Smith v The Hon Andrew Refshauge, MLA, Minister for Aboriginal Affairs
[2001] NSWLEC 271
•12/12/2001
Reported Decision: 117 LGERA 402
Land and Environment Court
of New South Wales
CITATION: Smith v The Hon Andrew Refshauge, MLA, Minister for Aboriginal Affairs and Ors [2001] NSWLEC 271 PARTIES: APPLICANT
RESPONDENTS
Smith
The Hon Andrew Refshauge, MLA, Minister for Aboriginal Affairs and OrsFILE NUMBER(S): 40153 of 2001 CORAM: Pearlman J KEY ISSUES: Aboriginal :- Local Aboriginal Land Council - appointment of administrator - challenge to basis of appointment LEGISLATION CITED: Aboriginal Land Rights Act 1983 s 57
Aboriginal Land Rights Regulation 1996 cl 91
Interpretation Act 1987 s 45
Public Finance and Audit Act 1983 s 41B(1)CASES CITED: Project Blue Sky Inc and Ors v Australian Broadcasting Authority (1998) 194 CLR 355 DATES OF HEARING: 23/11/2001 DATE OF JUDGMENT:
12/12/2001LEGAL REPRESENTATIVES:
APPLICANT
Mr R W Killalea (Barrister)
SOLICITORS
Tjakamarra ForrestFIRST RESPONDENT
Mr M J Leeming (Barrister)
SOLICITORS
I V Knight, Crown SolicitorSECOND RESPONDENT
THIRD RESPONDENT
Mr T F Robertson SC
SOLICITORS
Woolf Associates
no appearance
SOLICITORS
N/A
JUDGMENT:
IN THE LAND AND 40153 of 2001
ENVIRONMENT COURT
Pearlman J
OF NEW SOUTH WALES 12 December 2001
- Applicant
THE HON ANDREW REFSHAUGE, MLA
MINISTER FOR ABORIGINAL AFFAIRS
- First Respondent
- Second Respondent
Third Respondent
Introduction
1. These proceedings involve a challenge to the appointment of an administrator to the Wellington Local Aboriginal Land Council.
2. The applicant, Mr Peter Smith, who is a member of the Wellington Local Aboriginal Land Council (“the WLALC”), seeks the following declarations and order:
(1) A declaration that the purported appointment of the third respondent, Mr Peter Scolari, as the administrator of the WLALC was invalid for failure to comply with s 57 of the Aboriginal Land Rights Act 1983 (“the ALR Act”);
(2) A declaration that the first respondent, the Hon. Andrew Refshauge MLA, as Minister for Aboriginal Affairs, was acting without lawful authority in recommending to the Governor that the third respondent be appointed as administrator of the WLALC;
(3) A declaration that the appointment of the third respondent as administrator of the WLALC was invalid;
(4) An order that the third respondent cease forthwith to purport to perform any of the functions, or to purport to exercise any of the powers of the WLALC.
3. By a proclamation by the Governor in Government Gazette No 117 on 25 July 2001 the third respondent was appointed as administrator of the WLALC for a maximum period of eight months. It is this appointment which is the subject of the challenge. It is relevant to note, however, that that appointment was not the first appointment of the third respondent as administrator of the WLALC. He was first appointed to that position by a proclamation gazetted on 23 August 2000 for a maximum period of four months. He was then again appointed to that position by a proclamation gazetted on 20 December 2000 also for a maximum period of four months. I will refer to each consecutive appointment as the “first”, the “second” and the “third” appointments respectively.
4. The statutory power for the appointment of an administrator is to be found in s 57 of the ALR Act. Section 57(1) empowers the Governor at any time, by proclamation published in the Gazette, to appoint an administrator if one of six alternative conditions is satisfied. Pursuant to s 57(2), an appointment of an administrator may only be made on the recommendation of the Minister after consultation with the New South Wales Aboriginal Land Council.
5. The first respondent contends that three of the six conditions set out in s 57(1), namely, those conditions stated in subcls (b), (c) and (e), were satisfied in this case, and that, accordingly, the power to appoint an administrator was enlivened. The dispute between the applicant and the respondents centres on the applicant’s claim that none of those three conditions were satisfied. It is convenient to deal with each of the three conditions separately, but most of the focus during the hearing was on s 57(1)(c) and therefore I deal with that section first.
