Port Hedland Regional Aboriginal Corporation v Ngarda-Ngarli-Yarndu Regional Council

PHRAC 24 The review reported that PHRAC was well managed in comparison with the other indigenous housing organisations. The review noted that in the administration of PHRAC there was potential for a conflict of interest to arise insofar as a member of the governing committee of PHRAC was an authorised signatory for PHRAC and also an employee of PHRAC. The provision of service by PHRAC was "sound", although it may not have been complying with the "philosophy of CHIP" by failing to encourage tenants to purchase the properties they occupied and by acting to "expense surplus monies" in non-housing assets. The review commented on the possibility that PHRAC received income from several sources that may not have been fully disclosed in the accounts prepared by PHRAC. However, the accounts provided were audited accounts and the review acknowledged that the difference in income received and recorded may not have been material. The review stated that until an "internal audit" had been undertaken, the comments made in the review had to be viewed with caution. The review stated that PHRAC was almost self-sufficient and in the opinion of Ernst & Young, it was an indigenous organisation that appeared close to achieving "self-determination", said to be a strong object of the organisation. The review made the following comment to the Council: "This is an opportunity to further nurture [its] progress through…appropriate business development support programs." Pipunya 25 The review recognised that Pipunya was a small organisation that dealt with local housing needs at the remote location of Marble Bar. It had problems getting repairs and maintenance issues attended to and had an informal approach to the needs of tenants which, in the circumstances, could be regarded as acceptable. Its accounts were conducted satisfactorily. 26 With regard to the advice provided to the Council by the review as to whether it was appropriate to have a single indigenous housing organisation to provide housing services in the region, the review recommended that such an organisation be established but that it be a new organisation constructed by the Commission. The review stated that "comprehensive consultation" with interested parties would be required before formation of the new organisation was undertaken. The review recommended that individuals from each of the existing indigenous housing organisations be considered for employment in the new structure and stated that the new body should not be created by selecting one of the existing organisations. Any perception of preference of one entity over another had to be avoided. The Commission, and the Council, were advised to consider various models before making a decision as to the nature of the regional organisation to be established. In particular, the Commission would have to undertake consultation with the existing indigenous housing organisations, consideration being given to establishing an organisation under which existing indigenous housing organisations would remain responsible for wards or sub-regions. It was also noted that a deficiency of the existing arrangements was the limitation of the funding to annual grants which made it difficult for the existing indigenous housing organisations to construct or implement appropriate business plans that would cater for future needs and the opportunity should be taken in establishing a single regional indigenous housing organisation to operate on a triennial funding programme. 27 As noted above, the recommendations of the Ernst & Young review in respect of the formation of a single regional indigenous housing organisation were not put to any of the existing indigenous housing organisations for comment. 28 In February 2001 PHRAC forwarded to the Commission a detailed response to the remarks made in the Ernst & Young review on the management and delivery of services by PHRAC. In addition, PHRAC provided to the Commission comments by PHRAC's auditor rebutting all matters suggested by Ernst & Young as requiring further audit treatment. 29 In March 2001 an officer of ATSIC provided a summary of the review to the Council. At the meeting of the Council held in March 2001, the Council deferred further consideration of the review until the meeting of Council to be held on 3-6 April 2001. On 4 April 2001 an acting regional manager of the Commission, Mr Cottier, prepared a "brief" to Council setting out the resolutions the Council should adopt in respect of the applications for grants lodged by the applicants. In refusing those applications on or about 6 April 2001, the Council adopted the draft resolutions prepared by Mr Cottier. The "brief" submitted to Council by Mr Cottier also recommended that the Council "fund" Meta Maya as the sole indigenous housing organisation for the region. The Council did not make a resolution in those terms but, by refusing the applications of the applicants and by approving the application of Meta Maya, albeit only as to three-quarters, the Council gave effect to the thrust of that recommendation. 30 Indeed, the minutes of that meeting recorded that the reason for the decision to refuse the applications made by PHRAC was as follows: "Due to the Ernst & Young review of Housing Organisations in the [region] the [Council has] decided to recognise one Indigenous Housing Organisation." 31 In respect of the refusal of Pipunya's application, the reason recorded was as follows: "Due to the review process the [Council has] decided to recognise the Ernst & Young review and recommendations contained within. Council also considers this application to have less merit." 