Western Districts Foundation for Aboriginal Affairs Ltd v Aboriginal & Torres Strait Islander Commission

WESTERN DISTRICTS FOUNDATION FOR ABORIGINAL AFFAIRS LTD v. ABORIGINAL AND
TORRES STRAIT ISLANDER COMMISSION
No. NG524 of 1993
FED No. 610
Number of pages - 23
Administrative Law

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
WILCOX J

CATCHWORDS

Administrative Law - Aborigines - Application for grant to support welfare activities - Compromise of dispute over previous grant - Accountants' report obtained pursuant to that compromise - Delay in obtaining report - Whether delay deliberate in order to enable respondent to promote an alternative agency - Concern by respondent that applicant not subject to democratic control - Financial accountability - Concern about procedures for selection of employees - Allegation that refusal of application not made in good faith - Whether decision to refuse application was unreasonable.

Aboriginal and Torres Strait Islander Commission Act 1989, s.18.

Administrative Decisions (Judicial Review) Act 1977, s.5.

HEARING

SYDNEY, 19-20 August 1993

#DATE 1:9:1993

Counsel for the Applicant: N Francey and R Weaver

Solicitors for the Applicant: Smythe and Mallam

Counsel for the Respondent: J S Hilton and R T Beech-Jones

Solicitors for the Respondent: Australian Government Solicitor

ORDER

THE COURT ORDERS THAT:

1. The Application be dismissed.

2. The applicant pay to the respondent its costs of the proceeding.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

WILCOX J This is a challenge to a decision refusing an application for a grant of funds under s.18 of the Aboriginal and Torres Strait Islander Commission Act 1989. That section provides:

"18.(1) Subject to subsections (2) and (3), the Commission may, on such terms and conditions as it determines, make loans or grants of money to:

(a) the States, the Australian Capital Territory and the Northern Territory;

(b) State, Territory and local government bodies;

(c) Aboriginal or Torres Strait Islander corporations; or

(d) any other incorporated bodies;

for the purpose of furthering the social, economic or cultural development of Aboriginal persons or Torres Strait Islanders.

(2) The Commission may not make a loan or grant to a body under subsection (1) if the loan or grant is of a kind that could be made to that body under section 15, 16 or 17.

(3) The Commission may not make a loan or grant pursuant to paragraph

(1)(d) without the Minister's written consent."

The Commission, referred to in the section, is the Aboriginal and Torres Strait Islander Commission ("ATSIC"), a body incorporated by the Act: see s.6(1). It is the respondent to this proceeding. The decision under challenge was made by the Commission's New South Wales State Manager, Geoffrey William Scott, on 18 August 1993.

The facts
3. The applicant, Western Districts Foundation for Aboriginal Affairs Ltd, is a community based welfare organisation run from offices at St Marys, in outer western Sydney. The Foundation's Memorandum and Articles of Association contain no limitation on the persons whom it may serve. However, in practice and as its name implies, the organisation gives priority to members of the aboriginal community and especially those living in western Sydney and in some parts of country New South Wales, notably the Wellington district. The Foundation assists its clients by providing material assistance (food vouchers, payments towards electricity and gas bills and provision of clothing and furniture), social support and counselling, including referral to appropriate specialist agencies such as medical and legal services. The Foundation operates a truck which is used for the collection and distribution of donated food, clothing, furniture and bedding. Each Christmas, the Foundation distributes food hampers, gives toys to children and holds a Christmas party.

Since its establishment in 1975, the Foundation has received continuous government funding; initially from the Department of Aboriginal Affairs, more recently from ATSIC. At least in recent times, funding has been directed towards the payment of the infrastructure costs, chiefly salaries and equipment expenses, necessary to enable the Foundation to carry out its welfare activities. ATSIC has not provided funds for distribution to the needy or for the purchase of toys or for the Christmas party. These funds have been obtained by donations or New South Wales government grants. The Foundation is a registered charity under State legislation administered by the Chief Secretary of New South Wales.
As I understand the position, ATSIC funding is generally allocated to an organisation on a whole financial year basis. But the money is paid quarterly, subject to compliance by the grantee with the conditions of the grant.
The evidence about the matter is sparse, but it appears that in early 1993 a dispute arose between the Foundation and ATSIC concerning payment of the final quarterly instalment of the 1992-1993 grant. I gather that ATSIC asserted, and the Foundation denied, that the Foundation had breached one or more of the conditions of the grant. The Foundation commenced a proceeding in this Court concerning the matter; but an agreement was reached with ATSIC and the proceeding was discontinued. The agreement was recorded in a letter of 28 April 1993 from the Australian Government Solicitor, acting for ATSIC, to Smythe and Mallam, solicitors for the Foundation. It provided that ATSIC would pay $39,350 to the Foundation in two equal instalments, one within seven days, the other by 31 May 1993; subject, amongst other things, to ATSIC receiving a report regarding certain specified matters from auditors appointed by it.
The letter from the Australian Government Solicitor also referred to the Foundation's application for a 1993-1994 grant of $226,449, which was then under consideration by ATSIC. The letter said that, in due course -

"ATSIC will communicate to the Foundation its specific concerns regarding the constitution, management and operations of the Foundation and the Foundation will address each of these concerns by 30 June 1993".

