Barratt v Howard

Federal Court of Australia|1999-07-01|Before: Commission J, Hely J

REASONS FOR JUDGMENT 1 On 31 December 1997 the applicant was appointed pursuant to ss 36(1) and 37(2) of the Public Service Act 1922 ("the Act"), to the office of Secretary to the Department of Defence. The appointment was a "fixed-term" appointment for a period of five years commencing on 5 February 1998. The applicant took up his appointment. 2 A person who holds an office of Secretary under a fixed-term appointment is retired from the Australian Public Service by force of s 37(5) of the Act, if (inter alia) the Governor-General directs that the appointment be terminated: s 37(5)(b)(iii). The power of the Governor-General to give a direction to that effect may be exercised only in accordance with advice that is consistent with a recommendation by the Prime Minister: s 37(11). The power of the Prime Minister to advise or recommend termination is dependent upon the Prime Minister receiving a written report in relation to the taking of the action from the Secretary to the Department of Prime Minister and Cabinet ("the Cabinet Secretary"): s 37(12). 3 The respondents contend that neither the Cabinet Secretary, nor the Prime Minister is required to give natural justice, before exercising in relation to the applicant their respective roles under s 37 of the Act. The applicant contends to the contrary, and invokes the jurisdiction of this Court pursuant to s 6(1)(a) of the Administrative Decisions (Judicial Review) Act 1977 ("the ADJR Act") and s 39B of the Judiciary Act 1903 as the basis for determination of his claim. The making of the Cabinet Secretary's report, and the Prime Minister's recommendation, are each deemed to be the making of a decision by virtue of s 3(3) of the ADJR Act. 4 Thus the first issue in this case is whether: - The Cabinet Secretary, before making a written report to the Prime Minister in relation to the termination of the applicant's appointment; and/or

is obliged to afford the applicant procedural fairness, including a reasonable opportunity to be heard. It was accepted that the obligations in this regard did not extend to the Governor-General, whose role in the process is of a formal nature. 5 An obligation to proceed in that way is said to arise both on the proper construction of the Act, in the light of common law principles, and because the applicant has legitimate expectations derived from conduct of a substantive and procedural kind, which would be departed from if his tenure of office was prematurely terminated. If that is proposed, the applicant is entitled to notice, and to an opportunity of presenting a case against that course. 6 The second issue is whether the power of termination may only be exercised for cause shown. The applicant contends that the subject matter of the power conferred by s 37(5) is such that the power is to be exercised only for cause constituted by some fault or incapacity of a fundamental nature that goes to the fitness of the applicant to continue to occupy the office for the remainder of the fixed term.

