Plaintiffs v Defendant [2010] VSC 552 | Case summary

Supreme Court of Victoria|2010-12-03|Before: KYROU J

ADMINISTRATIVE LAW - Judicial review - Whether available to quash a decision made by a domestic body to refuse membership - Whether the Datafin principle applies in Australia - A company limited by guarantee administered an overseas student tuition assurance scheme approved by the Commonwealth Minister for Education under the Education Services for Overseas Students Act 2000 (Cth) and the Education Services for Overseas Students Regulations 2001 (Cth) - Membership of the company was a precondition to membership of the scheme - Whether company exercising governmental powers.

ADMINISTRATIVE LAW - Reasons for decision - No general duty at common law requiring a decision-maker to provide reasons for decision - No special circumstances warranting the imposition of a duty in this case.

1 This is an application by CECA Sydney Institute Pty Ltd (' Institute')[1] under O 56 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) to set aside a decision dated 6 August 2010 made by the Australian Council for Private Education and Training ('ACPET') to refuse the Institute's application for membership of the ACPET ('Decision').

2 The grounds for the application are that the ACPET breached the hearing rule of natural justice ('hearing rule') and that it wrongfully refused to provide reasons for the Decision.

3 The Institute's application for membership of the ACPET was in furtherance of its desire to offer tuition to overseas students in the Certificate IV in Front Line Management course and in the Diploma in Management course (collectively, 'Courses').

4 On 23 June 2010, the Institute was granted registration as a registered training organisation ('RTO') by the Vocational Education and Training Accreditation Board of New South Wales ('VETAB'). As an RTO, the Institute is authorised to offer the Courses to Australian students. However, the Institute's focus is on overseas students. In order to be able to offer the Courses to overseas students, who usually prepay a large proportion of their fees, the Institute must also be registered on the Commonwealth Register of Institutions and Courses for Overseas Students ('CRICOS').[2]

5 The Education Services for Overseas Students Act 2000 (Cth) ('Act') sets out a number of preconditions for registration on the CRICOS. One of the preconditions is membership of an overseas student tuition assurance scheme which is approved by the Commonwealth Minister for Education ('Minister') under reg 3.05 of the Education Services for Overseas Students Regulations 2001 (Cth) ('Regulations').

6 The ACPET operates an approved overseas student tuition assurance scheme ('ACPET's scheme').[3] Only members of the ACPET are eligible to be members of the ACPET's scheme. The Institute's application for membership of the ACPET included an application for membership of the ACPET's scheme. As explained below,[4] the Decision necessarily involved a rejection of the Institute's application to be a member of the ACPET's scheme. Unless the Institute satisfies one of the other preconditions for being registered on the CRICOS, the Decision prevents the Institute from offering the Courses to overseas students.

7 For the reasons that follow, I have concluded that the ACPET breached the hearing rule and that the Court should declare that the Decision is void.

Legislative and regulatory framework for tuition of overseas students

8 The Act regulates providers of education and training services to overseas students for the purpose of protecting the interests of students as consumers of those services and Australia's international reputation as a supplier of those services.[5] The consumer protection measures that are set out in the Act include tuition assurance schemes, which aim to ensure that students who are unable to complete prepaid courses with a particular provider for any reason - such as the provider's insolvency - can complete suitable alternative courses with other providers at no additional cost.

9 Under s 8 of the Act, it is an offence for a person to provide, or to offer to provide, a course to an overseas student unless he or she is registered to provide that course in the relevant State.

10 State authorities such as the VETAB are responsible for determining whether an RTO meets the requirements of the National Code of Practice for Registration Authorities and Providers of Education and Training to Overseas Students 2007 ('National Code') for registration as a provider of education services to overseas students. If a State authority considers that an RTO satisfies these requirements, it may recommend to the Secretary of the Department of Education, Employment and Workplace Relations ('DEEWR') that the RTO be registered on the CRICOS.

11 Section 9(1) of the Act provides that a State authority 'may recommend that an approved provider for that State be registered under this Act to provide a specified course for that State to overseas students.'

12 Section 9(2) provides that the Secretary must register the RTO if a number of requirements are met. The requirements include those contained in paras (ba) and (d), which are relevantly set out below:

(ba) either:

(i) the provider is a member of a tuition assurance scheme that is established in accordance with the regulations made for the purposes of paragraph 22(1)(a) and that covers the course; or

(ii) the provider is exempt from the requirements of section 22 under regulations made for the purposes of subsection 22(3) ...

...

(d) the Secretary has no reason to believe that the provider:

(i) is not complying, or will not comply, with this Act or the national code; or

(ii) does not have the principal purpose of providing education; or

(iii) does not have the clearly demonstrated capacity to provide education of a satisfactory standard ...

13 Section 9(3) provides that if any of the requirements in s 9(2) is not satisfied, the Secretary of the DEEWR must not register an RTO on the CRICOS.

Registered providers must belong to a tuition assurance scheme

(1) A registered provider for a course must at all times:

(a) be a member of a tuition assurance scheme that:

(i) is established in accordance with the regulations; and

(ii) covers the course; and

(b) comply with the rules of the scheme.

Note: The Minister may take action under Division 1 of Part 6 against a registered provider that has breached this section.

(2) A registered provider for a course who is not a member of such a tuition assurance scheme breaches subsection (1) even if the reason for not being a member is that:

(a) the provider's application for membership was rejected; or

(b) the provider's membership of a scheme has been cancelled.

(3) The regulations may exempt providers for courses from the requirements of this section.

15 Section 83, which is contained within div 1 of pt 6 of the Act, sets out the actions that the Minister may take against an RTO which he or she believes, on reasonable grounds, has breached the Act.[6] Those actions include suspension or cancellation of the RTO's registration.[7] Before the Minister takes any action, he or she must comply with s 93 of the Act, which imposes on him or her natural justice obligations.

16 Where it is alleged that an RTO has breached s 22(1)(b) of the Act, the Minister must decide for himself or herself whether the RTO has breached a provision of a tuition assurance scheme and cannot simply act on a finding made by the body that operates the scheme that a breach has occurred. This means that a finding by the ACPET that an RTO has breached the ACPET's scheme does not, of itself, effect a suspension or cancellation of the RTO's registration on the CRICOS.

17 Although the Act does not provide that the registration of an RTO on the CRICOS is automatically cancelled if the RTO's membership of a tuition assurance scheme is cancelled, s 22(2)(b) of the Act has the effect that the RTO must cease providing the relevant courses to overseas students unless it is exempted from the obligation to be a member of such a scheme.[8]

18 Section 45 of the Act establishes the ESSOS Assurance Fund ('Fund'). The purpose of the Fund is to protect the interests of overseas students by ensuring that they are provided with suitable alternative courses, or that they have their fees refunded, if the courses for which they have paid cannot be provided by an RTO.[9]

19 Section 24(1) of the Act provides that a registered provider must pay an annual Fund contribution for each calendar year. Section 24(2) exempts certain classes of provider from the requirement to pay annual Fund contributions. In accordance with s 24(2)(c), one of the classes of exempt provider is 'any ... provider specified in the regulations.'

20 Section 176(1)(a) of the Act provides that a decision refusing registration on the CRICOS may be reviewed by the Administrative Appeals Tribunal ('AAT').

Establishment of a tuition assurance scheme

For paragraph 22(1)(a) of the Act, a tuition assurance scheme is established in accordance with these Regulations only if the Minister has approved the scheme and the approval has not been revoked under regulation 3.10.

