FEDERAL COURT OF AUSTRALIA

Watson v Australian Community Pharmacy Authority [2011] FCA 1121

THE COURT ORDERS THAT:

1.    The application filed on 17 December 2010 be dismissed.

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

REASONS FOR JUDGMENT

INTRODUCTION

1        In 2010, Mr Paul Mason and Mr Robert Bele (the second respondents) applied to the Australian Community Pharmacy Authority (“the Authority”) to relocate their pharmacy business from Bogangar in northern New South Wales to Mullumbimby, also in northern New South Wales. Mr Craig Watson, the applicant, has conducted a pharmacy business in Mullumbimby for the past 11 years. Perhaps not surprisingly, he was opposed to the proposed relocation.

2        Initially, the Authority decided to reject the second respondents’ application. However, following a successful application by them to the Administrative Appeals Tribunal to review that decision, the application was remitted to the Authority for reconsideration. On its second consideration, the Authority decided to make the necessary recommendation to the Secretary of the Department of Health and Ageing (“the Secretary”) to approve the proposed relocation.

3        It is this second decision of the Authority that has led to these judicial review proceedings being filed by Mr Watson. At the heart of these proceedings is the expression “a legal right to occupy” as it appears in the National Health (Australian Community Pharmaceutical Authority Rules) Determination 2006 (“the Rules”).

4        Before turning to consider this central issue, it is necessary to set out some of the factual background to this application, the Authority’s decision, the procedural history to these proceedings and the provisions of the National Health Act 1953 (Cth) (“the Act”) and the Rules that fall for consideration.

LEGISLATIVE PROVISIONS

5        It is convenient to begin with the relevant statutory framework for the second respondents’ application to the Authority. That was aptly summarised by Bromberg J in Alexander v Australian Community Pharmacy Authority [2010] FCA 189 (at [7]–[8]). While his Honour was addressing an application for approval of a pharmacy business, rather than an application for a relocation of such a business, the same principles apply. They are as follows:

7.    The provision of pharmaceutical benefits by the Commonwealth is regulated by a scheme. That scheme is to be found in Part VII of the National Health Act 1953 (Cth) (‘the Act’) and in the National Health (Australian Community Pharmacy Authority Rules) Determination 2006 (Determination No. PB 23 of 2006) (‘the Determination’). In substance, the scheme aims to make available designated drugs and medical preparations to persons for whom they are prescribed, at the expense of the Australian Government, subject to the payment of financial contributions by those persons: Terry White Chemists Australia Fair v Secretary, Department of Health and Ageing and Another [2009] FCAFC 74; [2009] 178 FCR 161.

8.    A person is not entitled to receive a pharmaceutical benefit unless it is supplied by an approved pharmacist: s 89 of the Act. A pharmacist may make application and be approved for the purpose of supplying pharmaceutical benefits at or from particular premises. Such approval may be given by the Secretary of the Department of Health and Ageing: s 90(1) of the Act. Prior to being dealt with by the Secretary, an application for approval must be referred to the Authority. Subject to some exceptions not relevant for current purposes, only after the Authority has recommended the grant of the approval may the Secretary make the approval: s 90(3A) and (3B) of the Act. Section 99K of the Act empowers the Authority to consider applications and to make a recommendation. In making a recommendation, the Authority must comply with the Determination: s 99K(2) of the Act. The Authority is established by s 99J of the Act and is constituted by five part–time members, including three pharmacists: s 99N of the Act.

6        To similar effect, see Commonwealth of Australia v Horsfall (2010) 185 FCR 66; [2010] FCA 443 (“Horsfall”) at [9]–[14] per Katzmann J; Flaherty v Secretary, Department of Health and Ageing [2010] FCA 63 at [6] per Moore J and Ranallo v The Australian Community Pharmacy Authority (2009) 174 FCR 457; [2009] FCA 113 at [13]–[21] per McKerracher J.

7        Section 9 of the Rules (referred to above as the Determination) relevantly requires that the Authority must recommend an application be approved under s 90 of the Act in respect of particular premises if it is satisfied that various requirements set out in Schedules 1 and 2 to the Rules are met. As has already been alluded to in these reasons, the critical requirements are contained in Schedule 2 Item 201, as follows:

The Authority is satisfied that:

(a)    the applicant had, on the date of the application, and has, on the date on which the Authority makes a recommendation in respect of the application, a legal right to occupy the proposed premises; and

(b)    the proposed premises, on the date of the application and on the date on which the Authority makes a recommendation in respect of the application:

(i)    could be used for the operation of a pharmacy under applicable local government and State or Territory laws relating to land development; and

(ii)    would be accessible by members of the public at large; and

(c)    within 6 months after the date on which the Authority makes a recommendation in respect of the application, the applicant will be able to begin operating a pharmacy at the proposed premises; and

(d)    the proposed premises are not directly accessible by the public from within a supermarket.

