19 Oct 2009

Changes on the way for CDDA?

by Philip Harrison

The Commonwealth Ombudsman has called for improvements in the delivery of the Australian Government's scheme of compensation for defective administration. That call may well herald changes for the future.

Revised guidance was issued on the implementation of discretionary compensation mechanisms available to the Commonwealth, including the Scheme for Compensation for Detriment caused by Defective Administration (the CDDA Scheme).

The Commonwealth Ombudsman has now conducted an own-motion investigation into the administration of decision-making under the CDDA Scheme.

The Ombudsman has called for improvements to the compensation of persons affected by deficient government advice, information or practices. It may be that the Ombudsman's call will form a blue-print for changes to the CDDA Scheme. In the meantime, the Putting things right: compensating for defective administration report contains a number of valuable lessons for agencies against which compensation may be sought, particularly those with external clients.

What is the CDDA Scheme?

The CDDA Scheme is an administrative scheme, designed to cover losses (economic, non-economic and property losses), due to administrative failure, where no legal liability to compensate arises.

Decisions under the Scheme are made:

  • at the discretion of the decision-maker who the claim is before; and
  • on the basis that there is a moral, rather than a legal, obligation to the claimant.

The Scheme applies where there occurs:

  • a specific and unreasonable lapse in complying with existing administrative procedures;
  • an unreasonable failure to institute appropriate administrative procedures;
  • an unreasonable failure to give proper advice, within an official's power and knowledge to give; or
  • advice that was, in all the circumstances, incorrect or ambiguous.

Broadly, the CDDA Scheme may be relevant where there has been an agency failure to institute appropriate administrative procedures, to comply with existing administrative procedures, or to provide proper advice.

The Ombudsman's views

The Ombudsman's recommendations include:

  • providing greater visibility of the Scheme, so that the public knows they can ask to be compensated for government error;
  • establishing an inter-agency advisory or review panel, to deal with disputed or exceptional CDDA claims and to play a "best practice" leadership role;
  • using the potential offered by information technology to improve case monitoring, to provide support for decision-making, and to capture feedback; and
  • dealing appropriately with administrative drift, characterised as needless delays, in finalising claims.

Lessons for affected agencies?

All of the Ombudsman's recommendations could be independently considered by agencies, which deal with CDDA claims, before any are formally adopted in the Department of Finance and Deregulation's circular on Discretionary Compensation Mechanisms.

However, it is the Ombudsman's recommendation in relation to review which may be the more difficult to implement, although providing the more significant administrative returns.

At present, as CDDA decisions are not made under an enactment, they are not amenable to review under the Administrative Decisions (Judicial Review) Act 1977, although they may be reviewable under section 39B of the Judiciary Act 1901. CDDA decisions are not, in any case, reviewable by the Administrative Appeals Tribunal.

Beyond time-consuming and expensive legal processes, some agencies have an internal, administrative right of review mechanism. Otherwise, where a claimant under the Scheme does not accept a decision made in relation to them, it is open to the decision-maker to consider the matter again, although there is no obligation to do so.

It may be that a more formal system of internal review of CDDA decisions is worth consideration by all affected agencies. Internal review need not involve a meeting with, or oral hearing of, the claimant. Review may be had "on the papers" - that is, by review of the agency file, including any written submission of the CDDA claimant.

In the least, it may be that claimants could be given a full opportunity to comment on the agency's assessment of their claim before a decision is made on the claim - say, by providing a copy of the agency brief or submission, prepared for the decision-maker. That way, any inaccuracies may be readily corrected, before a decision is made. At the least, the CDDA decision-making process may be assisted by improved communication between agencies and claimants.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.