Re Century Metals and Mining Nl v Robert J Yeomans, the Liquidator of the Phosphate Mining Corporation of Christmas Island and the Minister of Arts and Territories [1989] FCA 273; 100 ALR 383; - FCA 1989 case summary — Zoe

[4]

81. The respondents dispute that the rules of natural justice -- or, in the more recent terminology, "procedural fairness" -- apply to the decisions made by the liquidator and the Minister in connection with the selection of Elders. Counsel for the liquidator suggested that the decision made by their client was not relevantly distinguishable from any decision requiring to be made by the liquidator of any corporation who had been asked by the shareholders to assess the merits of rival proposals for the concurrent purchase from the corporation, and from the shareholders, of complementary items of property, some of which were owned by the corporation and some by the shareholders. They say that the obligation to accord procedural fairness is not imposed merely by reason of the fact that the relevant decisions were made under statutory authority; s.14 of the Winding Up ordinance, in the case of PMCI assets, and s.5 of the Lands Ordinance, in the case of the lease by the Commonwealth. Counsel contended that nothing said by the Minister, the Department or Mr Yeomans himself regarding an independent assessment could transform the nature of the powers being exercised, and functions being performed, by Mr Yeomans so as "to create any legally significant right, interest or expectation in the appellant unless the same amounted to the creation of a contractual or proprietary right". Reference was made to two unreported decisions in which it was held that the requirements of natural justice did not apply to consideration by government of commercial expressions of interest or tenders: Cord Holdings Ltd v Burke (Smith J of Supreme Court of Western Australia, 22 January 1985) and White Industries Limited v Electricity Commission of New South Wales (Yeldham J of Supreme Court of New South Wales, 20 May 1987). The contention of counsel was that, from first to last, Mr Yeomans was engaged in an evaluation of proposals for the acquisition of assets, and no more; so that the doctrine of natural justice lacked any application.

[8]

"It is a fundamental rule of the common law

doctrine of natural justice expressed in

traditional terms that, generally speaking,

when an order is to be made which will deprive

a person of some right or interest or the

legitimate expectation of a benefit, he is

entitled to know the case sought to be made

against him and to be given an opportunity of

replying to it: ... The reference to 'right

or interest' in this formulation must be

understood as relating to personal liberty,

status, preservation of livelihood and

reputation, as well as to proprietary rights

and interests.

The reference to 'legitimate expectation'

makes it clear that the doctrine applies in

circumstances where the order will not result

in the deprivation of a legal right or

interest. Take, for example, an application

for a renewal of a licence where the

applicant, though he has no legal right or

interest, may nevertheless have a legitimate

expectation which will attract the rules of

natural justice. In Salemi v MacKellar (No.2)

[1977] HCA 26; (1977) 137 CLR 396 Barwick C.J. expressed the

view that the expression 'legitimate

expectation' adds little, if anything, to the

concept of a right. However, later decisions

demonstrate that the concept of 'legitimate

expectation' extends to expectations which go

beyond enforceable legal rights provided that

they are reasonably based: Heatley v

Tasmanian Racing and Gaming Commission (1977)

[1977] HCA 39; 137 CLR 487; F A I Insurances Limited v

Winneke [1982] HCA 26; (1982) 151 CLR 342; Attorney-General

(Hong Kong) v Ng Yuen Shiu [1983] UKPC 2; (1983) 2 AC 629.

The expectation may be based on some statement

or undertaking on the part of the authority

that makes the relevant decision. In the view

of some members of the Court in Salemi (No.2)

the 'amnesty' constituted an example of such

an undertaking. Alternatively, the

expectation may arise from the very nature of

the application, as it did in the case of the

application for a renewal of a licence in F A

I or from the existence of a regular practice

which the person affected can reasonably

expect to continue: Council of Civil Service

Unions v Minister for the Civil Service (1985)

AC 374. The expectation may be that a right,

interest or privilege will be granted or

renewed or that it will not be denied without

an opportunity being given to the person

affected to put his case."

[22]

"What is a fair opportunity and fair treatment

in the sense required by the rules of natural

justice will vary according to the

circumstances. In this case Century had, in

February 1988, submitted one proposal and

after a meeting with officers of DASETT and

the liquidator, had been invited to resubmit

in further detail. All of this happened of

course, before the liquidator was asked to act

as assessor by the Minister. It is

nevertheless relevant to the determination of

what constituted fair treatment by the

liquidator once he assumed that role. In my

opinion, whatever the content of his

obligation to observe natural justice, it did

not require him to afford to the applicants an

opportunity to rectify omissions or

deficiencies which should have been addressed

in their proposal. In particular, fairness

did not require him to invite the applicants

to submit some formula upon which royalties

could be negotiated or to negotiate such

royalties. The absence of any offer of

payment for the acquisition of the PMCI assets

spoke for itself and on the face of the

submission was explained by reference to the

undertaking of responsibility for demolition

at the termination of the project and for

relocation expenses of employees. There was,

in my opinion, no obligation in fairness on

the liquidator to explore alternatives or to

invite a cash offer. As to the matter of the

financial resources available to the

applicants, it was incumbent on them to make

the position clear in their proposal.

