FEDERAL COURT OF AUSTRALIA

Quintano v Minister for Finance and Deregulation [2014] FCAFC 159

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the respondent's costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

1        Luke Quintano was shot in the head during a brawl in a nightclub in December 2002. As a result he is severely disabled and has no capacity for remunerative employment. He sued the nightclub owner and the security company with which the owner had contracted ("the security firm") for damages in negligence. Before the hearing of the claim the nightclub owner went into voluntary administration and shortly thereafter, into liquidation. Leave was granted by the NSW Supreme Court to proceed against the company in liquidation. The nightclub owner was insured with International Unity Insurance (General) Ltd ("IUI General"), a company registered in the Solomon Islands. But neither IUI General nor its agent, International Unity Insurance Pty Ltd ("IUI Australia"), through which IUI General issued the insurance, was registered in Australia under the Corporations Act 2001 (Cth) and, before the hearing of Mr Quintano's claim, both were found to be insolvent. On 2 June 2004, on the application of the Australian Securities and Investments Commission ("ASIC"), the two companies were wound up: Australian Securities and Investments Commission v International Unity Insurance Pty Ltd [2004] FCA 1059; Australian Securities and Investments Commission v International Unity Insurance (General) Limited [2004] FCA 1060.

2        The negligence claim was heard some four years later (in July and August 2008) and judgment was published in May 2009: Quintano v B W Rose Pty Ltd [2009] NSWSC 446. Mr Quintano succeeded against the nightclub owner but failed against the security firm. The trial judge assessed damages at over $6.5 million plus the costs of funds management but reduced them by 50% for contributory negligence. Judgment was entered for $4,063,802.50. Mr Quintano has not and will not recover any part of that sum from either the nightclub owner or its insurer.

3        At all material times s 33 of the Financial Management and Accountability Act 1997 (Cth) ("FMA Act") (see now Public Governance, Performance and Accountability Act 2013 (Cth), s 65) permitted the Finance Minister to authorise the making of one or more "act of grace" payments if he considered it appropriate to do so because of special circumstances, although the payment or payments would not otherwise be authorised by law or required to meet a legal liability.

4        In February 2011 Mr Quintano asked the Minister to approve such a payment. Shortly put, he contended that the Minister should make the payment because of "a failure of prudential and corporate regulation", specifically the failure of the Australian Prudential Regulation Authority ("APRA") (and/or ASIC) to detect and prevent the unregulated and/or fraudulent conduct of the insurer and to warn the insured in sufficient time to enable it to "make alternative arrangements" (presumably to insure with another company) or to try and minimise its risks.

5        The Minister refused the application. Mr Quintano applied for judicial review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) ("ADJR Act"), but his application was unsuccessful.

The application for judicial review

6        In the proceeding below, Mr Quintano alleged that the Minister "erroneously determined … that there were no special circumstances within the meaning of s.33 of the FMA Act … because 'it would not be feasible for [the Australian Government] to accept responsibility for every situation involving the evasion of a regulatory regime' and determined 'that this view was confirmed by the legislative immunity given to APRA'" by s 58 of the Australian Prudential Regulation Authority Act 1988 (Cth) ("APRA Act"). In the originating application this was said to be an error of law for three reasons:

(1)    because the feasibility to which the Minister referred was an irrelevant consideration;

(2)    because the Minister failed to recognise that the legislative immunity cannot remove APRA's "actual" responsibility and "[t]he very fact of the immunity brings the matter within s.33 of the FMA Act, not the opposite, which appears to be the reasoning of the [Minister]";

(3)    because the Minister failed to have "proper regard" to the meaning of the term "special circumstances" by focussing on the wrong question.

7        The submissions traversed matters that were outside the terms of the originating application, criticising not only the conduct of APRA, but also ASIC.

The reasons of the primary judge

8        The primary judge described the originating application as "discursive" and, noting that some of the matters it raised were not argued at the hearing, declined to reproduce or summarise it. His Honour said (at [14]) that the principal argument put by Mr Quintano was that the Minister did not turn his mind to the question of whether special circumstances existed to justify a payment under s 33 "essentially because the [Minister] did not recognise that there may be a moral (as opposed to a purely legal) dimension to the matters that are to be considered in deciding whether or not to make an act of grace payment pursuant to [the section]". He characterised the application as being founded on s 5(1)(e) of the ADJR Act (that the making of the decision was an improper exercise of the power) read with s 5(2)(b) of the ADJR Act (failing to take a relevant consideration into account) and also s 5(1)(f) (error of law). He noted that, as part of that argument, Mr Quintano contended that the submission he made to the Minister that there had been a failure in the Commonwealth's regulatory regime had not been considered.