6. It is not in dispute that the power to appoint an administrator under s 57(1) is enlivened by satisfaction of any one of the conditions there specified. For the applicant to succeed, therefore, the Court would need to be persuaded that none of the three conditions in dispute, s 57(1)(b), (c) and (e), have been satisfied, and if the Court should find that any one of them had been satisfied, it would be unnecessary to deal with the others. However, each of them was fully argued, and I deal with all three.
Section 57(1)(c) - unsatisfactory audit certificate
7. Section 57(1)(c) provides as follows:
57(1) The Governor may at any time, by proclamation published in the Gazette, appoint an administrator under this section for a … Local Aboriginal Land Council area:
(c) on the receipt of a certificate by the Minister under section 32 stating that the results of an audit of the financial statements of the Council are unsatisfactory;
8. The language of sub-s (c) is ungrammatical, but there is no dispute between the parties that it refers to the receipt by the Minister of an unsatisfactory audit certificate.
9. The form of the auditor’s certificate required by s 32(5) is prescribed by cl 91 of the Aboriginal Land Rights Regulation 1996 in the following terms:
91 Certification
For the purposes of section 32(5) of the Act, the prescribed form of the certificate of the auditor is a certificate:
(a) stating that the auditor has audited the accounts caused to be kept by the Local or Regional Aboriginal Land Council for that financial year, and
(b) indicating whether the financial statements comply with section 41B(1) of the Public Finance and Audit Act 1983, and
(c) setting out any qualifications subject to which the certificate is given.
10. On 13 March 2001, the auditor appointed to audit the accounts of the WLALC for the period 1 October 1999 to 30 September 2000 prepared an audit report. It did not contain any indication of whether the financial statements comply with s 41B(1) of the Public Finance and Audit Act, but it did contain a qualification in the following terms:
We have been unable to form an opinion as to the correctness of the accounts as the information presented to us either does not exist or is too insufficient for us to form any opinion as to whether the financial statements that have been prepared show a correct position of the Land Council.QUALIFICATION
11. The applicant claims that s 57(1) was not satisfied at the date of the third appointment. It put its case on one basis in its oral submissions and on another basis in its written submissions. It was not clear to me that the latter basis was abandoned, and therefore I deal with both bases.
12. The first basis for the applicant’s claim is that the conditions specified in s 57(1) are predicated upon there being an existing or continuing breach of obligations under the ALR Act. It was said that the unsatisfactory audit certificate dated 13 March 2001 did not constitute an unsatisfactory audit certificate for the purpose of s 57(1)(c) as at the date of the third appointment, 25 July 2001, because it did not relate to an existing or continuing breach. Two reasons were proffered for this claim. First, there was no unsatisfactory audit certificate in existence in relation to the financial year current at the date of the third appointment (that being the year commencing on 1 October 2000 and expiring on 30 September 2001 – see s 33 of the ALR Act), nor could there be, because the obligation to prepare financial statements and have them audited for the financial year then current had not, by virtue of s 32(4) and (5), arisen at that date. Secondly, the unsatisfactory audit certificate dated 13 March 2001 related to the previous financial year, and, in respect of that financial year, the third respondent was in office as administrator under the first and second appointments. Accordingly, it was the responsibility of the third respondent as administrator to deal with the matters specified in the unsatisfactory audit certificate. Therefore there was no existing obligation of the WLALC in relation to the unsatisfactory audit certificate, and the appointment of an administrator founded upon it would be in effect the appointment of an administrator to an administrator.
13. In my opinion, this claim misconstrues s 57(1)(c). The condition specified in s 57(1)(c) must always involve an audit certificate relating to a previous financial year, because the obligation to prepare accounts and obtain an audit certificate does not arise until after the close of the financial year. Furthermore, there is nothing in the language of s 57(1)(c) to indicate that it is subject to the qualifications which the applicant claims. Thus, there is nothing to indicate that s 57(1)(c) is dependent upon the matters specified in the unsatisfactory audit certificate existing or remaining unremedied at the time the condition is satisfied. Nor is there anything in the language of s 57(1)(c) to indicate that it is to have no operation if the unsatisfactory audit certificate is furnished to the Minister at a time when an administrator is in office. The language is plain. The criterion which satisfies the condition in s 57(1)(c) is the receipt by the Minister of an unsatisfactory audit certificate.
