45 Ward v Williams involved the construction of s 66(2) of the Public Health Act 1902 (NSW). That Act provided, relevantly, that a complaint may be made to a magistrate should there be default in complying with a notice given by a local authority to a person who caused a nuisance. Upon complaint being made, a summons could issue. The section provided that on the hearing of a summons, the magistrate "may, if … satisfied that the nuisance exists or that though abated it is likely to recur, by order require the person to comply with all or any of the requisitions of the notice or otherwise abate the nuisance". The New South Wales Court of Appeal held that, notwithstanding the use of the facultative expression, the magistrate was required to make an order if the nuisance was proved.
46 The High Court held otherwise, stating at 505-507:
"'… it is necessary to bear steadily in mind that it is the real intention of the legislature that must be ascertained and that in ascertaining it you begin with the prima facie presumption that permissive or facultative expressions operate according to their ordinary natural meaning. …The question whether a Judge, or public officer, to whom a power is given by such words, is bound to use it upon any particular occasion, or in any particular manner, must be solved aliunde, and, in general, it is to be solved from the context, from the particular provisions, or from the general scope and objects, of the enactment conferring the power' - per Lord Selborne : Julius v. Bishop of Oxford. One situation in which the conclusion is justified that a duty to exercise the power or authority falls upon the officer on whom it is conferred is described by Lord Cairns in his speech in the same case. His Lordship spoke of certain cases and said of them '[they] appear to decide nothing more than this: that where a power is deposited with a public officer for the purpose of being used for the benefit of persons who are specifically pointed out, and with regard to whom a definition is supplied by the Legislature of the conditions upon which they are entitled to call for its exercise, that power ought to be exercised, and the Court will require it to be exercised'."
47 The Court referred to the provisions of the Interpretation Act 1897 that where an Act used the word "may" the word "shall mean that the power may be exercised or not at discretion". Acknowledging that the Interpretation Act provision was no more than a rule of construction, the Court added:
"there must be reasons which satisfy the mind that a statute to be construed does not intend that the power it confers should be exercised or not at discretion before it can be held that the power must be exercised on demand, assuming of course the fulfilment of any conditions precedent the statute may lay down".
48 The Court at 506 drew a distinction between a right to call for the exercise of a power and a duty to exercise it:
"In construing a statute conferring a power by permissive or facultative expressions, it is important not to mistake indications or evidence, found in the context or subject matter, of an intention that a right to call for the exercise of the discretion should exist, for indications or evidences of an intention that the officer in whom the power is reposed should be under a duty, upon request and upon fulfilment of the necessary conditions, to do the thing authorized."
49 Their Honours considered there were few indicators in s 66(2) to support an interpretation that the exercise of the power was obligatory. However, one such consideration which the Court said (at 507) is "usually accounted very strong" was that the power was conferred on a judicial tribunal and was to be invoked by a judicial proceeding, as powers are conferred on such basis for the enforcement of rights and the protection of interests. The fact that a penalty could be imposed by the magistrate was another indicator in favour of an obligatory exercise of the power. However, there were countervailing considerations. In particular, the High Court considered that as it was only the public authority who could complain to the magistrate, it was apparent the magistrate was interposed for the protection of the owner or occupier against whom a notice had been issued. It was also relevant that a nuisance might be so minor or trivial as to make it harsh or unreasonable to require it to be abated or removed. Further, disobedience to a notice given under the Public Health Act was not ipso facto an offence. Finally, a proceeding brought pursuant to the section was not for the protection of private rights and thus did not fall into the category of case described by Lord Cairns in Julius v Bishop of Oxford as requiring that a power conferred be exercised.
50 The Court summarised the position at 508:
"it is not a power deposited with the magistrate 'for the purpose of being used for the benefit of persons specifically pointed out': the conditions are not defined upon which any such persons are entitled to call for its exercise. The interests which the provisions are designed to safeguard or serve are those enjoyed in the locality by the public at large. There is no reason why the judgment of the magistrate should not extend over all the factors which govern such a question."
51 In Finance Facilities the Court was concerned with the question whether s 46(3) of the Income Tax Assessment Act 1936-1967 (Cth) gave the Commissioner a discretion to allow a rebate or whether, if the statutory preconditions for a rebate were satisfied, the Commissioner was required to grant it. The section provided that "the Commissioner may allow … a … rebate … if the Commissioner is satisfied that" one or other of the specified conditions had been satisfied. The matters specified were separate and alternative. The first two conditions were specific matters which were either satisfied or not on a given set of facts. For example para (a) was in terms that "the shareholder has not paid, and will not pay, a dividend [deeming a specific period] to another private company". Para (c), on the other hand, involved an evaluative determination by the Commissioner. Its terms were "having regard to all the circumstances, it would be reasonable to allow the further rebate". Notwithstanding this difference, the Court determined that the section required the Commissioner to grant the rebate if one of the preconditions had been made out.
