New South Wales Land and Housing Corporation v Navazi

Part 7 of the Act 27Part 7 of the Act applied, relevantly, to tenants renting public housing, such as Mr Navazi. Section 55 empowers a tenant to make application to the Corporation for a weekly rebate of rental. The application may be granted after making an investigation under s 58, and is to be determined in accordance with guidelines approved by the Minister. Section 57 and s 58, which are critical to the appeal, are in these terms: "57 Cancellation or variation of rental rebate (1) The Corporation may, after conducting an investigation under section 58, vary or cancel any rental rebate granted under this Part. (2) The Corporation is to determine the date (being a date occurring before, on or after the making of the determination) on which the variation or cancellation has effect or is taken to have effect. (3) The Corporation is to give notice in writing to a tenant of any decision to vary or cancel any rental rebate being received by the tenant and is to include in the notice the date on which the variation or cancellation takes effect or is taken to have effect. (4) If the Corporation reduces or cancels a tenant's rental rebate under this Part with effect from a preceding date, the Corporation may, by notice in writing to the tenant, require the tenant to pay to the Corporation: (a) an amount equal to any rental rebate or part of a rental rebate received by the tenant on or after the date that the variation or cancellation took effect to which, because of the variation or cancellation, the tenant was not entitled, and (b) interest (at the rate prescribed under section 101 of the Civil Procedure Act 2005 in respect of unpaid judgments) on any outstanding amount under paragraph (a) from a date specified in the notice, being a date not earlier than the date on which the notice is issued to the tenant. (5) Any amount (together with interest) referred to in subsection (4) that is unpaid may be recovered by the Corporation as a debt in any court of competent jurisdiction.

58 Investigation of application (1) The Corporation may make an investigation to determine the weekly income of: (a) a person who is an applicant for, or a recipient of, a rental rebate under this Part, and (b) any other resident of the house in which that person resides. (2) The Corporation may require a person who is an applicant for, or a recipient of, a rental rebate under this Part to produce such evidence as the Corporation thinks fit of the person's weekly income and of the weekly income of any other resident of the house in which that person resides."

28It is convenient to make four points immediately. First, the Corporation confined its submissions to s 57 as the sole source of power. Accordingly, there is no occasion to consider whether there may be an alternative source of power to support the cancellation of the respondent's rental rebate. 29Secondly, both at first instance and on appeal it has been common ground that the power to vary or cancel rental rebate in s 57(1) depended upon the Corporation conducting an investigation under s 58. 30Thirdly, it may be seen that the text of s 58 reflects the two roles it performs: an investigation prior to the granting of a rental rebate (hence the references to "an applicant for") and an investigation prior to the variation or cancellation of a rental rebate previously granted (hence the references to "a recipient of"). 31Finally, the power to "require" production of evidence conferred by s 58(2) makes no attempt to displace privileges such as that against self-incrimination. Nor for that matter is there any sanction to enforce compliance. Although "require" is a natural word to describe a compulsive power (cf Dalton v NSW Crime Commission [2006] HCA 17; 227 CLR 490 at [50]), that is not the nature of the power conferred by s 58(2). There is no power to compel the provision of any information. Still less does the section abrogate privileges against self-incrimination or exposure to penalties. Neither party suggested to the contrary. Although the "right to silence" is better described as a privilege or immunity: Australian Crime Commission v OK [2010] FCAFC 61; 185 FCR 258 at [38]-[43], Ms Morgan was correct in substance when writing to Mr Navazi to advise that he had a "right to silence" and did not need to participate in the interview she proposed. It will be seen below that the limitations upon the Corporation's power play an important part in identifying the nature of the precondition to the exercise of power under s 57(1).

