the PTB arguably rested on the assumption that the agreement was valid.
It is necessary to set out the history of the proceedings in some detail, to explain how these issues have arisen, and to provide the setting in which they can be decided.
The appeal and the judicial review proceedings
Ms Bell and Mr Zarko hold licences to operate two taxis. The licences are issued by the PTB under s 45 of the Act.
The taxis are commonly called “accessible taxis” or Access Cabs. They are so called because, in exercise of a power conferred by s 45(5) of the Act, the PTB imposed a condition on the licences requiring the taxis to be suitable for carrying a person using a “wheelchair, scooter or other large (ride-on) mobility aid within its allocated passenger space”. In other words, an accessible taxi is a taxi intended for use by people with disabilities who use what is called a “mobility aid”. Another condition attached to the licences, and the critical one for the purpose of the case, is condition 2(a) which provides as follows:
“The Operator must connect the Vehicle to a Centralised Booking Service (CBS) nominated from time to time by the PTB, and enter into an agreement with the CBS in terms approved by the PTB and the CBS.”
The CBS nominated by the PTB was operated by Yellow. This CBS was the only CBS nominated for the purposes of condition 2(a).
Yellow operates the CBS pursuant to a lengthy written agreement between the PTB and CBS (“the Agreement”). The Agreement is dated 28 October 1997.
Yellow entered into a written agreement with Bell and Zarko dated 23 November 1997. Under this agreement, in return for a “base fee” payable to Yellow by Bell and Zarko, Yellow engaged Bell and Zarko to provide “the Services”, which expression means “passenger transport services to persons with physical disabilities or mobility constraints and who are required to use wheelchairs, scooters or other large (ride-on) mobility aids”. This agreement required Bell and Zarko to be available to perform these services according to a roster, and appears to envisage that Yellow will assign jobs to Bell and Zarko, presumably being jobs received through the CBS operated by Yellow.
There has been a lengthy dispute between Yellow and Bell and Zarko since they entered into this agreement. The culmination of this was that on 1 September 2001 Yellow wrote to Bell and Zarko, noting that a Magistrate of the Magistrates Court had dismissed for want of prosecution civil proceedings brought by Bell and Zarko against Yellow, and informing Bell and Zarko that their taxis had been disconnected from the CBS operated by Yellow. I gather that in doing this Yellow was exercising a power to terminate its agreement with Bell and Zarko conferred by clause 21 of that agreement.
The result of this was that Bell and Zarko were no longer complying with condition 2(a) of their licences.
The PTB then gave notice to Bell and Zarko by letter dated 6 September 2000 that it was considering the exercise of its powers under s 50 of the Act. Section 50 empowers the PTB to suspend or cancel a taxi licence if, among other things, the holder fails to comply with a condition of the licence. The section requires the observance of procedures set out in regulations, but there is no suggestion that these procedures were not observed. The letter made it clear that the PTB would consider whether to suspend or cancel the licences because condition 2(a) was not being complied with. The letter invited submissions from Bell and Zarko. It is clear that the PTB was aware of the dispute between Yellow and Bell and Zarko, and aware of its general nature.
Bell and Zarko replied by letter dated 12 September 2000. They asserted that Yellow was in breach of their agreement with Yellow, but did not deny the termination by Yellow of the agreement, or that they were not complying with the licence condition. They enclosed a copy of a letter to the relevant Minister complaining about Yellow, about the terms of their agreement with Yellow, and apparently complaining that the base fee payable by them under the agreement was too high having regard to the return that they could earn through carrying passengers. There was no submission directed particularly to the issue that the PTB had to consider.
On 28 September 2000 the PTB resolved to suspend the licences until 28 October 2000. The letter of 29 September from the PTB to Bell and Zarko informed them of the decision, and indicated that if in the meantime Bell and Zarko entered into an agreement with Yellow, the suspension would be lifted. The letter further stated that the licences would be cancelled if Bell and Zarko did not enter into an agreement with Yellow by 28 November 2000, or dispose of the licences by that date.
On 4 October 2000 Bell and Zarko appealed against that decision to the District Court, exercising a right of appeal conferred by s 51 of the Act.
Their grounds were, broadly, that there was a history of dispute between Yellow and Bell and Zarko; that Yellow was at fault (brief details were given); that Bell and Zarko had complained to the PTB about the service provided by Yellow and the amount of the base fee required by Yellow; and that the decision of the PTB was “unconscionable” because Bell and Zarko could not comply with condition 2(a) because of their dispute with Yellow.