32 The Council's reference to the degree of merit in Pipunya's application is discussed later in the reasons. 33 By letters dated 23, 25 May 2001, the Commission advised the applicants that their applications for grants for the financial year commencing 1 July 2001 had been refused. The letters stated that the refusals were the implementation by the Council of recommendations provided to the Council by the Ernst & Young review. The Council advised the applicants that the Ernst & Young review and the recommendations in the review had been "endorsed" by the Council, in particular, "the recommendation to fund one Indigenous Housing Organisation" in the region. The letters stated that Council had selected Meta Maya to become the indigenous housing organisation for the region and after 30 June 2001 the Commission would provide no further funds to PHRAC and Pipunya for that purpose. The letters were under the hand of Mr Cottier. In addition, by a letter headed "Decline Advice" dated 15 May 2001, also under the hand of Mr Cottier, the Commission informed PHRAC that its applications for grants had been refused and provided the following reason therefor: "The [Council has] decided to pursue one of the recommendations raised in the review and [has] recognised only one organisation as the Indigenous Housing Organisation for the region." 34 Pursuant to s 13 of the ADJR Act the applicants requested the Council to provide reasons for its decision, including relevant findings of fact. A statement of reasons was provided in July 2001. 35 Under the heading "Reasons for the Regional Council Decisions", the reasons relied upon by the Council read as follows: "27. TheCouncil decided to accept the recommendations of the Ernst & Young review because it considered them to be financially sound and because they were in accordance with similar recommendations made in September 1994 for a single regional housing organisation. 28. Specifically, the Council decided to fund [Meta Maya] and decided to decline to fund PHRAC and Pipunya because: · The Council had limited funding at its disposal and was required to achieve better outcomes from that funding; · The funding submissions provided by PHRAC and Pipunya had less merit than the submission provided by [Meta Maya] and failed to substantiate that adequate services could be provided at the regional level; · [Meta Maya] had already demonstrated that it could perform the functions that would be expected of the Regional Indigenous Housing Organisation; and · Council intended to apply the same strategic approach under its housing policy in subsequent years." 36 The following comments may be made upon the reasons supplied by the Council. First, the decisions made in respect of the applications for grants made by the applicants were not the implementation of the recommendations of the Ernst & Young review. Second, the Council did not conduct any assessment of the relative merits of the applications for grants lodged by the applicants and the second respondent and, certainly, no findings of fact were set out in the statement of reasons provided by the Council to support the conclusion that "the funding submissions provided by PHRAC and Pipunya had less merit than the submission provided by [Meta Maya]". It is to be noted that neither applicant was invited by the Council to present a "funding submission" for the provision of services "at a regional level". 37 The "brief" submitted to Council on 4 April 2001 by Mr Cottier purported to be an overview of the information considered by Ernst & Young and of the recommendations made in the review, and it conveyed to councillors the impression that the appropriate manner of implementation of the recommendations of the review was as suggested in the "brief". That impression is confirmed by the subsequent correspondence forwarded by the Commission to the applicants, signed by Mr Cottier, referred to above. The "brief" proposed that three resolutions be adopted by the Council, two of which were to the effect that the applications for grants by PHRAC and Pipunya be refused, the third being that Meta Maya be "funded" as the regional indigenous housing organisation. 38 It is obvious that the proposed resolutions in the "brief" prepared by Mr Cottier did not constitute implementation of the recommendations provided by the Ernst & Young review. The terms in which the "brief" to Council was expressed had the capacity to mislead the Council in a material respect given that earlier in the meeting Council had resolved to "endorse" the review and its recommendations. A decision to "fund" Meta Maya as the sole indigenous housing organisation for the region was the antithesis of the relevant Ernst & Young advice. 39 The performance of the councillors was affected by reason of their misunderstanding of the material before them and by their failure, as a result, to address the proper questions to be considered. Such an error arose out of their collective reliance upon the "brief" prepared by Mr Cottier purporting to summarise the effect of the Ernst & Young review and to present proposed resolutions as the questions identified by the review to be dealt with by the Council. Consideration of that submission replaced consideration by each councillor of the Ernst & Young review in detail by which each councillor may have satisfied himself, or herself, as to the true nature of the recommendations made in that review and of the reasoning relied upon by Ernst & Young for those recommendations. 