9        Relevantly, his Honour made a number of pertinent observations.

10        First, he noted (at [8]) that it was for the Minister to determine what constitutes special circumstances justifying the making of an act of grace payment under s 33, having regard to any matter he thinks relevant "consistent with the subject, scope and purpose of the Act".

11        Second, he observed (also at [8]) that in exercising the discretion under s 33, the Minister must not make a decision that is unreasonable in a legal sense, by which he said he meant that "it must not be capricious, plainly unjust, or otherwise involve an abuse of power". He noted that Mr Quintano did not suggest that the Minister's decision was unreasonable in the legal sense.

12        His Honour rejected Mr Quintano's contention that the Minister had had not considered Mr Quintano's submission concerning the failure in the Commonwealth's regulatory regime.

13        On the principal question of the alleged failure to consider the "moral dimension" of the application, the primary judge said this:

It would necessarily involve an error of law for the respondent to consider the applicant's application on the footing that s 33 of the Act did not permit him to authorise an act of grace payment in circumstances where the Commonwealth (or one of its agencies) had no legal liability in relation to the loss to which the act of grace payment sought related. However, I am not satisfied that the respondent interpreted s 33 of the Act in this manner. Rather, the respondent seems to have proceeded on the basis that in the absence of legal liability, there was no reason for the Commonwealth to accept any moral responsibility for what occurred such as to justify the making of an act of grace payment to the applicant.

14        His Honour therefore rejected Mr Quintano's submission that the Minister had failed to turn his mind to the question of special circumstances.

The appeal

15        In his notice of appeal Mr Quintano alleged that the primary judge had erred in four respects:

(1)    in failing to determine whether the Minister had turned his mind to what special circumstances might justify an act of grace payment under s 33 and whether, on the facts of this case, there were special circumstances;

(2)    in failing to hold that the Minister had not considered whether there were special circumstances and, instead, "impermissibly focuss[ing] his reasoning on the ex post facto rationalisation … contained in the [Minister's] Statement of Reasons";

(3)    in failing to determine that the Minister had misunderstood the policy contained in Finance Circular 2009/09 (Discretionary Compensation and Waiver of Debt Mechanisms) ("the policy") and/or Mr Quintano's submission which (contrary to the Minister's finding) was consistent with the policy; and

(4)    in failing to grapple with Mr Quintano's argument that the Minister's decision to refuse the application was unreasonable or irrational.

16        On the last working day before the hearing of the appeal, Mr Quintano advised the Court and the Minister that grounds 1 to 3 were no longer pressed and provided the Court with a proposed amended notice of appeal, which confirmed as much, but which also contained two additional grounds to the effect that the primary judge erred:

(5)    in finding that the Minister took into account whether there was a moral obligation to make the payment when there was no evidence that he had; and

(6)    in failing to find that the Minister had inflexibly applied the policy and so:

(a)    impermissibly fettering his discretion; and

(b)    failing to properly consider Mr Quintano's submission on its merits.

17        It will immediately be apparent that only ground 5 raises a matter that was pleaded in one form or another in the originating application.

18        The Court granted Mr Quintano leave to rely on the amended notice of appeal. Accordingly, the appeal raises the following issues:

(1)    whether Mr Quintano should be permitted to argue on appeal matters that were not raised in the originating application;

(2)    whether, in any event, the primary judge failed to deal with Mr Quintano's argument that the Minister's decision was unreasonable or irrational;

(3)    whether, in any event, the Minister erred in law in determining the application by inflexibly applying the policy; and

(4)    whether there was any evidence to support the primary judge's finding that the Minister considered whether there was a moral obligation to authorise an act of grace payment.

Should Mr Quintano be permitted to argue on appeal matters that were not raised in the originating application?