Crown Servants 7 At common law, and apart from statute, Crown servants hold office at the pleasure of the Crown, and may be dismissed at any time without notice, and for any reason, or for no reason. There is no right to be heard before dismissal: Marks v Commonwealth (1964) 111 CLR 549, 586; Coutts v The Commonwealth of Australia (1985) 157 CLR 91, 101-102, 105, 121. Although sometimes spoken of as the prerogative of the Crown to dismiss at pleasure (eg Parker v Miller [1998] WASCA 124 at 29), in Shenton v Smith [1895] AC 229, 234-235 the Privy Council stated that Crown servants hold their office during the pleasure of the Crown, not by virtue of any special prerogative of the Crown, but because it is an implied term of their engagement. See also Gould v Stuart [1896] AC 575, 577. Evatt, The Royal Prerogative (1987) at pp 101 and 235 states that the right of the Crown to dismiss its officers is sometimes regarded as a term of the contract of service, but that there is ample authority for regarding it as a prerogative, partaking of the nature of executive power. 8 It is not necessary for present purposes, to resolve this debate. It is sufficient to note that the common law position is based on the notion that the Crown cannot by contract hamper its freedom of action in matters which concern the welfare of the State: Smith, Public Employment Law (1987) at p 86. "… [I]t is in the interests of the community that the Ministers for the time being advising the Crown should be able to dispense with the services of its employees if they think it desirable", per Rowlatt J quoted in Fletcher v Nott (1938) 60 CLR 55, 68. 9 In Australia, s 64 of the Constitution enables the Governor-General to appoint Ministers of State who hold office "during the pleasure of the Governor-General". Section 67 of the Constitution provides that until the Parliament otherwise provides, the appointment and removal of all other officers of the Executive Government of the Commonwealth shall be vested in the Governor-General in Council (subject to delegation). 10 The Act makes other provision for the appointment and removal of officers of the Executive Government of the Commonwealth within the meaning of s 67 of the Constitution. The relationship between an officer of the Australian Public Service and the Executive Government of the Commonwealth is governed by the Act and the rights of the officer must be ascertained by reference to its provisions: Director-General of Education v Suttling (1986) 162 CLR 427, 437-438; Boswell v Secretary, Department of Foreign Affairs & Trade (1993) 46 FCR 434, 441. In a case such as the present, there is no scope for the residual operation of any common law right to dismiss a Crown servant at will: Bennett v Commonwealth (1980) 44 FLR 446; Dixon v Commonwealth (1981) 55 FLR 34, 39. In Coutts, at 103 Wilson J adverted to the fact that statutory regulation had resulted in a virtual disappearance in many sectors of the public service of the Crown's right to dismiss at pleasure. At 105 Brennan J described the continued existence of the power, in relation to the armed forces, as "exceptional", and "perhaps anachronistic". Hogg, Liability of the Crown (1989) p 175 refers to the dismissal-at-pleasure rule as one which has "now shrunk to insignificance". 11 If the relationship between the applicant and the Executive Government was a purely contractual relationship of Master and Servant, then any entitlement to a fair hearing before dismissal would be dependent upon the terms of the contract. There would be no such right unless conferred by the contract, and the rights of the parties would be determined by reference to private law, rather than by reference to public law considerations. 12 But in the present case the applicant has been appointed to a public office (see "office of Secretary", s 7, s 25 and Sch 3). As Secretary to the Department of Defence, the applicant is, under the Minister, responsible for its general working, and for all the business thereof, and is to advise the Minister in all matters relating to the Department: Act, s 25(2). The terms of his appointment are regulated by the Act. The applicant cannot be removed from office at pleasure, but only upon and by the exercise of the statutory power in that regard. The exercise of that power is subject to general public law principles which govern the exercise of administrative discretions: cf Malloch v Aberdeen Corporation [1971] 1 WLR 1578, 1596-1597; Sanders v Snell (1998) 157 ALR 491, 505.

