Bread Manufacturers (NSW) v Evans

[7]

Bread and bread products were at all material times "declared goods" for the purposes of the Act. The Commission therefore had power, under s. 20(1), by order published in the Gazette to fix and declare the maximum price at which those goods might be sold. That power had been exercised by Prices Regulation Order No. 782, made on 30 July 1979 - an order whose validity is not challenged. On 31 July 1979 the Association on behalf of all its members made application to the Commission for an increase in the price of bread. The Commission, by an advertisement published in the Gazette on 17 August 1979, gave notice of its intention to hold an inquiry to determine whether it should exercise any of the powers conferred on it by s. 20 in respect of bread, and advised that it would be "giving particular consideration to an application from the Bread Manufacturers of New South Wales". Further applications were made to the Commission by the Association on 3 September 1979 and 2 October 1979. The inquiry commenced on 2 October 1979, and continued until 18 October 1979. There is no doubt that the Association was treated as a party to the inquiry. On 16 November 1979 the Commission stated its findings which were given effect by Order No. 787. It stated that a full report of the findings would be issued at a later date. No full report was ever published, but the Association later received an extract from the report. The extract stated that the submission of the Bread Manufacturers suggested that the price should be fixed at an amount which would allow a rate of return of 21.5 per cent on the value of their assets, and went on to say that a special study was undertaken by the research officers of the Commission to measure the return on assets achieved by twelve listed public companies engaged in food manufacturing. In this study, the mean percentage return on investment and the standard deviation were calculated, and the report stated that the sum of the mean and the standard deviation, namely 15.88 per cent, was taken by the Commission as the appropriate percentage return to use in pricing. The study was not tendered in evidence in the course of the inquiry and the Association was not made aware of its existence or given any opportunity to call evidence or make submission in respect of its contents. The appellants contended that the failure to inform them (through the Association) of the commissioning and result of the study and to give them an opportunity to be heard in relation to it rendered invalid the inquiry held by the Commission and the order based on it. They further complained that the statement by the Commission that 15.88 per cent was an appropriate return was misleading, in that the Commission in fact allowed a lesser percentage of return when it came to fix the price.

[8]

The increased price given by Order No. 787 did not satisfy the Association or its members, and in December and January the Association made a number of requests to the Commission for a further increase, which was sought urgently. The Minister dispensed with the holding of an inquiry and on 3 March 1980 the Commission made Order No. 792. The challenge to Order No. 792 before us rested on two grounds. The first line of attack, which was also mounted against Order No. 798, was based on the assertion that in considering whether an order should be made the Commission started with the assumption that the existing order gave to the sellers of bread all they were entitled to, and required the Association, when it applied for a new order, to show that there had been an increase in the cost of production since the price was last fixed. Therefore, it was said, if Order No. 787 was invalid, or failed to fix an adequate price, Order No. 792 rested on an unsound basis, namely that Order No. 787 was a proper starting point. Similarly, it was submitted that if Order No. 792 was invalid, the invalidity brought down Order No. 798. In other words, it was submitted that the invalidity of any order infected each order that succeeded it. It is convenient to deal immediately with this argument. The power given to the Commission by s. 20(1) of the Act is to fix and determine the maximum price at which declared goods may be sold. In terms that power is unfettered. The provisions of s. 58 of the Act, which require that the Act shall be administered with a view to (a) "the prevention of undue increases in prices and rates for goods and services", and (b) "the regulation so far as is necessary of prices and rates for goods and services which are essential to the life of the community", do not restrict the discretion in any way relevant for present purposes. It was clearly within the discretion of the Commission to proceed by granting an increase in price sufficient only to cover the increase in the cost of production since the last order. The fact that the earlier order was made was a matter to which the Commission was entitled to have regard. Even if the earlier order was invalid, the Commission might properly regard it as in fact stating a price which could appropriately be taken as the starting point for the new determination. If it could be proved that the price fixed by the earlier order was inadequate, that would mean only that the Commission had made an error of fact in thinking that it provided a sound starting point, and would not vitiate the exercise by the Commission of its discretion. None of the orders in question is expressed to depend on the validity of its predecessor - each order is self-contained. Even if one order was invalid and the Commission believed it to be valid, that would not affect the validity of a succeeding order.