52 Windeyer J stated the relevant principle at 134-5:
"While Parliament uses the English language the word 'may' in a statute means may. Used of a person having an official position, it is a word of permission, an authority to do something which otherwise he could not lawfully do. If the scope of the permission be not circumscribed by context or circumstances it enables the doing or abstaining from doing, at discretion, of the thing so authorised. But the discretion must be exercised bona fide, having regard to the policy and purpose of the statute conferring the authority and the duties of the officer to whom it was given: it may not be exercised for the promotion of some end foreign to that policy and purpose or those duties. However, that general proposition is irrelevant in this case. Here the scope of the permission or power given is circumscribed. Conditions precedent for its exercise are specified as alternatives. The question then is, must the permitted power be exercised if one of those conditions be fulfilled?
This does not depend on the abstract meaning of the word 'may' but of whether the particular context of words and circumstances make it not only an empowering word but indicate circumstances in which the power is to be exercised - so that in those events the 'may' becomes a 'must'. … Today it is enough to cite Julius v. Bishop of Oxford; and add in this Court Ward v Williams. But I select one reference out of this multitude: Macdougall v Paterson [(1851) 11 C.B. 755 [138 E.R. 672]]. There Jervis C.J. said in the course of the argument [at 766] "The word 'may' is merely used to confer authority: and the authority must be exercised, if the circumstances are such as to call for its exercise". And, giving judgment, he said [ at 773]:
"We are of opinion that the word 'may' is not used to give a discretion, but to confer a power upon the court and judges; and that the exercise of such power depends, not upon the discretion of the court or judge, but upon proof of the particular case out of which such power arises."
I consider that to be directly applicable to the present case. If the Commissioner, having considered the matter, is satisfied of facts out of which the power to allow a rebate arises, he cannot nevertheless refuse to allow it."
53 Commissioner of State Revenue v Royal Insurance Australia Ltd (1994) 182 CLR 51 was another case dealing with a taxing statute. There the Court held that in the absence of clear words, the word "may" should not involve the use of discretion when the question related to the refund of overpaid tax. Referring to Ward v Williams, Mason CJ noted, at 64, that the Court there pointed out that:
"the question whether a public officer, to whom a power is given by facultative words, is bound to exercise that power upon any particular occasion, or in any particular manner, is to be solved from the context, from the particular provisions, or from the general scope and objects of the enactment conferring the power."
54 Mason CJ considered that in the context of the taxation statute under consideration, the foremost consideration was that there was nothing in the statute which entitled the Commissioner to "levy, demand or retain any monies otherwise than in payment of duties and charges imposed by or pursuant to the Act".
55 Brennan J expressed the principle in traditional terms at 84-5:
"The question whether the repository of a discretionary power is under a duty to exercise the power depends upon the intention of the legislature as revealed in the language of the statute and, in ascertaining that intention, there is a prima facie presumption 'that permissive or facultative expressions operate according to their ordinary natural meaning'. Therefore, if the facultative term 'may' is used in the creation of a power, it does not in itself impose a duty to exercise the power but such a duty may be found in the statutory context in which the power is created. Thus, where a power is conditioned upon the existence of an event or upon the formation of a particular opinion by the repository of the power, the condition may sometimes be taken to specify the circumstances in which the power must be exercised."
56 A similar view to that expressed by Mason CJ was taken in The Commonwealth v SCI Operations (1998) 192 CLR 285. There McHugh and Gummow JJ said at 312:
"Legislation should not readily be construed as conferring upon the executive branch of government a discretion to retain, rather than an obligation to refund, moneys received under a statutory entitlement …"
57 Senior counsel for the claimants submitted that the deliberate use of the word "may" indicated that the word should be given its ordinary, that is a facultative, meaning. He submitted that the subject matter and importance of the cl 149 and its relationship with the general object of the Act and Regulations supported the view that cancellation was not imperative even if a ground for cancellation was made out. In particular, he submitted that the Regulation was "not intended to be for the benefit of persons who comply with its preconditions ie the Director-General. Rather it is a provision designed to avoid injustice". He added that it was apparent from other of the Regulations, particularly within Part 7 itself, that the drafter was cognisant of the distinction between facultative and mandatory provisions. I will return to that shortly. He submitted that the use of the facultative expression, having regard to the purpose of the legislative regime, indicated that the Director-General (or the District Court) was invested with a discretion to cancel or suspend a licence or not. Senior counsel summarised the claimants' position:
"There are some half dozen factors referred to by the High Court in Ward v Williams for the conclusion that when one is dealing with suspension or cancellation of privileges that the ordinary approach, particularly where the word 'may' is used, is that it confers a discretion."