The legislation - history 13 The Solicitor-General submitted that an examination of the history of the Act, and of the provisions of the Act in the form which it now takes, demonstrate that whilst there has been some statutory qualification of the Crown's common law right to dismiss a public servant at pleasure, the extent of the modification of the common law principle in relation to "fixed-term" secretaries has been very limited. 14 Prior to 1977, Secretaries (then called "Permanent Heads") could only be removed from office by abolition of their departments, unless dismissed from the service for misconduct (Act, s 56). The Act was amended in 1977, 1984 and again in 1994 as part of a process whereby Permanent Heads and Secretaries were treated in different manner from other officers of the service. 15 The Public Service Amendment (First Division Officers) Act 1976 (Act No 6 of 1977) introduced a subclass of Permanent Heads called "established candidates". These were Permanent Heads who either were appointed by a special appointment procedure involving the Public Service Board, or had previously been Permanent Heads. A person appointed to the office of Permanent Head to fill a vacancy, who was not an "established candidate", could have his appointment terminated by the Governor-General before the expiration of its term (maximum five years), on the recommendation of the Prime Minister, provided that the Prime Minister did not belong to the same political party as the Prime Minister who had recommended the appointment. 16 This was the first legislative recognition of the possibility of "politically appointed" Permanent Heads. It was accompanied by a recognition that it was appropriate that there should be a different regime in relation to their removal by a government of a different political colour. These provisions (ss 54 and 54A of the Act) were repealed in 1984. 17 The second major step occurred in 1984, with the Public Service Reform Act 1984. The 1984 Act made provision for the appointment of Secretaries of Departments, as opposed to Permanent Heads. A new s 37 was introduced, and it is this section which is the precursor to the present s 37. It provided for "fixed-term" appointments of persons who were not officers, to the office of Secretary for a maximum term of five years. Under s 37(5) the appointment of the person to the office of Secretary terminates, and the person becomes an unattached Secretary, if the office is abolished, or the Governor-General so directs. 18 Under s 37(6) the appointment of the person to the Service terminates, and the person is deemed to be retired from the Service if the Governor-General so directs. The s 37(5) and s 37(6) powers were only exercisable on the recommendation of the Prime Minister (s 37(11)) which, in turn, could only be given after receipt of a report from the Chairman of the Public Service Board (s 37(12)). Subsection 37(4) authorised a determination to be made when a person was given a fixed-term appointment to the office of Secretary, of the compensation payable upon retirement from the Service under subs (6). 19 The same Act introduced a new Division 8A. That Division did not apply to a fixed-term appointment (s 37(15)). Section 76D permitted the Governor-General to retire an inefficient, incapable or incompetent Secretary from the Service if the Board, after investigation, reported to that effect. Section 76E permitted the Governor-General to terminate the appointment of a person to an office of Secretary on the recommendation of the Prime Minister after receipt of a report from the Chairman in relation to the termination. In such case the former Secretary becomes an unattached officer. 20 Thus any Secretary, whether fixed-term or otherwise, could be removed from office by the Governor-General and become an unattached Secretary. A fixed-term Secretary could also be compulsorily retired from the Service, but could agree at the time of appointment (subject to the procedures in subs 37(4)), on the sum they would be paid in the event of termination. 21 The Prime Minister and Cabinet (Miscellaneous Provisions) Act 1994 removed the requirement that only persons who were not an officer are eligible for a fixed-term appointment. The two methods of terminating the appointment of a fixed-term Secretary (termination of the appointment to the office and termination of the appointment to the Service) became a single power to terminate the appointment to the office, with the automatic consequence of retirement from the Service (subject to some presently irrelevant qualifications). 22 The second reading speech for the Bill for the 1994 amending Act [Hansard No 4, 1994, p 1712-1713] includes the following: "The bill also includes amendments to the Public Service Act 1992 [this should read 1922] and the Superannuation Act 1976 to enable effect to be given to the government's decision to allow secretaries to departments and a limited number of equivalent level statutory office holders to relinquish their continuing tenure in the Public Service, and the value which attaches to that tenure, in return for a reasonable loading on their salaries being set by the Remuneration Tribunal. The government has recommended to the tribunal that the loading should be set at 20 per cent. The changes we are making are a natural evolution of the changes made 10 years ago when the parliament removed the right to tenure in particular departmental head positions and the policy of rotations on a five-year basis was introduced. Enabling secretaries to departments to choose whether to retain their tenure in the Public Service or to relinquish it in return for a salary loading is a logical progression which has taken place in many other public services both here and overseas. Even with the loading, which will be set by the independent Remuneration Tribunal, the remuneration of Commonwealth heads of departments, with their national level responsibilities, will not match that of their counterparts in Victoria and New South Wales. It should be noted that the government policy of reviewing secretaries' appointments after five years in one position will continue. Secretaries who remain in their current positions will be reviewed at the expiration of five years from the original appointment. In sharpening the focus on the policy of rotation of making greater use of fixed-term appointments, the government will continue to retain the traditional virtues of the Public Service with the emphasis there has always been on having heads of departments with great personal integrity, political impartiality and preparedness to offer the frank and fearless advice we expect of them." 23 Since the change of government in 1996 all departmental Secretaries have been on fixed term. 24 In addition to the 20 percent salary loading awarded by the Remuneration Tribunal to compensate those who accepted fixed-term appointments and the loss of public service tenure, a termination benefit is payable in the case of termination under s 37(5) before the expiration of the fixed term. This was fixed by the Remuneration Tribunal at one-third of base salary for the balance of the term up to a maximum of one year's base salary. 25 I have set out the history of the legislation at some length, in deference to the arguments of the Solicitor-General, which placed considerable reliance upon it, with particular emphasis on the financial benefits which accrue to a Secretary who takes up a fixed-term appointment. 26 In my view, however, that history is of little assistance in determining whether a Secretary whose appointment is proposed to be terminated under s 37(5) is entitled to procedural fairness. The fact that the Secretary will receive some compensation in the event of loss of office may be a factor in determining whether Parliament intended that the exercise of the s 37(5) power should be attended by a duty to afford procedural fairness to the person whose interests will be affected by its exercise. However, the entitlement to compensation does not flow from the Act, or from the terms of the applicant's appointment, but from a determination of the Remuneration Tribunal. But at most it is a factor, and in my view, not one of substantial significance. The Solicitor-General's submission fails to pay sufficient regard to the difference between the substantive facts that fixed term Secretaries do not have tenure and are exposed to premature termination of their office, and the more limited procedural question of whether Parliament intended that the rules of natural justice should apply before the Secretary's office is prematurely terminated.

