McMILLAN & ANOR v DIRECTOR-GENERAL OF COMMUNITIES NSW

McMILLAN & ANOR v DIRECTOR-GENERAL OF COMMUNITIES NSW - [2009] NSWSC 1440 - NSWSC 2009 case summary — Zoe

[33]

The plaintiffs' submissions 6 The plaintiffs submitted that relief ought to be granted in terms of Prayer 2 of the Summons. It was contended that the terms of the order were to be framed in the following manner, as provided in Order 1 of the plaintiffs' short minutes of order:- " The Court declares that the documents comprised of a letter dated 8 May 2009 from Henry Wong, General Manager of Manly Council, to the predecessor of the Defendant, the Director of Liquor and Gaming, a letter dated 17 July 2009 from Lisbeth Lawson to the Defendant and a statutory declaration signed by Henry Wong on 8 May 2009, is not a valid complaint for the purposes of s.79 of the Liquor Act 2007 (NSW)" 7 The reason for granting a declaration in the terms of order 1 was that it has "utility" as described in the decisions of Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 and Re Refugee Review Tribunal; Ex parte Aala (2000 204 CLR 82. In the plaintiffs' submission, such an order would determine a matter which is not hypothetical but which is a legal controversy as to whether the Council Complaint fell within s.79(1) of the Liquor Act: see Ainsworth (supra) at 582.1-582.4, 596.5-596.8. Declaratory relief in this respect would have the consequence of preventing the parties from treating the Council Complaint as a valid complaint in the disturbance proceedings: see Aala (supra) at [57]-[58]. 8 In support of the proposed Order 1, reliance was placed upon the decision in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355. In that case, the ABA determined a standard, which required Australian material to be at least 50% of all programming. The Australian Content Standard was inconsistent with the Trade Agreement and Protocol between Australia and New Zealand. However, the High Court held that breach of a condition which regulates the exercise of a statutory power is not necessarily invalid and of no effect (at 388). On the proper construction of the provision in that case, the Court held that an act done in breach of the provision was not invalid (at 393). 9 However, the provision did impose a legal duty upon the ABA and caused an act done in breach of it to be unlawful. Accordingly, a person with sufficient interest was entitled to sue for a declaration that the ABA had acted in breach of the Act and, in an appropriate case, obtain an injunction restraining that body from taking any further action based on its unlawful action (at 393). The Court made a declaration that the Standard was unlawfully made. 10 Based on the reasoning adopted in that case, Ms Allars of counsel on behalf of the plaintiffs submitted that her clients were entitled to a declaration that the Council Complaint was not a complaint within s.79(1) of the Liquor Act. 11 In respect of any proposed undertaking by the defendant, the plaintiffs submitted that that was not a proper basis for withholding the declaratory relief sought by the plaintiffs.