22 The requirements for approval of a tuition assurance scheme are set out in reg 3.08 of the Regulations. In essence, a scheme must contain arrangements that ensure that, if an overseas student pays fees to an RTO for a course and that RTO is not able to provide the course to completion, the student will be placed with another RTO which will provide a suitable alternative course at no additional cost.

23 Regulation 3.09(7) provides that an operator of a tuition assurance scheme that rejects an RTO's application to become a member of the scheme or that cancels an RTO's membership must, within 14 days after the rejection or cancellation, inform the Secretary of the DEEWR and the Fund Manager of the RTO's name and address and of the reasons for the rejection or cancellation.

24 Regulation 3.11 sets out the circumstances in which an RTO is exempt from the requirement in s 22 of the Act to be a member of a tuition assurance scheme. Regulation 3.11 provides:

Exemption from requirement to be a member of a tuition assurance scheme and to comply with rules of the scheme

For subsection 22(3) of the Act, the following providers are exempt from the requirements of section 22 of the Act:

(a) a provider who, under subsection 24(2) of the Act, is exempt from the requirement to pay annual Fund contributions;

(b) a provider who has a bank guarantee:

(i) that, in the circumstances mentioned in section 27 of the Act, indemnifies the provider for amounts that the provider may be required to pay under section 28 or 29 of the Act; and

(ii) that is approved by the Minister;

(c) a provider who is a body corporate and who has an indemnity agreement, in writing:

(i) with another body corporate that is a parent organisation of the provider and is incorporated in Australia; and

(ii) that provides either of the following:

(A) in the circumstances mentioned in section 27 of the Act, the parent organisation indemnifies the provider for amounts that the provider may be required to pay under section 28 or 29 of the Act;

(B) if the provider cannot provide a course for which a student has paid the provider, the parent organisation will arrange, and pay for, provision of a suitable alternative course to the student; and

(iii) that is approved by the Minister;

(d) a provider who the Minister believes on reasonable grounds should not be expected to become a member of a tuition assurance scheme established in accordance with these Regulations.

Examples of circumstances in which a provider should not be expected to become a member of a tuition assurance scheme

Tuition assurance schemes do not cover the courses provided by the provider.
Each tuition assurance scheme that covers the kind of courses provided by the provider has rejected the provider's application for membership.

25 Regulation 3.18 provides that, for the purposes of s 24(2)(c) of the Act, an RTO which charges tuition fees after the student has completed a course is exempt from the requirement to pay annual contributions to the Fund.

26 Regulation 8.01, when read together with reg 3.13, provides that a decision by the Minister not to approve a bank guarantee can be reviewed by the AAT.

27 The Minister has approved five overseas student tuition assurance schemes, including the ACPET's scheme. It was common ground that the ACPET's scheme was the only tuition assurance scheme which covered the provision of the Courses in New South Wales.

28 The ACPET is a national industry association for independent providers of post-compulsory education and training for Australian and overseas students. It is a public company limited by guarantee under the Corporations Act 2001 (Cth). The affairs of the ACPET are managed by a board of directors ('Board') in accordance with its constitution ('Constitution'), rules, by-laws and code of ethics. The ACPET receives approximately 96 per cent of its revenue from membership subscriptions and fees for the provision of services to its members. It does not receive any recurrent funding from any government.

29 The Constitution provides for four classes of membership: 'Members', 'Affiliate Members', 'Life Members' and 'Corporate Members'. Clause 2 of the Constitution states that the ACPET's objects are 'to promote and enhance the provision of private education and training in Australia, in particular through ... [r]epresentation and advocacy; ... [p]rovision of services to Members; and ... [p]romotion of private education and training.'

30 Clause 4 of the Constitution relevantly contains the following provisions in relation to membership of the ACPET:

4. Members

4.1 The following persons are eligible to apply for membership of the [ACPET] and may be accepted for membership by the Board upon payment of the relevant Subscriptions and fees payable under this Constitution:

(a) Member

A person, body, company, entity or organization:

(i) that complies with national, State or Territory requirements ... for devising and/or delivering registered and accredited education and training and/or educational assessment services to the public; but

(ii) which is not a publicly owned or operated institution deemed by the Board to be ineligible,

may apply to become a Member for each State or Territory in which it has business operations.

...

...

4.6 As soon as practicable after the receipt of an application, the Company Secretary shall refer that application to the Board. Upon an application being referred to the Board, the Board shall, in its sole discretion and in the strictest confidence, determine whether to approve or to reject the application. In doing so the Board shall consider, but shall not be limited to considering, the criteria set out in clause 4.1 and whether the applicant has engaged in or is likely to have engaged in, conduct which is referred to in clause 6.2 or which is contradictory to the [ACPET]'s objects.

31 Clause 6 of the Constitution deals with termination of membership. Clause 6.2 relevantly provides:

Subject to this Constitution, the Board may by resolution and in its sole discretion terminate the membership of a Member ... if the Board is of the reasonable opinion that the Member ...

(a) has refused or neglected to comply with this Constitution or any Rules or By-laws or a reasonable direction of the Board;

(b) has engaged in conduct which amounts to impropriety affecting professional character and which is indicative of a failure either to understand or practise the values required by the [ACPET];

(c) has engaged in unsatisfactory professional conduct where the conduct is such that it involves a substantial or consistent failure to reach reasonable standards of competence and diligence;

(d) has engaged in conduct that is or could reasonably be considered as likely to be prejudicial to the interests of the [ACPET];

...

32 On 6 October 2009, the ACPET adopted by-laws ('By-laws'). Section B of the By-laws deals with membership and contains paras 2.2, 3.3 and 4.1. Paragraph 2.2(a) provides that '[a]n applicant may be admitted as a Member when the Board is satisfied that the applicant has satisfied its membership requirements.' Paragraph 3.3 provides that '[t]he members of the Board upon receipt of a recommendation for membership from the Chief Executive Officer shall approve or not approve the application for membership.' Paragraph 4.1 sets out ineligibility criteria in respect of membership. It provides:

Ineligibility for membership

The criteria which the Council may consider as rendering a member or potential member as ineligible for membership are as follows:

(a) Acting contrary to the spirit of the ... By-Laws or Constitution or Code of Ethics;

(b) Passing into receivership, being placed in liquidation or being declared insolvent;

(c) Being convicted of a criminal offence which reflects adversely on the industry; ...

(d) Failing to act in the interests of the private education and training sector in Australia[;] or

(e) Acting in any manner likely to bring the private education and training sector in Australia into disrepute.

33 Neither the By-laws nor the Constitution require an applicant for membership to pay an application fee.

34 The ACPET's code of conduct contains the following relevant provisions:

Members are required to act with integrity in all dealings with students (past, present and future), employers and other organisations.

...

Scope

... Adherence to the general principles of the Code ... will be considered a formal condition of all applications for membership of the [ACPET] under the By-laws.

Members will adopt and maintain practices that ensure high professional standards in general management and the marketing and delivery of education and training services and which safeguard the interests and welfare of students, clients and the public.

Members will insist on the maintenance of generally accepted ethical standards in the educational and social relations between staff and students/trainees/clients.

Members will market their education and training services with integrity and accuracy, avoiding vague and ambiguous descriptions of courses or the qualification or capacities required by students to undertake them. They will avoid false or misleading comparisons with other education and training providers. They will avoid action that may damage the reputation of Australian education and training both domestically and internationally.

...

Obligations to other [ACPET] Members

...

Members will not engage in misleading or deceptive conduct in the provision of services.

35 Section E of the By-laws sets out various assurance schemes that have been established by the ACPET. The scheme that relates to overseas students, which I have defined as the 'ACPET's scheme', is set out in paragraphs 9.1 to 9.23 of the By-laws. The ACPET's scheme has been approved by the Minister and, accordingly, is an approved scheme for the purposes of ss 9 and 22 of the Act and reg 3.05 of the Regulations.