The reasoning of the primary judge 32There can be no doubt that the Corporation had conducted an investigation. However, Mr Navazi contended, and the primary judge accepted, that the precondition to the exercise of the power to cancel, "after conducting an investigation under section 58", was only satisfied if (a) the investigation was to determine the weekly income of Mr Navazi, and (b) the investigation had concluded. The primary judge found, on the evidence before him, that the Corporation not only had not determined Mr Navazi's weekly income, but also that it had not investigated in order to determine his weekly income: at [71]. Instead, his Honour found: "The investigation that was conducted, whatever was its subjective intent, was not an investigation 'to determine the weekly income of Mr Navazi'. The investigation was not an investigation under s 58 of the Housing Act." Consequently, his Honour found that the s 57(1) power had not been enlivened. 33Secondly, his Honour concluded that the power under s 57(1) could not be exercised without regard being had to the respondent's weekly income, if his weekly income was capable of ascertainment. In other words, the primary judge found that if it were capable of ascertainment, the respondent's weekly income was a mandatory relevant consideration, the failure to have regard to which vitiated the exercise of the power: at [74]-[77]. 34Thirdly, his Honour criticised reliance by the Corporation on the fact that the respondent owned and had let property. His Honour referred to a policy document which included the following: "Tenants who own or have a Share in Real Estate If a tenant (or their partner) owns or has a share in a property that could provide a viable alternative to public housing or a SAS tenancy they will not get a rent subsidy. Housing NSW expects them to live in that property or to sell the equity in the property to meet their housing needs. If a tenant or their partner is leasing the property to another person they are not eligible for a rent subsidy (irrespective of the rent earned). Any income generated by the property will be treated as non-statutory income in cases where the tenant or their partner only has a part share in the property. In this circumstance Housing NSW will only assess the part share of property income. Housing NSW may not consider the property, its value or any income generated by it for the subsidy assessment where the property is: in an isolated location an extremely run-down dwelling overseas tied up in a legal dispute and income cannot be generated from it. If another household member owns or has a partial share in a property in Australia, Housing NSW will treat this as an asset unless an income is derived from the property. The tenant may receive a rent subsidy and the value of the property is included in assessment of the household's income and assets. Where a client has an interest in a block of land we do not consider this in their rent subsidy assessment." 35His Honour noted that there was no evidence that the Corporation had investigated or determined whether the property owned by the respondent could have provided a viable alternative to the public housing that was provided. His Honour considered that the focus in the investigation and decision upon the ownership of other property was insufficient - his Honour said (at [95]-[96]): "Moreover, it is clear that mere ownership, without more, of property does not disentitle a tenant from receiving a rebate. The property owned must be suitable alternative accommodation. Again, giving the statute a construction that achieves harmonious goals, the cancellation of a rebate cannot be occasioned by the mere ownership of property, unless that property is suitable alternative accommodation. To the extent that the Corporation has taken into account the ownership of property in the way already described, it has asked itself the wrong question and taken into account a consideration that is irrelevant and wrongly constrained the exercise of power or discretion it was undertaking." 36By its appeal (which was as of right, because Mr Navazi's debt which was created by the decision exceeded $100,000), the Corporation challenged each of his Honour's conclusions. His Honour also referred to, but did not need to decide, two related questions relating to delegation. Mr Navazi had submitted that there was no valid delegation of authority either upon the officers of the Corporation making the s 58 investigation, or upon Ms Roil who purported to exercise power pursuant to s 57(1). By notice of contention, he sought to uphold the judgment on those bases. 37I respectfully disagree with each reason given by his Honour to invalidate the decision to cancel Mr Navazi's rental subsidy. I address each in turn, before turning to delegation and agency.