In the course of submissions before the Judge, counsel for Bell and Zarko raised, in a rather indirect way, the existence of the Agreement between the PTB and Yellow, and the fact that under the Agreement the PTB received a benefit. The benefit derived from the Agreement was said to be either the payment by the PTB of a low subsidy, or a payment by Yellow to the PTB. He said that commercial interests may well have influenced the PTB’s decision. At that stage, the Agreement was not part of the evidence before the Court. On a later day the PTB produced the Agreement, and a Request For Tender that led to the Agreement. The Agreement was then tendered. Although this matter was not raised by the grounds of appeal, it was taken up by the Judge. The agreement between Yellow and the PTB disclosed that, as part of the arrangement between Yellow and PTB, Yellow was obliged to pay to the PTB $12,000 per annum for five years. This payment was payable by Yellow “for the right to provide the Services”, and these are defined broadly as the provision of the CBS for accessible taxis and “Data Processing Services” identified in the agreement.
Before the District Court Judge the amount payable by Yellow was treated as confidential at the request of the PTB, but before us it was agreed that it was not confidential.
The Judge allowed the appeal. The Judge said, referring to this payment:
“However, there must be some expectation that the amount payable was a significant factor in the selection of Yellow as the successful tenderer. If the Board did not maintain its relationship with Yellow, it risked losing the money payable to it under the CBS Agreement.”
The Judge had earlier commented on the fact that there was nothing in the Act or Regulations to explain why the PTB was taking substantial payments from Yellow in return for engaging it to provide the CBS, and commented that the relationship between the PTB and Yellow was “not one that was specifically envisaged by the terms of the Act and the Regulations”. The Judge then referred to the fact that because Yellow was accredited (this is a statutory term) under s 29 of the Act to operate a CBS, the PTB had an obligation to consider taking disciplinary action against Yellow under s 36 of the Act, were it to be alleged that Yellow was not meeting the standards required to be met under the Act and the Regulations by the operator of a CBS. The Judge said:
“However, in that event it is difficult to see how the Board could properly exercise its quasi judicial powers in the light of the other relationship which it had with Yellow through the CBS Agreement. (I am not saying that there is any cause for disciplinary action against Yellow, but, if the allegations contained in the papers before me could be substantiated, there is a reasonable possibility of it) [The Judge is there referring to the allegations by Bell and Zarko against Yellow.] The problem for the Board in this eventuality would be that it had not of its own volition exercised the powers available to it under the CBS Agreement and/or s 36, and therefore could be seen to be favouring Yellow, and ensuring the continued benefits to it by the continuation of the CBS Agreement, by not itself earlier having taken such action against Yellow.”
His reason for setting aside the PTB’s decision was the following:
“For these reasons I consider that the fair-minded hypothetical impartial observer would entertain a reasonable apprehension of bias by the Board and would reasonably apprehend that in considering whether the appellants’ allegation against Yellow were made out it might unduly favour Yellow in the conclusions which it reached. I do not find that there was any actual bias by the Board, but it is not necessary to go that far.”
The Judge therefore set aside the PTB decision. He envisaged a further hearing in the District Court to consider the exercise of the discretion vested in the PTB under s 50(1), apparently taking the view that the District Court could make a new decision, in exercise of powers conferred on it by s 42E and s 42F of the District Court Act 1991. He envisaged the possibility of the Court receiving further evidence relevant to the matter. He said that the Court should exercise the power under s 50(1) because the PTB was disqualified.
The PTB appealed to this Court.
The appeal came on for hearing in May 2001, before a differently constituted Full Court, but of which I was one member. At the outset I asked Mr Kourakis QC, counsel for Bell and Zarko, if he intended to submit that the Agreement between the PTB and Yellow was beyond the powers conferred on the Board by the Act. There were clear hints of this in what had gone before. After some hesitation, he said that he did. I pointed out that Yellow was not a party to the proceedings, and that the validity of the agreement had so far not been an issue in the proceedings. In view of the fact that Bell and Zarko intended to challenge the validity of the Agreement, the Court desisted from further hearing the appeal, to enable proceedings to be instituted by Bell and Zarko, and to enable the parties, at their request, to explore the possibility of a compromise.
The appeal was again listed on 3 July 2001 before the Full Court as presently constituted. Proceedings challenging the validity of the Agreement had not been issued until 25 June, and were not ready for hearing. Yellow is a defendant in these proceedings. The Court took the view that it should have all issues before it at the one time, but was reluctant to delay matters further. Accordingly, the Court embarked on the hearing of the appeal.