There was substance in the complaint that the

liquidator had misread the submission so far

as it related to meeting demolition costs. It

was, in my opinion, reasonably clear that the

Century group did intend to bear these costs

in their entirety and that the figure of $2

million was no more than the amount of a

security for performance of that obligation to

be provided over the life of the project. But

the misinterpretation of the submission in

that respect, does not constitute a breach of

natural justice. Nor, in my opinion, does the

failure to consult with Century about it.

Fair treatment does not import a protection

against factual error or miscalculation in the

decision making process.

That is not to say that the liquidator should

not, as a matter of prudence, have had further

discussions with Century and the other

proponents. However, the minimum requirements

of fair treatment according to law were met so

far as they related to the opportunity on the

part of Century to put its case."

[37]

"Under the general rubric of natural justice,

the applicants also complained that they were

entitled to and did not receive impartial

treatment in the evaluation of the Century

proposal. In particular, they said, that the

evaluation was based upon the opinions and

conclusions provided by Inglis and Gardiner.

The draft specifications provided by Thomas of

Elders Resources were also said to have played

an illegitimate part in the evaluation. So

too was predisposition against Bennett and the

UCIW.

So far as the factual underpinning for these

allegations is concerned, I am satisfied on

the evidence that the liquidator took into

account the opinions provided by Inglis and

Gardiner and at least in part adopted them for

the purpose of his evaluation. In my view he

was entitled to do that and it does not

indicate any unfairness in treatment. It may

be the case that their views were coloured by

their experiences as officers of PMCI,

particularly relating to dealings with the

UCIW. And as to the liquidator himself, I

have no doubt that by the time he accepted the

Minister's invitation to assess proposals, he

had formed strong views about Bennett and the

Union which were adverse to them. He was

aware and sceptical of the Century proposal,

at least to the extent that it relied upon

co-operation with the UCIW and derived from

the Arthur Andersen Report.

These conclusions do not however determine

whether there was a breach of the rules of

natural justice. The question of bias and

predisposition in administrative

decision-making of the character here under

review, is not to be approached with that

nicety appropriate to the decisions of courts

and tribunals. This is particularly so where

the decision-maker has a continuing

involvement, and a particular policy or

orientation based upon prior knowledge of

matters relevant to the decision. This is

well illustrated in the case of ministerial

decision making by the observation of

Professor Wade at p 489 of the 6th edition of

his text:

'It is self-evident that ministerial

or departmental policy cannot be

regarded as disqualifying bias. One

of the commonest administrative

mechanisms is to give a minister

power to make or confirm an order

after hearing objections to it. The

procedure for the hearing of

objection is subject to the rules of

natural justice in so far as they

require a fair hearing and fair

procedure generally. But the

minister's decision cannot be

impugned on the ground that he has

advocated the scheme or that he is

known to support it as a matter of

policy.'

...

The fact that the liquidator in this case had

formed views of the reliability of the UCIW

and its secretary and of the prospects of the

Century proposal, does not, in my opinion,

vitiate his decisions. They are impugned as

decisions under s.14 of the Winding Up

Ordinance. Involved, as he was, in the

process of disposing of the assets of the

corporation, he was entitled to take into

account those views he had already formed on

the basis of information received from

departmental sources and former officers of

the PMCI. They were views which bore upon the

acceptability of the Century consortium

proposal to government and therefore upon the

question whether he should dispose of the

assets to that consortium.

The political designation of him as

'independent' had nothing to do with his

function as liquidator. It was designed for a

political purpose. It did not attract to the

discharge of his functions under the Winding

Up Ordinance any greater obligation than those

imposed by that statute."