8        In particular, it will be noted that the need for an applicant to have “a legal right to occupy the proposed premises” as at the date of the application; and as at the date the Authority makes its recommendation on the application, is one of the critical requirements of Item 201(a).

FACTUAL BACKGROUND

9        The second respondents initially applied to the Authority by an application dated 6 March 2010. That application was received by the Secretary on 8 March 2010. It is common ground between the parties that nothing turns on whether the application was made on 6 or 8 March. As I have already mentioned, the application sought a recommendation by the Authority to the Secretary to approve the relocation of the second respondents’ pharmacy business from Bogangar to Mullumbimby in northern New South Wales. In Mullumbimby, the pharmacy business was to be located at 107 Dalley Street (“the Dalley Street premises”).

10        On 30 April 2010, the Authority met and decided to recommend that the second respondents’ application not be approved. Its stated reason for this decision was that the Authority was not satisfied that the Dalley Street premises were at least 200m by straight line from the nearest approved pharmacy. This was a requirement under Item 107(2) of the Rules. In its decision, the Authority noted that it had recently recommended an application for approval of another pharmacy business at premises located at Shop 2, Cnr Dalley and Burringbar Streets, Mullumbimby, which premises were approximately 110m by straight line from the Dalley Street premises.

11        In June 2010, the second respondents applied to the Administrative Appeals Tribunal for a review of this first decision of the Authority. Sometime thereafter, it appears that the application for the other pharmacy businesses close to the Dalley Street premises was withdrawn. As a consequence, on 21 October 2010, the Administrative Appeals Tribunal remitted the second respondents’ application to the Authority to be reconsidered pursuant to s 42D of the Administrative Appeals Tribunal Act 1975 (Cth).

12        On 29 October 2010, following its reconsideration of the application, the Authority decided to recommend to the Secretary that approval be granted for the proposed relocation. As I have noted above, the Authority was obliged to make this recommendation once it was satisfied that the second respondents met all the relevant requirements of the Rules. That, of course, included being satisfied the second respondents had a legal right to occupy the Dalley Street premises. To establish this, the second respondents’ solicitors provided certain documentation to the Authority which, they claimed, showed the second respondents had a lease over the Dalley Street premises. That arose in the circumstances set out immediately hereunder.

13        In March 2009, about a year prior to their initial application to the Authority, the second respondents entered into an agreement to lease the Dalley Street premises for a term of nine months commencing on 9 March 2009 and expiring on 8 December 2009. The lease agreement provided for four consecutive options to renew the lease for periods of three years each. It is common ground between the parties that none of these options was ever exercised. Instead, the second respondents claim to have entered into two agreements to extend that lease, the first on 9 December 2009 to extend it from 8 December 2009 to 8 May 2010, and the second on 22 October 2010 to extend it from that date to 28 February 2011: see at [15]–[17] below. It will be noted that the first of these extensions covered the period of the second respondents’ initial application (see [9] above) and the second covered the period of the Authority’s reconsideration of their application (see [12] above).

14        The details of these lease extensions were provided to the Authority on 25 October 2010, some four days before its second decision. That occurred when Maunsell Pennington solicitors, acting on behalf of the second respondents, wrote to the Authority in the following terms:

We refer to previous correspondence. We attach copies of Agreements between our client and the landlord of the premises which are the subject of the application to extend the lease beyond the expiry date, the first date of 8th December 2009 and the second the 28th February 2011.

Item 201 requires our client to satisfy the Authority of its legal right to occupy the premises at the date of the Application and at the date the Authority the (sic) considers the Application.

The lease of the premises which accompanied the Application expired on 8th December 2009, the first of the attached documents extends the term to 8th May 2010. Our client’s application was received by Medicare on 8th March 2010.

Assuming that the Authority considers our client’s Application at its meeting on 29th October 2010 the second document confirms the extension of the Lease until 28th February 2011.

In each of these cases the agreements for extension relate to periods of less than three (3) years. Accordingly to be enforceable the agreements are not required to be in any particular format, nor in fact are they required to be in writing.

It is submitted that the documents attached establish the Applicant’s right to occupy the premises both at the time of Application and on the date of its consideration by the Authority.

