THE SUBMISSIONS ON GROUNDS (h) - (j)
56 Strictly speaking, it is not necessary that I consider these grounds of the amended notice of appeal, but the applicant did rely on them at the initial hearing of the appeal on 21 June 2006. At the resumed hearing on 11 October 2006, following the grant of leave to the Tribunal to intervene and make written and oral submissions on the grounds raised by the applicant at paras (g), (h), (i) and (j) in its amended notice of appeal, both the applicant and the Tribunal made substantive submissions in respect of these grounds. While these submissions and my conclusions in respect of them can have no bearing on the outcome of the appeal, they do impact on the issue of costs, in particular the order that should be made in respect of the costs of the Tribunal's motion and, in consequence of the grant of leave in terms of the order set out in [25] above, costs in relation to the resumed hearing, including the preparation of submissions in respect thereof. I therefore propose to address them and indicate my conclusions thereon.
57 On 1 June 2005 Ms Margaret McDonald, Director of the Tribunal, wrote to Mr Venkatramani of the Australian Prudential Regulation Authority ('APRA') in the following terms:
'Harry Wallace & Harry Wallace Personal Superannuation Fund
You would be aware of our recent section 64 referral to APRA of a possible contravention of Regulation 4.15 of the SIS Regs, which referral arose out of the Tribunal's inquiry into Mr Wallace's complaint. Since that referral, I have had several telephone conversations with Suzette Wilson of your office in relation to issues involved in the complaint. I suggested to Ms Wilson that it would be mutually beneficial if she could visit the Tribunal in Melbourne to examine the file and to engage in detailed discussion with us in relation to the complaint issues.
The complaint is an unusual one and presents issues that the Tribunal has not encountered before. We feel that Ms Wilson's experience and expertise could assist us in identifying all possible issues and gathering all relevant information before the matter is listed for a review determination. In addition, of course, Ms Wilson's examination of the file and discussions with us would assist APRA in determining whether there has been a breach of a law or whether serious prudential issues are evident.
If you are willing to have Ms Wilson attend our office, we would appreciate if the visit could be arranged soon, as we are close to listing the matter for review.
I would be very happy to discuss this further if you wish ….'
58 The referral under s 64 of the Complaints Act referred to was that made by Mr Graham McDonald, the Chairperson of the Tribunal, on 10 May 2005.
59 At the initial hearing of the appeal the applicant submitted that it is apparent from the face of Ms McDonald's letter of 1 June 2005 that the Tribunal engaged in an ex parte communication with the regulator on topics at the very heart of the matter as it concerned the Tribunal. Neither the fact that this had occurred nor the substance of what passed between Ms Wilson and the Tribunal was disclosed to the applicant.
60 The applicant submitted that there are a number of difficulties which, therefore, arise. First, the fact that the Tribunal was consorting with APRA and taking advice from it about the complaint gives rise to a reasonable apprehension of bias. Second, the communications were obviously relevant and probative to the issues about which the applicant was making submissions so that their non-disclosure evidences a breach of the rules of procedural fairness. Third, the Complaints Act does not contemplate that APRA should form part of the statutory decision-making processes of the Tribunal, therefore the statutory function under s 37 miscarried.
61 As to the first point, the applicant submitted that a fair-minded lay observer seeing the letter might reasonably apprehend that the Tribunal might not bring an impartial mind to bear on the issues before it. The situation it was said is not analytically different from a Supreme Court judge trying a criminal case seeking advice from the police. For that reason a case of apprehended bias is made out: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344 [6].
62 As to the second point, it was submitted that it is obvious that the communication was relevant to the inquiry being undertaken by the Tribunal. A decision-maker is obliged to disclose adverse information that is credible, relevant and significant to the decision to be made: Muin v Refugee Review Tribunal (2002) 190 ALR 601 at 631 [123], per McHugh J and 1005 [227], per Kirby J; Kioa v West (1985) 159 CLR 550 at 629; Minister for Local Government v South Sydney City Council (2002) 55 NSWLR 381 at 438 [260], per Mason P. Accordingly, a breach of the rules of procedural fairness occurred. By failing to afford the applicant procedural fairness, the Tribunal committed an excess of jurisdiction and hence an error of law.
63 As to the third point, the applicant submitted that there is nothing in s 37 of the Complaints Act which conferred any power on the Tribunal to consult with APRA as to the disposition of the complaint. In seeking to consult with APRA the Tribunal committed an error of law since it acted in excess of any authority conferred on it by s 37.