36 The key features of the ACPET's scheme are as follows:

(a) Membership of the scheme is restricted to members of the ACPET (para 9.5).

(b) The Board assesses applications for membership of the scheme (para 9.4).

(c) Membership of the scheme must be renewed annually. The Board assesses applications for renewal of membership (paras 9.4 and 9.21).

(d) A member of the scheme must pay such membership fees as are prescribed by the Board from time to time (para 9.4).

(e) A member of the scheme may be expelled or suspended from the scheme, but only in accordance with the provisions of the ACPET's code of ethics (para 9.5).

(f) Each member of the scheme is bound by the scheme in relation to the courses of that member which are accepted by the scheme (para 9.3).

(g) On joining the scheme and when renewing membership each year, a member with a current CRICOS registration must provide to the ACPET's membership renewal officer a copy of the member's CRICOS Individual Provider Report (para 9.21).

(h) A sub-committee of the Board implements and oversees the operation of the scheme (para 9.8).

(i) Subject to certain exceptions, when a member of the scheme is notified that a displaced student has accepted an offer of placement at the member's institution, the member must accept the student (para 9.19).

37 Although an RTO must be a member of the ACPET in order to become a member of the ACPET's scheme, membership of the ACPET does not guarantee membership of the ACPET's scheme. In determining whether to accept a member's application for membership of the ACPET's scheme, the ACPET undertakes a risk analysis of the applicant. The risk analysis considers, among other things, the financial viability of the applicant and the reputations of its principals.

38 The ACPET's pro forma application for membership of the ACPET incorporates an optional application for membership of the ACPET's scheme.

39 The Institute was established in January 2009 as a proprietary company under the Corporations Act. Its sole shareholder and director was Rahul Singh.

40 For the purposes of its application for approval by the VETAB as an RTO, the Institute expended approximately $600,000 in leasing premises, in obtaining planning permits, in fitting out the leased premises, in hiring consultants and in subscribing to academic journals.

41 At the time that the Institute was established, Mr Singh was also a shareholder and a director of Career Education Consultancy Australia Pty Ltd, which provides migration services. Mr Singh's wife, Preeti Singh, was a director of Career Education Consultancy Australia Pty Ltd until January 2010.

The Institute's application for membership of ACPET and ACPET's scheme

42 On 19 April 2010, following the VETAB's approval of the Institute as an RTO, the Institute applied to the ACPET to become a member of the ACPET and a member of the ACPET's scheme. The Institute's application had been preceded by a similar application made by CECA Institute Pty Ltd, whose application to the Victorian Registration and Qualifications Authority for registration as an RTO was still pending.

43 On 22 April 2010, the chief executive officer of the ACPET, Andrew Smith, wrote a letter to Ms Singh in respect of the applications that had been lodged by the Institute and CECA Institute Pty Ltd for membership of both the ACPET and the ACPET's scheme. The letter relevantly stated:

Thank you for your recent application for ACPET Membership and Tuition Assurance Cover.

In reviewing your application, we have been made aware of allegations regarding the recruitment of students from one institution to another by an organisation using the name CECA. The nature of these allegations is such that, if proven, the activities would breach the ACPET Code of Ethics.

The allegations include the recruitment of onshore students who have not yet completed their principal course of study, seeking the issuance of ECOE's[10] in the absence of a formal letter of release and the provision of fraudulent work experience certificates.

These allegations have been made anonymously and it is for this reason that I am writing to seek your response to the following matters before further consideration of your application.

The relationship between CECA Institute Pty Ltd, CECA Sydney Institute Pty Ltd and Career Education Consultancy Australia Pty Ltd;
The relationship between CECA Institute Pty Ltd and Mr Rahul Singh who is listed as [the] Director of CECA Sydney Institute Pty Ltd;
The full range of activities undertaken by CECA [Institute] Pty Ltd, CECA Sydney Institute Pty Ltd and Career Education Consultancy Australia Pty Ltd in addition to the provision of training services; and
A response to the allegations outlined above

Please provide your response to the above concerns in writing to me at ...

A full review of your application will be carried out following receipt of your response, with all documentation being passed to the ACPET National Board for final decision.

You will be advised of the outcome of your application following the Board's review.

44 Without seeking legal advice, Ms Singh responded by letter dated 27 April 2010. In that letter, Ms Singh explained that, while she and Mr Singh were husband and wife, there was no business association between Career Education Consultancy Australia Pty Ltd on the one hand and the Institute and CECA Institute Pty Ltd on the other hand. She also described the distinct activities of the three companies. In relation to the anonymous allegations, Ms Singh stated:

Career Education Consultancy Australia [Pty Ltd] has always worked ethically. Rahul Singh is a migration agent and knows [the] national code well. As mentioned above Career Education Consultancy Australia [Pty Ltd] has offices overseas and [in] Australia and recruits students from both the offices for countries like Australia, Canada and New Zealand. Career Education Consultancy Australia Pty Ltd never helped anyone in making any fraudulent documents ever and always recruited eligible students for all the countries.

I trust that the above information addresses all of your concerns. However, please advise if there is any further information required. If necessary I would be pleased to meet with you at your convenience.

46 The ACPET did not respond to the letter. Instead, on 16 June 2010, Mr Smith wrote a letter to Mr Singh to advise him that the Institute's application for membership of the ACPET had been rejected.[11] The letter stated:

I am writing with regard to the application for membership of the [ACPET], which was received from the [Institute].

Please be advised that, in line with Clause 4.6 of the ACPET Constitution, the ACPET National Board has determined that [the Institute] will not be admitted to membership of ACPET.

47 On 29 June 2010, Ms Singh met with Mr Smith. Mr Singh was also present at the meeting. Ms Singh requested Mr Smith to explain the reasons for the rejection of the Institute's application. Mr Smith said that the decision was made by the ACPET Board, which had sole discretion to make the decision. Mr Smith indicated that he was concerned about the relationship between the Institute and Career Education Consultancy Australia Pty Ltd.

48 As at 30 June 2010, Mr Singh had ceased to be a director and shareholder of the Institute and Ms Singh had assumed effective control of the Institute.

49 On 15 July 2010, the Institute made a fresh application for membership of both the ACPET and the ACPET's scheme. The application was submitted under cover of a letter from Ms Singh dated 15 July 2010, which emphasised that she was then the sole director and shareholder of the Institute.

50 By letter dated 6 August 2010, Mr Smith informed Ms Singh of the Decision. The letter was in the following terms:

I am writing with regard [to] your letter of 15 July 2010 enclosing applications for membership of the [ACPET] for CECA Institute Pty Ltd and [the Institute].

Please be advised that, in line with Clause 4.6 of the ACPET Constitution, the ACPET National Board has determined that CECA Institute Pty Ltd and [the Institute] will not be admitted to membership of ACPET.

51 On 8 September 2010, the Institute's lawyers wrote a letter to Mr Smith in which they complained that the ACPET had not provided reasons for the Decision.

52 On 29 September 2010, the ACPET's lawyers advised the Institute's lawyers that the ACPET would not be providing any reasons for the Decision.

Evidence about the availability of other options for registration on the CRICOS

53 It will be recalled from [24] above that reg 3.11 of the Regulations sets out a number of avenues for obtaining registration on the CRICOS by an RTO which was not a member of an overseas student tuition assurance scheme. Some of the affidavit evidence before me dealt with whether, in the light of the Decision, the Institute could, in practical terms, secure registration on the CRICOS through one of the alternative avenues.