On 9 August 2001, the parties signed a Special Case Stated to the Full Court. The Special Case set out background facts, many of which were before the Court on the appeal, but some of which were not. The Case Stated raises a question of law with reference to the Agreement, the question being:
“........ whether:-
(a)the Passenger Transport Act 1994 empowered or otherwise authorised the Passenger Transport Board to enter into the said Agreement, and;
(b)the said Agreement is void and of no effect.”
The Court has heard submissions on that matter on 22 August 2001. On this occasion Mr Morcombe QC appeared for Bell and Zarko.
The power of the PTB to enter into the Agreement
It is now necessary to say a little more about the Act, the PTB and the Agreement.
The Act establishes the PTB: s 6. The scheme of the Act is of a familiar kind. The PTB is established to accredit and to licence persons involved in an industry, in this case the industry of passenger transport by motor vehicle, train, or tram, and to oversee in a general way the provision of passenger transport services to the public. The functions of the PTB are wide ranging, requiring it to consider whether services are being provided efficiently and effectively to the public. The PTB has power to take disciplinary action against accredited operators in the industry and the power to cancel licences.
The broad nature of the functions conferred on the PTB is evident from the terms of s 20, stating the functions of the PTB. In the interests of economy, I set out only the first of those functions, which gives an impression of the width of the PTB’s functions:
“20(1)The Board has the following functions, to be exercised in the public interest:
(a)to oversee the creation and maintenance of an integrated network of passenger transport services involving all modes of passenger transport by public passenger vehicles within the State (including, to the extent that may be appropriate, an integrated fare system within that network).”
It is clear from the Act that the PTB is not what might be called a passive accrediting and licensing body, that is, granting accreditations and issuing licences, and then responding only to complaints. The PTB is to take the initiative to ensure that good practices are being observed in the industry. For example, s 20(1)(d) provides that one of the Board’s functions is:
“20(1)(d)to encourage best practices in the provision of passenger transport services and, as it thinks fit, to establish, audit and enforce standards for passenger transport within the State.”
There are other provisions to a like effect.
There are provisions in the Act which indicate that the PTB is intended to exercise its powers with a view to meeting the needs of disabled people. The Act has an unusually long objects section: s 3. The objects of the Act are broad, one being “to benefit the public of South Australia through the creation of a passenger transport network”, that meets certain criteria: s 3(a). One of those criteria is that the network:
“(a)(ii)provides accessibility to needed services, especially for the transport disadvantaged; and
.........”
One of the functions of the PTB set out in s 20(1) is:
“(i) to facilitate the use of passenger transport services by people with disabilities.”
On the hearing of the appeal certain parts of the Auditor-General’s report for the year ending 30 June 2000 were tendered. They are pp 777-778, p 779 and p 782. They were not before the District Court Judge. We permitted the tender of this further material because the basis of the Judge’s decision required some understanding of certain aspects of how the PTB operated, and had exercised its powers, and because the issue of the validity of the agreement had been foreshadowed. As well, it appeared to us that the way in which the issue of bias had arisen before the District Court meant that not all relevant material had been put before that Court.
The Auditor-General’s report shows that 66% of the PTB’s revenue is from Parliamentary appropriation. The operating expenses of the Board include an item “Grants and Subsidies $11,113,000”. Note 3 to the accounts records “Outputs of the Passenger Transport Board”, and these appear to be its major activities. Output 6 is:
“Accessible passenger services
The provision of targeted transport assistance to groups with special needs by subsiding taxi travel (South Australian Transport Subsidy Scheme), provision of fully-accessible passenger transport and the contract management of Access Cabs.”
Note 5 to “Grants and Subsidies” shows that of the total amount payable by way of grants and subsidies, $6,706,000 is attributable to “Concessions for people with mobility difficulties (Transport Subsidy Scheme)”.
This material, and references in the Agreement to the subsidy scheme, which I will refer to as SATSS for convenience, as this is how it is usually identified, indicate that the PTB is funded to make grants and to pay subsidies to ensure, among other things, the availability of taxi services for disabled people.
The Agreement, and the Request For Tender which preceded the Agreement, throw further light on SATSS. Under the Agreement, Yellow agrees to operate a booking service for accessible taxis to standards specified in considerable detail in the Agreement. This part of the Agreement is linked to the statutory objects already referred to by me. For example, among other things, Yellow is required to develop “an Action Plan” consistent with the Disability Discrimination Act 1992 (Cth). Other provisions of the Agreement indicate that Yellow is, broadly, to take appropriate measures to ensure that appropriate facilities are made available to disabled people through accessible taxis. It has an obligation to take affirmative measures in this respect.