64 As to the apprehension of bias ground, on the resumed hearing of the appeal, the Tribunal, in its submissions, referred to what was said in the joint judgment in Ebner at 345, [8]:
'The apprehension of bias principle … [in its] application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.'
The need for this two step process was affirmed in Smits v Roach (2006) 228 ALR 262 at [53], [56].
65 The Tribunal submitted that the correct approach is that set out by this Court (Kenny J) in VFAB v Minister for Immigration & Multicultural & Indigenous Affairs (2003) 131 FCR 102, at [25]:
'The test for apprehended bias in relation to curial proceedings is well-settled. The test is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question to be decided: see Re Refugee Review Tribunal; Ex parte H (2001) 75 ALJR 982, at [27] per Gleeson CJ, Gaudron and Gummow JJ. As their Honours observed, this rule may be expressed differently when applied to administrative proceedings, in order to take account of the nature of the decision-maker and its proceedings. "[R]egard must be had to the statutory provisions, if any, applicable to the proceedings in question, the nature of the inquiries to be made and the particular subject matter with which the decision is concerned": see Ex parte H, at [5]. Further, their Honours posited, at [28], that:
Perhaps it would be better, in the case of administrative proceedings held in private, to formulate the test for apprehended bias by reference to a hypothetical fair-minded lay person who is properly informed as to the nature of the proceedings, the matters in issue and the conduct which is said to give rise to an apprehension of bias. Whether or not that be the appropriate formulation, there is, in our view, no reason to depart from the objective test of possibility, as distinct from probability, as to what will be done or what might have been done. To do otherwise, would be to risk confusion of apprehended bias with actual bias by requiring substantially the same proof.'
66 The Tribunal noted that her Honour also emphasised (at [77]) that the nature of the Tribunal's processes was important to ascertaining the presence or absence of an apprehension of bias:
'In order to determine whether, in this case, there was disqualifying bias, the court must carefully consider all the circumstances in order to assure itself that the test is by a fair-minded lay observer. Accordingly, the Court must consider the nature of the Tribunal, the issues before it, and the conduct of all relevant participants in the proceeding.'
67 Applying those authorities to the present situation, the Tribunal submitted the following considerations are important:
(a) The Tribunal is an administrative tribunal which sits in private.
(b) Although it has the power to conduct oral hearings, it generally does not, but rather decides matters 'on the papers'.
(c) It decided this matter on the papers.
68 However, the Tribunal submitted that the following considerations are critical:
(a) As the High Court pointed out in Breckler, the Tribunal exercises a jurisdiction to which entities choose to subscribe, in return for, inter alia, preferential taxation treatment.
(b) It has a place within a complex regulatory scheme over superannuation entities, and although its review function is independent, it is, for example, supplied with staff by the Australian Securities and Investment Commission ('ASIC'): see subs 62(2) of the Complaints Act.
(c) Its secrecy provisions have an express exemption for disclosure of information where the Tribunal is requested to do so by ASIC or APRA: subs 63(3) of the Complaints Act.
(d) Sections 64 and 64A of the Complaints Act impose statutory obligations of notification to ASIC and APRA on the Tribunal.
69 Applying the two steps in Ebner, the Tribunal in its submissions asked and answered the following two rhetorical questions:
(a) What is said by the applicant to be the conduct which gives rise to the apprehension? It is said to be the writing of a letter by the Director of the Tribunal, Ms McDonald, to APRA inviting assistance from APRA. This letter follows a s 64 referral.
(b) What is the'logical connection between the matter and the feared deviation from the course of deciding the case on its merits'? No such connection has been articulated by the applicant. It is difficult to see what the connection could be, given that the author of this letter is a staff member of the Tribunal, and not one of the two members appointed pursuant to s 7 and constituted pursuant to s 9 to conduct this review. More so because the person who made the referral was the Tribunal Chairperson himself, and not one of the two constituted members.
70 The Tribunal submitted that the two step process set out in Ebner cannot be satisfied in the present case. Moreover, taking into account the factors set out above, the Tribunal submitted no fair-minded lay observer, informed of the nature of the Tribunal's jurisdiction, the way it conducts its hearings and the presence of its obligations under ss 64 and 64A of the Complaints Act, combined with other features of its legislative scheme, would apprehend that contact by Tribunal administrative staff would mean that the two Tribunal members constituted to deal with this review would not bring impartial minds to the review. Further, no such fair-minded lay observer, properly informed, would apprehend that a referral made by the Tribunal Chairperson pursuant to a statutory duty would mean that the two (other) Tribunal members constituted to hear this review would not bring impartial minds to their task.