(a) An investigation under section 58 was conducted 38It is wrong to construe s 57 on the basis that the investigation it contemplates must have a single purpose. An "investigation" is merely a series of inquiries and analysis directed to a particular topic. It is to be contrasted with a decision as to the action to be taken on the basis of the facts ascertained: Taciak v Commissioner of Australian Federal Police [1995] FCA 650; 59 FCR 285 at 294 (Sackville J). There is no reason why an investigation may not have multiple characters and multiple purposes, and, to paraphrase what was said of legal proceedings in Rich v Australian Securities and Investments Commission [2004] HCA 42; 220 CLR 129 at [35] (original emphasis), "That [an investigation] may bear several characters does not deny that it bears each of those characters". There is no reason why its nature might not change as it proceeds - an investigation which commenced on the basis that there had been an alteration in a person's financial circumstances might midcourse become an investigation into fraud. The reverse is also possible: an investigation into suspected fraud may transmute into one involving innocent mistake. 39There is no support in the text of the statute, which is concise and leaves much unstated, for a narrow meaning to be given to what is an "investigation". The nature of the Act is such that often the investigations will involve relatively small amounts of money, for s 55 requires there to be an investigation under s 58 in every case before a grant of rental rebate is made. It is obvious that many or most of the thousands of "investigations" will be short and informal. The Act may be contrasted with the formal investigations by bodies such as the Police Integrity Commission and the Independent Commission Against Corruption, whose legislation confers compulsive powers, and imposes reporting obligations (see Police Integrity Commission Act 1996 (NSW), ss 23-66 and s 96 and Independent Commission Against Corruption Act 1988 (NSW), ss 20-52 and ss 73-79). In short, the statutory text (particularly its generality and the absence of compulsive powers) seen in its context (hundreds or thousands of investigations) compels the conclusion that something relatively informal will amount to an "investigation under section 58". 40An investigation by a body such as the Corporation may involve inquiries relying on no statutory power. One such inquiry may be speaking with a complainant. It may also involve the limited powers conferred by s 69B to obtain information from various registers including those relating to real property and motor vehicles. In any investigation, there will come a time when further inquiries and analysis are unlikely to result in useful additional information. The results are then likely to be recorded in a document. Here, that document was the Final Investigation Report. 41Although it may seem self-evident, it should be said that the character of a written report following an investigation has nothing to do with the subjective states of mind of the persons involved in it, save perhaps in an exceptional case (say, where there is an allegation of sham or bad faith). In the present case, what Ms Morgan or anyone else thought he or she was doing between February 2009 and February 2010 was irrelevant to determining the character of the investigation. The evidence led by the Corporation was inadmissible on that issue, although admitted, and the cross-examination which ensued was likewise irrelevant. 42Ms Morgan's Final Investigation Report reflects an investigation which had multiple purposes. One aspect, which was probably the dominant aspect, was the allegation and finding of fraud, leading to recommendations to the Legal Services Branch. An applicant for rental rebate who wilfully makes false statements about his or her assets might commit a fraud upon the Corporation, within the scope of s 69, irrespective of anything to do with the applicant's weekly income. 43However, another aspect of the investigation which resulted in the Final Investigation Report was Mr Navazi's weekly income. The investigation uncovered abundant evidence that Mr Navazi was receiving a share of $245 per week from the complainant. It uncovered abundant evidence that the nature of that income was rent, pursuant to the lease which he and Mr Zaree had granted of the residential property they owned. Ms Morgan's Final Investigation Report summarised and attached the primary documents relevant to that issue. 44True it is that the investigation did not in fact determine Mr Navazi's weekly income. But one important aspect of the investigation was directed to the receipt of rental income, and indeed some primary evidence of that income was obtained. 45It is not a precondition to the exercise of the cancellation power that the investigation result in a definite answer as to the person's weekly income. At one stage Mr Navazi appeared to submit that there could not be an "investigation to determine the weekly income" unless there was in fact a determination of weekly income. That submission must be rejected, because the words "to determine the weekly income" refer to a purpose (which for reasons earlier stated need not be the only purpose), as opposed to the fulfilment of that purpose. In the present case, the weekly income of Mr Navazi was not determined, but nothing turns on that given that Mr Navazi refused to be interviewed, and the Corporation has very limited powers of compulsion. 46Mr Navazi submitted that more could have been done. He submitted that merely having obtained some information as to a tenant's income was something less than "an investigation to determine [his] weekly income", and that what was required for a s 58 investigation was that the Corporation had made "a real effort to ascertain his weekly income, and that [had been] taken as far as it can reasonably be taken in the circumstances". For example, he submitted that inquiries could be made of banks as to the cost of servicing the mortgages on the properties. It should be said immediately that there is no suggestion in the evidence that any additional material information would have been obtained by further inquiries. But the answer to Mr Navazi's submission is that the Act imposes no precondition upon the exercise of s 57(1) power as to the exhaustiveness and duration of an investigation. The Act leaves all those matters uncircumscribed. Putting to one side an "investigation" where there was no bona fide attempt to obtain information, there is no reason to imply a minimal standard of diligence or success which must be attained before there is an "investigation under section 58". 47One purpose of the investigation which resulted in Ms Morgan's Final Investigation Report was determining Mr Navazi's weekly income. Accordingly, there was an "investigation under section 58". That suffices to reject the primary judge's first basis for invalidating the decision to cancel.