14. There is no dispute in this case that the audit certificate dated 13 March 2001 (if it was valid) was unsatisfactory, and there is no dispute that it was received by the Minister. Accordingly, the condition specified in s 57(1)(c) was satisfied at the date of the third appointment.
15. In his written submissions, Mr Killalea, counsel for the applicant, put forward a second basis for claiming that s 57(1)(c) was not satisfied. He claimed that the unsatisfactory audit certificate failed to comply with cl 91(b) in that it failed to indicate whether the financial statements comply with s 41B(1). It was submitted that non-compliance renders the certificate invalid, and accordingly, it does not constitute a certificate within the terms of s 57(1)(c). The consequence is that the condition prescribed in that subsection has not been satisfied. It was submitted that the legislative purpose, to be discerned from s 32 and from cl 91, is that failure to comply with the legislative requirements will render the certificate invalid and of no effect. In Mr Killalea’s submission, that follows from the clear language of cl 91(b), from the obvious importance of the auditor’s certificate in the fulfilment of the obligations of an Aboriginal Land Council under s 32, and from the clear obligation imposed upon an Aboriginal Land Council under s 32(2) to prepare financial statements in accordance with s 41B(1) of the Public Finance and Audit act.
16. The first respondent endeavoured to meet this claim in two ways. First, the first respondent acknowledged that the unsatisfactory audit certificate does not expressly indicate whether the financial statements comply with s 41B(1). However, Mr Leeming, appearing for the first respondent, drew attention to s 41B(1)(e) which requires that the financial statements “… exhibit a true and fair view of the financial position and transactions …” of the relevant statutory body. In his submission, it is plain from the report that the auditor’s opinion was that the financial statements do not exhibit a true and fair view of the financial position and transactions.
17. Secondly, Mr Leeming submitted that, even if there has been a technical non-compliance with cl 91(b), the audit certificate is not invalid for all purposes. He pointed to the relevant Statement of Auditing Practice (“AUP 3”) as demonstrating that a qualified opinion which is expressed as “an inability to form an opinion” is the most extreme opinion that an auditor can express (AUP 3, pars 40, 54 and 55). In his submission, it cannot be the legislative purpose that a technical non-compliance with cl 91(b) in circumstances where the auditor’s certificate contains such an extreme opinion would render it not possible to exercise such power under s 57(1)(c). The courts would be reluctant to so hold in view of the public inconvenience which would result.
18. In my opinion, the first respondent’s first basis for resisting the applicant’s claim is correct. Clause 91(b) does not require a particular form of words to be used in the audit certificate. It requires “an indication” as to whether there has been compliance with s 41B(1). Such an “indication” is patently obvious from the auditor’s qualification. He has stated that he has been “unable to form an opinion as to the correctness of the accounts” (my emphasis). That is a clear indication, in my opinion, that the financial statements do not exhibit a true and fair view of the financial position. The failure to explicitly refer to s 41B(1) in coming to this conclusion does not demonstrate a non-compliance with cl 91(b). To hold otherwise would elevate form over substance.