40 I accept the evidence from several councillors that the Ernst & Young review was not distributed to councillors before the March 2001 meeting of the Council and that at no time did the councillors have an opportunity to analyse and consider the review at their leisure. The review was tabled at the March meeting but copies of the review were shared between councillors and the documents were treated as "In-Confidence" and collected at the conclusion of the meeting. That circumstance led, at the next meeting of the Council, to the councillors being dependent upon the accuracy of the representation by Mr Cottier that the proposed resolutions would give effect to the recommendations of the review. 41 The effect of the "brief" submitted to Council by Mr Cottier was to deflect the Council from considering the appropriate steps to be taken to give effect to the substance of the Ernst & Young review. It is apparent that the councillors had restricted opportunity to consider the Ernst & Young review in detail and accepted as authoritative the summary of the review, and the resolutions proposed to implement its recommendations, provided to the Council by Mr Cottier. 42 The consequence of the foregoing was that the Council was misled as to the nature of the material before it and it failed to address the proper question raised by that material, namely, to what extent the indigenous housing organisations providing services in the region should receive funding for continuation of their services in the financial year commencing 1 July 2001, pending implementation of the recommendation of Ernst & Young that a new organisation be formed as a regional organisation to oversee the provision of such services. 43 Furthermore, for some years PHRAC and Pipunya had rendered the service of providing and managing housing for Aboriginal persons in the region and, to the knowledge of the Council, they relied upon grants from the Commission to provide that service. For as long as those parties conducted their affairs and provided such service in a satisfactory manner each organisation had a legitimate expectation that the objects for which it had been formed, namely, to deliver services to Aboriginal persons, would continue to be supported by the Commission and that each organisation would be given the opportunity to comment on any proposal by the Commission to terminate the provision of financial support to that organisation for reasons other than just cause. The contradictory and confused advice given by the Council to PHRAC in July 2000 and January 2001 and to Pipunya in December 2000 and January and February 2001 as to "limitation" of the period of the grants made to those organisations for the 2000/2001 financial year pending a "feasibility study", did not satisfy that obligation. 44 As noted above, the Council excluded from the material provided to PHRAC and Pipunya for comment, that part of the Ernst & Young review that discussed whether there should be a single indigenous housing organisation to provide such services in the region and receive grants from the Commission. Given that the adoption of such a policy would impact directly upon the functions performed by PHRAC and Pipunya, and upon their viability as organisations, natural justice required that the opportunity be given to those parties to comment on any proposal for structural change in the manner of delivery of indigenous housing services. Such a requirement was even more obvious where the Commission, through the Council, proposed not only to adopt such a policy but to rely upon it as the ground for refusing to make further grants to PHRAC and Pipunya for the provision of housing services in the region. (See: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564). 45 The decision-making process engaged in by the Council on behalf of the Commission wholly miscarried by the Council failing to apply a fair procedure to the determination of the respective applications for grants made by PHRAC and Pipunya. By reason of the Council's misunderstanding of the material before it, and also by reason of its failure to afford to the applicants the opportunity to comment on the recommendations of the review that were likely to affect the operation of the applicants, the Council failed to allow the applicants a fair opportunity of presenting the case in support of their applications for grants for the financial year commencing 1 July 2001. 46 As Gleeson CJ said in Re Aala (2000) 176 ALR 219 (at [2]‑[4]): "The issues are whether, in the events that occurred, involving an erroneous statement by the Refugee Review Tribunal as to the material which was before the tribunal, there was a denial of procedural fairness…As a result of the conduct of the tribunal, the prosecutor was deprived of a fair opportunity of presenting his case, and of correcting an erroneous and unfavourable factual assumption relevant to his credibility. The circumstance that this resulted from an innocent misstatement does not alter the position. The question concerns the nature and extent of the statutory power exercised by the tribunal, and the condition that the power be exercised in a manner which was procedurally fair; not the good faith of the tribunal." 47 In the instant case, as a result of the Council being misled by the "brief" submitted to it by Mr Cottier, the Council failed to consider the proper question, or questions, raised by the material before it. To so act was not to determine the applications of the applicants in a manner that was procedurally fair and, therefore, authorised by the ATSIC Act. 48 There will be an absence of jurisdiction or authority for an administrative decision-maker to make a decision where the wrong issue is dealt with or the wrong question asked, or where an irrelevant consideration is taken into account or a relevant consideration not taken into account, or an erroneous finding made or a mistaken conclusion reached. (See: Craig v South Australia (1995) 184 CLR 163 at 179; Minister for Immigration and Multicultural Affairs v Yusuf (2001) 180 ALR 1 per McHugh, Gummow and Hayne JJ at [82]-[85].) 