54 The Institute relied on three affidavits of Ms Singh. Ms Singh was not cross-examined. Although there were some objections to parts of Ms Singh's affidavits, they were not material.

55 In relation to the option of obtaining payment of tuition fees in arrears,[12] Ms Singh's evidence was that this option was not feasible because overseas students posed a flight risk and because it would impose cash-flow burdens on the Institute. It also appears that the DEEWR has advised Ms Singh that this option was not suitable for the Institute.

56 In relation to the option of obtaining a bank guarantee, Ms Singh's evidence was that the form of bank guarantee that the Minister had approved was not commercially acceptable to the banks that the Institute had approached, and that an impasse had been reached because the Minister was not prepared to alter the approved form.

57 In relation to the option of a corporate indemnity, Ms Singh's evidence was that the Institute was financially not in a position to procure an indemnity that was acceptable to the Minister.[13]

58 In relation to the option of obtaining an exemption from the Minister, Ms Singh's evidence was that, although the Institute was in the process of applying for an exemption, she was pessimistic about the Institute's prospects of success. This was because the ACPET had not provided to the Institute any reasons for the rejection of its application for membership of the ACPET.

59 The Institute commenced this proceeding on 5 October 2010. In its further amended originating motion, the Institute seeks an order that the Decision be set aside, an order that the ACPET reconsider the Institute's application for membership of the ACPET and the ACPET's scheme, and an order that the ACPET provide reasons for the Decision. As an alternative to an order setting aside the Decision, the Institute seeks a declaration that the Decision is void.

60 The further amended originating motion defines 'the Decision' as a composite decision to refuse the Institute's application for membership of the ACPET and its application for membership of the ACPET's scheme. The question of whether the Decision was a composite decision is discussed below.

61 In the further amended originating motion, the grounds upon which the orders are sought are as follows:

[The Institute was] denied procedural fairness with respect to the Decision in that:

The [Institute was] not properly made aware of allegations made against [it];
The [Institute] did not have a proper opportunity to respond to allegations made against [it];
The [ACPET] gave weight to anonymous and/or unproven and/or untested allegations made against the [Institute] or persons said to be associated with the [Institute];
The [ACPET] gave weight to the alleged activities of a person or entity not associated with the [Institute];
The [ACPET] has refused to give reasons for its decision.

62 Relying on the same grounds that are set out above, the amended originating motion also alleged that the ACPET denied the Institute procedural fairness by breaching the Constitution and the By-laws.

63 The issues that require resolution are as follows:

(b) If the Decision is not amenable to judicial review, was the ACPET nevertheless obliged to comply with the hearing rule in making the Decision?

Does the Decision incorporate a refusal of membership of the ACPET's scheme?

64 Before I discuss the issues set out at [63] above, I need to consider a threshold question of whether the Decision involved a rejection of membership of the ACPET only or whether it also incorporated a decision to refuse membership of the ACPET's scheme.

65 Mr O'Bryan, who appeared for the ACPET, submitted that the only decision that the ACPET made was to refuse the Institute's application for membership of the ACPET. He said that a decision had not been made to refuse the Institute's application for membership of the ACPET's scheme, as the Institute was not eligible to become a member of the ACPET's scheme unless it was already a member of the ACPET.

66 Mr O'Bryan relied on the fact that the ACPET's composite application form[14] states that the approval process for applications for membership of the ACPET's scheme will not commence until after membership of the ACPET is finalised. At the time that Ms Singh completed the application form, she declared that she had read and understood the 'ACPET Information Kit' prior to completing the form. Mr O'Bryan relied on the following statement in the ACPET Information Kit:

Application for membership of an ACPET Tuition Assurance Scheme (TAS) is offered exclusively to approved and financial members of ACPET. Applicants must be an approved ACPET member prior to making an application for a Tuition Assurance Scheme (TAS), or can make an application for TAS membership simultaneously with an application for ACPET membership. The TAS application will not be considered however if the application for ACPET membership is not approved or is rejected.

67 While Mr O'Bryan's submission has some merit, the Court needs to consider the substance of the matter. The Institute used a single application form to apply for membership of both the ACPET and the ACPET's scheme for the express purpose of becoming a member of the ACPET's scheme and thereby qualifying for registration on the CRICOS. By refusing the Institute's application for membership of the ACPET, the Decision prevented the Institute from becoming a member of the ACPET's scheme. This was recognised by Nikola Oklobdzija, the ACPET's national operations manager, who stated in his affidavit that '[i]t is necessarily the case that a refusal of an application to be admitted as a Member of ACPET deems the applicant ineligible for consideration for membership of [the ACPET's scheme].'

68 In substance, the Decision had the effect of rejecting both applications for membership. As the ACPET has not admitted the Institute to membership of the ACPET's scheme and is not treating the Institute's application for membership of the ACPET's scheme as still pending, it must have rejected that application.

69 In these circumstances, if a decision by the ACPET to refuse the Institute membership of the ACPET's scheme would be amenable to judicial review, the fact that the only formal decision that the ACPET communicated to the Institute was a refusal of membership of the ACPET would not prevent the Court from reviewing the Decision. This must be so because a rejection of an application for membership of the ACPET necessarily involves a rejection of a concurrent application for membership of the ACPET's scheme. If that were not so, the ACPET could seek to frustrate the Court's jurisdiction by confining its formal decision to a rejection of an application for membership of the ACPET.

70 Regulation 3.11(d) contemplates that if an RTO applies for membership of an overseas student tuition assurance scheme, the operator of the scheme will make a decision on whether to accept or reject the application. Without such a decision, an obvious basis for obtaining a ministerial exemption pursuant to reg 3.11(d), namely, a rejection of an application to become a member of an overseas student tuition assurance scheme, would be precluded. It may well be that, for the purposes of reg 3.11(d), the absence of a decision to grant an application for membership of an overseas student tuition assurance scheme could be treated as a rejection of the application.

71 In support of his submission that the Decision is not amenable to judicial review, Mr O'Bryan relied on the existence of alternative avenues for the Institute to qualify for registration on the CRICOS, including an application under reg 3.11(d) for a ministerial exemption. This submission seemed to countenance that the Decision could be treated as involving a rejection of the Institute's application for membership of the ACPET's scheme for some purposes and not for others. In my opinion, such a bifurcation of the status of the Decision is inappropriate.

72 For the above reasons, I reject Mr O'Bryan's submission that the only decision that the ACPET has made is to reject the Institute's application for membership of the ACPET. I will proceed on the basis that the Decision was a composite decision comprising a refusal of the Institute's application for membership of the ACPET and a refusal of the Institute's application for membership of the ACPET's scheme.

73 There was no dispute that, if the Decision was amenable to judicial review, the Court could set it aside if it was made in breach of the hearing rule.[15] The critical question is whether the Decision is amenable to judicial review. The resolution of this question depends on whether the Decision is subject to an order in the nature of certiorari.