58 He also submitted that there is an unbroken line of authority in this Court dealing with cancellation of licences to the effect that the use of the word "may" conferred a discretion. Reference was made to Derisi v Vaughan [1983] 3 NSWLR 17 and Said v District Court (1996) 39 NSWLR 47.
59 In Derisi v Vaughan the Court was concerned with the provisions of the Commercial Agents and Private Inquiry Agents Act 1963 (NSW) and in particular the cancellation and disqualification provisions in s 11. Section 11(1) provided that the holder of a licence could be summonsed before a magistrate to show cause why a licence should not be cancelled and the person disqualified from holding a licence on three specified grounds, including "on any of the grounds on which objection may be taken to the grant of a licence under [s 10(6)]". Section 10 was the section which governed the grant and renewal of licences. Licences were only issued for a twelve month period. Pursuant to s 10(6) a licence could not be granted or renewed if an applicant had been convicted of an indictable offence. The section was mandatory in its operation. The licensee Mr Derisi had been convicted of such an offence.
60 Section 11(2) provided:
"Upon being satisfied of the truth of any such ground, the court may order that such commercial agent's license, private inquiry agent's license, or subagent's license, as the case may be, be delivered up in accordance with the provisions of this section and cancelled, and that such commercial agent, private inquiry agent, or subagent, as the case may be, be disqualified either permanently or for such period as the court specifies from holding a license under this Act, whether as a commercial agent, private inquiry agent, or subagent."
61 On the hearing of the summons the stipendiary magistrate Mr Vaughan considered he was compelled by s 11(2) to cancel the licence once the ground for cancellation was made out. The New South Wales Court of Appeal held, however, that the section conferred a discretion. The Court acknowledged that there was dissymmetry between s 10(6) if s 11(2) was construed as conferring a discretionary power. If it was construed as a mandatory provision, there would then be consistency between related provisions, an argument which the Court thought "might well be persuasive if there were not an indication within s 11(2) itself militating against its acceptance".
62 In looking at s 11(2) itself, the Court noted that it conferred two independent powers - one of cancellation and one of disqualification. It found that the disqualification power was, in substance, a discretionary power. Having found that the disqualification power was discretionary, it considered that the internal structure of the subsection, where "the same 'may' … governs both powers", was such to require that the cancellation power be given the same construction as the disqualification power. The Court therefore held that the cancellation power in s 11(2) was discretionary in nature. The Court noted that Hoban v Davey [1972] 1 NSWLR 59 was authority to the same effect, on the same section, and, in any event, as a matter of precedent, governed the situation.
63 Commissioner of Police v Payne (1998) 47 NSWLR 245 was a first instance application of Hoban v Davey and Derisi v Vaughan.
64 I do not consider that Hoban v Davey and Derisi v Vaughan have anything to say about this case. As with all authorities in this area, they are cases dependent upon the construction of the particular provision under consideration. There was a grammatical feature particular to that subsection which caused the Court to construe the power conferred as being discretionary.
65 The same may be said of the other authorities to which the Court's attention was drawn or which research has revealed: see for example NJ & JW Caldwell v Brennan (1995) 120 FLR 24 - dealing with s 45 of the Workers Compensation Act 1987 (NSW); DPP v West (2000) 48 NSWLR 647; and Said v District Court in respect of s 60 of the Business Franchise Licenses (Tobacco) Act 1987 (NSW).
66 In Said's, case s 60 of the Act conferred a power upon a Court to declare that tobacco seized by the authority under the Act to be forfeit to the Crown. It was thus a penal provision. Gleeson CJ, after examining the section by itself, in the context of the statute as a whole, and its history, held the provision was discretionary. He summarised his conclusion at 55:
"There is no reason, in principle or policy, to deny this degree of flexibility in the practical application of s 60. It does no violence to the language of the statute. It is consistent with the scheme of the statute in relation to the protection of the interests of third parties. It recognises a wider, rather than a narrower, judicial discretion, which in matters of punishment is generally to be preferred. Finally, it resolves an ambiguity in a penal statute in favour of the subject."
