Procedural fairness (also known as natural justice) forms part of administrative law, being the body of law that describes how governments must behave. It is one of the grounds for which an aggrieved party can ask the Supreme Court to review a government decision. There is a common law presumption that procedural fairness applies to decisions made under statute that affect rights and interests. But procedural fairness can also apply to private bodies that make decisions affecting rights and interests, such as disciplinary decisions, where such decisions are of a ‘public’ character.
Government lawyers regularly contract with such bodies or provide them with policy guidance, so we thought we'd recap the various ways in which private bodies can be required to accord procedural fairness in their decision making.
The precise steps a private body must take to fulfill its procedural fairness obligations depend, of course, on the relevant facts and circumstances, a topic beyond the scope of this post. Give one of our lawyers a call if you need specific advice on what is required for a particular decision.
Decisions of clubs and societies
The Court may step in to protect due process in decisions made under the rules of trade unions, political parties, racing stewards, sporting associations and professional bodies where financial interests or reputation are at stake, even where the decision-maker is not given powers under statute. However, this is usually not a judicial review action, but an action for breach of contract, or for unreasonable restraint of trade.
The requirements of procedural fairness can differ for these non-statutory bodies. It depends on their rules and may depend on the decision at hand. Where a Court determines that procedural fairness would apply to a decision of a club or society, the minimum procedural fairness obligation would include that:
- A person accused should know the nature of any accusation made against him or her;
- The person should be given an opportunity to state his or her case;
- The tribunal should act in good faith.
- The person must have a proper hearing, with access to all evidence against him or her.
When parliament has created a separate requirement that the body must provide procedural fairness
Parliament can create a requirement that a private body must provide procedural fairness if it is to be registered with government, such as s 4.3.1 of the Education and Training Reform Act 2006 for private schools or s 88 of the Cooperatives Act 1996 for co-operatives. This does not provide a basis for judicial review. However, for example, a parent of a private school student could ask the VRQA to withdraw a private school's registration if it failed to afford procedural fairness to a student.
When a contract between a private body and an individual requires procedural fairness
This will provide the individual with a contractual remedy if procedural fairness is not accorded. However, it will probably not provide a judicial review remedy, even if the private body was empowered to enter into a contract by a statute.
What about when governments transfer decision-making responsibilities to outside bodies?
The million dollar question. In Australia the law is unsettled but it looks ripe for growth.
The High Court's 2003 decision of NEAT Domestic Trading found that judicial review will not cover private bodies making decisions simply because the decisions are given force by an enactment. It will depend on the particular legislation.
NEAT was a wheat grower who sought permission to export wheat. Under the Wheat Marketing Act 1989, bulk export of wheat was unlawful without the consent of the Wheat Export Authority. The WEA could not give its consent without the approval of a corporation owned by wheat growers, AWB International Ltd. A 3:2 majority of the High Court found that AWBI's decision to withhold its approval was not a judicially reviewable decision because its capacity to provide an approval was not conferred by the Act but from the companies legislation under which it was incorporated. This was so even though AWBI's approval was a condition precedent to the WEA consenting under the Act.
But the case had strong dissents from Gleeson CJ and Kirby J. And since then, the High Court and the Victorian courts have made noises suggesting judicial review remedies (and thus procedural fairness obligations) follow when governments outsource decision-making…
In the unanimous 2011 decision M61, the High Court found that external contractors making decisions under the Migration Act 1958 were obliged to afford procedural fairness. This was because the contractors were taking steps under the Act, and because their inquiries had a direct impact on the rights and interests of the plaintiffs, being asylum seekers whose detention was prolonged as a result of the contractors’ inquiries.
In Victoria, there is a growing body of judicial support for the Datafin principle – the idea (from a 1987 English Court of Appeal case) that a decision of a private body may be amenable to judicial review if the decision is made in the performance of a ‘public duty’ or in the exercise of a power which has a ‘public element’. This principle extends judicial review to government decision-makers who act under non-statutory powers and to private regulatory bodies whose functions have a sufficiently public effect.
The two minority judges in NEAT appeared receptive to the logic of the principle, and thus its position in Australia remains unsettled until tackled by the High Court.
But it has some fans in Victoria, Justice Kyrou observing in 2010 that:
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.
And last year, the Court of Appeal described the principle as ‘appealing’ and ‘logical’ in light of the ‘increasing privatisation of governmental functions in Australia.
Masu Financial Management v Financial Industry Complaints Service No 2 is an example of the types of bodies and decisions that could be caught by the Datafin logic. In that decision, Shaw J held that a decision of the FICS was amenable to judicial review because it exercised powers of a public nature. FICS was a private incorporated body responsible for administering a complaints resolution scheme. It was established by the financial services industry and was not based in statute.
So we think the expansion of procedural fairness obligations to private bodies will be a hot issue in the near future. And not just because plaintiffs want to hang out with the likes of Hirdy in the Supreme Court foyer.
* it may have some quasi-religious status, but that’s another post for another day…
If you are in the Victorian government and need guidance on procedural fairness obligations, please contact:
t 8684 0226