(b) Weekly income is not a mandatory relevant consideration 48Contrary to Mr Navazi's submission, there is no basis to conclude that the exercise of power under s 57(1) was vitiated unless regard had been had to the person's weekly income, if that income was capable of being ascertained. The mandatory relevant consideration found by the primary judge is not express, and there are a number of reasons why it would not be implied. First, what does "capable of ascertainment" mean? If his Honour meant "capable of ascertainment" including by the exercise of compulsive powers, then a recipient of rental rebates could frustrate the exercise of the power to cancel merely by not co-operating; that cannot be the proper construction. If his Honour meant reasonably capable of ascertainment, having regard to the limited powers of the Corporation, then his Honour has by implication imposed a constraint upon the exercise of the power by reference to a contestable standard. As was made plain when the appeal was heard, Mr Navazi claimed and the Corporation denied that more inquiries should have taken place. This too is an unlikely implication of something failure to have regard to which vitiates the exercise of power. 49Secondly, where as here the mandatory relevant consideration is not express, it falls to be implied from the subject matter, scope and purpose of the Act. All are antithetical to an implied constraint upon the power. Why, when it is a criminal offence wilfully to deceive the Corporation to obtain a rental subsidy, would the power of cancellation be conditioned upon a determination of weekly income? 50But on the construction for which Mr Navazi contends, the power to cancel would not in those circumstances be available, although the Corporation could at the same time prosecute the recipient under s 69 and even obtain a conviction. Mr Navazi's construction is not supported by the legislative subject matter, scope or purpose. 51Thirdly, it is common ground that an investigation under s 58 is a precondition to the exercise of the s 57(1) power. It may readily be implied from the language of the subsection that the decision maker is required to consider what has emerged from that investigation before exercising the power. That more general mandatory relevant consideration tells against the existence of the narrower mandatory relevant consideration for which Mr Navazi contends.