71 As to the denial of procedural fairness ground, the Tribunal submitted that, once the subject matter of the s 64 referral is understood, it cannot sensibly be argued that whether APRA's investigations would or would not ultimately determine that the applicant had breached the standards set out in reg 4.15 was in any remote way 'relevant and probative to the issues the applicant was making submissions about'. There were no findings about a breach of such standards made by the Tribunal, nor were those standards put in issue. Accordingly, there was no occasion at all for disclosure of the referral to the applicant.
72 In any event, so the submission went, there is no substantive unfairness because the applicant was aware of the referral to APRA. By an email dated 3 June 2005 (that is, two days after the letter of 1 June 2005 [57]), Mr Ian Yard-Smith, counsel for the applicant, stated that he had 'just been discussing this matter with Suzette Wilson from APRA'.
73 The Tribunal submitted that there is no suggestion that the s 64 referral to APRA entered in any way into the deliberations of the two Tribunal members and that the applicant was plainly aware of the s 64 referral and had spoken to Ms Wilson from APRA about it; in those circumstances, the applicant could not be said to have been denied any opportunity to put whatever it wanted to put to the Tribunal about the s 64 referral if it had seen anything about the alleged breach of reg 4.15 as relevant to the issues before the Tribunal.
74 As to the ground that the Tribunal's statutory function under s 37 miscarried, the Tribunal submitted that a referral made under s 64 in relation to a particular complaint cannot deprive the Tribunal of authority to exercise its powers under s 37. Section 64 is an integral part of the legislative scheme established by the Complaints Act. There is no textual or contextual reason why the statutory obligation is inconsistent with the exercise by the Tribunal of the powers given to it under s 37. If any such inconsistency had been an intended part of the scheme, s 64 would have contained a provision to the effect that if a referral were made to APRA or ASIC under the section the review by the Tribunal would be stayed pending the outcome of any investigations by APRA or ASIC.
75 In reply, the applicant submitted that the suppressed premise in the Tribunal's position is that, following a complaint, APRA and the Tribunal are lawfully authorised to have a discussion with each other. The statute, and in particular s 63, does not authorise this. Even if it did, however, it is tolerably clear that the discussion would be about the matters notified so that the regulator could take whatever steps it wished to take in relation to those notified breaches. It does not, however, appear that this was what the discussion was about. The letter, referred to at [57], suggests that the discussion was, in part, about how the Tribunal should deal with the respondent's complaint and not with how APRA should deal with the applicant. The letter says, inter alia:
'We feel that Ms Wilson's experience and expertise could assist us in identifying all possible issues and gathering all relevant information before the matter is listed for a review determination.'
76 It is difficult, the applicant submitted, to see the link between that topic and the referral under s 64.
77 The applicant submitted that the answers to the two rhetorical questions at [69] which the Tribunal asked itself were: The conduct which gives rise to the apprehension of bias is the invitation to the regulator to be involved in the process of adjudication. The connection between that conduct and the feared deviation from deciding the case on the merits is that the regulator had already been informed by the Tribunal that there were possible breaches by the appellant. The Tribunal was not, therefore, asking for the assistance of a neutral third party - it was asking for the assistance of the body to which it had just reported the applicant for breach and whose function it was to consider what steps under law should be taken against the applicant. By contrast, APRA had no such relationship with the respondent.
78 Finally, the applicant submitted that the argument advanced by the Tribunal that there was no denial of procedural fairness was outside the grant of leave that was afforded to the Tribunal to make submissions about the matters in R v Australian Broadcasting Tribunal; Ex parte Hardiman (1980) 144 CLR 13. The Tribunal, by making this submission, enters the arena properly occupied by the applicant and the respondent; it is difficult to see how the submission is one which is limited to the Tribunal's powers and procedures. The applicant submitted that by making this submission, the Tribunal has taken the respondent's side in the case. The 'ambulatory' nature of the Tribunal which has intervened means that the apprehension of bias which arises cannot be resolved by reconstituting the Tribunal in a different way.
79 Apart from that difficulty, according to the applicant, the submission is without merit. The Tribunal argues that there is no substantive unfairness because the applicant was made aware of the notification to APRA, in an email dated 3 June 2005. However, the applicant continued, the apprehended bias case was not based on the notification to APRA. It was based on the discussions which may have taken place between APRA and the Tribunal afterthat notification.