67 The considerations which led his Honour to that conclusion do not apply here.
68 It is useful at this point to return to the principles which emerge from the authorities to which I have referred, interposing first the indicative rule of statutory construction in s 9 of the Interpretation Act that the word "may" indicates a discretion is conferred on the recipient of the power. Given that starting point, the question to be determined is whether the context of the particular terms of the provision in question or the general scope and object of the legislation indicates that the provision requires the power to be exercised.
69 Generally, if the power is not circumscribed by context or circumstances, it will be permissive or discretionary: see Finance Facilities per Windeyer J at 134. By contrast, the power is likely to be required to be exercised if the provision specifies those who have the right to call for the exercise of the power and the circumstances or preconditions for its exercise. Put another way, if a provision is for the protection of a private right in specified circumstances, it is likely that the power must be exercised if the conditions for its exercise are made out. However, the fact that there is no private right to be protected is not determinative: see R v Tithe Commissioner per Coleridge J.
70 It is always to be borne in mind however, that these matters are but considerations which might point in one direction rather than the other. They do not diminish or qualify the dual starting point that regard must be had to the context in which the particular provision is found and the general scope and objects of the provision: Ward v Williams. This is demonstrated in both Finance Facilities and Royal Insurance Australia. Admittedly, in both cases, the legislature did specify the persons for whose benefit the provision was directed. However, that factor did not feature in the approach of the Court to the determination of the question whether the power conferred was or was not discretionary. Rather, the focus was on the scope and objects of the provision in question. Underlying each case was a recognition that as a matter of public policy, a taxing authority has no right to monies (including retained monies) other than as specifically commanded by the statute.
71 What then, is the nature of the power under cl 149, which uses the facultative expression "may"?
72 The Poisons and Therapeutic Goods Act is "[a]n Act relating to the Regulation, control and prohibition of the supply and use of poisons, restricted substances, drugs of addiction, certain dangerous drugs and certain therapeutic goods …". The Act contains a Poisons List (s 8) involving the classification of eight different type of poisonous, dangerous, therapeutic and addictive substances. The manufacture and supply of goods specified in the Poisons List and relevantly of addictive substances is strictly controlled. The extent of the control is demonstrated by the Regulation of the packaging, labelling, storage, prescribing and recording of such goods as well as the Regulation of their supply (and in the case of addictive substances, their manufacture and supply). In so far as is relevant here, the Regulation of the supply of addictive drugs is facilitated by the system of licensing. The licensing Regulations make lawful what would otherwise be unlawful. This is underscored by cl 145(3) which provides that a licence is ineffective unless its conditions are complied with.
73 A most curious feature of the licensing provisions, given the otherwise strict control of addictive substances, is the almost complete absence of pre-conditions to the grant of a licence. Only two matters are prescribed, and the first is clearly discretionary - that the Director-General "may refuse an application if of the opinion that the applicant is not a fit and proper person to hold the licence": cl 143(1A). The second is, in my opinion, mandatory. "A licence may not be issued unless the Director-General is satisfied that the premises to which the application relates are appropriate for the … supply of drugs of addiction": cl 143(2). There is also a curious disjunction between cl 143(1A) and cl 149 relating to the cancellation or suspension of a licence, para (d) providing that the power of suspension or cancellation is available where a person "is no longer a fit and proper person to hold the licence..". Notwithstanding this disjunction, two things emerge from cl 149: (i) the cancellation/suspension power is directed at ensuring compliance with the regulatory regime - see for example, paras (b) and (e), itself a matter of public importance - and (ii) it ensures that the public interest is protected- see for example paras (c), (d) and (f).
74 The extensive regulatory regime, including the features to which I have just referred, makes it unarguable that the Act and Regulations are directed to public health issues and facilitates a highly important public policy matter - that there should be the controlled supply of methadone, itself a drug of addiction, to registered addicts. The specific provisions of cl 149 (paras (c), (d) and, in particular (f)) within that context, are directed to the protection of the general public and the public interest. Clause 149 does not, therefore, fall into Lord Cairns' category of being a power to be used for the benefit of specified persons - a factor pointing towards there being a discretion in the Director-General.
75 The claimants also relied upon the difference in language used in Pt 7 itself. For example, cl 142, which relates to applications for licences uses the clearly mandatory expression "must" - the application must be in the approved form; must be accompanied by the application fee and must be lodged with the Director-General. By contrast, cl 145 which empowers the Director-General to impose, vary and revoke conditions of a licence uses the facultative "may" and is clearly discretionary.