[10]

As soon as the Commission announced, on 29 February 1980, the decision which was to be given effect as Order No. 792, the Association lodged with the Commission an application for a further increase in the price of bread. A further application was made on 21 March 1980. On 24 April 1980 a meeting was held between the chairman of the Commission, some of the officers of the Commission and some representatives of the Association. In reply to a request for information as to when a decision would be made on the Association's application for an increase in price, which was claimed to be desperately needed, the chairman said: "Because bread prices were increased on 29 February [that is, by Order No. 792] we decided that it was politically impossible to make a recommendation to the Minister so soon and we have decided to have a meeting next month (May) on the application." The chairman said that he would send a report to the Minister on the meeting and would try to arrange for the manufacturers to meet with the other Commissioners. On 28 May 1980 the chairman of the Commission made a written report to the Minister which referred to the fact that an application for an increase had been received from the Association and stated that the Commission was of opinion that a further increase should be granted, but that it should take effect simultaneously with the announcement in New South Wales of any wage increases flowing from the National Wage Hearings, which was expected in a few weeks. The report continued: "Would you please inform me if you desire a meeting with the Commission before any formal recommendation is forwarded to you." The report went on to say that the officers of the Commission recommended an increase in the price of 3c, which did not include an allowance for the effect on costs of wage increases expected to result from the National Wage Case and that the two members of the Commission other than the chairman believed that the best course would be to grant an increase of 3c plus an allowance for the National Wage Case estimated at being more than 1c. The chairman said that he himself disagreed with the final amount of 4c; he favoured an increase of 2c, or 3c if the effects of a national wage decision were to be included. On this report the Minister made an indorsement "Please make no announcement. Discussion with me is needed". A meeting was arranged between the chairman and the Minister but it did not take place because on 5 June the present proceedings were begun. When the proceedings commenced, the appellants stated in court that they wished the Commission to proceed to deal with the matters the subject of the applications. On 2 July the chairman wrote to the Minister seeking an interview for the purpose of ascertaining whether the Minister would consent to dispense with the holding of an inquiry. The letter had attached to it a copy of the submission which had been sent to the Minister on 28 May, and a copy of a document, also dated 28 May 1980, which had been prepared for the Commission by one of its officers, Mr. Fleet, and which expressed the opinion that a rise of 3c per unit could be sustained - as had been mentioned, that 3c did not make allowance for the effect of the National Wage Case. There is no evidence as to whether the Commission did see the Minister but on 10 July 1980 it was publicly announced that the Commission had received the Minister's consent to announce an increase in price without holding a public inquiry and that there would be an increase of 3c on all loaves of bread. Prices Regulation Order No. 798, which was gazetted on 14 July 1980, gave effect to that decision. It was signed by all three members of the Commission. It is apparent that one at least of the members of the Commission must have changed his or her mind as to the amount of the increase between 28 May, when a disagreement amongst the members of the Commission was made known to the Minister, and 10 July, when the public announcement was made. Woodward J., at first instance inferred that the Commission had conceived that its obligation was to fix a price and to delay the effect of it so as to bring about a result "politically palatable to the Government". In the Court of Appeal, Hope and Glass JJ.A. drew the inference that the members of the Commission had had the interview with the Minister that had been sought by the letter of 2 July, and that at least one of them had changed his or her mind as to the amount of the increase because of something compelling that was said by the Minister. In drawing this inference their Honours were influenced by the absence of any evidence that a decision in favour of a 3c increase was made before the Commissioners saw the Minister. They held that the inference should be drawn that the Commission did not come to its own independent decision that it should recommend an increase of 3c but came to that conclusion because the Minister, in a way not permitted by the Act, had constrained it to do so, either by telling it what he wanted, or by indicating that he would veto a 4c increase. Hutley J.A. agreed, but expressed his conclusion more bluntly; he held that the Commission made an order which the Minister improperly dictated to it. The Court held that Order No. 798 was liable to be quashed but that the effect of quashing it would be to reinstate Order No. 792, and that this result would be unjust. The Court set aside the orders which Woodward J. had made quashing Orders Nos 787, 792 and 798 in so far as those Orders purported to fix and declare the maximum price for the goods specified therein, and instead ordered the Commission to reconsider according to law the applications made on 29 February 1980 and 21 March 1980.

