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03 Sep 2020

Administrative law mythbuster no 8: NEAT Domestic Trading Pty Ltd v AWB Ltd

By John Carroll, Neil Cuthbert, and Deborah Mak

Judicial review of decisions made by private entities is still unlikely to succeed. Notwithstanding its status as an outlier, the decision in NEAT Domestic Trading continues to have effect.

What people think NEAT Domestic Trading means

The principle for which NEAT Domestic Trading Pty Ltd v AWB Ltd (2003) 216 CLR 277 is cited is that private bodies making decisions of a public nature cannot be subject to judicial review, and accordingly, entities who are dissatisfied with the decisions of those private bodies may not be able to access public law remedies.

In NEAT Domestic Trading, the Wheat Marketing Act 1989 (Cth) required exporters to obtain written consent from the Wheat Export Authority prior to export. A pre‑condition to the Authority's consent was approval, in writing, from AWB (International) Limited (AWBI). AWBI was a private company controlled, through its shareholding structure, by Australian wheat growers. One of AWBI's objects, as stated in its company constitution, was to "maximise the net returns" of growers selling wheat through its wheat pool export system. Unlike other wheat exporters, AWBI was not required to obtain consent from the Authority to export wheat.

NEAT approached the Authority to obtain written consent to export wheat. AWBI refused to approve NEAT's proposed export. Without AWBI's approval, the Authority could not provide its consent to NEAT's proposed export. NEAT sought judicial review of AWBI's decisions to refuse to approve the export under the Administrative Decisions (Judicial Review) Act 1977 (Cth) in the Federal Court, and then appealed to the High Court.

The High Court dismissed the appeal, with its key reasons being that:

  • AWBI's refusal to approve NEAT's export was not a "decision under an enactment" for the purposes of the ADJR Act. Rather, it was a pre-condition for the Authority's consent to a proposed export;
  • the final decision as to whether the export permit could be granted was considered be the Court to be left to the Authority, rather than AWBI; and
  • AWBI's power and ability to determine whether to grant the required consent was derived from its own internal structure as a corporate entity, rather than being conferred by the Wheat Marketing Act. Because AWBI's power to approve an export was not conferred by an enactment, AWBI could not be compelled through mandamus or otherwise, to grant approval upon judicial review.

The High Court accordingly concluded that AWBI's "approval" was not a decision under an enactment that could be subject to judicial review, and was instead conduct undertaken in AWBI's private capacity.

So that's not right anymore?

It's not wrong, but it's important to consider the circumstances of each case, including the circumstances in the original decision.

NEAT Domestic Trading is a controversial decision because of its narrow approach to the availability of judicial review. It is often compared with the broad approach taken in R v Panel on Take-overs and Mergers; Ex parte Datafin [1987] 1 QB 815, in which the UK Court of Appeal held that private sector entities could be subject to public law restraints, including judicial review, when exercising public power.

In Datafin, the UK Court of Appeal considered the purpose of judicial review and its role in promoting government accountability. The approach taken in Datafin contrasts with the High Court's approach in NEAT Domestic Trading, which closely examined the specific characteristics of the statutory scheme, decision, decision-making entity and affected entity. Although the Datafin principle is not presently "good law" in Australia, it is often compared with NEAT Domestic Trading, and is cited for its statements about the purpose of judicial review of government decision-making.

In Griffith University v Tang (2005) 221 CLR 99, a majority of the High Court adopted a similarly narrow approach to the availability of judicial review of decisions made by private entities as in NEAT Domestic Trading. The High Court in Tang also looked to the specific structure and composition of the decision-maker and whether the decision‑making power was conferred by statute. Holding that the university's decision‑making power did not arise under an enactment, the High Court held that the decision could not be subject to judicial review.

In the middle of the spectrum between NEAT Domestic Trading and Datafin, the New South Wales Court of Appeal in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR 393 considered that a decision of a private adjudicator appointed under the Building and Construction Industry Security of Payment Act 1999 (NSW) (Security of Payment Act) could be subject to judicial review for jurisdictional error. Justice Basten noted that in order to be eligible as an adjudicator under the Security of Payment Act, a person could not have a vested interest in the outcome. He considered that a critical feature of the adjudicator's task was that it was conditioned by the statutory scheme, and observed:

"The right which is to be determined by the adjudicator is not a right which necessarily arises under contract; although the amount may depend upon the contract, the right to payment is a creation of statute."

In NEAT Domestic Trading, the Wheat Marketing Act gave effect to the result, being the Authority's decision whether or not to provide its consent, but the Act was not necessary to empower the AWBI's conduct. Further, unlike the scheme under the Wheat Marketing Act, the statutory scheme in Chase Oyster Bar required adjudicators to consider particular statutory criteria when making their determination.

What you need to remember about NEAT Domestic Trading

Although the decision in NEAT Domestic Trading has not been overturned, it should not necessarily be cited as authority for the blanket proposition that private entities appointed or conferred with public powers can never be subject to judicial review.

Since NEAT Domestic Trading, courts have looked to the statutory scheme, and the specific details of the private decision‑maker including internal structure, and where they get their decision‑making power from. Cases like Chase Oyster Bar suggest that in certain circumstances, the decisions of private entities exercising public power may be subject to judicial review where the decision‑making power is conferred and guided by an enactment.

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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.