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Consideration - appropriate order 15 In Project Blue Sky (supra), whilst the High Court held that the relevant act under consideration in that case was not invalid it nonetheless made a declaration that the act of the ABA in contravention of s.160 was unlawful. Section 160 of the Broadcasting Services Act 1992 (Cth) was a significant provision. It provided the conceptual framework in which certain functions (under s.158 of the Act) were to be carried out (at 384 per McHugh, Gummow, Kirby and Hayne JJ). It was held to be "the dominant provision" in its relationship to s.122 of the Act. 16 A breach of such a provision was, accordingly, a matter of particular significance which could carry consequences. The Court held, as noted above at 393, that a person with sufficient interest was entitled to sue for a declaration that the ABA had acted in breach of the Act. 17 The fact that the Council "complaint" was not a valid one is in a very different category. No breach or unlawfulness, of course, could attach to the Council's actions in making a defective complaint. The present case is also quite unlike the circumstances in Ainsworth (supra) where the High Court made a declaration to the effect that the former Criminal Justice Commission failed to observe the requirements of procedural fairness in producing its report. Although the report did not affect the appellants' legal rights and liabilities, it had and could continue to have adverse practical consequences to their reputations. 18 The fact that the Council's "complaint" did not conform to the statutory provisions for the making of complaints under s.79 was not an act that carried with it either legal significance (as with actions involving unlawful conduct) or practical consequences. The making of a declaration in relation to the Council's complaint would have no utility. Accordingly, I do not consider that a declaration should be made as sought in paragraph 2 of the summons filed on 10 August 2009. Submissions on Costs Partial success 19 The plaintiffs submitted that they enjoyed success in obtaining part of the relief sought, namely, in relation to Prayer 2 and Ground 2 of the Summons. 20 The defendant submitted there was no basis for departing from the ordinary rule that costs follow the event. The issues raised by the plaintiffs in their Summons were numerous (11 grounds), and they failed on all but one issue. Although the Council Complaint was held to be defective, it did not have any practical outcome because the Police Complaint was held to be valid and the conference decision not made in excess of power. 21 The Court was required to determine the validity of the Police Complaint on the same principles as those that were applicable to determining the Council Complaint. In this way, the defendant submitted that the dispute concerning the validity of the Council Complaint was not discrete, dominant or clearly separable from the issues in respect of the Police Complaint. On that basis, it was contended that apportionment of costs between the Council Complaint issue and the remaining issues in the proceedings was inappropriate. 22 In addition, the defendant contended that other factors balanced against the plaintiffs' limited success in respect of the Council Complaint demonstrate that it would be unfair for any order for costs to be made in the plaintiffs' favour. Those factors include delay caused by the plaintiffs in respect of the Police Complaint and any action that could be taken by the defendant in respect of that complaint. Further, unfounded accusations of bias were directed toward Mr Freeman which were serious in nature, having regard to his position within the Office of Liquor, Gaming and Racing.

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25 Ms Mills became Director-General on 27 July 2009. She did not inform the plaintiffs that she intended to withdraw, or had withdrawn, Mr Freeman's delegation to preside at the conference or that she intended to conduct the conference until her letter dated 9 October 2009. No assurance as to procedural fairness was made until 13 October 2009. The plaintiffs submitted that had they received this information prior to 10 August 2009 when they commenced proceedings, they would have been in a position to consider the effect upon Grounds 4 and 6 of the Summons. 26 The plaintiffs accordingly contended that the Director-General's letters of 9 and 13 October 209 constituted a surrender by the defendant on the issues of apprehended bias and procedural fairness at the hearing. The decisions in Oshlack v Richmond River Council (1998) 193 CLR 72; Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 and One.Tel Limited v Commissioner of Taxation (2000) 101 FCR 548 were relied upon in this respect. Ms Allars submitted on behalf of the plaintiffs that on 9 and 13 October 2009, the Director-General effectively surrendered the litigation in respect of Grounds 4 and 6. 27 On that basis, it was contended that it would be inappropriate for the Court to order the plaintiffs to pay the entirety of the defendant's costs in respect of those grounds. 28 In the Defendant's Reply Submission, the defendant referred to the fact that notwithstanding that Ms Mills determined that she herself would convene the conference, the following finding was made in respect of Ground 4 (at [190]):- " I do not consider, in the particular circumstances of the present case, that Mr Gardner's or Mr Freeman's involvement in the investigations, inquiries and processes leading to the charges…have been shown to be incompatible with the performance of the Director's statutory responsibilities arising under Division 3 ." 29 On that basis, the defendant contended that the plaintiffs would have failed on Ground 4 absent Ms Mills' letter of 9 October 2009 as I found that none of the three bases relied upon in respect of Ground 4 were established (at [200]). 30 Similarly, the defendant submitted that although the Director's letter of 13 October 2009 "undermined" the plaintiffs' position in relation to Ground 6, it cannot be said that Ground 6 was determined purely or solely on that basis. The plaintiffs failed to establish any denial of procedural fairness as set out in Ground 6, and the defendant made reference in particular to the following findings in that respect:-

