James Hird and the future of procedural fairness by private bodies

Though footy may rule Melbourne, the AFL is not part of government.*  So why did James Hird allege that the AFL should have accorded him procedural fairness – an administrative law doctrine – in determining whether he breached the AFL Rules?

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:

Penina Berkovic
Principal Solicitor
t 8684 0226
penina.berkovic@vgso.vic.gov.au

The ICT market in the cloud

If your Department is in the market for some information technology and communications (ICT) products and services, you’ll need to master the new eServices Register.

The Register replaces the eServices Panel and eServices Online.  It has been in place since 1 July 2013.  All Departments and agencies must use the new Register for any new ICT procurement.

Unlike the Panel, the Register is open to all companies that agree to the Government's terms and conditions. There is no limit to the number of suppliers on the Register, improving opportunities for small to medium ICT businesses. 

The Register is an online cloud-based portal that allows Government purchasers to provide feedback on service delivery.  Rather than using a formal system of rating for suppliers (which was thought to be too subjective and unfair), the Register allows Government purchasers to see what engagements a supplier has had with other Government project officers. This allows Government users to check with their colleagues about suppliers’ performance.

Purchasers must still define their requirements and issue a Statement of Work (specification) for suppliers to quote on. However, the entire procurement will be conducted within the Register portal.

Former Panel suppliers are already eligible to join the Register.  Joining the Register also enables suppliers to identify possible partners, particularly small and medium companies who may not be able to respond to a request on their own.

Departments have greater flexibility with procurements under the Register.  Use of the Register will be in accordance with departmental procurement plans.  Where department procurement plans are not yet in place, interim approach to market arrangements apply.  These have been determined by the VGPB.

The old online system is accessible only for the completion of existing Panel engagements, including completing end project reporting.

So which contract applies?

• All contracts commenced before 1 July 2013 will continue to be managed and completed under the existing eServices Panel contract.
• Between 1 July 2013 and 31 August 2013, an interim contract is available for use, which will be the same as the existing contract, subject to some small changes to reflect the new arrangements. These include removing references to lead agency oversight and the distinction in service categories. Further, the rates under the Panel arrangements no longer apply. This will be replaced by a new eServices contract. The interim contract and new eServices contract will not be mandatory to use.
• RFPs/RFTs issued by Government agencies before 1 July will continue to operate using the existing contract. Similarly, all existing purchase order contracts will continue to operate for the term of those contracts.
• The new eServices contract is being circulated for consideration. DSDBI has suggested that the new contract should be ready by 1 September 2013. 

For more information about ICT procurement, please contact

Sam Funnell
Managing Principal Solicitor
t 9947 1407
sam.funnell@vgso.vic.gov.au

When is it OK for a public servant to tweet political opinions?

Are you a public servant who uses social media to express political views?  A recent Federal Circuit Court decision involving a pseudonymous Twitter account has once again highlighted the importance for public servants to 'look before you leap' into social media and for Departments to provide clear guidance about political comments by public servants, whether on social media or in other public fora.

The decision

The decision is Banerji v Department of Immigration and it raises more questions than it answers.  Being a Federal Circuit Court decision, it is not binding on State courts or the State Government.  Furthermore, the Court was deciding an application for an injunction and the decision is not a final determination of the limits of a public servant's freedom to engage in social media.  However, the circumstances of a public servant tweeting critical comments about her employer are probably not unique to the federal sphere and it is likely that a Victorian court would consider the case if a similar issue arose with Victorian public servants.  It is therefore a timely reminder to revisit the difficult issue of what kind of online political discussions Victorian public servants may legitimately engage in.

Michaela Banerji works for the Department of Immigration.  She has a Twitter account under the pseudonym @LaLegale.  She used this account to criticise the immigration policies of the Federal Government, the conditions in detention centres and comments made on these issues by various Ministers and government employees.

Ms Banerji claimed the tweets were a ‘simple expression of political opinion, made in her own time away from work’.  The Department claimed that the tweets breached:

• her contract of employment;
• the Department’s Social Media Guidelines; and
• the Australian Public Service’s Code of Conduct.

Judge Neville declined to issue an injunction preventing Ms Banerji’s dismissal on the basis that the application for an injunction was premature, as the internal departmental processes had not yet been finalised. 

Twitter and the implied freedom of political communication

In doing so, his Honour made some brief comments about Ms Banerji's Twitter use, and whether the implied constitutional right of freedom of expression protects it, which set the Twittersphere alight and gave many a public servant pause for thought before pressing 'retweet'.

An implied right to freedom of political communication exists in our Constitution, limiting federal or State ‘laws’, be they exercises of legislative or executive power.  Free communication on matters of government and politics is necessary for the system of representative and responsible government established by s 7 and s 24 of the Constitution, the High Court unanimously reasoned in the 1997 case Lange.  The freedom is not absolute but if limitations are to be imposed on it, those limitations must be ‘reasonably appropriate and adapted’ to maintaining the system of government prescribed by the Constitution.

As his Honour was deciding whether to grant an injunction, Judge Neville did not need to consider whether dismissal of Ms Banerji would be reasonable.  His Honour simply found, without explanation, that the implied freedom did not provide ‘a license… to breach a contract of employment’.