The legislation - present structure 27 Section 76D provides for the Governor-General to retire a Secretary from the Service on the ground of inefficiency, incompetency, or incapacity, upon a report by the Board, after investigation into the circumstances. The requirement for an investigation and for a report as well as the consequences of the exercise of the power, suggest that its exercise is subject to procedural fairness. Section 76D is within Division 8A, and thus is of no application to a person holding a fixed term appointment: s 37(15). 28 Section 76E permits termination of the holding of the office of Secretary on the recommendation of the Prime Minister after receipt of a report from the Commissioner, in the case of the Department of the Prime Minister and Cabinet, or, in any other case, from the Cabinet Secretary. In such case, unless the person continues to hold another office as Secretary, the person becomes an unattached officer. Section 76E is also within Division 8A, and is of no application to a person holding a fixed term appointment. The Solicitor-General submits that this procedure would not require natural justice both because it does not affect the public service status of the former incumbent and because it does not require any reason. That may be so with respect to the first proposition. I doubt that it would be so with respect to the second, because the Commissioner's or Cabinet Secretary's report would contain reasons for whatever advice is tendered or otherwise in relation to the matter the subject of the report and it is inconceivable that the Prime Minister would not have some reason for the recommendation which he makes to the Governor-General: Malloch v Aberdeen Council at 1582 recognises that the absence of an obligation to formulate reasons does not necessarily negate an obligation to afford procedural fairness. 29 Dismissal of Secretaries for disciplinary reasons is dealt with by s 57 (misconduct), and s 58 (crime). Each may lead to dismissal from the Service by the Governor-General. There is a detailed specification of the procedures to be followed including notice to the Secretary of the case against him, and the opportunity of putting submissions in response. 30 Subsection 37(7) provides that the Governor-General is not to give a direction under subs 37(5) by reason only of the fact that the Secretary's conduct is such that a charge could be laid against him under s 57, or on the ground that a Court has convicted the Secretary of a criminal offence under s 58, or found, without recording a conviction, that the Secretary has committed the offence.

Legislative displacement of common law doctrines 31 The Solicitor-General submits that the dismissal at pleasure rule is so strongly embedded in the law that it cannot be displaced unless the legislature expresses its intention in that regard in the clearest of terms. Whilst the Act partially abrogates the Crown's prerogative right to dismiss at its pleasure a Secretary holding a fixed term appointment, except to the extent that the Act expressly provides otherwise the rule and the incidents of the rule, including the proposition that there is no right to be heard before dismissal, survive: cf Rodway v The Queen (1990) 169 CLR 515, 522.8. 32 The effect of subs 37(4) of the Act is that a departmental Secretary on a fixed-term appointment holds office "on such terms and conditions (if any) relating to matters not provided for by or under this or another Act as are determined in writing by the Governor-General". Apart from fixing a five year term, the Governor-General has not determined any terms or conditions on which Mr Barratt is to hold office. 33 The Act indicates, in the clearest of possible terms, that Mr Barratt does not hold his office of Secretary "at pleasure". The model provided by s 67 of the Constitution has been departed from. By force of the statute, his appointment is for a term, which may only be prematurely determined in the circumstances referred to in subs 37(5), subject to the constraints upon the power of the Governor-General to direct that the appointment be terminated imposed by subs 37(7) and (11). The incidents of service which is "at pleasure" simply have no application to a person in the position of Mr Barratt. His entitlements flow from the Act, and from the terms of his appointment.