Pursuant to this agreement, ATSIC appointed a firm of chartered accountants, Duesburys, to undertake an investigation of the Foundation's financial affairs. The investigation did not proceed as rapidly as the parties had envisaged when they made the 28 April agreement. Apparently, it was necessary, under government policy, for ATSIC to call tenders for the work. This caused a three week delay in selecting the firm to be appointed. It was not until early June that Duesburys commenced an eight-day inspection of the Foundation's records. Then there was delay in provision of the report. The report is dated 8 July. Apparently, it was not available to ATSIC until then.
In the meantime, ATSIC paid the Foundation the whole sum of $39,500 promised by the 28 April agreement. The money was not paid in the two instalments contemplated by the agreement because Allen Hedger, the Sydney Regional Manager of ATSIC, realised that there would be a substantial delay before the accountants' report was available. He thought that the second instalment should be paid before then.
The Foundation submitted monthly reports for April, May and June 1993, as required by the 28 April agreement. ATSIC apparently found these satisfactory.
With the approach of the new financial year, the Foundation became concerned about the fate of its 1993-1994 application. Of course, the Foundation's officers knew about Duesburys' investigation, but they had heard nothing further. On 24 June, Rodney Garmaise, the Foundation manager, spoke to Peter Armstrong, Sydney Deputy Regional Manager of ATSIC. Mr Armstrong told him that the ATSIC councillors (apparently the Sydney Region councillors) had rejected the Foundation's funding application on 20 June but that he, Mr Garmaise, would have to speak to Mr Hedger for further information. Mr Garmaise did speak to Mr Hedger, on the following day, but Mr Hedger said he could not give any details of the rejection until the matter had been reviewed by the Australian Government Solicitor.
Although there is no direct evidence on the matter, the case has been conducted on the basis that the Sydney Region councillors reached an adverse decision on 20 June but that this did not bind ATSIC. The Regional councillors have a merely advisory role. And, in the present case, a lot of information became available after 20 June but before Mr Scott's final decision. As he recognised, he was obliged to take that information into account. Neither party places weight on the 20 June resolution.
On 30 June, Smythe and Mallam wrote to Mr Hedger seeking information. They received no reply. They wrote again on 6 July. On 8 July, Mr Garmaise spoke to Mr Hedger. Mr Hedger said that he still had not heard from the solicitors. Mr Garmaise asked for a copy of Duesburys' report but Mr Hedger said this could be supplied only with the solicitor's approval. On 9 July, Smythe and Mallam wrote a further letter to Mr Hedger. They pointed out the effects of the funding uncertainty on the Foundation's work. Still there was no reply.
On 19 July this proceeding was commenced. The filed Application sought review, under the Administrative Decisions (Judicial Review) Act 1977, of a decision to -

"refuse continuation of grant funding by the respondent, that decision having been made prior to 24 June 1993 and communicated by telephone to the Applicant on that day".

Although the Application did not so state, the reference was to the resolution of the Sydney Regional councillors.

The matter came before the Court for directions three days later, on 22 July 1993. Counsel for ATSIC informed the Court that no final decision on the application had yet been made. Accordingly, with the consent of the applicant, the directions hearing was adjourned until Friday, 30 July.
On 23 July, Mr Hedger sent a letter to William May, Chairperson of the Foundation, seeking information regarding numerous matters. I will return to the detail of the inquiries. For the moment, it is enough to note that Mr Hedger's questions concerned aspects of the constitution, structure and membership of the Foundation; its accountability; and aspects of its delivery of services. The letter enclosed a copy of Duesburys' report. Some questions were directed to comments in that report.
Mr Garmaise replied to this letter on 28 July. He supplied answers to many of the questions, but not all of them.
On 30 July the matter again came before the Court. Counsel for ATSIC indicated that their client was considering Mr Garmaise's response and that no decision had yet been made on the grant application. The directions hearing was again adjourned, this time till 12 August.
On 11 August the Australian Government Solicitor sent to Smythe and Mallam a document prepared by Mr Hedger and entitled "Statement of Reasons for Recommendation". The document concluded with a recommendation that the Foundation's application for 1993-1994 funding be declined. The letter from the Australian Government Solicitor concluded:

"I am instructed that the State Manager is minded to accept that recommendation and to adopt the Regional Manager's reasons as his Statement of Reasons under s.13 of the Administrative Decisions (Judicial Review) Act 1977 subject to receiving any further submissions (which should be received by 9.30 am tomorrow, unless your client requires further time to respond)."

The Foundation decided not to comment directly on this draft. When the matter came before the Court on the following day, counsel for the Foundation indicated that their client wished to amend the Application so as to complain of the conduct of ATSIC, in connection with the decision-making process, rather than the legal validity of a decision made before 24 July; that is to say, the Foundation would rely on s.6 of the Administrative Decisions (Judicial Review) Act rather than s.5. Counsel accepted that, so far as they were aware, no statutory decision had yet been made. Counsel indicated that the Foundation challenged the relevance of many of the matters raised by Mr Hedger and wished the Court to rule on their relevance. They pointed out the difficulties that the Foundation was experiencing because of the uncertainty about funding and pressed for the earliest possible hearing date.
Because of the settlement of another matter, I was able to commence the hearing on Thursday, 19 August. In the meantime Mr Garmaise swore a further affidavit, dated 13 August, dealing with the matters referred to by Mr Hedger. Mr Hedger prepared a Supplementary Statement of Reasons for Recommendation in which he commented upon Mr Garmaise's response. This was referred to Mr Scott who, on 18 August, made a decision adopting Mr Hedger's recommendation to decline the application. In endorsing his decision on the document prepared by Mr Hedger, Mr Scott added the following handwritten notation:

"In considering this matter I have taken into account both this statement of reasons and the attached supplementary statement of reasons for recommendation.

Further that any one of the five reasons for recommendation at page 6 would in my view constitute sufficient reason to decline funding to the applicant."

The five reasons at page 6 were:

"(1) I am not satisfied that WDFAA is a body which is accountable to its members. On the contrary, the directors have acted in an undemocratic manner in expelling members who sought to call an Extraordinary General Meeting to question actions of the Directors. It is not appropriate that ATSIC continue to fund such a body.

(2) I am not satisfied that there are proper and adequate procedures in place relating to the recruitment of staff to salaried positions in the WDFAA. I consider it important that all members of the Aboriginal community have the opportunity to apply for such positions based on merit and that bodies who receive funding from ATSIC for their administrative overheads should allow that to occur and should be scrupulous in following proper procedures.

(3) I am not satisfied that WDFAA have in place adequate financial controls and accounting procedures, in particular, the controls over cash withdrawals and the personal use of official motor vehicles appear inadequate or non existent. Once again ATSIC should not fund an organisation which lacks adequate accounting controls.

(4) I am satisfied that, contrary to the terms of its 1992/93 funding grant the WDFAA has not provided pertinent financial information specifically requested by ATSIC.

(5) I am satisfied that there is a significant overlap of services between the BAC and the WDFAA. In my view the preferable way of dealing with the overlap and ensuring that ATSIC's funds are used to maximum benefit is to continue funding the BAC and cease funding WDFAA."

Mr Scott's decision was received by the Foundation on 18 August. When the matter came before me for hearing on the following day, counsel for the Foundation informed me that a decision had now been made and that their client wished to amend its Application in a different way; so as to challenge that decision. Counsel for the respondent did not object to this course but they sought particulars of the grounds of invalidity alleged by the Foundation. Counsel for the applicant then mentioned a number of the grounds itemised in s.5 of the Administrative Decisions (Judicial Review) Act. It is unnecessary to detail them all. Most were subsequently abandoned. In their final address counsel for the Foundation limited themselves to two grounds: that the decision to decline the application was made in bad faith (Administrative Decisions (Judicial Review) Act, s.5(1)(e) and s.5(2)(d)) and was so unreasonable that no reasonable person could have made the decision (s.5(1)(a) and s.5(2)(g)).