[38]

105. It seems to us that, in the situation which here occurred, it does not matter whether one describes Mr Yeomans as lacking independence or as lacking impartiality. Putting the position at its lowest, a fair-minded person who was aware of the facts might, in such circumstances, entertain a reasonable apprehension that Mr Yeomans might not bring an impartial and unprejudiced mind to the task which was committed to him. This is the test of bias applicable to judicial proceedings: see Livesey v New South Wales Bar Association (1983) 151 CLR 188. We agree with French J that it is a test which will not usually be appropriate in connection with administrative decisions. Ministers and other administrators frequently have a continuing relationship with a particular issue or particular person during the course of which they necessarily form views; in practice it would generally be impossible for them to bring an open mind to a new decision pertaining to that issue or person. But respectfully disagreeing with French J, we think that, in this unusual case, the test applicable to judges is relevant. As is illustrated by the decision in Regina v Kent Police Authority; Ex parte Godden (1971) 2 QB 662, there are cases in which it is appropriate to apply the judicial test to administrative decisions. In the present case the decisions to be made by the liquidator and the Minister were each administrative decisions; but they were decisions affecting substantial commercial interests in respect of which the Minister had repeatedly promised an "impartial" assessment. To adopt the approach of his Honour, overlooking the fact that Mr Yeomans "had formed views of the reliability of the UCIW and its secretary and of the prospects of the Century proposal", would be to strip the Minister's promise of its content. If a Minister, though not legally bound to do so, chooses to announce that a particular decision will be preceded by an "impartial" assessment, members of the public are entitled to expect that the person who will make that assessment will bring to that task a mind which is both uncommitted in fact and which appears to be uncommitted. The reason was spelled out in a passage from the judgment of Lord Denning MR in Metropolitan Properties Co (FGC) Ltd v Lannon [1968] EWCA Civ 5; (1969) 1 QB 577 which was quoted by Barwick CJ, Gibbs, Stephen and Mason JJ in The Queen v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 at p 259:

Parties

Applicant/Plaintiff:

# Re Century Metals and Mining Nl

Respondent/Defendant:

Robert J Yeomans, the Liquidator of the Phosphate Mining Corporation of Christmas Island and the Minister of Arts and Territories \[1989\] FCA 273; 100 ALR 383;

Legislation Cited (12)

Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987

Lands Ordinance 1987

Decisions (Judicial Review) Act 1977

Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987

Lands Ordinance 1987

Decisions (Judicial Review) Act 1977

Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987

Lands Ordinance 1987

Decisions (Judicial Review) Act 1977

Phosphate Mining Corporation of Christmas Island (Winding Up) Ordinance 1987

Lands Ordinance 1987

Decisions (Judicial Review) Act 1977

Cases Cited (13)

Re Century Metals and Mining Nl v Robert J Yeomans, the Liquidator of the Phosphate Mining Corporation of Christmas Island and the Minister of Arts and Territories [1989] FCA 273; 100 ALR 383; (1989) 40 FCR 564 (25 July 1989)

77. We also accept that the assessment, and the decision to be made thereon, raised matters of public interest which were politically contentious. It does not follow that it is outside the competence of the Court to review the procedures which were applied to the assessment. Most decisions which are subject to review under the Administrative Decisions (Judicial Review) Act involve the public interest. Many of them are politically controversial. There is no general principle that decisions which are made in the public interest and/or which are politically controversial are immune from judicial review. Even decisions made by an Executive Council -- see R v Toohey; Ex parte Northern Land Council [1981] HCA 74; (1981) 151 CLR 170 and F A I Insurances Ltd v Winneke [1982] HCA 26; (1982) 151 CLR 342 -- or a Cabinet -- see South Australia v O'Shea [1987] HCA 39; (1987) 163 CLR 378 and Minister for Arts, Heritage and Enviroment v Peko-Wallsend Ltd (1987) 15 FCR 274 -- may be subject to review. Decisions made pursuant to prerogative powers may be reviewable, depending upon their subject matter: see Peko-Wallsend at p 302-303 and Council of Civil Service Unions v Minister for the Civil Service (1985) 1 AC 374.

(1989) 40 FCR 564

(1981) 151 CLR 170

(1982) 151 CLR 342

(1987) 163 CLR 378

(1987) 15 FCR 274

(1986) 162 CLR 24

(1985) 159 CLR 550

(1977) 137 CLR 396

(1978) 20 ALR 323

(1983) 151 CLR 188

(1976) 136 CLR 248

Re Century Metals and Mining Nl v Robert J Yeomans, the Liquidator of the Phosphate Mining Corporation of Christmas Island and the Minister of Arts and Territories [1989] FCA 273; 100 ALR 383;

At a glance

Court

Decision date

Before

Source

Judgment (52 paragraphs)

Parties

Legislation Cited (12)

Cases Cited (13)

Re Century Metals and Mining Nl v Robert J Yeomans, the Liquidator of the Phosphate Mining Corporation of Christmas Island and the Minister of Arts and Territories [1989] FCA 273; 100 ALR 383; (1989) 40 FCR 564 (25 July 1989)