(Emphasis in original)

15        It should be noted that the second respondents had already provided a copy of the lease and the details of the first extension prior to the Authority considering their initial application. As indicated in this letter, it had attached to it two documents – one dated 9 December 2009 and the other dated 22 October 2010. The first was in the following terms:

9/12/2009

On behalf of Paul Victor Haselgrove, Anne Maree Haselgrove, Alexandra Gay Evans and myself, Lionel Scott Evans, we agree to extend the lease on 107 Dalley Street, Mullumbimby NSW 2482 by a further 6 months from the option renewal date from 8 December 2009 to 8 May 2010.

We further agree to extend the options to renew dates by 6 months each.

Signed

Lionel Scott Evans

Accepted

16        The second document was in the following terms:

    22/10/10

    On behalf of Paul Victor Haselgrove, Anne Maree Haselgrove, Alexandra Gay Evans and myself, Lionel Scott Evans, we agree our agreement to extend the lease on 107 Dalley Street, Mullumbimby NSW 2482 to 28th February 2011.

    We further agree to extend the options to renew dates by 6 months each.

Signed

Accepted

17        Each document contained the signatures of Mr Evans, Mr Mason and Mr Bele, above where their names appear on the document.

THE AUTHORITY’S DECISION

18        Soon after the Authority’s second decision, Mr Watson’s solicitors made a request under s 13(1) of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“the ADJR Act”) for a statement of the reasons for that decision. That statement of reasons (“the Reasons”) was subsequently provided. At this point it is convenient to identify a number of aspects of the Reasons that are particularly relevant in these proceedings.

19        In the “Background” section of the Reasons, the Authority identified the requirements of Item 201 of Schedule 2 to the Rules (set out in [7] above) as requirements it had to consider in making its decision. In the section entitled “Evidence”, the Authority recorded that, among the evidence it considered in making its decision, was the lease for the Dalley Street premises dated 9 March 2009 and the letter and attachments from the second respondents’ solicitors dated 25 October 2010 (set out at [14]–[17] above). The “Findings on Material Questions of Fact” section of the Reasons included a section entitled “B. Requirements under Schedule 2, Item 201”. That section contained the following statement:

201(a) – The applicant had, on the date of application, and has, on the date on which the Authority makes a recommendation in respect of the application, a legal right to occupy the proposed premises.

31.    The Authority considered the signed Lease between the lessors and the lessees, and the two agreements to extend the lease, signed by both parties.

32.    On the basis of this evidence, the Authority was satisfied that the Applicants had, on the date of application, and on the date on which the Authority makes a recommendation in respect of the application, a legal right to occupy the proposed premises a legal right to occupy the proposed premises (sic).

20        The Reasons concluded with a paragraph wherein the Authority stated that it: “was satisfied that the Application met all the relevant requirements of the Rules and was therefore required to recommend the Applicants (sic) be approved in accordance with section 9 of the Rules”.

PROCEDURAL HISTORY

21        Shortly after receiving the Authority’s Reasons, Mr Watson filed these proceedings under the provisions of the ADJR Act. The sole ground of that application that is now being pursued, is a “no evidence” ground as follows:

[T]here was no evidence before the [Authority] that on the date of the application the Second Respondents had a legal right to occupy the subject premises as required under Schedule 2 Item 201 of the National Health (Australian Community Pharmaceutical Authority Rules) Determination (as amended) made under section 99L(1) of the National Health Act 1952.

22        It is not in dispute that the Authority’s decision was a decision under an enactment for the purposes of s 3 of the ADJR Act. This is so under s 3(3) of the ADJR Act, even though the Authority has no discretion in making a recommendation to the Secretary once it is satisfied about the requirements set out in the Rules: see [7] above.

23        At an early directions hearing, the Authority and, subsequently, the third respondent, advised the Court that they would abide its decision in the proceedings. Consequently, neither respondent took any active part in the proceedings.

CONTENTIONS

24        Mr Gibson QC for the applicant submitted that the crux of the applicant’s case was that the Authority had no evidence before it upon which it could be satisfied that the second respondents had a legal right to occupy the Dalley Street premises. In making this submission, Mr Gibson was emphatic that the applicant’s case was solely based on the “no evidence” ground under s 5(1)(h) of the ADJR Act. There was no such evidence, so he submitted, because neither of the two attachments to their solicitors’ letter dated 25 October 2010 effected an extension of the lease over the Dalley Street premises as each of those documents was only signed by one of the four co-lessors, or co-owners, of those premises. He submitted that was so for one, or both, of the following reasons. First, there was no evidence of any actual or ostensible authority of Mr Evans, the co-owner who signed each document, to act as an agent to bind his other three co-owners and such authority could not be founded on a representation made by Mr Evans himself that he had that authority because the requisite representation had to come from his principal, ie the co-owners. In making these submissions, Mr Gibson relied upon the decisions in Essington Investments Pty Ltd & Ors v Regency Property Pty Ltd [2004] NSWCA 375 at [44], Armagas Ltd v Mundogas SA [1986] 1 AC 717 at 778 and Pola v Commonwealth Bank of Australia [1997] FCA 1476 per Sundberg J (“Pola”).