REASONING ON GROUNDS (h) - (j)
80 There is no doubt that the real complaint of the applicant in relation to ground (h) - the Tribunal acting in a way (by consulting with APRA) which gave rise to an apprehension of bias - was not the s 64 referral made by the Chairperson of the Tribunal on 10 May 2005, but the letter of invitation to Mr Venkatramani of APRA, at [57], sent by Ms McDonald, a Director of the Tribunal, on 1 June 2005 and the content of that letter. It invited discussion not on possible contravention by the applicant of reg 4.15 of the SIS Regs but in assisting the Tribunal in identifying all possible issues and gathering all relevant information before the matter (the respondent's complaint) was listed for a review determination.
81 For that reason, I do not agree with the Tribunal's submission that the Tribunal's statutory functions and procedures, in particular the requirement in s 64 to refer matters to APRA, informs or circumscribes the practical content of the requirement to avoid apprehension of bias. Nor do I think the rule of necessity operates in the present case to prevail over and displace the application of the rules of natural justice to ensure that the Tribunal is not disabled from performing its statutory functions, cf., Laws v Australian Broadcasting Tribunal (1990) 93 ALR 435 at 448, 449. The letter at [57] and the subject matter of the invitation it contained had nothing to do with the statutory functions of the Tribunal under s 64.
82 However, there are a number of difficulties in the way of the applicant succeeding on this ground and the next - an alleged failure to accord the applicant procedural fairness. First, the letter at [57] was not sent by the members who constituted the Tribunal for the purpose of hearing the respondent's complaint. Indeed, it was not even sent by the Chairperson who made the s 64 referral. It was sent by a staff member of the Tribunal holding the position of Director.
83 Second, there is no evidence that any meeting or discussions took place in response to the letter and even if a meeting or discussions took place, there is no evidence as to who participated at that meeting or in those discussions.
84 Third, if a meeting or discussions took place in response to the letter, there is no evidence of the subject matter of the meeting or discussions.
85 Senior Counsel for the applicant, correctly in my view, acknowledged these difficulties but nevertheless submitted that an internal staff memorandum to the Director of the Tribunal dated 16 February 2005:
'… suggests that within the Tribunal as an organic whole … it is the practice of members of staff to provide effectively [sic] recommendations. Now, I can't prove that those recommendations end up in the hands of the Tribunal members or whether they form an integer in the Tribunal member's reasoning process. I can't prove that but what I'm inviting your Honour to do is to draw the inference that they do end up as an integer in the Tribunal member's reasoning process.'
86 Senior Counsel for the applicant referred to a difficulty with this argument which can be put to one side for the moment because there is a more fundamental difficulty which was not acknowledged. It proceeds from the premise that the staff member has been tainted from his contact with an employee of APRA, a premise which may fall within the spectrum of reasonable hypothesis, but which has no provenance to support its status as fact.
87 In my view, the ground that the Tribunal erred in law by acting in a way which gave rise to an apprehension of bias by consulting with APRA cannot succeed.
88 The same difficulties beset ground (i) - the Tribunal erred in law by failing to accord the applicant procedural fairness by not disclosing to the applicant matters which passed between it and APRA. The applicant's counsel acknowledged as much. An essential step in this argument is that there was adverse material which passed between the Tribunal and APRA which was taken into account by the Tribunal but which was not communicated to the applicant. But at the outset, there is no evidence that there was any adverse material, leaving to one side the absence of any evidence that, if there was, it was taken into account by the Tribunal.
89 This led Senior Counsel for the applicant to the submission:
'Which means that I can put it really no higher than what you can draw from [the Tribunal's questionnaire to the applicant dated 7 July 2005] … and the ultimate negative decision. So there is that difficulty and another difficulty is that … it is the staff rather than the members. If I get over those two points then the way the argument works is that your Honour should infer the existence of the adverse material, and it seems clear it wasn't put to Mr Yard-Smith.'
90 In my view, the leap is too great to draw any such inference.
91 Ground (j) - that by consulting with APRA when s 37 of the Complaints Act did not authorise it to do so the statutory function under s 37 miscarried - was not pressed by the applicant at the resumed hearing on 11 October 2006. In any event, even accepting the letter at [57], there is no evidence that any organ of the Tribunal, let alone the members constituting the Tribunal that heard the respondent's complaint, 'consulted' with APRA. The ground cannot be sustained.