A presumption in favour of procedural fairness? 34 In Annetts v McCann (1990) 170 CLR 596, 598 Mason CJ, Deane and McHugh JJ said: It can now be taken as settled that, when a statute confers power upon a public official to destroy, defeat or prejudice a person's rights, interests or legitimate expectations, the rules of natural justice regulate the exercise of that power unless they are excluded by plain words or necessary intendment … an intention on the part of the legislature to exclude the rules of natural justice [is] not to be assumed nor spelled out from 'indirect references, uncertain inferences or equivocal considerations'." (Citations omitted.) 35 The applicant is the beneficiary of a fixed term appointment for five years. His entitlements, or legitimate expectations in that regard could be defeated by the exercise of the administrative power contained in subs 37(5) of the Act. The effect of a recommendation by the Prime Minister is that the applicant will be deprived of his livelihood. It may also be that his reputation will be adversely affected. Therefore, prima facie, the applicant is entitled to procedural fairness unless the terms of the Act display a legislative intention to exclude the rules: cf Sanders v Snell at 505. 36 The Solicitor-General submitted that it is only in the case of judicial proceedings that there is a presumption that the rules of natural justice apply unless expressly excluded. In the case of administrative action there is no presumption in favour of the application of the rules merely because a statute confers upon a public official the power to destroy, defeat or prejudice a person's rights, interests or legitimate expectations. A legislative intention in favour of the application of the rules must be apparent. 37 This submission was based upon the following observations of Mason J in The Queen v MacKellar; Ex Parte Ratu (1977) 137 CLR 461, 475-476: "In relation to judicial proceedings in courts it has been said that an intention to displace the rules is 'not to be assumed nor is it to be spelled out from indirect references, uncertain inferences or equivocal considerations. The intention must satisfactorily appear from express words of plain intendment'. (Commissioner of Police v Tanos [(1958) 98 CLR 383 at 396]). Here the context in which orders are made under s 18 is not that of judicial proceedings, with the consequence that we are not confronted with the necessity of finding 'express words of plain intendment' to displace the requirements of natural justice. It is a matter of determining what is fair, having regard to the subject matter and to the provisions of the statute." 38 All that Mason J actually decided in the passage referred to was, that in the case of purely administrative action, there was no requirement for "express words of plain intendment" before the application of the rules is displaced. That sentence from Tanos was excluded from the statement of the general proposition in Annetts referred to above, which was derived from Tanos. Annetts concerned a coronial inquest, which is not strictly a judicial proceeding. 39 Kioa v West (1985) 159 CLR 550 was concerned with a ministerial power to make deportation orders under the Migration Act 1958. It had nothing to do with judicial proceedings. At 584 Mason J said: "The law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary statutory intention." 40 In Kioa and in Annetts Mason CJ addressed the determination of "what is fair". His Honour came to the conclusion, concurred in by other justices of the High Court, that fairness required a public official to observe the rules of natural justice in the exercise of powers which had the requisite character, subject only to the clear manifestation of a contrary statutory intention. 41 Annetts itself recognises, that the application of the rules of natural justice has been evolving over the last thirty years. In the light of the decisions of the High Court in Kioa and Annetts, the observations of Mason J, as his Honour then was, in Ratu cannot now be accepted as authority for the proposition for which the Solicitor-General contends, even assuming that they ever were authority for that proposition. The accuracy of that assumption is at least open to doubt.

Expressio Unius 42 The Solicitor-General placed particular reliance upon the presence in the Act of ss 57 and 58, and the failure to replicate in relation to s 37 the provisions to be found in those sections as to the giving of notice to the Secretary of the matters alleged against him, and as to affording the Secretary an opportunity of putting his case in response. It would be contrary to principle, it was submitted, to imply the applicability of natural justice to cases falling within s 37, when that section creates its own procedures without any mention of natural justice. 