Under the Agreement Yellow also agrees to provide specified Data Processing Services (“DPS”). In broad terms the DPS are for the purposes of SATSS. There are four main aspects to the DPS. They are the processing of applications by disabled people for membership of SATSS; the issue of identification cards to successful applicants; the issuing of books of vouchers under which members of SATSS may use accessible services, and processing vouchers used under SATSS when an accessible taxi is hired, and under two other apparently unrelated schemes.
Under the Agreement the PTB is required to pay Yellow for the DPS, according to a fee schedule. The rate of payment varies with the service provided. For example, a fee of between $5 and $10 is payable for each approved membership application and for each membership application not approved. A fee of about 10c is payable for each voucher processed under SATSS. (I have not given the exact amounts because they are confidential.) On the basis of information about the anticipated usage of the scheme by disabled people, which information is found in the evaluation of the tenders, the payments by the PTB to Yellow for DPS are likely to far exceed the annual payment by Yellow to the PTB of $12,000.
This all reveals that the Agreement between the PTB and Yellow is an aspect of a scheme by the PTB, in pursuit of its statutory functions, to assist disabled people by providing a subsidised taxi service. Yellow plays its part in organising the provision of transport, through accessible taxis and the CBS that it operates, and a separate part in the mechanics of providing a subsidy through a voucher system, by providing the DPS.

The appointment of Yellow by the PTB, and the agreement between them, was preceded by the Request For Tender, and by the evaluation of the tenders received. The Final Evaluation Report indicates that tenders were evaluated by reference to the quality of the service proposed and by reference to the “cost to Government”. It is clear that despite the annual payment by Yellow, SATSS operates at a net “cost to Government” met from moneys appropriated by Parliament and paid for the purposes of “grants and subsidies”.
SATSS is linked to various provisions of the Act. Yellow had to gain accreditation under s 29 of the Act to operate a CBS. If it did not do so, the PTB could terminate the Agreement, without incurring any liability: cl 2.3. An operator of an accessible taxi must obtain a licence under s 45, and Bell and Zarko were granted licences with appropriate conditions imposed under s 45(5). The Case Stated indicates that a number of licences have been issued with special conditions which make the vehicle “wheelchair accessible”. In relation to these conditions, I note that reg 28 of the Passenger Transport (General) Regulations 1994 provides for “kinds or grades of taxi licence”, and they include “special vehicle licences”. Such a licence is defined as follows:
“Reg 28(3) A special vehicle licence is a licence for a taxi that -
(a)is suitable to carry persons who use wheelchairs, scooters or other large (ride-on) mobility aids; and
(b)is determined by the Board to be a special vehicle licence under these regulations.”
It is conceivable that SATSS, or a variant of it, could operate with more than one CBS for accessible taxis, but it is equally understandable that it might prove convenient, as apparently it did, to appoint a single operator of the CBS for the purposes of SATSS. The manner in which fare subsidies or concessions for transport services for people with disabilities is managed is obviously a matter for the PTB.
On the basis of this material I am satisfied that the PTB had statutory power to establish a subsidised taxi fare scheme for people with disabilities; to enter into contractual arrangements with Yellow to provide a CBS for accessible taxis to facilitate the use of accessible taxis by people with a disability; to operate the subsidised taxi fare scheme using a system of vouchers administered by Yellow; to engage Yellow on a basis that included the making of a payment by Yellow, and payments to Yellow for providing DPS; to require operators of accessible taxis, that is, taxis licensed by a special vehicle licence, to enter into an arrangement with Yellow, as the operator of the relevant CBS and provider of DPS, because of Yellow’s role under the Agreement in the provision of services to disabled people, and to meet the cost of this from funds appropriated by the Parliament.
The Agreement is supported by the statutory provisions to which I have referred along the way. The Agreement implements a scheme to provide fare subsidies to disabled people wishing to use taxis, involving the use of an approved central co-ordinator of accessible taxis which has a responsibility for the availability and quality of the services, and for aspects of the administration of the subsidy scheme.
Mr Kourakis made the point that by s 39(2) the PTB is empowered to invite tenders for contracts to provide regular passenger services (services on regular routes according to timetables), but no such power is conferred in relation to accreditation to operate a CBS or in relation to the provision of transport by taxis. He suggested that the Agreement involved an unauthorised tender process. I disagree. The accreditation of Yellow to operate a CBS was essential for the purposes of the Agreement. But what the PTB invited tenders for was the provision of a taxi booking service for disabled people by an accredited CBS operator, and for the administration of SATSS, its subsidy scheme. The PTB had power to provide the service and to operate the subsidy scheme. How it did this was for the PTB to decide.