The Statement of Reasons: democratic control
24. In order to appreciate the submissions of counsel, it is necessary to refer to the matters referred to by Mr Hedger in his Statement of Reasons for Recommendation, and his Supplementary Reasons prepared after seeing Mr Garmaise's affidavit of 13 August. These reasons were adopted by Mr Scott, the statutory decision maker, in making his final decision.

The first of the five matters mentioned by Mr Hedger concerned democratic control. On this matter he made the following findings of fact:

"(i) In July 1993 it came to my attention that certain full members of WDFAA had been denied rights provided for all such members in the organisation's constitution. ...

(ii) Specifically the WDFAA articles of association, Paragraph 14, provide that 'Any Director or any three members may whenever they think fit convene an extraordinary general meeting.'...

(iii) The WDFAA appears to have received two written requests ... from members of WDFAA calling extraordinary general meetings. In each case the board of WDFAA denied the requests for meetings and expelled the members responsible for calling the meetings from the WDFAA on the basis that their actions were 'detrimental to the Foundation'. ...

(iv) In response to ATSIC's request to specify how these members

(sic) actions had been detrimental, WDFAA declined to provide any particulars. ...

(v) In my opinion it is inappropriate to fund an organisation which shows such a disrespect for its constitution and its members. The board have acted in an undemocratic fashion in the face of criticism from the members."

Two requisitions for an extraordinary general meeting were received by the Foundation in April 1993. The first, dated 2 April, was signed by four persons, presumably members. The requisition set out six proposed resolutions. The first resolution was for Mr May's removal as a director, the second for the removal of the whole board of directors. The fourth resolution called for an independent audit and the fifth for the removal of the existing auditor.
The second requisition, dated 19 April, also proposed resolutions critical of the board of directors. They included a resolution that Mr May stand down immediately from his position as Chairperson and as a director of the Foundation and a vote of no confidence in Mr Garmaise. This requisition was signed by six persons, again apparently members of the Foundation.
The evidence does not reveal an immediate response to the first requisition; except that it is clear that no extraordinary general meeting was held. It does reveal that, on 20 April, Mr May wrote to the six signatories of the second requisition and to two other people, one at least of whom had signed the earlier requisition, discussing the resolutions proposed by the 19 April requisition. The letter stated:

"In the considered opinion of the majority of the Board of Directors you are in breach of the constitution and the aims and objectives of the Foundation and detrimental to the organisation in accordance with Article 7(c)(I) and (II) of the constitution therefore your membership has been terminated forthwith".

The letter stated that no extraordinary meeting would be called "due to the motions being null and void because all issues have been addressed by the board of directors". Each letter concluded with a notice to show cause within seven days why the addressee's membership should not be terminated.

It seems that none of the addressees responded to the letter. On 12 May, Mr May wrote to each of them notifying that their membership had been cancelled as at that day because of failure to show cause.
In his affidavit of 13 August, Mr Garmaise referred to these documents, which he annexed to his affidavit. He stated that he was informed by Mr May that the application by these members for an extraordinary general meeting was the fourth such application since 1992 and that two extraordinary general meetings were called in response to the first two applications in 1992 at a cost of about $2,500 to the Foundation. He said that the "termination of the memberships thereafter took place in accordance with the Foundation's constitution".
The evidence does not suggest that any of the earlier extraordinary general meetings were requisitioned by any of the people who signed the April requisition. Neither does it disclose the nature of the resolutions considered at the earlier meetings.
In his Supplementary Reasons, Mr Hedger made the following comments on Mr Garmaise's affidavit:

"i) In my view, reliance by members upon their rights under the articles of association of WDFAA to requisition an extraordinary general meeting should not be regarded as detrimental conduct, particularly when it is clear that the directors have failed to respond to those requisitions; ii) In my view, the matters which the members sought to raise in their petitions of 2 April, 1993, and 19 April, 1993 were matters which appear to be important which should have been considered by all members of the Association. The directors appear to be wanting to suppress open discussion of the conduct of the affairs of the Association; iii) Contrary to Mr. Garmaise's affidavit, the letters sent to the members do not appear to rely upon any allegation that they acted in a manner detrimental to WDFAA by making repeated requisitions for extraordinary general meetings. In the letters addressed to the members concerned, supplied to me by WDFAA, this matter was not mentioned; iv) The letter of 20 April, 1993 advised the members to whom it was directed that their membership had been terminated forthwith. This advice appeared in the first paragraph of the letter, although it did not descend to specify the basis for this termination. Then, in the final paragraph of the letter, the members were informed that they were being given the opportunity to show cause why their membership should not be terminated. This is obviously confusing and one may infer that a concluded decision by the directors to expel these members was made in advance of any submission by the members as to why they should not be expelled; v) ATSIC has still not been advised by the WDFAA of any acceptable basis for concluding that these members had acted in a manner detrimental to the interests of the Foundation."

The Statement of Reasons: staff selection procedures
34. The second of Mr Hedger's five matters of concern was the staff selection procedures followed by the Foundation. It appears that, at all material times, there have been five directors of the Foundation and that they have included Mr May as Chairperson and his daughter, Katie Church, as Secretary. The funding application for 1993-1994 included a budget identifying seven paid positions. They included full-time positions of truck driver and trainee welfare officer. The currenttruck driver is Kevin Church, the husband of Mrs Katie Church and son-in-law of Mr May. Mr Church was appointed to the position in March 1992. According to some hearsay evidence in Mr Garmaise's affidavit, to which no objection was taken, a notice concerning the position was placed on the notice board of the Commonwealth Employment Service at Blacktown. A couple of days later, no application for the job having been received, Mr May offered Mr Church the position on a part-time basis. His appointment was later confirmed by the board of directors. On 4 May 1992 the board made the appointment a full-time position.

The incumbent trainee welfare officer is Kellie May, a grand-daughter of William May. In his letter of 28 July, Mr Garmaise stated that Ms May had previously acted as an unpaid assistant to Vera May during 1992 and was permanently appointed to the paid position on 8 October 1992. Applications for the position were not called. Vera May is a director of the Foundation. She is said to be unrelated to William May. The evidence does not disclose the nature of her 1992 activities or her qualifications as a welfare officer.
In addition to the seven positions referred to in the budget, the Foundation occasionally employs David Church, Mr May's grandson, as "driver's offsider for larger deliveries of charity goods".
Mr Hedger commented on the Foundation staff selection procedures in this way:

(i) I am concerned that proper and appropriate selection procedures have not been used in some instances where staff appointments have been made at the WDFAA. This is of particular concern given the extent to which the funds of WDFAA provided by ATSIC are spent on wages and salaries. ...