49 The decision to deny the grant of any further funds to PHRAC and Pipunya had a major impact upon the affairs of each organisation and, as the letter of advice forwarded to each applicant indicated, the Council was aware that a consequence could be the cessation of substantial activities by each organisation, the Commission advising each organisation to make arrangements for the termination of staff, to pay all creditors and prepare a final report for the Commission. 50 Each organisation had an expectation, if not an entitlement, to be consulted in respect of material relied upon by the Council to make a determination of such effect and to be given the opportunity to make submissions upon that material. The material actually before the Council was the recommendation of Ernst & Young that a new organisation be established as a single indigenous housing organisation in the region, utilising some of the staff and, perhaps on a sub-regional basis, the services of existing indigenous housing organisations. The review recommended against selecting one of the three indigenous housing organisations to act as the sole regional housing organisation and stated that extensive consultation would have to be carried out with PHRAC and Pipunya and others before the recommendation for creation of a new regional organisation could be implemented. For the reasons discussed above, the Council misunderstood that material, and purported to take action contrary to the thrust of that recommendation. In either case the applicants should have been informed of the recommendation of the review and of the steps adverse to the interests of the applicants that the Council proposed to take in purported implementation of that recommendation. The failure of the Council to give the applicants the opportunity to be heard on those matters involved a denial of procedural fairness. (See: Haoucher v Minister for Immigration & Ethnic Affairs (1990) 169 CLR 648; Century Metals & Mining NL v Yeomans (1989) 40 FCR 564.) 51 The applicant submitted further that the decision to "fund" Meta Maya was a decision made without jurisdiction or authority in that the Council made the decision without consideration of, and contrary to, a written direction from the Commission which governed the delegated power of the Council pursuant to s 45A(2) of the ATSIC Act. It was submitted that the CHIP Policy issued by the Commission bound the Council. It was said that Meta Maya did not qualify for a grant from the CHIP funds under the CHIP Policy, not being an organisation that had received CHIP funding prior to March 1996, and not being an organisation that owned "housing stock". 52 The arguments on this issue are unnecessary, and perhaps inappropriate, to determine. If the decisions made in respect of the applicants are to be set aside on the grounds set out above, then it follows that the decision made in respect of Meta Maya is equally flawed and must be set aside. If the applicants were unable to establish grounds on which the decisions made on their applications may be set aside, it would not follow that the decision to establish a sole indigenous housing organisation for the region could be set aside on a ground that depended on the failure of the Council to follow a direction to the Council set out in the CHIP Policy. Furthermore, if the applicants were unable to have decisions in respect of their applications set aside, it may not follow that the decision to approve the Meta Maya application for a grant would be set aside on the ground that the CHIP Policy was not followed and the Council was not authorised to make the decision. First, if the Council's decision to establish one indigenous housing organisation for the region and, in effect, to select Meta Maya as that organisation were not able to be set aside on the grounds already discussed, it may have been argued that Meta Maya came within the meaning of the term "regional federation" as one of the exceptions to ineligibility set out in cl 5.4 of the CHIP Policy. Second, it may have been argued that Meta Maya was an "existing housing organisation" at the commencement of the CHIP Policy, having been incorporated for that purpose in 1994. Those issues were not addressed in this matter. It may be noted that Meta Maya took no part in the proceeding. 53 Counsel for the applicants further contended that the process of decision-making involved circumstances that would present to a reasonable observer an apprehension that bias affected the deliberations of the Council. It was said that such an apprehension of bias would involve a breach of the rules of natural justice in connection with the making of the decision and that the Council would not have authority under the ATSIC Act to make a decision in such a manner. 54 The grounds relied upon by counsel for that submission were principally those identified in the Ernst & Young review in respect of the potential, or actual, conflict of interest that arose out of the fact that the chairperson of Meta Maya was also chairperson of the Council. 