(c) No error in relying on ownership of property 52Finally, the primary judge said that it was an irrelevant consideration to have had regard to the fact that Mr Navazi owned other property in exercising the power under s 57(1). I respectfully disagree. 53First, the power in s 57(1) is conferred in unfettered terms, save only that it be exercised after conducting an investigation under s 58. It is an instance of that class of broadly worded and undefined discretionary powers described by Dixon CJ in Klein v Domus Pty Ltd (1963) 109 CLR 467 at 473, to which Hayne, Kiefel and Bell JJ referred in Minister for Immigration and Citizenship v Li [2013] HCA 18; 87 ALJR 618 at [67]: "We have invariably said that wherever the legislature has given a discretion of that kind you must look at the scope and purpose of the provision and at what is its real object. If it appears that the dominating, actuating reason for the decision is outside the scope of the purpose of the enactment, that vitiates the supposed exercise of the discretion. But within that very general statement of the purpose of the enactment, the real object of the legislature in such cases is to leave scope for the judicial or other officer who is investigating the facts and considering the general purpose of the enactment to give effect to his view of the justice of the case." It is for the Corporation to determine administratively, in the exercise of a broadly worded power, how it will allocate its resources. 54Secondly, the Ministerial policy relied on by Mr Navazi cannot create an irrelevant consideration regard to which vitiates the exercise of power. Only if the Act expressly or impliedly provides that an exercise of power is invalid if regard is had to a particular subject matter can this ground be made out. Neither regulations nor guidelines can be used to construe an Act: Wallaby Grip Limited v QBE Insurance (Australia) Ltd [2010] HCA 9; 240 CLR 444 at [21]. 55Thirdly, the policy does not bear the meaning given to it by the primary judge. The policy is not confined to ownership of residential property which is a viable alternative to public housing. The policy speaks of an expectation "to live in that property or to sell the equity in the property to meet their housing needs" (emphasis added). The natural meaning of the policy is that owners of residential property do not qualify for rental rebates. If the property is not suitable for the owner's own residential needs, the policy is that the value of the property is to be used to meet the person's housing needs. 56The primary judge placed reliance on the definite article in the policy statement "If a tenant or their partner is leasing the property to another person they are not eligible for a rent subsidy"; his Honour considered that that was to be confined to a reference to the property earlier mentioned "that could provide a viable alternative to public housing". But a "viable alternative to public housing" may be provided in various ways - directly, by residing in the other property (if it is suitable) or indirectly, by selling it or letting it (if it is not). A natural reading of the policy is a statement that one viable alternative to public housing is selling or letting unsuitable residential property and using the proceeds for accommodation. 57For those reasons, all of the grounds relied upon by the primary judge are to be rejected.

Delegation and Agency 58Delegation is distinct from agency: Plaintiff M61/2010E v Commonwealth of Australia [2010] HCA 41; 243 CLR 319 at [68]. The act of a delegate is the delegate's own act; that of an agent is treated in law as the act of the principal. It has long been accepted that a statutory regime may permit an agent's actions to be attributed to the principal. Commonly, in its application to power conferred in terms up on Ministers and senior officers, this is called the "Carltona principle", after Carltona Ltd v Commissioners of Works [1943] 2 All ER 560. 59Sections 6 and 15 of the Act maintain the distinction between delegation and agency. Section 6(3) of the Act expressly invokes agency: "Any act, matter or thing done in the name of, or on behalf of, the Corporation by the Director-General, or with the authority of the Director-General, is taken to have been done by the Corporation." In contrast, s 15(1) confers a power of delegation upon the Corporation. 60The presence of those separate provisions within the Act confirms that there can be no implication in this legislative regime from the existence of a power to delegate that the Carltona principle, based on agency, has been displaced. A power to delegate does not necessarily exclude the existence of an implied power to act through the agency of others: Re Patterson; Ex parte Taylor [2001] HCA 51; 207 CLR 391 at [176], although it is a factor which makes the operation of the Carltona principle less likely: Minister Administering the Crown Lands Act v New South Wales Aboriginal Land Council [2009] NSWCA 352; 117 LGERA 56 at [62]. But s 6(3) removes the need to consider whether agency has been impliedly displaced in this statute. 61Mr Navazi's notice of contention challenged the lawfulness of both the inquiry under s 58 and also the cancellation decision under s 57(1). But those two exercises of administrative power are quite different things, and should be addressed separately.