Nor do I accept the submission that the Agreement contravened s 20(2) of the Act which provides:
“(2) The Board must not operate a passenger transport service.”
The relevant service is operated by Yellow and taxi cab operators. The role of the PTB is to encourage them to operate the service for disabled people, and to provide a subsidy for disabled people using the service.
Nor, I consider, does the Agreement compromise or qualify in any way the powers of the PTB under s 36 to hold an inquiry to determine whether proper cause exists for disciplinary action against Yellow, or the power under s 50 to suspend or cancel the licences held by Bell and Zarko. Nor does the Agreement compromise the exercise of these powers more generally. The reasons for this conclusion emerge from my consideration of the next issue.
Accordingly, I reject the submission that the power to enter into a contract, conferred by s 22(2)(a) of the Act, does not extend to the Agreement. It was suggested that it did not, because of the suggested effect of the existence of the Agreement on the exercise by the PTB of the powers conferred by s 36 and by s 50. But, as will appear below, that suggested effect does not occur.
I also reject the submission that the PTB had no statutory authority to receive the five yearly payments of $12,000. I consider that the function of facilitating the use of passenger transport services by disabled people, and the function of administering a system of fare subsidies, authorised the PTB to make an arrangement for the provision of subsidised services to such people on a basis that includes the making of a payment for the right to provide those services, at least if (as is the case) the payment does no more than reduce the total subsidy payable to the service provider.
For those reasons I would determine the Special Case as follows:
“The Passenger Transport Act 1994 authorised the Passenger Transport Board to enter into Exhibit P1 being the Deed of Agreement between Passenger Transport Board and Yellow Cab Group Pty Ltd.”
The finding of a reasonable apprehension of bias
I refer to the Judge’s conclusion, which I set out above.
The Judge was influenced by the provision of the Agreement for an annual payment to be made by Yellow to the PTB, and by the fact that if the PTB did not maintain its relationship with Yellow, reflected in the Agreement, it risked losing that money. The Judge said that if a complaint was made by an accessible taxi operator against Yellow, warranting an inquiry under s 36 of the Act to determine whether proper cause existed for disciplinary action against Yellow, the PTB would be compromised by its commercial relationship with Yellow. He said that if in the present case it emerged that the complaints by Bell and Zarko warranted investigation, and the Board had not acted under s 36, then:
“The problem for the Board in this eventuality would be that it had not of its own volition exercised the powers available to it under the CBS Agreement and/or s36, and therefore could be seen to be favouring Yellow, and ensuring the continued benefits to it by the continuation of the CBS Agreement, by not itself earlier having taken such action against Yellow.”
The decision that the PTB made to suspend the licences held by Bell and Zarko was made under s 50 of the Act, which is in Part 6 which deals with “Taxis”. The Board was not exercising its power under s 36.
It was not disputed before the PTB that Bell and Zarko were not complying with condition 2(a) of their licence. Their agreement with Yellow had been terminated.
The PTB was aware of the dispute between Yellow and Bell and Zarko; of the allegations by Bell and Zarko that Yellow was in breach of its agreement with Bell and Zarko; of their more general complaints against Yellow, and of the fact that proceedings by Bell and Zarko in the Magistrates Court against the PTB had been dismissed for want of prosecution.
The contractual dispute between Yellow and Bell and Zarko was not before the PTB, nor was it a matter which the PTB was competent to decide.
It might be thought that the issue before the PTB under s 50 was a clear one, although in saying that I do not imply that the answer was simple. The issue was whether, as Bell and Zarko were not complying with a condition of their licences, the PTB should now suspend or cancel the licences. That issue has no obvious or immediate connection to the Agreement between the PTB and Yellow. Nor, it seems, did the material before the Judge indicate whether the PTB was considering the exercise of its disciplinary powers, or had decided not to exercise them, in relation to Yellow.
Mr Kourakis submitted that in exercise of the powers conferred by s 45(6) of the Act, the PTB might have varied condition 2(a) to remove the requirement for connection to a CBS nominated by the PTB, instead of resolving to suspend the licences. He submitted that the agreement between the PTB and Yellow would cause a fair-minded observer to apprehend that the PTB might be disposed against this course of action, because to do so would interfere with the arrangement with Yellow, because the Agreement gave Yellow a measure of exclusivity in the provision of CBS services, and setting Bell and Zarko loose from Yellow would undermine that aspect of the Agreement. The Agreement does not provide much support for this submission. By cl 5.1 the PTB reserved the right to engage others to provide the contracted services. The only right reserved to Yellow in that event is to “seek a variation of the Agreement”, if Yellow reasonably believed the decision by the PTB would have “a significant financial impact” on Yellow: cl 5.1. I note that there is no indication that the PTB was asked to follow this alternative course of action.