43 Reliance was placed on Salemi v MacKellar (No 2) (1977) 137 CLR 396. It is true that in that case one of the factors which Gibbs J took into account in determining that the Minister's power under s 18 of the Migration Act 1958 to order the deportation of a prohibited immigrant was not subject to the rules of natural justice was the contrast between the apparently unfettered power in s 18, and the power in s 14 to order the deportation of aliens in certain circumstances but subject to compliance with "natural justice" type provisions. 44 However, the principal basis on which the statutory majority of the High Court found as they did was that an unconditional power was given to order the deportation of a prohibited immigrant. By the very description, he is not a person having any title to remain in the country. Whereas an alien, whilst in Australia is entitled to the protection of its laws, including, in appropriate cases, the rules of natural justice. 45 The Solicitor-General's submission invokes the maxim: expressio unius est exclusio alterius. The High Court has repeatedly warned that this principle is to be applied with caution: Re Wakim; Ex parte McNally [1999] HCA 27 at 79; Federal Commissioner of Taxation v Rowe (1997) 187 CLR 266 at 277; Ousley v R (1997) 148 ALR 510 at 525 and 539; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 575; Houssein v Under Secretary of Industrial Relations & Technology (NSW) (1982) 148 CLR 88 at 94; Wentworth v NSW Bar Association (1992) 176 CLR 239 at 250; PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301 at 311. It applies only when the intention it expresses is discoverable upon the face of the instrument: Houssein v Under Secretary of Industrial Relations & Technology (NSW) at 94; Ousley v R at 525. "Reliance on the maximum expressio unius personae vel rei, est exclusio alterius can seldom, if ever, be enough to exclude the common law rules of natural justice": Baba v Parole Board of NSW (1986) 5 NSWLR 338 at 349C. 46 In Baba, the NSW Court of Appeal held that the Parole Board was required to afford a prisoner a right to be heard prior to rescission of a parole order under s 33 of the Probation and Parole Act 1983 even though s 33 did not replicate provisions to be found elsewhere in that Act whereby the exercise by the Board of various powers was subject to a hearing. 47 At 347 Mahoney JA said: "I do not think that the reason why, in relation to s 33, the legislature omitted the detailed provisions as to procedure and notice which it enacted in relation to other sections was that it intended that no notice or other opportunity to 'put his case' should be given to a prisoner whose order for parole was to be rescinded. The circumstances in which the rescission power might come to be exercised may well have been seen as so various as to make no one form of procedure or no one requirement as to notice or opportunity to be appropriate in every case. The legislature may well have relied upon the reiteration by the courts that, absent an intention to the contrary, a requirement as to a just procedure and opportunity to address the matter would be required. It may have assumed that the courts would, in relation to s 33, act in accordance with principles of this kind." And at 349 McHugh JA said: "In the present case the Board argues that the express provision for a hearing given by the Probation and Parole Act 1983, ss 27-30 and 40, shows a plain legislative indication that the rules of natural justice do not apply to s 33. But I am unable to accept that this is so. Indeed the legislature's failure to provide for the nature of the hearing in respect of s 33, when it had done so in the other sections, is the clearest indication that the common law rules of natural justice were intended to be applicable to s 33. In those other sections, Parliament has provided a detailed code concerning the nature of the hearing. At least in so far as those sections deal with the nature of the prisoner's right to be heard, they leave no room, and are in substitution, for the common law rules of natural justice." In Annetts at 598 the High Court cited Baba with approval, and as authority for the proposition that an intention to exclude the rules of natural justice is not to be inferred from the presence in the statute of rights which are commensurate with some of the rules of natural justice. 48 Accordingly, I conclude that any contrast between the provisions of ss 57 and 58 of the Act, incorporating specific "natural justice" type obligations, and s 37, does not evince, or evince with the requisite clarity, an intention to exclude the operation of the rules of natural justice in relation to s 37. It is to be expected that where issues of misconduct and criminality are present, the legislature would provide a detailed and specific code for dealing with them. It does not follow from the absence of such provisions in s 37, that the more flexible obligation to accord procedural fairness to a person whose office is to be terminated under s 37 was intended to be excluded. What procedural fairness requires in any particular instance may vary with the circumstances of the case. An important circumstance might be that the s 37 power was proposed to be exercised by reason of matters falling within s 37(7) as well as other matters.