(a) Ms Morgan was authorised to conduct the s 58 investigation 62There must be thousands of s 58 investigations (one for each person who applies for and is granted a rental rebate under ss 55 and 56), none of which involves any coercive power nor takes away an existing right of any tenant. Additionally, there will be a further s 58 investigation whenever it is proposed to vary or cancel a rental rebate under s 57. A review of the evidence demonstrates the magnitude of the problem of tenant fraud and confirms that the investigations were authorised and engaged the deeming provision in s 6(3). 63The evidence disclosed that in March 2007 there were "currently over 150 active tenant fraud investigations underway". A briefing note to the Director-General stated: "Given the volume of work ... it has now become necessary to allocate additional resources to the investigation and resolution of these tenant fraud matters." 64It was proposed to create two new temporary positions "to manage the ongoing workload of tenant fraud investigations". In April 2008 the Director-General approved the appointment of Ms Morgan to a temporary position as "Project Director" to "get the amnesty completed and the new fraud policies and procedures implemented". (The Housing Amendment (Tenant Fraud) Act 2008 (NSW) had conferred additional powers to detect, investigate and prosecute fraud by tenants; it was this Act which inserted the provisions which Ms Morgan's Final Investigation Report proposed be invoked against Mr Navazi, namely, ss 69B and 72B. The "amnesty" referred to in relation to Ms Morgan's appointment was that inserted as item 18 of Sch 3 of the Housing Act, whereby a person could avoid prosecution under those provisions by notifying the Corporation of the conduct constituting the offence before 1 October 2008.) 65A briefing note dated February 2009 stated that "Over 1,300 matters are currently being investigated by the Client Service Teams and investigators in the [Tenant Fraud Unit] and the [Legal Services Branch]" and "An average of 30 allegations per week of tenant and applicant fraud are still coming to the [Tenant Fraud Unit] from the HCC Fraud & Corruption hot line." The same briefing note recommended that the Director-General extend Ms Morgan's position until 30 June 2009. The Director-General approved the recommendation on 27 February 2009. 66There can be no doubt that Ms Morgan's function to investigate pursuant to s 58, including investigations which might enliven the power to vary or cancel rental rebates, was expressly authorised by the Director-General. Even in the absence of the briefing papers referred to above, given the nature and scale of the issue, a court would readily find, aided if necessary by the presumption of regularity, that Ms Morgan was authorised to undertake the investigations she was undertaking. Accordingly, Ms Morgan's investigation and Final Investigation Report answers the description of something done on behalf of the Corporation with the authority of the Director-General. Section 6(3) deems it to have been done by the Corporation.

(b) Ms Roil was empowered to cancel Mr Navazi's rental rebate retrospectively 67Mr Navazi's written and oral submissions attached importance to a written delegation to certain officers to "Approve cancellation of rebate subsidy" but which carried a qualification, "Up to 6 months". Mr Navazi took the point that there was no evidence to establish that the General Manager Central Sydney Division was in the administrative reporting line above one of the (relatively junior) positions authorised by the delegation. Were it necessary to do so, I would infer that Ms Roil was, and that therefore she had delegated authority to exercise power under s 57(1). The more substantive submission was that even if that were so, on the ordinary reading of the delegation, Ms Roil (and every officer excluding the Director-General) lacked delegated authority under s 57(2) to backdate a cancellation by more than six months. 68Nevertheless, taking Mr Navazi's argument at its highest, the absence of a delegation says nothing as to whether Ms Roil was acting on behalf of the Corporation with the authority of the Director-General, which is sufficient to engage s 6(3). In O'Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 at 20 and 30, Mason J referred to "administrative necessity" and Wilson J referred to "the necessity in modern government for the shared performance of duties short of delegation". There is no sound reason to find that the Act required all cancellation decisions involving a backdating for a period in excess of six months to be undertaken by the Director-General; the material referred to above suggests that such decisions may be very numerous. The process by which Ms Morgan's report was reviewed and approved by two officers within the department before being presented to Ms Roil supports the inference that the exercise of power was reserved for the more senior officers and that Ms Roil, the General Manager for the Central Sydney Division, was authorised by the Director-General to exercise the power. 69Mr Navazi submitted that there was no evidence of practical necessity, but the evidence referred to above refutes that submission. He also submitted that there was no legal foundation for the operation of the Carltona principle; to the contrary, the principle is recognised by the presence of s 6(3), and in the administration of functions involving relatively small amounts of money amongst thousands of tenants in public housing, there is every reason for the principle to operate.

Orders 70I propose that the appeal be allowed, the orders made on 12 June 2013 be set aside, and in lieu thereof, Mr Navazi's amended summons be dismissed. Mr Navazi advanced at first instance each of the submissions wrongly accepted by the primary judge, and sought to maintain them on appeal. He should pay the Corporation's costs at first instance and on appeal.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 December 2013