(ii) The WDFAA has failed to satisfy ATSIC that legitimate/appropriate selection procedures were observed in the appointment of:

* Ms K. May to the position of Trainee Welfare Officer. * Mr K Church as a full time driver for the organisation.

(iii) In respect of the appointment of Ms. K. May I note:

(a) She is the grand daughter of Mr W. May, who is the chairman of the WDFAA.

(b) The position of welfare officer was advertised in the Sydney Morning Herald on 3 October 1992.

(c) Ms May was appointed to the position on 8 October 1992.

(d) WDFAA have not responded to my request of July 23 1993 to explain the process used to appoint Ms May to the position.

(e) WDFAA have also failed to advise me as to whether any relative of Ms K. May was involved in the decision to appoint her.

(iv) In respect of the appointment of Mr Church, the WDFAA has failed to provide any information on the circumstances in which he was appointed. Such information was requested in my letter to the organisation dated 23 July 1993. I note that Mr Church is the son in law of Mr. W. May, who is the Chairman of WDFAA."

Mr Garmaise commented in his affidavit that it was wrong to connect the advertisement of 3 October with Ms May's appointment; the advertisement sought a qualified welfare officer whereas Ms May was only a trainee. It appears that a qualified welfare officer was appointed on 29 December 1992. On 25 March 1993 she resigned. The position was re-advertised on 6 May 1993. An appointment has been made but, because of the uncertainty over funding, the appointee has not yet commenced duties with the Foundation. Mr Garmaise said that Ms May was appointed to the position by the board. He understood that Mr May presided over the board decision.
Mr Garmaise was unable to speak of 1992 events from his own knowledge. He commenced employment with the Foundation only on 11 January 1993.
In his Supplementary Reasons, Mr Hedger referred to the fact that his letter of 23 July sought information from the Foundation concerning the number of applicants for Ms May's position, the procedure invoked to fill the position and whether any relation of hers was involved in the decision to employ her. He noted that the Foundation had still not stated how her appointment was made, the procedures invoked or the specific people involved in the decision to employ her. He also maintained his dissatisfaction with the procedure adopted for the appointment of Mr Church as truck driver.

The Statement of Reasons: financial control
41. The third matter listed by Mr Hedger in his Statement of Reasons for Recommendations was lack of adequate financial/accounting control. He said:

"(i) I am not satisfied that there are adequate financial controls and accounting procedures governing financial matters of the WDFAA.

(ii) The WDFAA have been unable to provide details of financial security procedures used in relation to cash withdrawals from the WDFAA term deposit account held with the Advance Bank Ltd.(Account number 306832627). Two withdrawals made from this account were for $10,017.50 and $10,189.18, made on 30 October 1992 and 6 November 1992 respectively.

(iii) The WDFAA has not complied with ATSIC's request to provide minutes of the Board Meetings approving the cash withdrawals disclosed at C (ii). All that has been provided are extracts of a meeting of 7 June 1993 which refer to these withdrawals and assert that Board approval was given.

(iv) I note that Mr. W. May was the Chairman of the Board of Directors of WDFAA at the time of the cash withdrawals disclosed at C(ii) above and is currently the Chairman of the Board. I also note that Mrs. K Church and Mrs. V May were board members at the time of these withdrawals and are current Board members.

(v) I am not satisfied that adequate control and security procedures were operated in respect of the cash withdrawals disclosed at C(ii). Further I am not satisfied, based on paragraph (iv)(and contrary to the assertion made in the WDFAA letter of 28 July 1993 that 'All foundation transactions are conducted in a safe, secure manner') that the present Board will maintain adequate controls and security procedures for cash withdrawals.

(vi) The WDFAA owns two motor vehicles, and it informs me that employees have access to the vehicles for personal use. WDFAA also inform me that log books are not maintained for either of the vehicles. This is unacceptable as ATSIC is funding an unknown amount of costs associated with personal travel in the WDFAA vehicles, by WDFAA employees and/or officers."

In his affidavit of 13 August, Mr Garmaise commented that Mr Hedger appeared to be concerned with two matters: the amount spent on toys during 1992-1993 and use of the Foundation's motor vehicles. In relation to toys, he quoted from his letter to Mr Hedger of 28 July:

"The amount spent on toys for the 1992/93 year was $41,253.44. The apparent discrepancy you refer to in point (vi) arises from the cash payments that you note in your following question together with the amount for cheques numbered 427 - 432 inclusive totalling $5,406.10 for the provision of 'party food' for the children's Christmas parties. A copy of our reconciliation sheet is annexed hereto and marked "F" for your information. In response to your expressed concern regarding the cash purchase of toys copies of the invoices for those toys purchased for cash are annexed hereto and marked 'G'.

I am however at a loss to understand why you consider it necessary to require us to undertake a full accounting of the distribution of those toys. I note that none of the money expended on toys comes from ATSIC funding but is provided by our fund-raising efforts and other grants. The Foundation is currently being audited for our annual report to the Chief Secretary's Department, the body responsible for overseeing our operations as a charitable organisation. We will happily provide a copy of that report, prepared at the Foundation's expense, when same is available. We do not however consider that our administrative funding should be delayed pending its receipt since it covers an area which is not strictly within the compass of your Commission. The toys were purchased from a wholesaler who at the time offered the Foundation a 20% discount for cash payment. Board approval was obtained at the time of the purchase and is noted in the copy of the minutes of the Board meeting of 7 June 1993 which is annexed hereto and marked 'H'. All Foundation cash transactions are conducted in a safe, secure manner."

The attachments to the letter referred to by Mr Garmaise are confusing. Annexure "F" is not a reconciliation sheet. It is only an extract from a list of December 1992 payments, apparently prepared by Ester Emslie, the Foundation's sometime book-keeper. The list includes five payments, totalling $5,406.16, which (judging by the names of the payees) might reasonably be assumed to relate to the 1992 Christmas party. Annexure "G" consists of two invoices, No. 11-12 for $10,091.54 and No.53 for $10,017.50. The second invoice bears a notation adding the value of the invoices ($20,109.04) with the note "Both paid by cash - Taken from Advance Bank Term Deposits A/C 306832627 - A/C has seen (sic) been cancelled". All the goods listed in these invoices appear to be toys.
Annexure "H" is not a minute authorising the cash transaction but merely a note that Mrs Emslie wished the following information to be minuted:

"The disbursements of money withdrawn from the fixed investment accounts between October and November, 1992 used mainly to purchase toys and food for the Christmas period. The decision to withdraw these monies to purchase these items had been approved by the Board of Directors late last year."