19        In Water Board v Moustakas (1988) 180 CLR 491 at 497 Mason CJ, Wilson, Brennan and Dawson JJ observed:

More than once it has been held by this Court that a point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. Where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point, but otherwise the rule is strictly applied: see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483; 60 ALR 68 at 71; Coulton v Holcombe (1986) 162 CLR 1 at 7–8; O'Brien v Komesaroff (1982) 150 CLR 310 at 319.

20        Here, it is not suggested that the two arguments raised for the first time on appeal could possibly have been met by calling evidence below. No explanation was offered for the change of tack. Nevertheless, it is reasonable to infer that it is due to a change in legal representation. As the Minister did not object and as we have heard full argument, subject to ensuring that the Minister is protected in relation to costs thrown away as a result of the amendments, it is expedient and in the interests of justice to entertain the points.

Did the primary judge fail to deal with Mr Quintano's argument that the Minister's decision was unreasonable or irrational?

21        There can be no doubt that the primary judge did not consider whether or not the Minister's decision was unreasonable or irrational. He did not do so because he did not understand such an allegation to have been made.

22        At [8] of his reasons, having reflected on the breadth of the discretion given by s 33 of the FMA Act, his Honour observed in passing that in exercising the discretion "the Minister must not make a decision that is unreasonable in the legal sense". He explained that by that he meant that the decision must not be "capricious, plainly unjust, or otherwise involve an abuse of power". But in the present case, his Honour added, it was not suggested that the Minister's decision was unreasonable in the legal sense. Accordingly, his Honour did not proceed to consider whether it was.

23        We are not persuaded that his Honour erred in this respect.

24        First, as we have already observed, the issue was not raised in the originating application.

25        Ms Novak of counsel, who appeared for Mr Quintano on the appeal but not before the primary judge, submitted that, despite its omission from the originating application, the matter was "briefly touched on" in the written submissions below. She also submitted that the Minister briefly touched on the question in his written submissions. She said that she was instructed that the argument was principally addressed verbally.

26        Mr Quintano's written submissions below contain two scant references that could be relevant. The first appears at para 7 where Mr Quintano contended that in rejecting each of his submissions "the [Minister] erred in law by failing to exercise his discretion reasonably". That proposition appears in some introductory remarks that precede the submissions on the grounds of appeal. Two references appear in the footnote to para 7: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 ("Peko-Wallsend") esp at 39–40 (Mason J), Gibbs CJ and Dawson J agreeing at 30 and 71 respectively, and Toomer v Slipper [2001] FCA 981 at [31] (Weinberg J).

27        The contention was not developed. No application was made to the primary judge to amend the originating application to advance an additional ground encapsulating the contention.

28        The discussion by Mason J in Peko-Wallsend in the passage relied upon deals with the failure to take into account a relevant consideration as a ground of judicial review. The only reference in the judgment to a decision-maker acting unreasonably is at 41 where Mason J referred to the alternative ground of setting a decision aside as "manifestly unreasonable". In that context, his Honour referred to Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 at 228, 230, 233–4 in which Lord Greene MR said that this ground of review would only be made out if it were shown that the decision was so unreasonable that no reasonable person could have come to it ("Wednesbury unreasonableness"). Mason J noted the inclusion of a ground in those terms by ss 5(2)(g) and 6(2)(g) of the ADJR Act. But neither of these provisions was mentioned in either the originating application or the written submissions below. What is more, despite the argument put by Mr Quintano's solicitor in written submissions in reply in this Court, Ms Novak eschewed reliance on Wednesbury unreasonableness.

29        Weinberg J's remarks in Toomer v Slipper at [31] were extracted in full by the primary judge at [7]. They relate to the breadth of the Minister's discretion. They say nothing at all about unreasonableness or irrationality. Moreover, the issue was not considered anywhere else in the judgment.

30        The only other allusion to the point in Mr Quintano's written submissions below appears in para 22. Paragraph 22 was the last paragraph of the submission directed to the first alleged error of law described as follows:

Failure to have proper regard to the "special circumstances" constituted by the absence of a proper legislative regime regulating foreign insurers and the combined failings by both APRA and ASIC in supervising IUI General and IUI Australia.

31        Paragraph 22 read:

The statement by the Minister that Mr Quintano's situation is no different to any other person seeking to recover against someone without insurance completely misconceives the significance of the applicant's submissions concerning the fact that there was insurance. This directly brought into focus the activities of the two regulators of that industry and the unjustness caused to Mr Quintano resulting from their failings. As demonstrated by that statement, the Minister has unreasonably disregarded the relevance of those "special circumstances".