Mr Kourakis also submitted that the complaints by Bell and Zarko raised matters that warranted the PTB considering the exercise of its powers under s 36, in relation to Yellow, and that the Agreement between Yellow and the PTB and the payments by Yellow were matters that would cause a fair-minded observer to apprehend that the PTB might not wish to exercise those powers, or to act in a way that would imperil the Agreement. This reflects the view that the Judge took.
He further submitted that a fair-minded observer might apprehend that the PTB might ignore these wider considerations, or other possible courses of action, in favour of the decision it actually made, because of its Agreement with Yellow, and because of a reluctance to upset that Agreement.
There is an air of artificiality about this. The PTB was acting under s 50, it was not asked to consider varying the condition under s 45(6) nor was it asked to conduct an inquiry into Yellow’s conduct under s 36.
In any event, in my opinion the submission that the PTB was disqualified on grounds of bias fails at the outset.
The annual payment by Yellow to the PTB is of no particular importance. As I said earlier, I am satisfied that the Agreement between the PTB and Yellow would result in the PTB paying Yellow substantially more than Yellow paid to the PTB. However, it appears that Yellow was the preferred tenderer for the operation of the CBS and for DPS, because its tender was the best tender, taking into account quality and cost. Terminating the Agreement, the withdrawal of Yellow’s contractual right to operate the CBS, or forcing Yellow to accept a variation of the Agreement, might all mean that the PTB would have to reconsider how to achieve its aim of assisting the disabled.
But a fair-minded observer, considering the issue of apprehended bias, must be taken to understand the general nature of the Agreement. In particular, such an observer must be taken to understand that the PTB’s agreement with Yellow imposed detailed and substantial obligations on Yellow relating to the scope and standard of the services to be provided. PTB would have no reason at all to want to protect Yellow against allegations of non-performance, or against the possibility of an adverse finding by the PTB in the course of an inquiry under s 36. To the contrary, in administering the funds appropriated by Parliament, and in the exercise of its statutory powers, and contractual powers, the PTB had an interest in ensuring, and an obligation to ensure, that Yellow discharged its obligations to the PTB, and that overall the agreement was operating in the public interest.
When the general effect of the agreement between the PTB and Yellow is understood, and is put in context, there is no reason at all why the contractual arrangements between the PTB and Yellow might cause a fair-minded observer to apprehend that the PTB might not be disposed to exercise its statutory powers under the Act in the public interest, and as the circumstances might require. It might be asked rhetorically why the PTB, having imposed detailed and substantial contractual obligations on Yellow, would then be disposed to avoid exercising its contractual rights, or using its statutory powers, to ensure that Yellow conducted itself as required by the Agreement and in a way that would assist the Board to achieve its objective?
When putting his submission that the Agreement fell outside the statutory power in s 22(2)(a) to enter into a contract, Mr Morcombe QC argued that the commercial arrangement found in the Agreement might cause a fair-minded observer to apprehend that, reluctant to lose its arrangement with Yellow, the PTB might approach the exercise of its powers under s 36 and s 50 with a predisposition in favour of Yellow, or with a view to preserving that commercial arrangement. But, as I have attempted to demonstrate, such an apprehension is not a reasonable one, and is not supported by the facts. There is no reason why the PTB would not be disposed to exercise its statutory powers properly. To the contrary, the PTB would want to know if Yellow was not performing as agreed, and would want to exercise any available contractual or statutory powers to ensure that it did.
The relevant principle is that stated by the majority of the High Court in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 75 ALJR 277 at [6]:
“...... a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.”
I proceed on the basis that the same principle applies to the PTB in the exercise of the power conferred by s 50 of the Act. The majority went on to say, in relation to this principle, at [8]:
“Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an ‘interest’ in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated.”
It is the commercial arrangement embodied in the Agreement between the PTB and Yellow which, it is said, might lead a fair-minded observer reasonably to apprehend that the PTB might not bring an impartial mind to the decision about the action to be taken under the Act in light of non-compliance by Bell and Zarko with condition 2(a) of their licences and in light of their allegations about Yellow. It is said that the Agreement would cause a reasonable apprehension that the PTB would not be disposed to consider fairly a variation in the licence conditions, or condition 2(a) in particular or alternatively, I gather, taking no action against Bell and Zarko for the time being and instituting an inquiry into the conduct of Yellow under s 36.