During the course of his cross-examination, Mr Garmaise said that "it could be right" that Ms Emslie ceased her employment as book-keeper in September 1992, but he said that he was not sure when she was there and when she was not. Annexure "H" to Mr Garmaise's letter contains a note concerning the toys:

"2. The following transactions took place during the months of October and November 1992 and it is brought to the attention of the Board that these should be included in the Minutes of the Meeting held during those months, or thereabouts.

Investment accounts deposited with Advance Bank totalling $53,757.62 were withdrawn and used to purchase toys and food given away at Christmas time. They represented the following accounts: No. 307349451 $10,039.31

127622827 23,529.13

306832627 20,189.18

Plus withdrawal from St. George

Bank, A/C 059015565 9,973.62

Total $63,691.93

The above amount was used to pay the following:

1. Toys - $15,738.30 Ch.397 and 385

2. Toys - 20,109.04 Adjustment made as no cheque was drawn for this.

$35,847.34 The account was closed and the cheque was paid directly to the supplier. The balance of the withdrawn amount was used to pay termination payments and group taxes relating to the payments."

On the face of it, this note suggests a significant accounting omission. Even accepting the adequacy of the evidence concerning the cash payment of $20,109.04, according to this document only $35,847.34 was spent on toys as compared with $63,691.93 withdrawn from bank accounts for the purpose, a difference of $27,844.59. The difference is said, vaguely and without verification, to have been spent on "termination payments and group taxes".
However, in fairness to the Foundation, I should record two points made by counsel in relation to this document. First, they pointed out that Mr Hedger's letter of 23 July referred by number to seven invoices for toys. He gave the value of these invoices as $40,875.88. Counsel suggested that this letter constituted an acknowledgment that ATSIC was satisfied that $40,875.88 had been spent on toys. On that basis, counsel said, there was be no omission to account. The only mystery was the source of the difference between the revealed $35,847.34 and the expended $40,875.88. However, this was not a case of funds missing, rather the reverse.
What counsel say about the letter of 23 July may be correct. The letter is confusing. I am uncertain whether Mr Hedger saw the invoices. On the one hand, his letter says: "Our records indicate that the total value of toys purchased during October and November 1992 was $40,875.88"; on the other, the letter notes that Duesburys identified only $15,739 toy expenditure and asks for confirmation of the correct amount and for the provision of original invoices. This apparent inconsistency was not resolved at the hearing. I do not know what is the position. But it may be that ATSIC was satisfied that the Foundation spent $40,875.88 on toys.
Secondly, counsel said that, until the matter was raised in Court, nobody complained about the adequacy of the information regarding termination payments and group taxes. So far as I can see, this is right. Duesburys did not comment on the matter. I remain mystified about the precise disbursement of the $63,691.93 withdrawn from the various bank accounts. However, particularly in the light of Duesburys' investigation, there is no warrant for assuming that any funds have been misappropriated. Nobody has ever alleged misappropriation; indeed, Mr Hedger expressly disclaimed it in his Supplementary Reasons.
In his Supplementary Reasons, Mr Hedger set out his response to the comments regarding financial control made by Mr Garmaise and the Points of Contention filed in this case on behalf of the Foundation:

"(i) I note that in paragraph 2(c)(i) of the Points of Contention it is asserted that ATSIC should not take into account the adequacy of WDFFA's financial control and accounting procedures in respect of cash withdrawals which do not relate to ATSIC funding. In my view, the purpose of ATSIC's funding is to assist bodies such as WDFAA, to provide a service that is consistent with their objectives and functions. As such it is imperative that ATSIC should be satisfied that financial controls and accountability are in place. In ATSIC's letter of 23 July, 1993, WDFAA was asked to provide specific documents and details relating to the cash transactions in question which the Commission considered necessary to enable it form (sic) a conclusion on whether adequate financial controls were and are in place. Further, in the letter of 23 July, 1993 WDFAA was asked to provide the minutes and resolutions of the meetings where authorisation was given concerning the cash withdrawals. Other than the minute referred to in paragraph 2C(iii) of my reasons of 11 August, 1993, WDFAA has still not provided the minutes and resolutions requested or any specific details of the security procedures followed for those transactions. In my view the bald assertion that 'all cash transactions are carried out in a safe, secure manner' is not verified by any evidence".

The Statement of Reasons: compliance with general conditions of grant
51. The next point concerns the matter of compliance with the general conditions of ATSIC funding for the 1992-1993 year. In his Reasons for Recommendation, Mr Hedger said:

"(i) The general conditions of ATSIC funding of the WDFAA for the 1992/93 financial year required the WDFAA to provide financial and administrative reports and some other information to the Commission as requested: Clause 5.2(b).

(ii) Specifically, in response to my written request of 23 July 1993 the WDFAA has failed to provide the following: - Monthly Accounts Statements for period 1 July 1992 to 31 May 1993.

- Original invoices supporting the purchase of $40,253.44 worth of toys.

- Evidence of receipt of goods worth $40,253.44. - Details of the method of payment used in relation to the purchase of $40,253.44 worth of toys. - A copy of the WDFAA response to a letter from the Chief Secretary's department dated 17 February 1993. - Bank statements for the period 1 July 1992 to 31 May 1993."

Clause 5.2(b) of the General Conditions had no application to the toys. That sub-clause empowered ATSIC, or its agent, to seek further information to establish that "the grant monies" have been used for the approved project. It applies only to monies granted by ATSIC. As previously mentioned, the toy monies were provided by others. When the point was put to him, Mr Scott conceded that the reference to cl.5.2(b) was mistaken. Nonetheless, he insisted that ATSIC had a legitimate concern with the expenditure of the toy monies; the control of that expenditure bore upon the issue of the Foundation's financial accountability.
In relation to financial records generally, Mr Garmaise enclosed some documents with his letter of 28 June. He said that more detailed reports would be available on completion of the yearly audit, currently under way. He referred to Duesburys' report.
Duesburys' report is lengthy. I do not propose to deal with it in detail. It contains a lot of useful information regarding the Foundation's operations. It concludes with the statement that, despite all its criticisms, "the accounting records were of a sufficient standard to provide directors with an adequate guide to the financial position, and adequate for the management of WDFAA".
However, the report's criticisms and qualifications were important. First, Duesburys noted the absence of third party vouchers or receipts for funeral benefit payments. In 14 out of 22 cases, in the period of review, there was no way of knowing whether the payments had been used as intended. Secondly, there was little or no explanation of petty cash payments to welfare recipients; similarly with assistance towards electricity and gas payments. In this connection, Duesburys noted a major limitation upon their review: they were refused access to the Foundation's welfare files on the ground of client confidentiality. Duesburys could not satisfy themselves that the persons who received payments were in fact welfare applicants; still less could they check whether those people presented a genuine case of need. Similar problems arose in connection with other forms of welfare assistance: emergency travel assistance, Christmas food hampers, food vouchers, receipt of distributed food and one payment of $350 for medical equipment (the beneficiary being at Ulmarra on the New South Wales north coast).
Duesburys referred to the Christmas toy issue; not only their difficulty in reconciling the financial records, but also the lack of records regarding distribution of the toys. They said that it was not possible to form an opinion whether they were distributed on the basis of genuine need. They referred to a complaint that some toys were sold en route to a country destination, something admitted by Mr May who blamed a particular person no longer associated with the Foundation. Duesburys said they had no evidence to substantiate Mr May's explanation. They also discussed perceived inadequacies in the Foundation's stock records. They suggested improvements to the present system.
In his Supplementary Reasons, Mr Hedger commented on Mr Garmaise's response:

"i) As stated above, in my view, ATSIC must consider the overall operations of the Association, not just those matters it specifically funds.

ii) I took into account the information provided by Duesbury's

(sic) in their audit, but their report raised concerns which motivated me to seek specific documentation and seek further explanation of the queries raised as set out in the letter of 23 July, 1993;

iii) WDFAA has still not provided the material requested in the letter of 23 July, 1993 set out in sub-paragraph (ii) of paragraph 2D of my recommendation of 11 August, 1993."

The Statement of Reasons: delivery of services
58. The final matter mentioned by Mr Hedger in his Reasons for Recommendation was service delivery. He said:

"I note that the Blacktown Aboriginal Corporation (BAC) is providing a similar service to that provided by WDFAA. In particular, the BAC provides the following types of services in the Blacktown region: - Advocacy

- Family and individual support

- Emergency child care

- Employment referral

- Awareness programs for local Police and general community The WDFAA General Manager has asserted that BAC 'is a women's refuge and does not provide welfare assistance beyond immediate physical support and counselling to Koori (and presumably white) women.'

The Manager of BAC in a subsequent communication to ATSIC stated the following:

* Mr Garmaise had rung wanting to know the composition of the Blacktown Aboriginal Corp. committee.

* At no stage did she state that the Blacktown Aboriginal Corporation was a Women's Refuge. In fact she siad (sic) that BAC is a referral, advisory and resource centre.

Notwithstanding the different versions of events I have no reason to disbelieve the Manager of BAC. ATSIC have been funding BAC since and including the 1991/92 financial year."

Mr Garmaise responded to this material by referring to his letter of 28 July concerning his telephone conversation with Margaret Ryan, General Manager of BAC. His affidavit contained the statement that Ms Ryan said that her organisation is a women's refuge and that it did not provide welfare assistance beyond immediate physical support and counselling of women. In his Supplementary Reasons, Mr Hedger stated that he did not form his opinion on Ms Ryan's statement "but on the basis of my knowledge, from perusing ATSIC's files, of the activities of the Blacktown Aboriginal Corporation". He said that his conversation with Ms Ryan was merely to check the terms of the reported conversation, as it seemed contrary to his understanding of the position.
The BAC files have been tendered in this case. They reveal that BAC was formed in 1991. Initially, it seems, BAC's work was limited to the operation of a women's refuge. In October 1992, it sought ATSIC funds for a survey of aboriginal women. In April 1993, BAC made an application for an ATSIC grant of $64,435 for welfare services. The sum of $27,235 was approved for the period 1 May - 30 June 1993. For the year 1993-1994 BAC sought $168,475. On 25 June, $82,083 was approved.

Bad faith
61. As I have said, many points were initially raised by counsel for the Foundation. During the hearing, most fell by the wayside. In the end, counsel pressed only the matters of bad faith and unreasonableness. The essence of their argument on bad faith is that Mr Hedger and Mr Scott determined that BAC should be the preferred supplier of welfare services in western Sydney; accordingly, during the period May-August 1993, the two men stalled a decision on the Foundation while building up the ability of BAC to take the Foundation's place, and then refused the Foundation's application because there would be a significant overlap between its services and those of BAC. Initially, counsel suggested that Mr Hedger and Mr Scott deliberately delayed commissioning Duesburys. However, following Mr Scott's evidence about government tender requirements, this suggestion was abandoned. Nonetheless, counsel maintained their criticism of Mr Hedger for his delay in apprising Mr Garmaise of the content of Duesburys' report and thereby affording him a chance to respond.

I do not think there is any justification for the charge of bad faith against Mr Hedger and Mr Scott. I asked counsel to suggest a motive for Mr Hedger and Mr Scott preferring BAC. They responded that this would save money, BAC's 1993-1994 application being for a lesser amount than that of the Foundation. This is a simplistic response. If the Foundation is permanently denied funding, it is likely that BAC will seek additional monies to equip it to take over more of its work. Anyway, the task of Mr Hedger and Mr Scott is not to save money, but to ensure that it is effectively expended.
I am prepared to accept that Mr Hedger and Mr Scott were keen to foster BAC. They seem to have been impressed by the quality of its work. They may also have been influenced by doubts about the Foundation's long-term suitability for funding and a perception that BAC could fill part of the services gap that would be left if ATSIC terminated grants to the Foundation. This suggestion was not put to Mr Scott in cross-examination. But even it if were so, I would not regard such a course of conduct as improper or bespeaking bad faith; provided always that Mr Hedger and Mr Scott remained ready to consider the Foundation's application on its merits. The responsibility of Mr Hedger and Mr Scott was not to any particular grantee organisation, but to the public; to the people that the organisations were supposed to assist and to the taxpayers, throughout Australia, who provided the funds available for distribution. If, in the first half of 1993, Mr Hedger and Mr Scott were developing doubts as to whether the Foundation was a satisfactory grantee, it was their duty to consider the available alternatives and to place some other organisation in a position to take over some of the work, if a replacement was needed.
I think it unfortunate that there was a delay between ATSIC's receipt of Duesburys' report on 8 July and its release to the Foundation on 23 July. The period involved was only 15 days, but they were 15 days at a critical time. The report was delivered later than the parties had envisaged on 28 April. The new financial year had already commenced and the Foundation was in the difficult position of not knowing whether it would receive the funds it needed to pay its staff. Smythe and Mallam had twice written to ATSIC emphasising the Foundation's difficulties. Under the circumstances, I think that the report should immediately have been delivered to the Foundation, with an invitation to comment.
However, whatever criticism may fairly be made about ATSIC's delay in releasing the report, the delay does not establish bad faith. The withholding of the report until receipt of legal advice and a thorough study of its content is consistent with common bureaucratic caution in cases where litigation is expected. The important point is that, in due course and before any decision was made, the report was released to the Foundation along with a letter (Mr Hedger's letter of 23 July) putting a series of pertinent questions about matters relevant to his consideration of the grant application. The Foundation was given a full opportunity to respond to these questions and Duesburys' comments. Its response (the letter of 28 July) was taken into account by Mr Hedger in formulating a draft recommendation. This document was, in turn, supplied to the Foundation for comment. The Foundation chose to make its comments in an affidavit of Mr Garmaise. Even so, the comments were analysed by Mr Hedger in the Supplementary Reasons he gave Mr Scott before he made his ultimate decision. I see nothing unfair about this procedure; indeed, it is difficult to see how it might have been bettered.
Of course, the adoption of a fair procedure does not negative bad faith if a decision maker is in fact influenced by an improper motive. But the only improper motive here suggested is a determined preference for BAC; and of that there is no evidence.