(Emphasis added.)

32        By no stretch of the imagination can this be described as an argument that the Minister's decision was unreasonable or irrational. At best it was an argument that it was unreasonable not to have regard to Mr Quintano's argument. More accurately, given its context, it was an argument in support of the proposition that the Minister did not have regard to the alleged failings of the regulators.

33        In our view, the primary judge cannot be criticised for failing to construe this submission as an argument that the Minister's decision was legally unreasonable.

34        As for the proposition that the point was raised in oral submissions, the transcript was not included in the appeal books. Indeed, the Court was informed that none was available. There was no agreement between the parties about what had been put below. Mr Free of counsel, who appeared for the Minister both at first instance and on appeal, said that he could not say with certainty that the point was not raised.

35        In all these circumstances we are not satisfied that the proposition that the decision was unreasonable or irrational was "squarely raised", as Ms Novak put it. Accordingly, we would dismiss this ground of appeal.

36        In any case, we consider that there is no proper foundation for it.

37        The argument was based on what counsel for the appellant described as four "key points":

(1)    The Minister proceeded on the erroneous basis that, because there was no legal liability, the Commonwealth had no responsibility to Mr Quintano, when it is in fact the absence of any legal liability to which s 33 of the FMA Act is directed.

(2)    It should be inferred from the Minister's reasons that he was primarily concerned about the feasibility of the government being liable for every situation in which there was an evasion of a regulatory regime. Counsel submitted that "[i]t is unsound to proceed on the basis of considering liability for every situation, as a generic concept, without appreciating the myriad of possibilities in between and the shades of grey".

(3)    While the Minister made detailed findings of facts, in his reasons he failed to advert to Mr Quintano's injuries or to the more specific factual circumstances that resulted in Mr Quintano making an application for an act of grace payment.

(4)    The Minister proceeded on "an utterly irrational basis" that Mr Quintano's situation was the same as that of any other person who was injured.

38        Mr Quintano relied on the decision in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 ("Li") where the High Court held that a decision of the Migration Review Tribunal to refuse an adjournment of a hearing in order to present certain evidence was unreasonable and had resulted in jurisdictional error.

39        We will deal with these points seriatim.

40        First, while it is true that s 33 of the FMA Act is concerned with the position where there is no legal liability, we reject the proposition that the Minister limited himself to that situation. If that were so, it would have been unnecessary for him to say anything more than there was no legal liability. But the Minister did not stop there.

41        At para 6 of his statement of reasons the Minister said:

It was submitted on Mr Quintano's behalf that the Australian Government should reimburse Mr Quintano because there had been a failure in the Government's regulatory regime in relation to IUI General and that this had led to Mr Quintano not receiving damages. I did not accept this submission as I do not consider that the Australian Government has assumed responsibility for every situation arising because a person or organisation evades a regulatory regime.

42        In the following paragraph he said that it would not be feasible for the Government to accept responsibility for every such situation.

43        The reference in these paragraphs to "responsibility" is plainly a reference to "moral responsibility". It certainly does not suggest that the Minister took the view that, absent any legal obligation, he could not or should not approve the payment.

44        Furthermore, at paras 11 and 12 of the statement of reasons the Minister said:

11.    I also did not accept [Mr Quintano's submission that it would be desirable to apply the benefits of present legislation retrospectively to Mr Quintano] as I considered it was speculative whether an earlier implementation would in fact have affected Mr Quintano's situation. I noted that there would be questions as to whether an approved insurance provider would have been prepared to offer a public risk policy to the nightclub company, and whether the company would have been prepared to pay the applicable premium, presumably at a significantly higher rate than the rate paid to IUI General.

12.    Mr Quintano was seeking to recover damages from the nightclub company and, as the company had chosen to take out insurance, he hoped to obtain payment from the insurer but this proved not to be possible. I considered that his situation is therefore essentially the same as that of any other person who has been injured but cannot recover damages because the other person or organisation does not have sufficient assets and has no insurance or insufficient insurance. I therefore considered that it was not appropriate to approve an act of grace payment to Mr Quintano.

45        These considerations have nothing to do with the question of legal liability. They plainly bear upon whether there was a moral obligation.