19. However, I also hold the view that it is not the purpose of the relevant statutory provisions that failure to comply with cl 91(b) will render the certificate invalid. The Court’s task, in determining an issue of validity of this kind, is to ask whether it was a purpose of the legislation that an act done in breach of the statutory provision should be invalid, and, in determining the question of purpose, regard must be had to the language of the relevant provision and the scope and object of the whole statute: Project Blue Sky Inc and Ors v Australian Broadcasting Authority (1998) 194 CLR 355 at par 93). I can discern nothing in the language of cl 91 or s 32, or in the scope and object of the whole of the ALR Act which would require the conclusion that the purpose of the statute is that a failure to comply with cl 91(b) would render the audit certificate invalid. The language used in cl 91 shows that it is about the form and the content of the certificate, and it is a form and content explicitly linked to s 32(5). Section 32(5) provides for the furnishing of an audit certificate to the New South Wales Aboriginal Land Council and to the Minister, but it is s 32(3) which is more critical because that section provides for the verification and certification of the financial statements by the auditor. Section 32 appears in pt 5 of the ALR Act, which deals as a whole with matters relating to the finance of Aboriginal Land Councils, and it appears in div 2, which is about the keeping of accounts. Division 2 deals with the preparation of financial statements and their verification and audit, as well as budgets, quarterly reports, and, importantly, the circumstances in which funding to Aboriginal Land Councils is to cease. That context indicates, in my opinion, that it was not a purpose of the ALR Act that a failure to comply with cl 91(b) would render the audit certificate invalid. The legislative purpose which can be discerned from the relevant provisions is to ensure that financial statements are properly kept, verified and audited in the interests of the proper allocation and control of the funding of Aboriginal Land Councils. Strict compliance with the form and content requirements of the audit certificate does not underpin that legislative purpose, and that is a strong indication, in my opinion, that the legislative purpose is not invalidity of the certificate where there has been a failure of strict compliance.
20. For all those reasons, I find that the condition specified in s 57(1)(c) was satisfied at the time of the third appointment.
Section 57(1)(b) - compliance with s 32
21. Section 57(1)(b) provides as follows:
57(1) The Governor may at any time, by proclamation published in the Gazette, appoint an administrator under this section for a … Local Aboriginal Land Council area:
…
(b) if the Council fails to comply with section 32, 34A or 34B …
22. It is not in dispute that the first respondent purported to rely only upon a failure of the WLALC to comply with s 32, which is in the following terms:
32 Aboriginal Land Councils to keep accounts
(1) Each Local Aboriginal Land Council … must cause proper accounts and records to be kept in relation to all its operations.
(2) Each such Council must prepare financial statements for each financial year of the Council in accordance with section 41B(1) of the Public Finance and Audit Act 1983.
(3) The financial statements must be submitted for verification and certification to an auditor selected by the Council from a list of auditors compiled in the manner prescribed by the regulations.
(4) The financial statements must be prepared and submitted to the auditor not later than 6 weeks after the end of the financial year to which they relate.
(5) Each such Council must furnish to the New South Wales Aboriginal Land Council and to the Minister the audited financial statements and a certificate of the auditor, in the form prescribed by the regulations, not later than 4 months after the end of each financial year.
23. Here, again, Mr Killalea submits that there must be a present breach to satisfy the condition specified in s 57(1)(b). I think that he is correct in this submission. Section 57(1)(b) is couched in the present tense – its uses the word “fails”. This may be contrasted with the language in both s 57(1)(e), which refers to “has … breached”, and s 57(1)(f), which refers to “has … ceased”. The question, then, is whether, as the applicant claims, there was no present failure to comply with s 32 as at the date of the third appointment.
24. Mr Killalea submitted that there could be no present failure to comply with s 32. As at the date of the third appointment, the current financial year was 1 October 2000 to 30 September 2001. In accordance with s 32(4) and (5), the obligations in relation to the preparation and audit of the current financial statements, that is, those for the current 2001 year, did not arise until six weeks after 30 September 2001, and the obligation to furnish audited financial statements and an auditor’s certificate does not arise until four months after 30 September 2001. Accordingly, as at the date of the third appointment, there could be no failure to comply with s 32, because the relevant obligations had not at that time arisen.
25. However, there is another obligation under s 32(1), which requires an Aboriginal Land Council to cause proper accounts and records to be kept in relation to all its operations. The first respondent relies upon a failure by the WLALC to do so. In support of that claim, Mr Leeming pointed to two matters. First, he drew attention to the final report of the third respondent dated April 2001 relating to his administration under the second appointment. That report is replete with references to the fact that proper accounts and records had not been kept in respect of the financial year ending 30 September 2000. Secondly, Mr Leeming pointed to correspondence in August 2001 between the third respondent and Mr Amatto, the current chairperson of the WLALC, which was annexed to the third respondent’s affidavit of 23 October 2001. In that correspondence, the third respondent asked for accounting records to be produced to him, but, as is apparent from the response to his request and the further correspondence from the third respondent, they were not produced. Mr Leeming asked the Court to infer from this correspondence that the failure to keep proper records noted by the third respondent in his April 2001 report was ongoing, and constitutes a present failure to comply with s 32(1).