Unreasonableness
67. Section 5(2)(g) of the Administrative Decisions (Judicial Review) Act refers to "an exercise of a power that is so unreasonable that no reasonable person could have so exercised the power." This ground adopts the judge made rule often referred to as "Wednesbury unreasonableness": see Associated Provincial Picture Houses Limited v Wednesbury Corporation (1948) 1 KB 223 at 230.

To say that a decision is unreasonable, in the sense of s.5(2)(g), is to say more than that it is wrong. In Bromley London Borough Council v Greater London Council (1983) 1 AC 768 at 821 Lord Diplock rephrased Wednesbury unreasonableness as referring to "decisions that, looked objectively, are so devoid of any plausible justification that no reasonable body of persons could have reached them". In Re W (an Infant) (1971) AC 682 at 700 Lord Hailsham LC remarked:

"Not every reasonable exercise of judgment is right, and not every mistaken exercise of judgment is unreasonable. There is a band of decisions within which no court should seek to replace the individual's judgment with his own."

It follows from the above that I would not be justified in finding that unreasonableness was established simply because I concluded that, if I had been in Mr Scott's place, I would have not declined the application; but perhaps taken some other course, such as approving the grant subject to stringent conditions. I would have to hold that Mr Scott's actual decision was irrational.
I cannot say that Mr Scott's decision was irrational. I think Mr Scott had good reasons to believe that the proper course was to decline funding until the Foundation put its house in order. It is true, as counsel say, that ATSIC has power to attach conditions to grants. But Mr Scott was entitled to conclude that this was not a realistic alternative course of action. Conditions sufficient to meet the concerns expressed by Mr Hedger would necessarily be comprehensive and detailed. They would need to deal with the constitution, membership and management of the organisation as well as its financial and stock control systems and staff recruitment procedures. The preparation of such conditions would be a major task, involving detailed consultation with the Foundation and its advisers. The task would take time and impose substantial burdens on ATSIC resources; not least because of the antagonism existing immediately prior to 18 August and the parties' differences of opinion as to what fell within ATSIC's legitimate area of concern. ATSIC has Australia-wide responsibilities. There must be a limit to the resources it can commit to one grantee organisation.
Counsel for the Foundation emphasised Mr Hedger's error in treating their client's failure to account for the toy expenditure as a breach of cl.5.2(b) of the General Conditions of Grant. As Mr Scott adopted Mr Hedger's reasons, it may be assumed that he fell into the same error. I do not think this matters; Mr Scott was undoubtedly correct in asserting that nonetheless ATSIC was legitimately concerned with the issue. ATSIC makes grants each year to numerous organisations. The evidence does not disclose the number; but it must be a figure of several dozens, perhaps even hundreds. Without a major expansion in its resources, creating a substantial new bureaucracy, it would be impossible for ATSIC to supervise the day-to-day financial dealings of all its grantees. Yet it is essential that grants be managed honestly and intelligently, and used only for stipulated purposes. Mismanagement of grants will quickly erode the public and political support vital to the maintenance of assistance programs for disadvantaged aborigines. As a practical matter, it seems to me, ATSIC has no choice other than to limit its grants to organisations of established financial integrity and competence. Because ATSIC basically must trust its grantees, it is entitled to insist that they be beyond financial reproach. If there is any reason to believe that a particular organisation may not meet this stringent test, that reason is relevant to the question whether ATSIC should make further grants to it. It does not matter whether the concern arises in relation to ATSIC grants or funds supplied by someone else.
Another matter put by counsel in relation to unreasonableness concerned the overlap with BAC. They argued that it was unreasonable for Mr Scott to decide that this matter alone would be a sufficient reason to decline the application. I have some sympathy for this submission. If none of the other matters noted by Mr Hedger existed, it would seem harsh for ATSIC to withdraw funding from the Foundation because there was an overlap between its services and those now provided by a recently formed organisation. Moreover, I wonder at the extent of the overlap, at least in geographical terms. As I understand the situation, BAC's operations are confined to the Shire of Blacktown. The Foundation operates over a much wider area than this. If funding is permanently withdrawn from the Foundation, and unless there is a major expansion in the reach of BAC, many Koori clients are likely to be left without assistance.

Severability of the reasons
73. If the decision of Mr Scott depended upon the cumulative effect of the five reasons adopted by him, the matter just mentioned would be critical to the result of this case. If I thought that Mr Scott's view about overlap was outside the bounds of rationality, I would have to set aside his decision and remit the matter for reconsideration; I could not be sure that, absent that irrational element, he would have reached the same conclusion. But Mr Scott stated that he would have regarded any one of the five grounds as requiring refusal of the application. He said so when he made the decision on 18 August. He said so again in the witness box. I accept that this was, and is, his position. In that situation, unless he can be stigmatised as unreasonable in relation to each of the five grounds, the refusal itself is not unreasonable.