46        Second, the inference Mr Quintano invites should not be drawn. The notion that the Government has not assumed responsibility for every situation in which there has been an evasion of a regulatory regime was certainly the first matter dealt with in the statement of reasons. But it does not follow that it was the Minister's primary concern. No doubt it was dealt with first because it was the primary matter relied upon by Mr Quintano's lawyers.

47        Nor does it follow from what the Minister said that he was not alive to the "myriad of possibilities" and "the shades of grey". After all, he said that he did not consider that the Government had assumed responsibility for every situation involving the evasion of a regulatory regime. Read in context, it is implicit that he thought there might be situations in which responsibility might be assumed, although he concluded that this was not one of them. The relevant context is that he was dealing with the particular submission advanced by Mr Quintano's lawyers.

48        As Ms Novak ultimately acknowledged, all the Minister was saying, in effect, is that the mere evasion of a regulatory regime does not require the Australian Government to assume responsibility. There must be something special in the individual case. There is, as Ms Novak frankly conceded, no error in that.

49        Third, contrary to the submissions advanced on Mr Quintano's behalf, the Minister did not fail to advert to or consider Mr Quintano's injuries or his "specific factual circumstances". In para 4 the Minister stated that in reaching his decision he made certain findings of fact. The accident to Mr Quintano and its impact upon him are amongst those findings. So, too, are the circumstances concerning the insurance companies. While the Minister did not state what the injuries were, he did find that Mr Quintano had been shot in the head, was now permanently incapacitated, had no capacity for remunerative employment, and was unable to recover damages from the nightclub owner or its insurer. The factual findings cannot be read in isolation from the reasons for the decision. In the section of the statement in which the reasons are set out, the Minister explains why those circumstances are not special or not special enough to warrant him authorising an act of grace payment. In paras 11 and 12, in particular, Mr Quintano's personal circumstances are expressly considered.

50        The fourth point unfairly characterises the Minister's reasons. He did not put Mr Quintano in the same category as any other injured person. Rather, he put him in a class of persons who had sued an insolvent company and which was uninsured or insufficiently insured. Mr Quintano submitted that this was irrational because it failed to give "due recognition" to the particularly serious nature of his injuries and, while the outcome might be the same (namely, no compensation for injury suffered), the "basis" for the outcome was different in his case due to the inaction of the regulatory agencies.

51        The Minister's conclusion that Mr Quintano's situation was essentially the same as that of any other injured person who cannot recover damages because the defendant has insufficient assets or insufficient or no insurance was a rational, not an irrational, conclusion. One might disagree with it. One might take the view that the seriousness of Mr Quintano's injuries should have been given greater weight. One might consider the decision to have been harsh. It is difficult not to have sympathy for Mr Quintano's plight. But none of this is enough to establish legal error. The Minister's decision was not arbitrary or capricious or devoid of common sense (Li at [28] per French CJ). Nor did it lack "an evident and intelligible justification" (Li at [76] per Hayne, Kiefel and Bell JJ). Rather, the conclusion the Minister reached was one upon which reasonable minds might differ. It is not irrational or unreasonable to prefer one conclusion to another possible conclusion: see Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 at [78] (Heydon J), [121]–[131] (Crennan and Bell JJ). As French CJ observed in Li at [30]:

The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a court disagrees even though that judgment is rationally open to the decision-maker. Gleeson CJ and McHugh J made the point in [Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [40]] that the characterisation of somebody's reasoning as illogical or unreasonable, as an emphatic way of expressing disagreement with it, "may have no particular legal consequence".

(Footnotes omitted.)

52        In our view, this is an apt description of the challenge to the Minister's decision in the present case.

Did the Minister determine the application by inflexibly applying the policy without regard to the merits?

53        Mr Quintano submitted that the Minister applied the policy rigidly because he rejected one of his submissions because it was not consistent with the policy.

54        To understand the argument it is necessary to refer to several paragraphs of the Minister's decision. In paras 7–10 the Minister said:

7.    It was also submitted on Mr Quintano's behalf that it would be desirable to apply the benefits of present legislation retrospectively to Mr Quintano's case. It was submitted that, if the present legislation had been in force at the relevant time, APRA and ASIC would have had enhanced powers and the problems with the nightclub company's insurance cover would have been revealed.