74 In Craig v South Australia,[16] the High Court stated that the writ of certiorari 'went only to an inferior court or to certain tribunals exercising governmental powers.'[17] The test to determine whether a body is a tribunal exercising governmental powers is whether it has 'legal authority to determine questions affecting the common law or statutory rights or obligations of persons or individuals.'[18]

75 While there is some debate about the precise boundaries of the expression 'legal authority' in this context, it is generally agreed that the exercise of a statutory or prerogative power is amenable to judicial review, whereas the exercise of a power that is derived solely from contract is not.[19]

76 In the present case, the ACPET is a private body and the power of its Board to admit an applicant as a member of the ACPET or as a member of the ACPET's scheme is derived from its Constitution and By-laws.[20]

77 Notwithstanding the private nature of the ACPET, however, the Decision may be amenable to judicial review if the principle adopted by the English Court of Appeal in R v Panel on Take-overs and Mergers; Ex parte Datafin plc[21] ('Datafin principle') applies in Australia and the Decision falls within that principle. The Datafin principle is that a decision of a private body which was not made in the exercise of a statutory power may be amenable to judicial review if the decision is, in a practical sense, made in the performance of a 'public duty' or in the exercise of a power which has a 'public element'.[22]

78 The Datafin principle was discussed in the following terms by Lloyd LJ:

I do not agree that the source of the power is the sole test whether a body is subject to judicial review ... Of course the source of the power will often, perhaps usually, be decisive. If the source of power is a statute, or subordinate legislation under a statute, then clearly the body in question will be subject to judicial review. If, at the other end of the scale, the source of power is contractual, as in the case of private arbitration, then clearly the arbitrator is not subject to judicial review ...

But in between these extremes there is an area in which it is helpful to look not just at the source of the power but at the nature of the power. If the body in question is exercising public law functions, or if the exercise of its functions have public law consequences, then that may ... be sufficient to bring the body within the reach of judicial review. It may be said that to refer to 'public law' in this context is to beg the question. But I do not think it does. The essential distinction, which runs through all the cases to which we referred, is between a domestic or private tribunal on the one hand and a body of persons who are under some public duty on the other.[23]

79 Datafin has been referred to with apparent approval in a number of Australian cases, including Norths Ltd v McCaughan Dyson Capel Cure Ltd;[24] Typing Centre of New South Wales v Toose;[25] Victoria v Master Builders' Association of Victoria;[26] MBA Land Holdings Pty Ltd v Gungahlin Development Authority;[27] Whitehead v Griffith University;[28] McClelland v Burning Palms Surf Life Saving Club;[29] Minister for Local Government v South Sydney City Council;[30] Hall v University of New South Wales;[31] Masu Financial Management Pty Ltd v Financial Industry Complaints Service Ltd [No 2];[32] D'Souza v Royal Australian and New Zealand College of Psychiatrists;[33] and Grocon Constructors Pty Ltd v Planit Cocciardi Joint Venture [No 2].[34]

80 Datafin was also cited passively in Adamson v New South Wales Rugby League Ltd.[35]

81 In South Sydney,[36] the New South Wales Court of Appeal dealt with a challenge to a report of the Local Government Boundaries Commission, which was established under the Local Government Act 1993 (NSW). In the course of his judgment, Spigelman CJ said:

In my opinion, the common law basis for the duty to accord procedural fairness is reflected in the cases which extend the duty to the exercise of prerogative powers. (See, eg, Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 at 409; State of Victoria v Master Builders' Association of Victoria [1995] VicRp 47; [1995] 2 VR 121 at 133-139, 147-149, 154-159.) It is also the basis for the extension of the principles of judicial review to private bodies which make decisions of a public character. (See, eg, Forbes v New South Wales Trotting Club Ltd [1979] HCA 27; (1979) 143 CLR 242; R v Panel on Take-overs and Mergers; Ex parte Datafin PLC [1987] QB 815.)[37]

82 In Masu, Shaw J considered Toose, McClelland and South Sydney and concluded that 'the preponderance of Australian authority indicates that [Datafin] is applicable in this country'.[38] His Honour held that a decision by a panel appointed by Financial Industry Complaints Service Ltd ('FICS') pursuant to its complaints resolution scheme was amenable to judicial review because, although FICS was a private body, it exercised powers of a public nature.[39] In doing so, his Honour relied on the following 'indicia':

the federal government was responsible for appointing a substantial proportion of the members of the board of FICS;
the federal government was involved in the appointment of two-thirds of any panel appointed by FICS to hear a complaint;
the scheme was constituted in compliance with the policy statement issued by the federal government;
that scheme was established under the umbrella of a regulation made by the Australian executive government under statute;
failure to comply with a decision of FICS could result in the federal government cancelling a licence and exposing the licensee to prosecution if it continued to conduct a business.[40]

83 D'Souza involved, among other things, an application for judicial review to quash a decision made by a review panel of the Royal Australian and New Zealand College of Psychiatrists ('College'). The review panel had upheld a decision that Dr D'Souza had failed to pass a clinical examination, in circumstances where the successful completion of that examination would have qualified him for election as a fellow of the College. The College was a public company limited by guarantee. The decision of the review panel was made under the constitution of the College. Dr D'Souza was an associate of the College and was thus in a contractual relationship with the College. Election as a fellow of the College carried with it as of right recognition under the Health Insurance Act 1973 (Cth) and de facto recognition as a qualified psychiatrist under the Mental Health Act 1986 (Vic).

84 Ashley J dismissed Dr D'Souza's application for judicial review on the basis that, notwithstanding that the review panel's decision had public consequences, it was made in the exercise of a power under a private contract and was therefore not subject to judicial review.[41] His Honour referred to Datafin and, in the course of concluding that the College did not exercise public functions and powers in determining to elect a candidate to fellowship, made the following observations:

The plaintiff primarily seeks, vis-à-vis the decision of the panel, that the same be brought up and quashed. He does not bring a claim for relief founded on the contract between he and the college. The question, it seems to me, is whether Datafin, as it should be understood and as it has been understood in Australia, provides a test of general application in deciding whether the decision of a particular body is subject to judicial review; or rather whether it provides a test for deciding cases in the middle ground between two extremes: that is, at one extreme entities whose exercise of powers is grounded in statute; and at the other extreme entities whose exercise of powers is grounded in contract.

Datafin itself was a case in the middle ground. Both Lloyd and Donaldson LJJ appear to have set the extreme positions and then supplied a test apposite to the middle ground. ...

In Australia, as I understand it, Datafin has yet to receive endorsement by the High Court. But in some cases it has been relied upon and in other cases cited (whether directly or indirectly) by intermediate courts of appeal and superior courts at first instance.

So far as I can see, Datafin has not been applied, in Australia, to a case where the pertinent relationship between the parties was contractual. In Whitehead, its application in such a situation was denied. In Neat, Kirby J might be said to have implicitly accepted the role of Datafin in the middle ground; likewise Eames J in Master Builders. In Hudson Securities, on the other hand, although Datafin was not expressly cited, Santow J apparently approved a text passage to the effect that the question of availability of judicial review remedies in the case of a breach of the listing or business rules of the Australian Stock Exchange involved an area of developing law, the answer depending 'on whether there is a public element present in the exercise of contractual powers'.

Where does this discussion lead? In my opinion the answer is that on the present state of Australian authority certiorari is not available in respect of a decision of a body whose powers derive only from private contract.[42]

85 In Grocon, Vickery J referred to Master Builders and Masu and stated that, in Master Builders, 'the Full Court approved and applied [Datafin]'.[43]

86 Although a large number of Australian cases have referred to Datafin, a judicial review remedy was granted only in Master Builders, Gungahlin and Masu. Of these cases, only in Masu was such a remedy granted in respect of a decision that was made by a private body in the exercise of a power that was neither statutory nor executive.

87 The decision-maker in Master Builders, the Building Industry Taskforce, was held to be part of the executive government.[44] The decision-maker in Gungahlin, the Gungahlin Development Authority, was a statutory authority.

88 The decision-maker in Masu, FICS, was a private body - a company incorporated under the Corporations Act - administering a complaints resolution scheme that was established, not by the government, but by the financial services industry. FICS did not exercise any statutory or executive powers. Shaw J held that a determination of FICS was amenable to judicial review because it exercised powers of a 'public nature' within the Datafin principle.

