06 June 2005
Key Points:
Public officials must grant procedural fairness to people whose interests are likely to be affected by their decisions, unless the governing statute clearly and specifically provides otherwise.
When must decision-makers grant procedural fairness, in the form of an opportunity to be heard or to make written submissions, to people who might be affected by an imminent decision? In its recent decision in Perron Investments Pty Ltd v Assignment Holdings Pty Ltd [2005] WASCA 2, the Western Australian Full Court considered this important practical issue which routinely confronts decision-makers in Government.
This case serves as a reminder to decision-makers to continue to be attentive to this issue, especially when the statutory process they are dealing with is silent on the issue of procedural fairness.
The decision
Assignment Holdings Pty Ltd was the lessee from Perron Investments Pty Ltd of a shop in the Mirrabooka Square Shopping Centre. A rent review for the lease was conducted in June 2002 but the parties could not agree on a new rental figure. Each party appointed a licensed valuer in an attempt to resolve the dispute. The valuers were also unable to agree.
As a result, Assignment, under section 11(5) of the Commercial Tenancy (Retail Shops) Agreements Act 1995 (WA), referred the question of the rent payable to the Commercial Registrar of the Commercial Tribunal of Western Australia for determination. The Registrar considered a report prepared by each of the valuers and made his determination. However, the Registrar did not, as part of his adopted process, provide either party’s valuer with an opportunity to read the report prepared by the other party’s valuation expert. Nor did he conduct any hearing or receive any submissions other than in the form of the two reports.
Perron argued that the Registrar’s failure to take such steps prior to making his determination meant that he had failed to comply with the rules of natural justice in the course of making his determination.
Decision at first instance
Both parties accepted that the rules of natural justice applied. The question was whether the rules of natural justice only required the Registrar to give each party an opportunity to put material it wished before the Registrar, or whether the rules required that each party be given a fair opportunity to correct or contradict any relevant prejudicial material in the other party’s valuation report.
At first instance, Justice Wheeler of the Western Australian Supreme Court disagreed with Perron’s submissions. In reaching her decision, she noted that there was no express requirement in the Act to provide a hearing to, or receive written submissions from, the parties affected by a section 11(5) determination. She compared this to Part III of of the Act which required the Registrar to conduct a hearing and give parties an opportunity to make a written submission before deciding a question (other than rent) arising under a lease. Justice Wheeler decided that the fact that clear provision was made for submissions and a hearing in Part III of the Act, but not in section 11, suggested that neither step was required in relation to section 11.
Section 11(7) of the Act empowered the Registrar, in determining a rent question referred to him under section 11(5), to require the parties to furnish to him such valuations, documents or other information as he thinks fit. Justice Wheeler took the view that this provision suggested that disclosure of those materials to the parties, rather than to the Registrar, was not required - a position which was considered to be unsurprising given that such material would typically be commercially sensitive.
The appeal
The Full Court reversed the initial decision on appeal. It described as "trite law" the proposition that a person whose interests are likely to be affected by a decision must be given an opportunity to deal with relevant matters adverse to those interests where the decision-maker proposes to take those matters into account when making the decision.
It also found that it is settled that, when a statute confers on a public official the power to do something which affects another’s rights, interests or expectations, the rules of natural justice regulate the exercise of that power unless they are expressly excluded.
Finally, it noted and approved previous authority that a legislative intention to exclude natural justice in relation to an exercise of power should not be inferred from the fact that natural justice is expressly provided for elsewhere in the statute in relation to the exercise of a different power.
In the circumstances, the Full Court found that the fact that procedural fairness rules were prescribed in Part III of the Act, but not in relation to section 11(5), did not mean that a lesser standard of procedural fairness was contemplated in relation to the exercise of the power in section 11(5), or that the Registrar was free to deny to a party who had referred a rent question under section 11(5) the fundamental entitlement to deal with relevant matters adverse to its interests where the decision-maker proposes to take those matters into account.
The Full Court held that this "fundamental entitlement" was meant to ensure decisions are both informed and just, and that denying an affected person the right at least to read, and make submissions on, any relevant adverse material before the decision-maker would expose the ultimate decision to a real risk that it would be neither informed nor just.
It accepted that issues of confidentiality may arise but noted that there were means of protecting confidential information without denying to a party (or its advisers) this fundamental entitlement.
Conclusion
There are, perhaps, few greater challenges to budgetary discipline and bureaucratic efficiency than the unwanted, and often avoidable, expense and delay that is caused by the successful judicial review of administrative decision-making.
The most commonly cited and successful ground of review in judicial review proceedings continues to be that the rules of natural justice were breached during the making of the relevant decision. This case provides a timely reminder to decision-makers that they must carefully consider their administrative decision-making processes, decide on a case-by-case basis whether it is appropriate to provide procedural fairness to affected persons and, for each case, determine how the rules of natural justice will apply in practice.
If a decision-maker is uncertain about these questions, they should seek appropriate legal advice. To fail to do so could be a costly and potentially embarrassing mistake.
For further information, please contact Tosin Aro.