This is an interesting finding. Entry into contracts is a textbook example of an exercise of executive power.  And the implied freedom of political communication can curtail executive power.  This is settled law, even though the only aspect of executive power that has been litigated for infringing the freedom is the exercise of delegated legislative power.

Perhaps some contracts lack a sufficient connection with a ‘law’ to fit within the Lange test.  But Commonwealth public servant employment contracts are so intertwined with Public Service Act 1999 that it is surely arguable that the disciplinary provisions within this Act must be interpreted in line with the freedom.  A discussion for a later judgment, perhaps?

In the meantime, there are only questions and a degree of angst about acceptable online behavior for public servants.  When is tweeting a political opinion OK?  Is there a difference between pseudonymous accounts and accounts that identify the public servant?  What if Ms Banerji had worked for the Department of Treasury while criticising the Department of Immigration?  Perhaps it was the way in which Ms Banerji expressed her tweets, which were described as 'sometimes mocking, sometimes critical'?  Would it have been OK if Ms Banerji had a sufficient disclaimer in her bio? If she was praising her Department rather than criticising? If she was simply re-tweeting the views of others?

How would Ms Banerji have fared if she were a Victorian public servant?

Victorian public servants are bound by the Code of Conduct for Victorian Public Sector Employees (No 1) 2007, the Public Service Standards Commissioner’s ‘Guidance for use of social media in the Victorian public sector’ and individual Departmental policies, such as the Department of Justice’s Social Media Policy.

Clause 2.2 of the Code requires public servants to ‘conduct themselves in an apolitical manner' and to avoid 'in the course of their work, any participation in activities which support a political party or independent candidates including attendance at fund raising or similar events’.  Whilst Ms Banerji was expressing political views, she claimed not to be doing so in the course of her employment - although it is interesting to note that Ms Banerji is a 'public affairs officer' responsible for communicating the Department's message.  Ms Banerji's tweets were not in support of a political party or candidate.

Clause 3.5 of the Code states: ‘When making a comment in a private capacity, public sector employees ensure their comments are not related to any government activity that they are involved in or connected with as a public sector employee and make it clear they are expressing their own view. They ensure personal comments do not compromise their capacity to perform their public sector role in an unbiased manner’.  Ms Banerji was tweeting on matters relating to government activity with which she was connected.  But did her views prevent her carrying out her role without bias?

The Department of Justice policy that public servants should not ‘make any comment or post any material that might otherwise cause damage to the department's reputation or bring it into disrepute’ is stated to apply only ‘[w]here your comments or profile can identify you as a public servant’. 

The issue of how much political discussion is too much for a public servant has always been a difficult one, with clues to the answer lying in the Constitution Act 1975, the Public Administration Act 2004, the Charter of Human Rights and Responsibilities Act 2006, the VPS Code of Conduct and Departmental policy.  The issue is not a new one, but social media has made it more visible.

While the answers remain elusive, Victorian public servants engaging in online or offline political discussion would be wise to read and regularly re-read the VPS Code of Conduct and their Department's policies and to 'think before you tweet'.  Victorian departments and agencies should also regularly review their social media and other policies to check whether they are providing useful and specific guidance on how their employees may participate in political discussions in their private lives.

For advice on social media use by Government and public servants, please poke:

Katie Miller
Principal Solicitor
t  8684 0460 
katie.miller@vgso.vic.gov.au

Deep pockets to no longer cop it

Governments around Australia introduced proportionate liability legislation in the early 2000s to help cut the price of insurance.  They intended to prevent ‘deep pocket’ defendants being held entirely liable for losses to which others contributed.  Yet judges have since interpreted the legislation to allow maximum recovery to plaintiffs.

The High Court has recently handed down a decision that restores the original aims of the proportionate liability regime.  It is good news for a ‘deep pocket’ defendant like the government, as its liability (in a non-personal injury action) is likely to be limited to that for which it is actually responsible, as was always intended by the legislation. 

The decision is Hunt & Hunt v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10. 

Facts

Mitchell Morgan was a lender. Hunt & Hunt were their lawyers. They had prepared a mortgage instrument for a loan from Mitchell Morgan to a Mr Vella and a Mr Caradonna.  The instrument was registered against property owned by Mr Vella alone. Unbeknownst to either the lender or the lawyers, Mr Caradonna had forged Mr Vella's signature on the loan documents and on the mortgage instrument.  Mr Caradonna spent the loaned money and then become bankrupt.

Mitchell Morgan therefore could not recover the money from Mr Caradonna.  Nor could it recover from Mr Vella, as the mortgage instrument was void because of the forgery.  So it turned to Hunt & Hunt…

Trial history

The NSW Supreme Court held that Hunt & Hunt had been negligent in preparing the mortgage instrument. Hunt & Hunt did not appeal this finding.  The issue for the High Court was whether the proportionate liability provisions applied, limiting Hunt & Hunt’s liability to a percentage of the total loss that reflected their culpability.