An unfettered discretion 49 For reasons which I will shortly explain, I have come to the conclusion that the applicant has failed to make out his case that the s 37(5) power can only be exercised for cause, in the sense of some fault or incapacity of a fundamental nature that goes to the fitness of the applicant to continue to occupy his office for the remainder of the term. The section does not limit the circumstances in which the Prime Minister may make a recommendation for termination. The matter is left to his discretion. The Solicitor-General submits that the Prime Minister is not required to determine any question. He is not required to give any reasons. Termination might be recommended for reasons which do not reflect adversely upon the particular incumbent, as for example upon a change of government, or upon a candidate becoming available for appointment who enjoys the particular confidence of the Prime Minister. If termination is to be recommended for such reasons, what can the incumbent usefully say in opposition to the course proposed? These factors suggest, so it is submitted, that a recommendation by the Prime Minister is outside the ambit of a duty to act fairly. 50 I accept that the relationship between a Minister and the head of his or her department should be one in which the Minister has trust and confidence in his or her departmental head. I also accept that policy or political considerations may have a bearing upon the selection of a departmental head. These factors may explain why the Act contains provision for the termination prematurely of a Secretary's term of office, and for the removal from office of a Secretary whose appointment is otherwise than for a fixed term. 51 I also accept that the power in the Prime Minister to recommend the termination of a Secretary's appointment is one which is exercisable having regard to the public interest. 52 Ridge v Baldwin [1964] AC 40 decided that where an office is held at pleasure, the person having the power of dismissal is not bound to disclose his reasons and he is not obliged to afford the officer a hearing before dismissing him. The reason that this was so, according to Lord Reid at 65-66, is that the person having the power of dismissal "need not have anything against the officer, he need not give any reason". Thus there is no subject matter, the presence of which might make a hearing appropriate. 53 However, in its modern expression, the duty to act fairly is not confined to adjudicative functions. It applies to any administrative action which satisfies the description in Annetts. The recommendation of the Prime Minister has a direct and immediate effect on the applicant's interests, even though the decision may be taken having regard to a wide range of considerations. It is the impact of the administrative action upon a person in his or her individual capacity which enlivens the obligation to extend procedural fairness, rather than whether the power is non-discretionary in nature. 54 Nor does the fact that the power is exercisable having regard to the public interest necessarily exclude a duty to observe procedural fairness. Again the impact of the administrative action on a person in his or her individual capacity is the main factor. And in the present case, what the public interest requires is inextricably bound up with an evaluation of matters relating to the applicant, because the decision is that his tenure of office, for whatever reason, should be terminated. 55 In FAI Insurances Ltd v Winneke (1982) 151 CLR 342, 398 Wilson J addressed the question of the circumstances in which a duty or right to be heard might be excluded by reason of the fact that the decision was of a 'policy' nature. At 398 his Honour said: "So long as there are considerations personal to the individual which may influence the outcome, then the objective of fairness may require that he be given to understand the general nature of those considerations and provided with an opportunity to submit written material by way of answer or explanation in relation to them together with any other matters which may support a favourable decision." 56 To similar effect, are the observations of Mason CJ in The State of South Australia v O'Shea (1987) 163 CLR 378, at 388-389: "I would reject the argument that, because this notion of public interest involves some aspects of political or policy judgment, it lies outside the ambit of the doctrine of natural justice or the duty to act fairly. True it is that the courts do not substitute their view of policy for that prescribed by the Executive, but this does not mean that policy issues stand apart from procedural fairness. Although it is unrealistic and impractical to insist on a person having the opportunity to present submissions on matters of high level general policy, the same considerations do not apply to the impact of policy on the individual and to those aspects of policy which are closely related to the circumstances of the particular case and that is the case here." (But see per Brennan J at p 411.) 57 Accordingly, the discretionary nature of the power, and the fact that it isexercisable having regard to the public interest are not sufficient to exclude the duty to extend procedural fairness. 58 In Malloch v Aberdeen Corporation at 1597 Lord Wilberforce considered that the fact that the power of termination was discretionary in character, without the need for reasons, was insufficient, in the circumstances there under consideration, to exclude the rules of procedural fairness. It may heighten their importance. See also Lord Reid at 1582 to like effect. The observations of Lord Wilberforce were applied by Deane J in his dissenting judgment in Coutts at 113. Mason ACJ's agreement with Deane J was subjectto the qualification that: "… in my opinion no obligation to conform to the rules of natural justice can arise when the power to dismiss at pleasure is exercised for discretionary reasons …". 59 Here the power to terminate is not "at pleasure", but only after observance of the prescribed formalities. It would be contrary to accepted principles of administrative law to conclude that a statutory power of termination is exercisable without any reason, and there are indications within the section that the power will be exercised on grounds or for reasons. 60 In The Queen v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189 Kitto J said: "It is a general principle of law … that a discretion allowed by statute to the holder of an office is intended to be exercised according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself". See also The Queen v The Australian Broadcasting Tribunal; Ex parte 2HD Pty Ltd (1979) 144 CLR 45 at 49. 61 Section 37(7) assumes that the s 37(5) power will be exercised for reasons or upon grounds, because s 37(7) prevents the Governor-General terminating an appointment by reason only of particular facts or on a specified ground. Thus the Prime Minister must still have reasons or grounds for recommending the appointment even though he may be, in the ordinary case, the sole judge of their sufficiency. 62 The duty to afford procedural fairness is sometimes said to be referable to a general duty of good administration: Attorney General (NSW) v Quin (1990) 170 CLR 1, 20. In that regard, I should refer to s 6 of the Act which provides: "The chief object of this Act is to constitute a public service for the efficient, equitable and proper conduct, in accordance with sound management practices (including personnel management practices), of the public administration of the Australian Government and this Act shall be construed accordingly." (Emphasis added.) 63 There is no reason for excluding those provisions of the Act which relate to departmental secretaries from the reach of s 6. Section 6, in my view, reflects the same notion as that which underpins the common law requirements of procedural fairness, and is a statutory incorporation of that notion as a premise by reference to which the Act is to be construed. 64 I do not think that it can be said that to inform the applicant of the reasons why his termination is proposed, and to afford him the opportunity of responding, is an empty formality, or that it should be assumed that there is nothing which he can usefully say in opposition to what is proposed. 65 There is force, I think, in Mr Gageler's submission that the less it is thought that a person may be able to say against a particular exercise of a discretion against the person's interest, the more important it is that the person should have the opportunity of raising for consideration, matters which may not be already obvious: see Kioa v West at 633. As Burchett J said in Colpitts v Australian Telecommunications Commission (1986) 9 FCR 52, 71: "The principles of natural justice are designed to ensure that the voice of the defence is heard, which is never more necessary than when the Tribunal is in danger of feeling that defence would be useless." See also Somaghi v Minister for Immigration, Local Government & Ethnic Affairs (1991) 31 FCR 100, 120. 66 There is one further factor to which I should refer. The requirement in s 37(12) for the Prime Minister to receive a written report from the Cabinet Secretary before making any recommendation to the Governor-General recognises that the exercise of the power of termination may have a substantial adverse effect upon the interests of the Secretary concerned. In requiring that procedure, Parliament must have intended that the Prime Minister should have drawn to his attention all considerations which are relevant to "the efficient, equitable and proper conduct" of the public service insofar as the continued occupation by the Secretary of his office is concerned. Whilst the Act does not expressly state that the Prime Minister is bound to take into account the Cabinet Secretary's report, that is implicit: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 44. Parliament must have intended that the Cabinet Secretary would inform himself of all relevant matters for the purpose of preparing such a report. That factors such as fairness and justice are relevant, as well as those of efficiency, suggests a legislative intention that the Cabinet Secretary should afford the Secretary whose position may be affected with an opportunity to be heard if his report is to be adverse to the Secretary's position. 67 Accordingly, my conclusion is that the applicant is entitled to procedural fairness before the Prime Minister makes a recommendation pursuant to s 37(11).