55 Some three months after that position of conflict was identified in the Ernst & Young review, and only several days before the Council made its decisions on the applicants' applications, the chairperson of Meta Maya resigned from that position. It is to be noted, however, that the resignation was tendered in a letter addressed to the organisation that had not been considered by Meta Maya at the time the decisions in question were made. It may be said that the relationship between the chairperson and Meta Maya had not been wholly extinguished at the time the Council determined the applicants' applications for grants. 56 The Court received evidence from several members of the Council to the effect that they were uncomfortable with the apparent conflict of interest involving the chairperson with regard to his support of the proposals for the acceptance of the application for a grant by Meta Maya and rejection of the applications of the applicants. Shortly after the meeting one of the councillors wrote to the chairperson of the Council to set out his concerns in that regard in some detail. 57 In the end, however, the decision made was the decision of the Council as a whole, not the decision of the chairperson. It may be accepted that the circumstances outlined could raise an apprehension in the mind of a reasonable observer that the chairperson applied less than an open mind to the contribution he made to the decision-making process. But, the circumstance remains that the resolution to refuse a grant of funds to PHRAC was carried by seven votes to one, and the resolution to refuse a grant of funds to Pipunya was passed by eight votes to nil. 58 In the absence of some evidence that the chairperson exercised a degree of influence that affected the deliberations of other councillors, or that other councillors acted so as to support or advance the interests of the chairperson qua chairperson of Meta Maya, it should not be concluded that the decision-making process in respect of the decisions made on the applications of the applicants lacked procedural fairness by reason of a perceived conflict of interest, or antipathy to the claims of the applicants, on the part of the chairperson of the Council. Obviously, a chairperson has a standing that may produce some influence upon fellow councillors but evidence would be required to show the extent of that influence and demonstrate whether a reasonable person would apprehend in the circumstances disclosed by that evidence that the decision of the Council as a whole was grounded on bias. (See: Hot Holdings Pty Ltd v Creasy [2002] HCA 51.) 59 The applicants also alleged that they were denied natural justice in that they were not given the opportunity to comment on Meta Maya's responses to that part of the Ernst & Young review which related, and had been forwarded, to Meta Maya. The applicants contended that in circumstances where the Council decided to select one organisation, to the exclusion of the applicants which had legitimate expectations of continued funding, the applicants were entitled to be given the opportunity to consider Meta Maya's case. 60 The respondent contended that this could not amount to a denial of natural justice because funding decisions are made in the context of strict confidentiality pursuant to the ATSIC Act (s 90(2)) which restricts communication of information relating to a party's application for a grant. It drew an analogy with the process of tenders for contracts which do not require disclosure of bids by other tenderers, although importing requirements analogous to natural justice. 61 Given my conclusion that the decisions of the Council in this matter should be set aside, it is unnecessary for me to consider this point, but it may be said that the material does not suggest that the circumstances of this case would involve lack of procedural fairness by failure of the Council to inform the applicants of the comments made in the review on the operations conducted by Meta Maya and Meta Maya's responses thereto. 62 For the reasons already provided, the decisions cannot stand because the Council misunderstood what it was doing and did not address the correct questions. It did not even purport to ask for, or consider, submissions from the organisations on the ultimate recommendation of the review that a new regional housing organisation be established. If, as it thought it was doing, the Council intended to implement that recommendation of the review, the question of the comparative operations of the organisations would have been irrelevant in any event. 63 The decisions to refuse the applications for grants made by the applicants and to approve the application for a grant made by Meta Maya, and the decision to "fund" one indigenous housing organisation in the region, must be set aside and the matter returned to the Council for determination according to law. It was submitted that the latter decision was not within the meaning of the term "decision" as used in the ADJR Act but it is plain that it was an operative determination, not a mere expression of opinion or a statement that, in itself, had no effect. It was the cornerstone of the decisions made on the applicants' applications. Those decisions were inter-locked with the decision that only one indigenous housing organisation, Meta Maya, be granted funds by the Commission for the next financial year and thereafter. As a result, the latter decision had an operative effect and was subject to review under the ADJR Act. (See: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 per Mason CJ at 338.) I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Counsel for the Applicants: Dr J T Schoombee, A P Rumsley

Solicitor for the Applicants: McKie & Associates

Solicitor for the 1st Respondent: Australian Government Solicitor

Date of Hearing: 28 February 2002

Date of Judgment: 22 November 2002