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16 Apr 2020

Administrative law mythbuster no 06: Bhardwaj

By Caroline Bush, John Carroll, Neil Cuthbert, Oliver Morris

Bhardwaj provided that administrative decisions infected by jurisdictional error should be treated as having no legal consequence. Whether this is applicable depends on the legislation pursuant to which the decision was made.

What people think Bhardwaj means

In Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] HCA 11, the High Court considered the capacity of an administrative tribunal to correct its own error when, because of that error, it had failed to discharge its statutory function.

Mr Bhardwaj applied to the Tribunal for review of a decision to cancel his visa. The day before the hearing, the Mr Bhardwaj's agent sent to the Tribunal a fax stating that Mr Bhardwaj was ill and requesting an adjournment. This was not brought to the attention of the Tribunal member.

The Tribunal member, being unaware of the fax, heard the matter and determined it adversely to Mr Bhardwaj. The Tribunal subsequently became aware of the letter and set a new date for hearing. The Minister argued that the Tribunal had already made its decision and was functus officio.

The High Court rejected the Minister's argument, finding that the Tribunal could correct its own decision. Although the Court delivered six different judgments (Justice Kirby in dissent), the most commonly cited observation is that of Justices Gaudron and Gummow:

"[A] decision involving jurisdictional error has no legal foundation and is properly to be regarded, in law, as no decision at all. Once that is accepted, it follows that, if [the decision-maker] proceeds to make what is, in law, no decision at all, then, in law, the duty to make a decision remains unperformed."

Their observations have sometimes been thought to apply to all administrative decisions, meaning simply that any administrative decision affected by jurisdictional error will be without consequence and can be remade without the decision-maker being functus officio.

So that's not right anymore?

Subsequent analysis of Bhardwaj has demonstrated that its application is not so simple and depends upon the statute pursuant to which the decision was made. Not every error will be jurisdictional, and not every decision affected by jurisdictional error should automatically be treated as a nullity. Certainly, it is not always the responsibility of the decision maker to decide that such an error exists. Before attempting to remake a decision, we suggest that decision-makers consider the following four questions.

First, is the decision affected by jurisdictional error? Although it is not possible exhaustively to define the category of jurisdictional error, some of the more common examples can include:

  • the absence of a jurisdictional fact;
  • disregard of a matter that the relevant statute requires be taken to account as a condition of jurisdiction; or
  • misconstruction of the relevant statute, thereby misconceiving the nature of the function being performed or the extent of powers.

In some circumstances, the question of whether a decision is afflicted by jurisdictional error with be a highly controversial issue and it would be up to a Court to determine the existence of such an error eg. where it was argued that a person had accrued rights pursuant to the initial allegedly flawed decision.

Second, was the error material to the outcome of the decision? Following Hossain v Minister for Immigration and Border Protection [2018] HCA 34, courts will ask whether the avoidance of error could realistically have resulted in a different decision. If the result would have been the same even in the absence of the error, a court may be reluctant to set the decision aside.

Third, what consequences does the underlying legislation attribute to the making of a jurisdictional error? As the Full Federal Court made clear in Jadwan Pty Ltd v Secretary, Department of Health and Aged Care [2003] FCAFC 288, a jurisdictional error may render a decision as a nullity, depending on the particular statutory scheme:

"In our view, Bhardwaj cannot be taken to be authority for a universal proposition that jurisdictional error on the part of a decision-maker will lead to the decision having no consequences whatsoever. All that it shows is that the legal and factual consequences of the decision, if any, will depend upon the particular statute."

In some cases, the underlying legislation may disclose an intention that a decision affected by error is not void from the time at which the power is exercised unlawfully. In Stambe v Minister for Health (No 2) [2019] FCA 479, the Federal Court dealt with a decision of the Minister for Health to grant approval to a company to operate a pharmacy, overriding a decision of the Secretary which had refused to grant the approval. The Court found that the decision was affected by jurisdictional error.

The Court was tasked with determining the appropriate order. Justice Mortimer decided that the decision should be remitted to the Minister for reconsideration. But what of the period between the original, faulty decision and the Court's decision setting it aside? It was agreed that the pharmacy had operated and been paid benefits under the National Health Act 1953 in that period. If Bhardwaj were to be applied, those benefits would have been paid in error and would have to be repaid.

Justice Mortimer explained that the legislation in Stambe No 2 did not support the application of the reasoning in Bhardwaj. Her Honour considered that the intention of the National Health Act 1953 was for an approval decision by the Minister to have effect unless and until it is set aside. Accordingly, Justice Mortimer concluded that the benefits paid pursuant to the faulty decision were validly paid.

A pertinent issue to consider in this regard is whether the parties have consented to a decision being remade in the event of a jurisdictional error. For example, where the decision-maker and affected parties consented to the making of an order setting aside a decision, then the law may treat that decision as having never been made and that a power to decide a matter may be re-enlivened as a consequence: Comptroller-General of Customs and Anor v Kawasaki Motors Pty Ltd (1991) 103 ALR 661.

The fourth and final question is whether there is a statutory power to revisit and possibly remake a decision. Such a power may be express. For instance, both section 85.4 of the Aged Care Act 1997 and section 209.5 of the Higher Education Support Act 2003 permit a decision-maker to reconsider decisions when there is a "sufficient reason".

Alternatively, where the legislation is silent, there may nevertheless be an implied power to remake a decision. The Acts Interpretation Act 1901 can assist decision-makers to identify whether the legislation impliedly allows a decision to be remade. Section 33(1) provides:

"Where an Act confers a power or function or imposes a duty, then the power may be exercised and the function or duty must be performed from time to time as occasion requires."

Section 33(1) is increasingly relied on for the purpose of remaking decisions, because it does not depend upon the identification of a jurisdictional error: it simply provides for the exercise of a power from time to time. However it should be borne in mind that the application of section 33(1) is itself subject to evidence of a contrary intention in the underlying legislation: Minister for Indigenous Affairs v MJD Foundation Limited [2017] FCAFC 37.

What you need to remember about Bhardwaj

The reasoning in Bhardwaj remains significant: it has been applied time and again by Australian courts. However, Bhardwaj does not establish a universally applicable rule. Where a material jurisdictional error is identified in an administrative decision, a further step of statutory construction is required to determine the consequences of any error in the context of the underlying statutory scheme.

Making judgments about the statutory consequences of legal errors will never be free from risk, and decision-makers should be mindful that a Court on judicial review may take a different view. There may be cases in which a decision, although it was made unlawfully, will be nevertheless be treated as having continuing effect until it is set aside by a Court. This is particularly the case where, as in Stambe No 2, the faulty decision has given rise to ongoing rights and liabilities.

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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.