89 The High Court has not had occasion to decide whether the Datafin principle is part of the law of Australia. However, Datafin was considered by Kirby J in Neat Domestic Trading Pty Ltd v AWB Ltd.[45]

90 In Neat, the High Court had to consider whether a decision by a private body, AWB (International) Ltd ('AWBI'), was made 'under an enactment' for the purposes of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('ADJRA'). The Wheat Marketing Act 1989 (Cth) ('WMA') prohibited the export of wheat from Australia without the consent of the Wheat Marketing Authority ('Authority'), which was established by the WMA. Under the WMA, the Authority was prohibited from giving its consent without the approval of AWBI. At issue was AWBI's decision to refuse to approve applications for the Authority's consent to export wheat made by Neat Domestic Trading Pty Ltd ('NDT'), which was a competitor of AWBI. The effect of the decision was that the Authority was obliged to reject the applications. NDT sought a review of AWBI's decision under the ADJRA on the basis that it was an administrative decision made under an enactment, namely, the WMA.

91 McHugh, Hayne and Callinan JJ, in a joint judgment, held that NDT's application for judicial review was incompetent because AWBI's decision was not a decision made under an enactment for the purposes of the ADJRA.[46] Their Honours raised, but declined to answer, the general question of 'whether public law remedies may be granted against private bodies.'[47] Gleeson CJ said that, while he preferred the view that AWBI's decision was a decision made under an enactment, the primary judge, Mathews J, had correctly dismissed NDT's application on the 'administrative law merits'.[48] Kirby J, in dissent, held that AWBI's decision was a decision made under an enactment[49] and that Mathews J had erred in dismissing NDT's application.[50]

92 Although Gleeson CJ did not expressly refer to Datafin, his Honour made observations which are consistent with the Datafin principle. Those observations were as follows:

Mathews J was right to reject [NDT's] case on what might be termed the administrative law merits. That makes it strictly unnecessary to decide whether the withholding of an approval by AWBI was a decision of an administrative character made under an enactment. I should indicate, however, that my preference is for the view (accepted by Mathews J) that it was. While AWBI is not a statutory authority, it represents and pursues the interests of a large class of primary producers. It holds what amounts, in practical effect, to a virtual or at least potential statutory monopoly in the bulk export of wheat; a monopoly which is seen as being not only in the interests of wheat growers generally, but also in the national interest. To describe it as representing purely private interests is inaccurate. It exercises an effective veto over decisions of the statutory authority established to manage the export monopoly in wheat; or, in legal terms, it has power to withhold approval which is a condition precedent to a decision in favour of an applicant for consent. Its conduct in the exercise of that power is taken outside the purview of the Trade Practices Act.

...

The argument that what is involved is not a decision of an administrative character under an enactment takes as its focus the private interests represented, and pursued, by AWBI, as distinct from the public character of the Wheat Export Authority. That appears to me to involve an incomplete view of the interests represented by AWBI, and also to leave out of account the character of what it does, which is, in substance, the exercise of a statutory power to deprive the Wheat Export Authority of the capacity to consent to the bulk export of wheat in a given case.[51]

93 In his dissenting judgment, Kirby J referred to Datafin in the context of the question of 'whether, in the performance of a function provided to it by federal legislation, a private corporation is accountable according to the norms and values of public law'.[52] After discussing the views of Lloyd LJ in Datafin about the importance of the nature of the power being exercised by a decision-making body in determining whether or not it was subject to judicial review,[53] his Honour said:

Whether or not the criterion of the exercise of 'public power' is sufficiently precise to be accepted as the basis for review of decisions under the common law, the observations about the nature of the power identified in cases such as Forbes and Datafin are helpful in analysing whether particular decisions are of an 'administrative character'.[54]

94 Datafin was considered by the New South Wales Court of Appeal in the recent case of Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd.[55] Like Vickery J in Grocon, the Court was there dealing with an application for judicial review of a determination made by an adjudicator appointed under security of payment legislation applicable to the building and construction industry.[56] Consistently with Grocon, the Court (Spigelman CJ, Basten JA and McDougall J) held that, in making a determination under the legislation, an adjudicator exercised statutory power and that the determination was therefore amenable to judicial review.[57]

95 Although it was not necessary for the purposes of the decision in Chase, Basten JA considered whether Datafin was applicable in Australia. His Honour referred to Grocon, Master Builders, Masu, Neat, South Sydney, McClelland and Adamson,[58] and made the following observations:

(a) Contrary to Vickery J's conclusion in Grocon, his Honour '[did] not read the Full Court decision [in Master Builders] as applying, or approving, Datafin.'[59] The 'real issue' in Master Builders was 'whether the courts had powers in the nature of judicial review with respect to the exercise of prerogative powers of the government'.[60] His Honour accepted that Eames J could be said to have 'applied' Datafin, but stated that, if that were so, 'it was clearly unnecessary ... [as] the Taskforce [was] an emanation of government, exercising governmental power.'[61]

(b) Although Shaw J stated in Masu that the preponderance of Australian authority indicates that Datafin is applicable in Australia, 'the decision did not depend upon any extension of general law principles to non-government bodies or any close comparison of FICS with the Take-over Panel in Datafin.'[62] To the extent that Shaw J relied upon South Sydney and Master Builders, Basten JA 'would not accept that either decision demonstrates the applicability of Datafin in Australia.'[63]

(c) South Sydney 'provided no occasion for the consideration of whether Datafin applied in Australia, nor did [Spigelman CJ] express a view in that regard.'[64]

(d) The reference to Datafin in McClelland was made 'in passing'. According to his Honour, this was because Campbell J

was dealing with the application of procedural fairness to the exercise of a power of expulsion by a private club, a matter which ... was the subject of well established authority permitting remedies for breach, not by issue of a prerogative writ, but by way of a declaration of invalidity.[65]

(e) The result of his Honour's analysis suggested 'that there is an absence of authority in Australia addressing the question of whether or not Datafin applies.'[66] The authorities relied upon in Grocon did _'_not support the proposition that [Datafin] is applicable and, to the extent that it extends public law remedies to private bodies which do not exercise functions conferred by government, whether under statute or otherwise, it is not necessary to rule on its applicability in the present case.'[67] It sufficed to say that 'there is no authority in the High Court which supports [Datafin's] application and statements of general principle in that Court might be thought to adopt a more limited scope for the operation of public law remedies.'[68]

96 Spigelman CJ agreed with Basten JA.[69] This was surprising in view of his Honour's observations in South Sydney.[70] McDougall J did not consider this issue.

97 To my knowledge, prior to Basten JA's obiter observations in Chase, no Australian decision had cast doubt on the applicability of Datafin in Australia. On the contrary, numerous cases have discussed Datafin in the process of deciding whether to grant a judicial review remedy.

98 It is true, however, that most of the cases that have referred to Datafin with express or implied approval did so in obiter. It is also true that the Datafin principle was the basis for the granting of a judicial review remedy in only one Australian case, namely, Masu.

99 In my opinion, the Datafin principle represents a natural development in the evolution of the principles of judicial review. Indeed, it is a necessary development to ensure that the principles can adapt to modern government practices. The last 20 years or so have seen a growing tendency by the legislature and the executive to out-source important governmental functions to private organisations. As this trend is unlikely to abate, the Datafin principle is essential in enabling superior courts to continue to perform their vital role of protecting citizens from abuses in the exercise of powers which are governmental in nature.[71]

100 In my opinion, in the absence of High Court authority to the contrary, Master Builders is sufficient authority for the applicability of the Datafin principle in Victoria.