But when the connection between the Agreement and the “feared deviation from the course of deciding the case on its merits” is examined, the complaint dissolves. As I have attempted to show, there is no reason to apprehend that the PTB might not deal fairly or impartially with the exercise of its powers under s 50, and would not consider fairly and properly whether it should enquire into the conduct of Yellow, exercising its statutory powers under s 36, or acting simply as a party entitled to insist upon the performance by Yellow of contractual obligations.
That is not to say that the PTB’s response to the situation might not be influenced by its view about the best way of achieving the objective of subsiding access to taxis by disabled people, and might not be influenced by its belief that it was appropriate to insist upon a single operator of the CBS and a single provider of DPS.
But it is going too far to suggest that, simply because there is an existing commercial arrangement which might be affected by the exercise of a statutory power under the Act, a fair-minded observer might then apprehend a failure by the PTB properly to consider the exercise of its statutory powers. And, in the context of this particular case, there is no reason at all to apprehend that the PTB would be reluctant to enquire into or to identify possible breaches by Yellow of its contractual obligations to the PTB.
There are some general considerations that support this conclusion. They also tend against acceptance of the submission that the power to enter into a contract is not to be read as extending to the Agreement, because the arrangements in the Agreement give rise to a reasonable apprehension of a predisposition in favour of Yellow, and so compromise the exercise of the PTB’s powers under s 36 and s 50. I earlier made the point that the Act makes it clear that the PTB is to do more than accredit and licence operators in the passenger transport industry, and to respond to and deal with complaints about them. The Board is to play an active part in aspects of the passenger transport industry, as s 20 makes plain. Among other things, it is to “foster and promote efficient and effective passenger transport services”: s 20(1)(c). A submission that the Board cannot exercise its disciplinary powers or powers over licences, because it is playing an active part in facilitating the provision of transport services in some respects, and discharging statutory functions that authorise it to do this, has to be considered with caution. That is not to say that such a submission is to be dismissed, simply on the basis of the functions of the PTB. But nor should the exercise of the PTB’s statutory powers be approached on the basis that unless it is as removed from the situation as would be a court, and unless it measures up to the strict standards of impartiality required of a court, its powers cannot be exercised. It goes without saying that in most situations a Judge would not sit on a case involving a party with whom the Judge had an existing contractual relationship, although there are exceptions, such as the ordinary relationship that exists between a Judge as a customer and a bank. The point I make is simply that the requirement of impartiality and the exercise of disciplinary powers must be assessed according to the circumstances, and in the context of this Act the fact that there is a contract between the PTB and Yellow is not of itself a reason to treat the PTB as unable to exercise its disciplinary powers. Nor should one too readily conclude that the arrangements reflected in the contract have that effect.
However, in the end I am satisfied that there is no substance in the submission advanced on behalf of Bell and Zarko, and apart from making that general point, I can leave it at that.
For those reasons I would allow the appeal, set aside the decision of the District Court, and substitute a decision that the appeal to that Court from the decision of the PTB be dismissed.
Other matters

Other points were argued on appeal. I deal with them briefly.
Mr Kourakis argued that by condition 2(a), and by nominating Yellow as the only CBS operator, the PTB had delegated its disciplinary powers under the Act to Yellow. That submission confuses the disciplinary powers under the Act and the power that Yellow had over Bell and Zarko because they had to reach an agreement with Yellow if they were to use the licences granted under s 45 of the Act. The statutory powers could be exercised only by the PTB, and their exercise was not compromised by the Agreement or by the nomination of Yellow. All that Yellow could do was exercise such powers as the agreement between Yellow and Bell and Zarko provided. Even if the PTB were to nominate more than one CBS operator, each of those operators would have a measure of power over Bell and Zarko, because Bell and Zarko would have to reach agreement with one of them. All one could say is that the power of each of them would be diminished because Bell and Zarko could negotiate with a number of operators.
Ms Layton QC, counsel for the PTB, submitted that even if a reasonable apprehension of bias arose, the principle of necessity obliged the PTB to consider the exercise of its powers under s 50, because only it could exercise those powers. She made the point that by s 51 an appeal lay by a person aggrieved by a decision of the PTB, and if the powers were exercised by a delegate the right of appeal would not arise. The power to delegate, found in s 26 of the Act, is a wide one. It is not necessary to decide this point, and for that reason I prefer not to.
Conclusions
For these reasons I would answer the question of law to the effect that the Act authorised the PTB to enter into the Agreement, and I would allow the appeal from the District Court, set aside the decision of the District Court, and substitute a decision that the appeal to that Court be dismissed.
PERRY J I agree with the reasons given by Doyle CJ and with the orders which he proposes. I have nothing to add.