[21]

By s. 9, "for the purposes of an inquiry", the Commission may summon witnesses, take evidence on oath and require the production of documents, books and papers. By s. 13, "for the purposes of an inquiry", the Commission or an authorized officer may require any person to furnish information and answer questions. By s. 15, "for the purposes of an inquiry", an authorized officer may enter upon and search premises and inspect, inter alia, documents, books and papers. By ss. 14 and 17 the Commission is given further powers to obtain information, but these powers are not expressed to be exercisable only "for the purposes of an inquiry". It was submitted on behalf of the Commission in the present case that the only rights which a party to an inquiry has in relation to the conduct of the inquiry are those specifically conferred by s. 8E, and that they do not include the right to see all the material which the Commission obtains for the purpose of the inquiry, to test by cross-examination the accuracy of such material, or to adduce further evidence in answer to it. This is too narrow a view. Section 8F makes it clear that if an inquiry is held, it must be a public inquiry. The fact that the Commission is given, by s. 9, the power, for the purposes of the inquiry, to summon witnesses, take evidence on oath, and require the production of documents does not mean that the Commission can take evidence in private, or, in making its inquiry, have regard to documents which are never made public. The powers are given for the purposes of an inquiry, and the inquiry is to be held in public, subject only to s. 8F(2). The same is true of the powers given by ss. 13 and 15. The powers under ss. 14 and 17 are not limited to the purposes of an inquiry, and so could be used by the Commission to obtain information for use in fixing a price in a case in which the Minister had consented to dispense with the holding of an inquiry, or for the purpose of functions conferred on the Commission by other sections of the Act. But if the Commission obtains material under s. 14 or s. 17 which it wishes to use for the purposes of the inquiry, that too must be publicly adduced, unless it is confidential and falls within s. 8F(2). It is not clear why the powers of the Commission under ss. 13 and 15 are limited, when those conferred by ss. 14 and 17 are not, for the purposes of an inquiry, but the distinction does not assist the argument of the Commission. All four sections enable the Commission to obtain information, but they do not enable the Commission to use it for the purposes of an inquiry unless it is publicly presented or is confidential and comes within s. 8F(2). The holding of a public inquiry would be illusory if the Commission, after solemnly taking evidence in public, could, without notice to the parties, base its decision on material that it had obtained in secret and never disclosed.

[27]

As a general statement this is correct. There is no doubt that, in the absence of a clearly expressed legislative intention, no one can be dismissed from office, penalized, or deprived of or prejudiced in relation to his property without being afforded an adequate opportunity to be heard. It may be said that an order fixing the maximum price at which goods may be sold affects the existing right of the seller to sell them at whatever price he chooses. Such an assertion seems rather artificial when the price of the goods is already fixed, and the order that is challenged increases the maximum price. But the question whether a seller who will be affected by an order under s. 20 of the Act must be given an opportunity to put his case against the making of the order before it is made should not be answered in the negative only for the reason that an order increasing the price does not adversely affect his rights. It is necessary to examine the nature of the power in question in deciding whether the observance of the principle audi alteram partem is a condition of its exercise. It is sometimes said that the question whether the rules of natural justice are applicable is one of statutory interpretation. That is only partly true. The words of a statute may of course reveal an intention to exclude the rules of natural justice. But, in order that those rules should apply, it is not necessary that the statute in question should, on its proper construction, render them applicable. I have already referred, in Salemi v MacKellar [No. 2] [2] , to Cooper v Wandsworth Board of Works [3] , where Byles J. said that "although there are no positive words in a statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature". In the present case, it was submitted on behalf of the Commission that the rules of natural justice do not govern the exercise of a power of a legislative kind. Jordan C.J., in In re Gosling [4] , evidently took that view. The actual decision in that case was that a regulation was not invalid because it permitted the Milk Board, before fixing the price of milk, to hold a private inquiry at which persons affected by the exercise of the power had no right to be heard. Jordan C.J. was of opinion that the power to fix the price was a delegated legislative power, and that the rules of natural justice were not applicable to such a power. Further support for the Commission's contention is provided by Bates v Lord Hailsham of St. Marylebone [5] , where Megarry J. held that a committee set up under a statutory provision and given power to prescribe and regulate the remuneration of solicitors was not bound to consult with, or afford opportunities for representations to be made by, bodies (other than the Law Society) representing solicitors before making an order which would affect solicitors generally. Megarry J. expressed the opinion that the rules of natural justice do not affect the process of legislation, whether primary or delegated [6] . I do not doubt the correctness of the decisions in those cases. But I am not persuaded that the question whether the rules of natural justice apply should be answered by deciding whether or not the power in question should be classified as legislative.