8.    This submission referred to Finance Circular 2009/09, Attachment B, clause 5, third dot point. This states that "special circumstances" in terms of section 33(1) of the FMA Act are generally considered to apply where it is considered that, "the matter is not covered by legislation or specific policy, but the Australian Government intends to introduce such legislation or policy, and it is considered desirable in a particular case to apply the benefits of the relevant policy prospectively".

9.    It appears that the submission was based on the subsequent introduction of the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007, which took effect on 1 July 2008, and strengthened the Australian Government's regulatory powers in relation to overseas insurers.

10.    I did not accept this submission. The submission proposed a retrospective application and was not consistent with the policy approach in the Finance Circular, which refers to prospective policy or legislative changes. I did not see any basis for modifying this policy approach as proposed on behalf of Mr Quintano.

55        It is an improper exercise of power as defined in s 5(2)(f) of the ADJR Act to exercise a discretionary power in accordance with a rule or policy without regard to the merits of the particular case.

56        We reject the notion that the Minister exercised his discretion in accordance with the policy contained in the Finance Circular without regard to the merits of the case.

57        Blind or slavish adherence to policy is one thing, but a decision is not open to judicial review merely because it was made in accordance with a policy: Surinakova v Minister for Immigration, Local Government and Ethnic Affairs (1991) 33 FCR 87 at 98 (Hill J). As Brennan J said in Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 1979) 2 ALD 634 at 640:

There are powerful considerations in favour of a Minister adopting a guiding policy. It can serve to focus attention on the purpose which the exercise of the discretion is calculated to achieve, and thereby to assist the Minister and others to see more clearly, in each case, the desirability of exercising the power in one way or another. Decision-making is facilitated by the guidance given by an adopted policy, and the integrity of decision-making in particular cases is the better assured if decisions can be tested against such a policy. By diminishing the importance of individual predilection, an adopted policy can diminish the inconsistencies which might otherwise appear in a series of decisions, and enhance the sense of satisfaction with the fairness and continuity of the administrative process.

58        This is not a case of blind or slavish adherence to policy.

59        First, the Minister noted (at para 5 of the Statement of Reasons) that the Finance Circular provided policy "guidance" to agencies of the Australian Government and stated that he did not regard himself as bound by the document.

60        Second, it is clear from what he said at paras 7–10 of that statement that in this part of his reasons the Minister was dealing with the submission made on Mr Quintano's behalf which relied on cl 5 of Attachment B of the policy. He rejected the submission because it was based on a misreading of the policy.

61        Third, in any event, the Minister considered whether he ought to have modified the policy. Furthermore, he considered whether there was merit in this particular case. That was the focus of paras 11 and 12 of his reasons.

Was there evidence to support the primary judge's finding that the Minister considered whether there was a moral obligation to authorise an act of grace payment?

62        Despite the way in which this question was raised in the amended notice of appeal, Mr Quintano's submission was to the effect that, in the "glaring" absence of any express reference in the Minister's reasons to "moral considerations", the primary judge's finding was based on inference and the inference was not open.

63        Mr Quintano contended that the Minister merely reasoned that, because there was no legal liability, he should not approve the payment.

64        We reject the submission.

65        The Minister said he had considered the Finance Circular. Paragraph 6 of Attachment B of the Circular states that one of the key features of the act of grace mechanism is that "it is appropriate in cases where there is a moral, rather than legal, obligation to the person or body concerned". In these circumstances, there is no reason to conclude that the Minister did not consider whether there was a moral obligation to Mr Quintano. True it is, the Minister did not use the expression "moral obligation". But, as the Minister submitted, there is no particular magic in those words. As we have already observed, the matters raised in paras 6, 11 and 12 of the Minister's statement of reasons relate to that very question.

66        It follows that we are satisfied that there was evidence to support the primary judge's conclusion.

Conclusion

67        None of the grounds of appeal is made out. The question the Minister was required to answer was whether, absent legal liability, he considered it appropriate to authorise the making of a payment because of special circumstances. It is clear that he recognised that there was no legal liability but that he did not consider Mr Quintano's circumstances to have been special or sufficiently special to warrant the exercise of his discretion to authorise the payment. In coming to that conclusion he did not err in law.

68        The appeal must therefore be dismissed. There is no reason why costs should not follow the event. There will be orders accordingly.

Associate:

Dated:    25 November 2014