76 However, both the context of cl 142 as well the provisions of other clauses of the Regulations point to the opposite conclusion. Clause 142 is, in effect, an administrative provision. It prescribes how and to whom an application for a license must be lodged. The underlying purpose of the prescriptive nature of the clause is simply administrative efficiency. Save that the language used in cl 142 may indicate that the drafters of the Regulations knew what language to use for a strictly prescriptive provision, I do not consider it assists in the construction of cl 149. Of much greater relevance is cl 143(1). It provides that the Director-General "may issue" or "may refuse" an application for the issue of a licence. It clearly imports a discretion. If the argument of the appellants is accepted, the drafters of the Regulation understood the difference between obligatory and discretionary language, it was unnecessary to provide alternatively that the Director-General "may refuse" an application. The clause would have been clear and operated effectively had its language been that the "Director-General may issue an applicant a licence". However, the legislature has, in cl 143 used specific and alternative language to denote the existence of a discretionary power. This is to be contrasted with cl 149 where no such distinction is drawn
77 The final matter relied upon by the claimants is the context of cl 149 itself. It was submitted that if the power to cancel or suspend must be exercised if a precondition for its exercise is made out, it means that a minor infraction of, for example, a condition of a licence, would result in a cancellation or suspension of a licence. There is merit in this argument, but it is one which can be argued both ways. Although an infraction of a condition may be minor, the fact is, a licence permits what would otherwise be unlawful. That is a significant matter in itself and reinforces the strictures of the regulatory regime. The Regulation also makes provision for minor infractions in the case of, for example, breach of condition or a late payment of a licence fee by providing for suspension as an alternative to cancellation. The other matters specified in cl 149 of their nature, tend not to involve minor or trivial matters. However, the provision allows flexibility in dealing with such matters by permitting suspension as an alternative to cancellation.
78 This leads directly to the next consideration. The most significant factor which points to the power in cl 149 being one which must be exercised, is the very fact that the circumstances of its exercise are clearly and unambiguously circumscribed by the provision itself. The catalogue of circumstances in which the licence may be suspended or cancelled both indicates the degree of control over the lawful supply of drugs of addiction and recognises, in para (f) in particular, that the impingement on the rights of the public must, in a relative sense, be minimised. The fact that para (d) involves the Director-General having formed an opinion about the continuing fitness of a person to hold a licence does not detract from the basic premise that the circumstances calling for the exercise of the power are specifically circumscribed by the terms of the provision: see Finance Facilities.
79 A further indicator pointing towards a construction that the power must be exercised, if the conditions for its exercise are met, is the nature and extent of the Regulation making provisions of the Act. The Act is unusual in having two Regulation making provisions. Section 45C is in typical form conferring, in subs (1), a general power to "make Regulations not inconsistent with the Act". Section 24, by contrast, specifically empowers the making of Regulations "for the purpose of preventing the improper use of drugs of addiction". Section 24(2) provides that Regulations shall be made under the Division (which relates to drugs of addiction) relating to the matters specified therein, including the issue, grant and renewal of licences for the manufacture and supply of such drugs.
80 The significance of s 24(2) is that it reflects the legislature's intention that the implementation of measures controlling the supply of drugs of addiction not be left to executive discretion. In this way, it reinforces the nature, scope and purpose of the legislation. The legislature has recognised that certain drugs of addiction should, as a public health issue, be available. The requirement that Regulations must be made in respect of the licensing of their manufacture and supply creates, by way of mandatory legislative direction, a means of ensuring that there is, in fact, in place the means of providing addictive drugs to the community under strictly controlled circumstances.
81 In my opinion, upon its proper construction, cl 149 confers on the Director General a power which must be exercised if one or more of the matters in the clause are established.
82 The licensing system created by the Regulations is to permit and control the circumstances in which addictive drugs may be supplied to the community. It reflects and implements important public policy considerations in relation to drugs of addiction. The matters specified in cl 149 in relation to cancellation are a reflection of those same public policy considerations; the strict control of the supply of drugs of addiction with the community requires that conditions of a licence be complied with and that the regulatory regime, including the payment of licence fees, be respected; that persons who are not fit or proper persons to hold a licence should not hold a licence; that persons who commit drug related offences or offences against the Act or Regulations should not hold a licence. Likewise, if the amenity of the area is disrupted by the supply of methadone, then the public interest is adversely affected.
83 The word "may" is directed, not to a discretionary exercise of the power as such but to its manner of exercise. It empowers the Director-General to engage one of two alternative sanctions: suspension or cancellation.
84 It follows that the first basis for relief has not been made out.