BLEBY J I agree that the Special Case should be answered in the manner proposed by the Chief Justice. I have nothing to add to his reasons for so doing.
As to the appeal from the District Court, I agree that the appeal should be allowed, the decision of the District Court set aside and that there should be substituted a decision that the appeal to that Court be dismissed. I agree with the reasons given by the Chief Justice. I add some further remarks of my own. For the sake of consistency I will use the abbreviations adopted by the Chief Justice.
Ms Bell and Mr Zarko, who are the respondents to the appeal (“the respondents”), had been in dispute with Yellow for some time. They alleged that Yellow was in breach of its contract with them. They went further and alleged that Yellow had wrongfully terminated those contracts. It was because the PTB had reason to believe that contractual relations with Yellow had been terminated that it instituted its inquiry under s 50 of the Act as to possible suspension or cancellation of their licences, because of the alleged failure to comply with Condition 2(a) of the licences.
The foundation of the respondent’s argument seems to be the necessity of the Board, on that inquiry, to embark upon a consideration of the merits of their contractual dispute with Yellow, and whether or not Yellow’s termination of the contract was justified. It was their claim that that might give an appearance of bias in favour of Yellow because a finding against Yellow might also constitute a breach of its contract with the PTB. There were benefits which flowed to the PTB from that contract, and it would be disadvantageous to the PTB to make findings adverse to Yellow, which might require the PTB to take steps either to terminate its contract with Yellow, or to take disciplinary action against Yellow under s 36 of the Act in relation to its accreditation. Either course could be to the PTB’s ultimate commercial disadvantage.
The Chief Justice has shown that upon an overall consideration of the Act and the statutory obligations cast on the PTB, the question of apprehended bias cannot arise. However, there is a further reason why it cannot arise by virtue of the nature of the inquiry being undertaken by the PTB.
The PTB’s function was not to inquire into the merits of the termination of the contract between the respondents and Yellow, or to inquire whether the termination was justified or whether it was not, whether it amounted to repudiation by Yellow or whether the contract was properly terminated by Yellow consequent upon breaches of contract by the respondents. The PTB had no power to embark upon consideration of such questions, nor was it equipped to determine them. Its only function was to inquire whether, as a matter of fact, Condition 2(a) of the respondents’ licences was being fulfilled, and if it was not, whether their licences should be cancelled or suspended. In making the latter determination, the PTB would not be affected at all by its contract with Yellow. It would make that determination according to how best it could discharge its functions in the public interest with particular reference, in this case, to the provision of an efficient taxi service in the interest of people with disabilities. No perception of bias could reasonably arise.
If the respondents, in response to the notice of inquiry by the PTB, had said that they were not complying with Condition 2(a) because they had no choice, namely because their contract had been unlawfully terminated by Yellow, the proper approach of the PTB would have been to adjourn the hearing, if requested to do so, to enable that dispute to be resolved in a court of law. The fact that the respondents’ complaints, if valid, might also cause the PTB to take remedial action under its contract with Yellow or to hold an inquiry into Yellow’s conduct under s 36, raised no conflict of interest such as to disqualify the PTB from conducting the limited inquiry it did. It was not concerned, nor could it be concerned on the inquiry under s 50 of the Act, with the merits of that contractual dispute.
As it happened, and as the PTB was aware, following the termination of the contract by Yellow on 23 March 2000, the respondents commenced proceedings in the Magistrates Court alleging breach of contract against Yellow. However, on 1 September 2000 those proceedings were struck out for want of prosecution. In those circumstances, the PTB could properly conclude that the contractual dispute was at an end, and that there was nothing to prevent the PTB from proceeding with its inquiry as to whether in fact the respondents were connected to the CBS and the agreement restored, whether a breach of Condition 2(a) had been established and whether the licences should be suspended or terminated. The limited nature of that inquiry raised no possible question of bias on the part of the PTB arising out of its relationship with Yellow.
The determination the subject of the appeal to the District Court was that made on 28 September 2000, whereby the PTB suspended the licences for one month to enable the respondents to comply with Condition 2(a) or dispose of the licences.
We are not concerned in these proceedings with what happened thereafter, and whether in fact the respondents offered to enter into the agreement, whether Yellow refused, whether there was any justification for that refusal, and whether, because of that or for any other reason, there is ground for disciplinary action under s 36 against Yellow. If such questions should arise, for the reasons given by the Chief Justice, there would be no legal impediment to the PTB embarking on such an inquiry if such an allegation against Yellow were to be made.

[2001] SASC 309

29 August 2001