Does the Decision fall within the Datafin principle_?_

101 It will be recalled that the ACPET's scheme has been approved by the Minister in accordance with reg 3.05 of the Regulations and that an RTO which is a member of the ACPET's scheme must comply with the scheme.[72] Under s 22(1) of the Act, an RTO which fails to comply with the ACPET's scheme may be the subject of action by the Minister pursuant to div 1 of pt 6 of the Act.[73] Such action can include suspension or cancellation of the RTO's registration on the CRICOS.[74] The effect of the above legislative provisions is that the ACPET's scheme has statutory force.

102 A factor that militates against a finding that the ACPET exercises power of a public nature within the meaning of the Datafin principle is that it is the Minister, rather than the ACPET, that exercises power under the Act in relation to the ACPET's scheme. In particular, it is the Minister, rather than the ACPET, that decides upon the action that is to be taken under the Act in relation to an RTO's breach of the ACPET's scheme.

103 The ACPET was responsible for the preparation of the ACPET's scheme and for submitting the ACPET's scheme to the Minister for approval. The ACPET continues to operate the ACPET's scheme on an ongoing basis. This includes assessing applications for membership of the ACPET's scheme, coordinating the placement of displaced overseas students in accordance with the scheme, monitoring RTOs' compliance with the scheme and making decisions on whether to expel RTOs from the scheme in accordance with its code of ethics.

104 There is an important difference between the ACPET's scheme and the complaints resolution scheme that was considered in Masu, namely, that neither the Commonwealth nor the State appoint any of the members of the ACPET's Board. The ACPET's Board comprises 11 members, 10 of whom are elected member representatives and one of whom is nominated by the Board. There are no government or regulatory authority representatives or appointees on the Board. Further, the Board does not receive or execute any delegated power or authority from any government department or statutory authority.[75]

105 On the other hand, there are important similarities between the ACPET's scheme and the complaints resolution scheme that was considered in Masu. The ACPET's scheme was constituted in accordance with Commonwealth government policy statements and was established under the umbrella of the Act and the Regulations. An RTO's failure to comply with the ACPET's scheme can result in the Minister cancelling its registration under the CRICOS. These features are shared with other overseas student tuition assurance schemes. The primary objects of the schemes are not private, in the sense of securing benefits for their members, but public. Directly, the schemes protect the interests of overseas students. Indirectly, they enhance Australia's international reputation.

106 A breach of the ACPET's scheme by an RTO which is a member of the scheme can have serious legal and financial consequences for the RTO. Where such a breach occurs, the ACPET can expel the RTO from the ACPET's scheme, which would prevent the RTO from continuing to provide the relevant course,[76] and the Minister can take action to suspend or cancel the RTO's registration on the CRICOS. These consequences can be described as 'public consequences'.

107 It is not necessary, however, for me to decide whether the above features of the ACPET's scheme engage the Datafin principle because they are applicable only to an RTO that is a member of the scheme and that is bound by its provisions. The features do not apply to an RTO which is not a member of the ACPET's scheme and whose only interface with the scheme is that it seeks to become a member.

108 Unless and until it becomes a member of the ACPET's scheme, an RTO which applies to become a member has no obligations under the scheme and cannot engage in any conduct which can result in action by the Minister under the scheme.

109 In both Datafin and Masu, the plaintiffs were bound by the relevant industry schemes, were the subjects of adverse determinations under the schemes and sought to impugn those determinations. By way of contrast, the Institute is not a member of the ACPET's scheme, is not bound by the scheme and is not seeking to impugn a determination made under the scheme that adversely affects it as a member of the scheme. The Institute is simply seeking to impugn a refusal of membership of the ACPET's scheme.

110 While an adverse decision by the ACPET under the ACPET's scheme in relation to an RTO which is a member of the scheme may have 'public consequences' within the meaning of the Datafin principle, the Decision does not. The Decision does not preclude the Institute from being registered on the CRICOS because membership of the ACPET's scheme is only one of five options that are available to secure registration. The other options are charging of student fees in arrears, a parent company indemnity, a bank guarantee and a ministerial exemption.[77] Even if it is accepted that only the last of these options is available to the Institute, it has not been established that the Institute cannot obtain a ministerial exemption because no application for such an exemption has been submitted.

111 In my opinion, the legal and financial consequences of a rejection of an application for membership of the ACPET's scheme are no different from the legal and financial consequences of a rejection of an application for a bank guarantee. If granted, either application will suffice for qualification for registration on the CRICOS. If rejected, either application will prevent qualification for registration on the CRICOS unless another option is available. It has not been suggested that a decision by a bank to reject an application for a bank guarantee is amenable to judicial review.

112 The fact that the ACPET's scheme has been approved by the Minister is not sufficient to differentiate it from a bank guarantee, as the Minister has approved a form of bank guarantee to be used for the purposes of the Act. Under reg 3.11(b)(ii) of the Regulations, a bank guarantee will not suffice to secure registration on the CRICOS unless the Minister approves the bank guarantee.[78]

113 For the above reasons, the Decision does not fall within the Datafin principle and is not amenable to judicial review.

Was the ACPET obliged to comply with the hearing rule of natural justice?

114 My conclusion that the Decision is not amenable to judicial review is not determinative of the question of whether, in making the Decision, the ACPET was obliged to comply with the hearing rule.[79] This is because the duty to comply with the rules of natural justice is not co-extensive with the availability of certiorari for a breach of those rules.[80]

115 Accordingly, it is necessary for me to consider whether, in making the Decision, the ACPET was obliged to comply with the hearing rule. I will do so on the basis that membership of the ACPET's scheme would confer on the Institute the opportunity to acquire the statutory right to be registered on the CRICOS and subject the Institute to the statutory obligation to comply with the ACPET's scheme in order to continue to offer the Courses to overseas students.

116 The requirements of the hearing rule vary depending on the circumstances of the case. Generally speaking, where the rule applies to a body in respect of the making of a decision that will prejudice a person, the body must give notice to the person of any adverse matters that it proposes to take into account and afford him or her a reasonable opportunity to respond to those matters before making the decision. The notice must set out sufficient information about the adverse matters to enable the person to know the substance of the case that he or she has to meet. In many cases, it will be sufficient for the person to be afforded the opportunity to respond in the form of a written statement without being afforded the opportunity to attend a face-to-face meeting or an 'oral hearing'.

Principles for determining the application of the hearing rule to private bodies

117 Many private bodies, including professional associations, trade unions and sporting clubs, have been found to be subject to the rules of natural justice in making adverse decisions in relation to their members. Those decisions have included expulsion or suspension from membership and the removal of benefits that were already enjoyed by the member.

118 The courts have been less enthusiastic about imposing on private bodies an obligation to comply with the hearing rule in relation to decisions to refuse to grant a privilege or benefit which the applicant does not already enjoy. An example is an initial application to become a member of a private body.

119 In FAI Insurances Ltd v Winneke,[81] the High Court was concerned with an application for renewal of approval to operate a workers' compensation insurance business. In separate judgments, Mason, Aickin and Wilson JJ stated that, while the hearing rule will usually be attracted by an application for renewal of an approval, it will not usually be attracted by an initial application for approval.[82]

120 Attorney-General (NSW) v Quin[83] involved an application by a former stipendiary magistrate for a new position as a magistrate. In the context of the hearing rule, Dawson J said that '[i]t is one thing to expect to continue in a position; it is another to expect to be appointed to it.'[84] His Honour went on to hold that, in the absence of special circumstances, the position is as described by Lord Denning MR in Breen v Amalgamated Engineering Union:[85]

If a man seeks a privilege to which he has no particular claim - such as an appointment to some post or other - then he can be turned away without a word. He need not be heard. No explanation need be given ...[86]

121 In Simjase Pty Ltd v City of Melbourne,[87] McGarvie J held that, where a person's only interest is an interest in obtaining a privilege which he or she does not currently enjoy, rather than an interest in retaining or renewing an existing privilege, the body to which an application for the grant of the privilege is made does not have a legal obligation to comply with any of the rules of natural justice.[88]

122 The cases discussed above dealt with initial applications for statutory licences, privileges or positions. The principles underpinning the decisions apply with even greater force to initial applications for non-statutory licences, privileges or positions.