I leave aside the fourth matter, non-compliance with grant conditions, which involves the application of cl.5.2(b) of the grant conditions. It is, in my opinion, impossible to fault Mr Scott's decision in relation to any of the first three matters. I will deal with each of them briefly.
The first matter relates to the structure and democratic control of the Foundation. Mr Scott said in his evidence that democratic control is an essential prerequisite to ATSIC funding. The grant sought in 1993-1994 was a substantial sum, to be paid from public funds. Mr Scott's approach was far from irrational; indeed, I agree with it. It would, in my opinion, be indefensible for substantial monies to be paid to an organisation not amenable to the control of its members, with the risk that the monies would be disbursed in the interests of a controlling minority rather than the membership at large. This particularly applies where the organisation is one in which members who complain about the directors, manager and auditor are expelled without apparent justification on vaguely stated grounds. Mr Scott was entirely justified in deciding that, at least until the Foundation reformed its constitution and structure so as to ensure effective control by the members, there could be no further ATSIC grant.
The situation is similar in relation to financial control. There is no reason to believe that anyone connected with the Foundation has been dishonest. Nonetheless, the Foundation's financial accountability leaves much to be desired. It is sufficient to refer to the continuing mystery about the toy transactions and the matters mentioned by Duesburys. As I have said, ATSIC has no real option but to limit its grants to organisations of demonstrated financial integrity and competence.

The third matter, the method of selection of staff, might be regarded as something of lesser import. I do not think that it is. Once again, we are concerned with public money. It would be destructive of public confidence in ATSIC, and public support for its work, if it were seen to grant funds to nepotistic organisations. Ms Kellie May and Mr Kevin Church may be competent employees; nobody has suggested otherwise. But there must have been many people in western Sydney, especially in a high unemployment year like 1992, anxious, and qualified, to obtain employment as a trainee welfare worker or truck driver. Those people were given little or no chance of competing for these positions. Instead, the jobs were given to two close relatives of the Chairperson and Secretary. I think that Mr Scott was justified in concluding that the absence of fair and impartial selection procedures was fatal to the Foundation's grant application.

Orders
78. It follows from the above that the Application must be dismissed. Having regard to the nature of the contending parties, under some circumstances I would consider leaving each party to bear its own costs. I have in mind a case where there was a difference, on arguable grounds, upon a matter of law, but I determined that ATSIC's position was correct. But the present case is very different to that. Counsel for ATSIC asked that any dismissal of the proceeding carry an order for costs in favour of their client. This attitude was influenced by what they called the Foundation's unwarranted attack on the good faith of ATSIC and its officers, Mr Scott and Mr Hedger. I agree that the attack was unwarranted. The attack having failed, the Foundation should bear ATSIC's costs of the proceeding. I will so order.

Counsel for the applicants submitted that, if the proceeding was dismissed, I should indicate the concerns the Foundation needs to address in order to make its future grant applications acceptable. I gather that this is not an entirely academic question. Apparently, some funds remain available, even for 1993-1994; and counsel for ATSIC assured me that any future application would be considered on its merits.
I do not think I ought to accept counsel's invitation; at least not in the terms they state. It is for ATSIC to determine what circumstances make an application eligible for acceptance. Any view I express cannot bind ATSIC.
Nonetheless, with some hesitation, I have decided to make some observations. I make them for what they may be worth. They do not form part of my decision or bind anyone. My comments are offered only in the hope that they may assist in resolving the problems between the parties that this litigation has exposed. I am concerned by the possibility that, if the Foundation does not acceptably reorganise its affairs, there will be a permanent denial of funding to the Foundation to the disadvantage of its welfare clients, people who are not to blame for what has occurred. My comments refer only to what I consider the minimum reforms of the Foundation's affairs. What I mention may not be enough; that is for ATSIC to determine.
First, it seems to me that two inter-related structural questions require to be addressed. I have already mentioned that the Foundation's Memorandum and Articles do not restrict the reach of its activities, either geographically or by limiting benefits to members of the aboriginal community. Although the matter is not at the forefront of this dispute, the open-ended nature of the Foundation's charter is obviously a point of contention between the parties. I can understand the Foundation's desire to be free to assist all who enter its doors. But such a situation must make it difficult for ATSIC to ensure that its money is spent most effectively. It seems to me that a body like ATSIC needs to be able to target its expenditure to a particular community; knowing that it will be used only for those people. It ought not be exposed to a situation where money intended for people in one geographical area ends up in another, where there may be another agency in operation. This could lead to undesirable competition between agencies and duplication of services in the second district whilst the people in the first area are inadequately served.
The evidence suggests that the Foundation's assistance to the Wellington district stems from the personal associations of some directors with that district. This seems to be an unsatisfactory reason for Wellington being targeted for care. I would suggest, as the first step, that the Foundation define its geographic area of operations; an area that may be justified by reference to practical, rather than personal, considerations. I think the Foundation should also address ATSIC's concern that its work be directed to the aboriginal community. It may be difficult to make this an absolute rule. Perhaps it would be enough to amend the Memorandum and Articles so as to require that service to the aboriginal community be the Foundation's primary object, allowing assistance to non-Koori people only when this is incidental to work amongst aborigines.
Secondly, it seems to me that, following decisions about the Foundation's area of operation, steps need to be taken to obtain and maintain democratic control. Possibly, there should be a membership drive throughout the selected geographic area; the greater the membership within that area, the easier it will be for the Foundation to argue that it represents the area's aboriginal community. The members expelled in May 1993, and any others who were expelled or forced to resign because of differences with the board of directors, ought to be restored to membership.
Whether or not there is a membership drive, there ought to be a general meeting of members at which elections are held for all elective positions. If the existing office bearers are returned in such elections, well and good; it will be seen that they have the confidence of the majority of the members. If not, they will be replaced by members more congenial to current member sentiment. In either case, the principle of democratic control will be vindicated.
The second major area of reform is that of financial and stock control. These are matters on which the Foundation should obtain its own expert advice. Duesburys' report will provide a useful beginning. Any new system should include a mechanism whereby independent accountants, such as the Foundation's auditors, can periodically satisfy themselves that those receiving welfare payments are people presenting a genuine welfare case. It is not acceptable for investigating accountants to be denied access to welfare files on the basis of client confidentiality. I agree that the privacy of individual clients must be preserved. But I see no difficulty about allowing members of the audit team to have access to welfare files if those members have first given an undertaking not to divulge any information about particular clients. Client confidentiality is important in many areas; medical and legal practices come readily to mind. Yet the need for confidentiality does not prevent investigations into alleged medical over-charging or solicitors' trust account dealings.
Finally, I think that there need to be guidelines regarding the recruitment of employees - with requirements that positions be advertised, applicants interviewed and a selection made by a panel that excludes anybody related to an applicant.
There may be other matters needing attention. But it seems to me that if all the above steps are taken, the Foundation will have laid the basis for a credible new funding application.
The formal order I make is that the Application be dismissed with costs.

[1993] FCA 610

01 SEPTEMBER 1993