26. I find that there was a failure to comply with s 32(1) during the financial year ended 30 September 2000, but I am unable safely to draw an inference from the correspondence that the failure is ongoing. The tone of the correspondence certainly suggests a lack of cooperation between the third respondent and Mr Amatto, but it does not provide grounds for any inference at all about current position regarding proper records – that is, whether they are currently being kept or whether there is an ongoing failure to keep them.
27. That finding, however, does not assist the applicant because it does not establish that there is no current failure to comply with s 32(1). These proceedings are brought by the applicant and the onus is upon the applicant to prove its case that proper records are being kept. It must moreover discharge the presumption contained in s 45 of the Interpretation Act 1987 which relevantly provides as follows:
45(1) It shall be presumed, in the absence of evidence to the contrary, that all conditions and preliminary steps precedent to the making of an instrument have been complied with and performed.
(2) In this section:
instrument means:
(a) an instrument:(i) that is made by the Governor
being an instrument … that is required by law to be published in the Gazette.
…
28. The applicant endeavoured to discharge this onus by reference to the fact that the second appointment ceased on 20 April 2001, and that, at an annual general meeting of the WLALC on 24 April 2001, new office bearers were elected. In Mr Killalea’s submission, there is no evidence to show that, as at the date of the third appointment, the new office bearers on behalf of the WLALC failed to keep proper records and accounts. That submission is, however, insufficient. For the applicant to succeed in relation to its claim that s 57(1)(b) was not satisfied, he must provide evidence to the contrary of the presumption that the condition is satisfied, and no such evidence has been furnished.
29. I find, therefore, that the condition specified in s 57(1)(b) was satisfied at the date of the third appointment.
Section 57(1)(e) – substantial breach
30. Section 57(1)(e) provides as follows:
57(1) The Governor may at any time, by proclamation published in the Gazette, appoint an administrator under this section for a … Local Aboriginal Land Council area:
(e) if the Council for that area has substantially breached the requirements of this Act or the regulations or the rules of the Council;
31. The applicant’s case is that, as at the date of appointment of the third respondent on 25 July 2001, the WLALC was constituted by its new elected office bearers. There was no relevant material before the first respondent as at 25 July 2001 that the WLALC, as so constituted, had substantially breached the requirements of the ALR Act or the regulations or the rules of the WLALC.
32. The first respondent’s response to this claim is that there had been a breach of s 32(1) in the failure to cause proper accounts and records to be kept in relation to all the operations of the WLALC.
33. I have already found that there was a failure to comply with s 32(1) in that, for the period covered in the third respondent’s report dated April 2001, no proper accounts and records of the WLALC had been kept. However, the applicant claims that s 57(1)(e) requires a continuing or present breach for it to be satisfied.
34. There is no requirement in s 57(1)(e), properly construed, that the breach upon which it is founded must be continuing or extant at the precise time that sub-s (e) is relied upon to found the appointment of an administrator. The Governor is empowered to make such an appointment “at any time” so long as one of the relevant conditions is satisfied. The language used in sub-s (e) is “has … breached” rather than, for example, “is in breach”. Furthermore, as Mr Robertson SC, appearing for the second respondent, pointed out, s 48 of the Interpretation Act 1987 provides that, if a function is conferred or imposed on any person, the function may be exercised from time to time as occasion requires.
35. For these reasons I find that the condition specified in s 57(1)(e) was satisfied at the date of the third appointment.
Conclusion
36. Any one of the conditions specified in s 57(1) of the ALR Act is sufficient to enliven the power of the Governor to appoint an administrator for a Local Aboriginal Land Council area. I have found that each of the three disputed conditions was satisfied. Accordingly, the applicant’s challenge to the appointment of the third respondent as administrator of the WLALC must fail.
37. My formal orders are as follows:
(1) The application is dismissed.
(2) I reserve the question of costs.
(3) The exhibit may be returned.
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