What does procedural fairness require? 68 The applicant is entitled to be told the grounds or reasons upon which a recommendation is proposed to be made to the Governor-General that his appointment be terminated, and he is entitled to be heard in relation to those grounds or reasons. There is no requirement for an oral hearing, nor is it necessarily the case that the applicant is entitled to put submissions both to the Cabinet Secretary and to the Prime Minister. If he is informed of grounds or reasons upon which the Cabinet Secretary proposes to report, and if his response forms part of the Cabinet Secretary's report, and if the Prime Minister does not take into account any further or other matters in formulating his recommendation to the Governor-General, then considerations of fairness do not require that the applicant should have the opportunity of repeating the case which he has already put. It would or may be otherwise if the Prime Minister proposed to formulate his recommendation to the Governor-General for reasons different from those comprised in the Cabinet Secretary's report.

Legitimate expectation? 69 The applicant puts an alternative case based on legitimate expectation arising from conduct apart from the terms of his appointment. The applicant has filed particulars of the legitimate expectation for which he contends, and of the facts upon which he relies in support of these contentions. 70 I was informed by counsel that there was no material factual issue between the parties which needed resolution by a trial judge, and such differences as there were between the applicant's and the Cabinet Secretary's versions of events were not material. I was also informed that, for self evident reasons, a decision is required in this matter as soon as practicable. 71 In those circumstances, in view of the conclusion which I have reached on the principal issue, there is no need for me to decide the alternative case.

Termination only for cause 72 It may be accepted that there is no such thing as an unconfined statutory discretion, for a statutory discretion is confined by the type of considerations referred to in Ipec-Air and Peko Wallsend. But those considerations do not suggest that the discretionary power of the Prime Minister under s 37(11) is confined in the manner for which the applicant submits. 73 The applicant submitted that s 37(7) assumes that the s 37(5) power will be exercised for reasons, or on grounds, and that s 37(7) carves out from the s 37(5) power, the power to terminate on disciplinary grounds separately dealt with in Division 6. Section 37(15) also makes it clear that Division 8A does not apply to fixed term Secretaries. That implies, so it is submitted, that the residual power in s 37(5) should not be construed as going beyond the grounds on which a fixed term employment was terminable under the general law. 74 In my view there is no warrant in the structure of the legislation for the implication for which the applicant contends. Neither s 37(7), nor s 37(15), nor the provisions referred to in those sections, have that effect. 75 The fact that certain grounds are carved out of the s 37(5) power tells one nothing as to the nature of what remains. The fact that Division 8A does not apply to fixed term Secretaries does not indicate that the s 37(5) power is subject to unexpressed limitations.

Conclusion 76 The applicant is entitled to a declaration that he is entitled to procedural fairness, including a reasonable opportunity to be heard, before any recommendation is made by the Prime Minister that his appointment as Secretary to the Department of Defence be terminated. 77 The applicant should bring in short minutes of order to give effect to this conclusion. I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Counsel for the Applicant: R J Ellicott QC, S J Gageler and S C Dowling

Counsel for the Respondent: D M J Bennett QC (Solicitor-General for the Commonwealth) T E F Hughes QC and S J Archer

Solicitor for the Respondent: Australian Government Solicitor

Date of Hearing: 4, 6, 9, 12 August 1999

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