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Surrender 33 The question of surrender was addressed by McHugh J in Ex parte Lai Qin (supra), in which an applicant for a protection visa under the Migration Act 1958 (Cth) commenced proceedings in the High Court for prerogative relief. Before the application was heard, the Minister exercised his discretion under the Act and granted a protection visa. His Honour stated at 624-625:- " In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation… … If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings ." 34 However, McHugh J also observed that, in some cases, a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried (at 625). 35 In One.Tel (supra), Burchett J considered the authorities on the issue of surrender. His Honour observed at [6]:- " [6] In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs ." 36 The applicants in One.Tel (supra) sought to challenge the validity of certain notices, and to have them set aside. The respondent, after initially defending those notices, encountered an evidentiary difficulty, and acknowledged that they were to be set aside. Considering the question of reasonableness, his Honour found that the respondent's earlier stance must have been unreasonable, at least once the true position had been ascertained. Yet that stance was maintained by opposition to the applicant's motion to amend, and by service of the notice to admit facts. It was only abandoned after the applicants defeated the attempt to obtain admissions. Accordingly, his Honour concluded that the respondent should be ordered to pay the costs of the applicants. 37 As discussed above, the plaintiffs submitted that the Director-General's letters of 9 and 13 October 2009 constituted a surrender by the defendant on the issues of apprehended bias and procedural fairness at the hearing as provided in Grounds 4 and 6 of the Summons. The defendant submitted that the letters did not amount to surrender in respect of Grounds 4 and 6 as these communications did not constitute the only factor in determining the merits of these grounds. 38 Ground 4 of the Summons had three bases (at [152]):-

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(3) Mr Freeman had a direct relationship and contact with Mr Robert Doran, the licensee of the Steyne Hotel, who was his client. 39 In considering Ground 4, regard was had to the powers and roles of the Director in relation to the performance of his or her functions under the Liquor Act. The Director's statutory powers and functions under the Act included the assessment of disturbance complaints and, if considered appropriate, the convening and chairing of a conference held under Division 3. As stated above at paragraph [25], I did not consider that it was established that Mr Gardner's or Mr Freeman's involvement in the investigations, inquiries and processes leading to the charges was incompatible with the performance of the Director's statutory responsibilities (see paragraph [190] of the judgment). 40 The effect of the letter dated 9 October 2009 which advised that Ms Mills was to preside at the conference was examined at paragraph [189] of the judgment:- " The short answer to what might be referred to as the 'accuser/decision- maker' point is that there is no basis for impugning Mr Gardner's role in relation to the performance of his statutory functions in the circumstances of the present case where it has not been suggested that he will be involved in determining whether or not action should be taken under s.81 against the plaintiff licensees." 41 The only decision that could affect substantive rights on a disturbance complaint is one taken under s.81. On the basis that Mr Freeman was to preside at the conference, the statutory scheme envisaged the exercise of that function and other functions of the Director under the Act, including investigating complaints. No reasonable apprehension of bias would have been apparent were Mr Freeman to conduct the conference. The letter of 9 October 2009 did not, in my opinion, contain either an express or implied admission that a reasonable observer would consider Mr Freeman to be biased or that there could be an apprehension of bias. It was not a surrender in respect of Ground 4. 42 In respect of Ground 6, no denial of procedural fairness was established insofar as the complaints failed to contain allegations and particularise the precise factual matters said to form the basis for the complaints (paragraph [211]). It was also accepted that the plaintiffs had been provided with in excess of six weeks to prepare for the conference. As the conference had been postponed, the plaintiffs had the benefit of additional time to examine the materials served in support of the Police Complaint. Accordingly, the adequate time was allowed to the plaintiffs to deal with the material in relation to the complaints. 43 The evidence indicated that the procedures in relation to the conduct of the conference were of a flexible nature (at [218]). The broad discretion vested in the Director regarding procedural aspects of the conference was noted in this respect. The letter sent by the Director on 13 October 2009 advised that she would keep the procedure of the conference under review in order to ensure that a fair hearing was afforded. Such an assurance undermined the plaintiffs' position in relation to Ground 6. It was not, however, determinative of the issue in respect of Ground 6.

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