123 Although, generally speaking, the courts are reluctant to recognise that a person who makes an initial application for a licence or other privilege is entitled to a 'hearing', there is no absolute principle that precludes the hearing rule from applying to a private body when it considers an application for membership. The absence of such an absolute principle is borne out by the fact that some cases have applied the hearing rule to refusals of membership.

124 The courts have struggled, however, to develop coherent principles that provide sufficient guidance on the circumstances in which the hearing rule will apply to decisions that are made by private bodies in relation to persons who are not members and with whom they are not in a contractual relationship.

125 In Re Maggacis,[89] the Queensland Netball Association had refused to appoint Ms Maggacis to the position of State Open Coach for 1993. Thomas J concluded that those circumstances 'fail[ed] to reach either the degree of public aspect ... or the infringement of right which would reasonably demand ... supervision by [the] courts.'[90]

126 In McClelland,[91] Campbell J, after finding that the Burning Palms Surf Life Saving Club was obliged to comply with the rules of natural justice by virtue of contract, made the following comments in obiter:

If a decision is arrived at by a private body which, contrary to its own rules, does not accord procedural fairness to a non-member who is affected, it is in theory possible that there may be circumstances where the courts will recognise such a person as having standing to apply for a declaration of the invalidity of the decision, and an injunction against treating it as valid. It would be for the courts to develop, on a case-by-case basis, the circumstances in which such standing should be recognised. Even though the legal basis of the body's right to make a decision is contained in the constitutive documents of the body itself, there is no necessary reason why it should be only members of the body, or people with the benefit of a contractual promise that the body will follow its own required procedures, who can assert the invalidity of the decision. It is a fact of life that a decision of a private tribunal can affect people who are not members, or people who are not bound by contract to observe the decision - and the existence of the private body and of the decisions of its tribunal is a reality which affects people other than by force of a contract with the body. If the body has practical power to affect a plaintiff in a sufficiently serious way, it would be for the courts to recognise in which situations the nature of affectation of the interests of the plaintiff is sufficient to confer standing.

For all the conceptual difficulties of the notion of there being a 'right to work', the practical importance of not being deprived of the opportunity to work may well suffice to accord a plaintiff standing to contend that the decision of a private tribunal which denied him or her the opportunity to work was void, and that a declaration of invalidity and injunction should issue.[92]

127 In the present proceeding, there arose the question of whether the damage to a person's reputation that might result from a private body's rejection of a person's application for membership was sufficient to require the body to comply with the hearing rule.

128 Unsurprisingly, Mr Hanson, who appeared for the Institute, submitted that reputation was a sufficient interest to engage the hearing rule. He relied on McInnes v Onslow-Fane;[93] Stininato v Auckland Boxing Association Inc;[94] Stininato v Auckland Boxing Association Inc [No 2];[95] Kioa v West;[96] Toose;[97] Ainsworth v Criminal Justice Commission[98] and Master Builders.[99]

129 Mr O'Bryan submitted that, in the absence of a contractual relationship, the fact that a decision which is likely to damage a person's reputation has been made by a private body without giving the person a 'hearing' is not sufficient to confer jurisdiction on the Court to review the decision. According to Mr O'Bryan, an additional element is required, such as that the decision-maker possessed monopoly powers in relation to a particular profession,[100] or engaged in an unreasonable restraint of trade.[101]

130 The cases to which Mr Hanson referred support the proposition that reputation is a sufficient interest to attract the hearing rule and the Court's jurisdiction. They do not stipulate that an additional element is required. It is not necessary for me to decide, however, whether Mr O'Bryan's submission is correct. For the reasons set out below, if an additional element is required, one exists in relation to the Decision. That element is the nexus between the Decision and the power of the Secretary of the DEEWR to grant registration on the CRICOS under s 9(2) of the Act and the power of the Minister to grant an exemption from the requirement to be a member of an overseas student tuition assurance scheme under reg 3.11(d) of the Regulations.

131 Mr O'Bryan also submitted that where a person's reputation is relied upon to attract the hearing rule, it must be established that the impugned decision did in fact affect the person's reputation. I reject this submission. The fundamental purpose of the hearing rule is to compel a body to give notice of matters that it proposes to take into account before making a decision that will, or is likely to, adversely affect a person's rights or interests, including his or her reputation.

132 The Court has ample jurisdiction to grant an injunction to prevent a denial of natural justice before a body makes a decision that will affect a person's rights and interests, as well as jurisdiction to declare void an adverse decision which has been made in breach of the rules of natural justice. In Toose, Mathews J referred to the decision by the Advertising Standards Council as having 'the potential to do considerable damage to the plaintiff's reputation' and concluded that, on that ground alone, the plaintiff was 'entitled to be heard before an adverse finding were to be made against it.'[102] In Master Builders, it was held that the hearing rule applied because the dissemination of the blacklist among government departments and agencies was 'likely to damage the commercial reputations of those [building companies] whose names [were] on the list'[103] and to affect adversely their abilities to tender for future government contracts.

133 In my opinion, the circumstances in which a decision of a private body to refuse an initial application for membership or some other privilege can attract the hearing rule in the absence of an existing contractual relationship include:

(a) where the body has a monopoly or a near monopoly in relation to a particular profession or trade such that a refusal of an application for membership of that body in accordance with its governing documents effectively prevents the applicant from pursuing his or her preferred profession or trade;[104]

(b) where, as in this case, the grounds for a decision to refuse membership under the body's governing documents are likely to affect adversely the applicant's individual, business or commercial reputation in the eyes of an official who is exercising, or will exercise, a statutory or executive power in relation to the applicant and who would be expected to take into account the decision and the grounds in the exercise of that power;[105] and

(c) where the body conducts a public activity at a venue that is open to the public upon the payment of a fee and the body proposes to refuse entry to a person that has paid the fee by exercising a power under its governing documents to 'warn off' him or her.[106]

Application of the principles to the making of the Decision

134 The Institute relied on two bases in support of its contention that the ACPET was obliged to comply with the hearing rule in making the Decision. The first basis was that the obligation arose under the general law. The second basis was that the obligation arose as a matter of contract under the Constitution and the By-laws. I will consider the two bases in reverse order.

Obligation under the Constitution and By-laws to comply with the hearing rule

135 There is nothing novel in the proposition that the governing documents of a private body may be held to impose an obligation on that body to comply with the hearing rule in its dealings with members. The relevant authorities are discussed in detail in McClelland.[107]

136 Whatever the position may be between the ACPET and a member of the ACPET or the ACPET's scheme, as the Institute was never a member of the ACPET or the ACPET's scheme, the Constitution and By-laws cannot be the source of a contractual obligation on the part of the ACPET to comply with the hearing rule in deciding whether to grant the Institute's application for membership of the ACPET and the ACPET's scheme.

Obligation under the general law to comply with the hearing rule

137 The question whether the general law imposed an obligation on the ACPET to comply with the hearing rule in making the Decision must be considered by reference to the principles set out at [117] to [133] above.

Plaintiffs v Defendant

At a glance

Court

Decision date

Before

Source

Judgment (363 paragraphs)

Parties

Legislation Cited (13)

Cases Cited (18)