Justice Young of the Supreme Court had found they did and apportioned only 12.5% of the liability to Hunt & Hunt.  But the Court of Appeal found the provisions did not apply, as the loss caused by Mr Caradonna was different to the loss caused by Hunt & Hunt.  It found that Mitchell Morgan was therefore entitled to recover 100% of its damages from Hunt & Hunt.

High Court

A 3:2 majority of the High Court agreed with the trial judge, finding that the proportionate liability regime under Part 4 of the NSW Civil Liability Act 2002 (which is in all material respects identical to Part IVAA of the Victorian Wrongs Act 1958) applied. 

The Court found that the distinct wrongs committed by Mr Caradonna and by Hunt & Hunt had caused a single economic loss for Mitchell Morgan, being its inability to recover the money lent to Mr Caradonna.  Mr Caradonna and Hunt & Hunt were therefore concurrent wrongdoers, bringing the NSW proportionate liability provisions into play.

The Court clarified that ‘it is not a requirement of proportionate liability that the actions of one independent concurrent wrongdoer contribute to the negligence of another. The question is whether each of them, separately, materially contributed to the loss or damage suffered’. 

In other words, it was enough that Mr Caradonna and Hunt & Hunt had both contributed to Mitchell Morgan’s loss, broadly described as its inability to recover the money that it had advanced.

Implications

This decision will be of significance to solicitors, insurance brokers, valuers, accountants and other professionals whose calling requires them to protect clients from the economic consequences of wrongs committed by others.  Proportionate liability will likely now reduce these professionals’ exposure in many cases.

However, it is important that any government body in negligence proceedings (other than personal injury) identify all possible concurrent wrongdoers. This now includes any person who materially contributed to the loss. It does not matter that each concurrent wrongdoer may have caused the loss in a different way or even that one of the wrongdoers acted fraudulently.

For example, this decision could apply in property damage or economic loss cases that name an emergency service provider as a defendant (assuming a duty of care was owed, which would depend on the circumstances). If a fire fighting authority negligently failed to stop a chemical leak caused by a third party, this decision suggests that the fire fighting authority and the third party would be concurrent wrongdoers.   This means that the fire fighting authority would only have to pay a portion of the total damages, rather than the full amount.  As such, this decision may prove to be good news for emergency service providers in certain classes of proceedings for damages. 

What do you think about this development? Will it achieve the goals of the proportionate liability regime?

For more information on this decision or for advice on your dispute resolution strategy, please contact:

Jon Bayly
Principal Solicitor
t  8684 0223 
jonathan.bayly@vgso.vic.gov.au

Farewell party-party

Since 1 April 2013, the Supreme Court of Victoria has had a new costs regime.  It applies to all proceedings, even if they were commenced before that date.

It’s likely to result in more generous costs orders.  Parties currently in litigation should consider this as part of their dispute resolution strategy.

Here are the major changes to the Rules that you need to know:

• No more ‘party-party’ costs.  Previously, there were three ways the Court could calculate the legal costs payable by a party under a costs order:
• party-party - the default method, based on what was considered to be the ‘necessary or proper’ work for a particular case;
• solicitor-client - costs ‘reasonably incurred and of reasonable amount’; and
• indemnity - all costs incurred, unless unreasonable.

The new default method for calculating costs is the more generous solicitor-client basis.  This has been renamed the ‘standard basis'.  Indemnity costs may still be ordered.

This means that under a standard costs order, successful litigants will recover more of their legal spend than they would have under the old regime. 

• Interlocutory costs are not now recoverable until the end of the proceeding (unless leave is sought).
• A successful party with a costs order in their favour will generally be entitled to:
• reserved costs (previously, the Court would make orders on a case by case basis);
• the cost of an interlocutory application (previously, parties typically bore their own interlocutory costs); and
• costs from amending a pleading (previously, the amender typically bore the cost).

The Scale of Costs is now more generous, more simplified and more in line with modern litigation practices (bad news for all the litigators out there conducting proceedings by telex). 

Five changes you might be interested in:

• The Scale is now exclusive of GST.
• Use of the six-minute unit. Solicitors’ time for attendances will now be claimable in six-minute units, which is the time recording system used by most private law firms (not VGSO – we only record the time we actually spend.  Crazy, we know…).  A six-minute unit is calculated at $36 plus GST per unit.  This amounts to a higher hourly rate than previously (where the amount recoverable depended on the nature of the attendance). 
• Maximum fees payable for counsel.  Unless otherwise ordered, recovery of counsel’s fees is capped at a maximum of $5000 plus GST per day for junior counsel and $7500 plus GST per day for silks.  
• The cost of photocopying (previously claimable at $2.30 per page) is now entirely discretionary.  The Supreme Court has indicated that copying is likely to be allowed at 22 cents per printed side of page where copied in-house.
• The scale provides for the sending of messages that are 20 words or less by email or SMS or other electronic means.

What do you think about these changes? Do you think it will affect parties’ litigation strategy?

For more information on the changes to the Supreme Court costs regime or for advice on your dispute resolution strategy, please contact:

Andrew Suddick
General Counsel (Litigation)
t  8684 0458 m 0408 037 927
andrew.suddick@vgso.vic.gov.au