[31]

I return to consider the nature of the power which the Commission exercises under s. 20(1). Except in a case where an inquiry is required to be held, the Commission does not follow a procedure similar to that of a court. It is not called upon to adjudicate upon a controversy between contending parties. The exercise of its discretion does not depend upon the formation of an opinion as to any particular fact or circumstance. It is no doubt required, by s. 58, to consider such general matters as whether an increase in price would be "undue" and to what extent the regulation of the price of bread (an essential commodity) is "necessary", but its discretion is virtually unfettered. Its function, at least in the present case, was to make a general decision of a discretionary character which affected all consumers and sellers of bread. In Salemi v MacKellar [No. 2] [11] , Jacobs J. drew a distinction between an act which directly affects a person individually, and one which affects him simply as a member of the public or a class of the public, and said that an executive or administrative decision of the latter kind is truly a "policy" or "political" decision and is not subject to judicial review. Although it is unsafe to generalize, I respectfully agree with the significance of the distinction. I do not suggest that the presence of any one of these features by itself would necessarily mean that an authority exercising a statutory power would not be required to observe the audi alteram partem rule, but the presence of all of them in the instant case does in my opinion lead to that result, particularly in the light of the fact that the Act makes detailed provision for the holding of an inquiry in certain cases, with the concomitant obligation to hear parties to the inquiry. The provisions of the Act support the view, which the nature of the power suggests, that the audi alteram partem principle has no application to the exercise by the Commission of its powers in a case in which no inquiry is required to be held.

[125]

Mr. Porter argues that on the proper construction of the Act there was no obligation to disclose the research material. The Act says nothing about the Commission giving evidence, and in any event the rights of the parties are expressly stated to extend to giving evidence, calling witnesses, and making submissions. There is no right to cross-examine witnesses called by other parties, nor to attack that evidence in any other way. The purpose of the Act is to ensure that any interested groups in the community will be obliged to put all their material to the Commission in public, in order that everything will be open and above board; it is not to require the Commission to expose its own material to public scrutiny and debate. But there is a fatal flaw in the argument. It ignores the fact that ss. 9, 13 and 15, sections which furnish the Commission with most of its investigative powers, were each amended in 1976 by adding at the commencement of the section the words "For the purposes of an inquiry". It may be curious that the same words were not inserted in ss. 14 and 17. But perhaps there is a greater curiosity, namely, that the investigative powers of the Commission were limited in this manner at all. If the legislature wanted to ensure that in the event of an inquiry the Commission would disclose the fruits of its own investigations it could easily have said so. The serious consequence, as it seems to us, of the course that has been adopted is that the Commission has been deprived of the bulk of its coercive powers except where those powers are invoked "for the purposes of an inquiry". It is apparent that there are many occasions when it is expedient that prices be revised or fixed without the delays and expense necessarily attendant upon the holding of an inquiry. This is a course which can be adopted by the simple method of seeking from the Minister a dispensation from the holding of an inquiry pursuant to s. 8B. But in such a case the Commission cannot use any of the powers contained in ss. 9, 13 and 15.

Bread Manufacturers (NSW) v Evans - [1981] HCA 69 - HCA 1979 case summary — Zoe

At a glance

Court

Decision date

Before

Source

Judgment (170 paragraphs)

Parties

Legislation Cited (2)