25        Secondly, Mr Gibson submitted that one joint co-owner of real property cannot bind or encumber the interests of his or her fellow co-owners , relying upon the decisions in Hedley v Roberts [1977] VR 282 at 287–8, Andrews v Wilcox [2008] NSWSC 280 at [27]–[28], Stenberg v Lechowics [2010] NSWSC 926 (“Stenberg”) at [60]–[61] and Allen Taylor & Company Pty Ltd trading as Boral Timber v Norman Leslie Harrison [2010] NSWSC 1021 (“Allen Taylor”) at [34]. Perhaps in anticipation of a submission to be made by the second respondents, Mr Gibson also submitted that the second respondents were not holding over as monthly tenants under Cl 12 of the lease dated 9 March 2009. He submitted this was so because Cl 12.4 only operated “if the lessor allows the lessee to continue to occupy the property after the end of the lease period” and this required the second respondents to be in actual occupation of the Dalley Street premises immediately before the lease expired. Mr Gibson submitted that there was no evidence before the Authority that the second respondents were in actual occupation of the premises at that time. Finally, Mr Gibson also made it clear that the applicant accepted the second respondents’ written submissions about the meaning to be given to the expression “a legal right to occupy”: see [26]–[29] immediately below.

26        Mr Flanagan SC, for the second respondents, submitted that since the Rules were a legislative instrument within the provisions of the Legislative Instruments Act 2003 (Cth), they should be construed in the same way as any legislation. In his written submissions, Mr Flanagan set out a number of definitions of the words used in the expression “a legal right to occupy” variously taken from the Shorter Oxford English Dictionary, the Macquarie Dictionary (3rd ed) and Butterworths Concise Legal Dictionary. First, in relation to the word “right”, he relied upon the following definitions:

… an entitlement of justifiable claim on legal or moral grounds, to have or obtain something, or to act in a certain way.

… a thing that justly accrues or falls to someone; what one may properly claim; once due.

… a just claim or title, whether legal, prescriptive, or moral.

… that which is due to anyone by just claim.

27        Secondly, in relation to the term “legal right”, he set out the following definitions:

1.    an interest, claim or privilege to something that is recognised and protected by rule of law, irrespective of whether the right has a moral basis. Legal rights are in contrast with moral rights which do not have any legal affect (sic).

2.    right recognised by customary, international, and domestic law.

28        Finally, in relation to the word “occupation”, he submitted it was defined to mean: “the action or condition of residing in or holding a place or position; the state of being so occupied; tenure, occupancy” and “to take up (space, time, etc); to be resident or established in (a place) as its tenant; to tenant”.

29        Based upon these various definitions, Mr Flanagan submitted that the word “right” in Item 201(a), when qualified by the word “legal”, distinguished that “right” from a moral right and the complete expression “legal right to occupy” meant a right to hold or occupy the premises that was founded in law. Further, he submitted the word “legal” in this context distinguished between a trespasser and a person who had a right to occupy beyond that of a trespasser. Finally, he submitted that, while the word “occupation” incorporates the concept of “possession”, it does not require any element of exclusivity as would arise under a lease for exclusive possession. Thus, he submitted, something less than the rights inherent in a lease would satisfy the expression “legal right to occupy”.

30        As to the central issue in this case, Mr Flanagan submitted that there was ample evidence before the Authority in the form of the lease agreement and the two agreements to extend that lease represented by the letters dated 9 December 2009 and 22 October 2010, upon which the Authority could be satisfied that the second respondents had a legal right to occupy the Dalley Street premises. He appeared to define the nature of that right as involving either, or both: the agreements to extend of the lease for two periods – the first, from 8 December 2009 to 8 May 2010, and the second, from 22 October 2010 to 28 February 2011, or a holding over under Cl 12.4 of the lease. Furthermore, he submitted that the Authority could infer from these three documents that the second respondents had remained in occupation of the Dalley Street premises throughout the relevant period of time and had duly paid rent for the premises. In summary, he submitted that either pursuant to the terms of the extension agreements contained in the letters dated 9 December 2009 and 22 October 2010, or pursuant to the terms of the original lease, the second respondents continued to have a legal right to occupy the Dalley Street premises at all relevant times.

31        Mr Flanagan made a number of other submissions. First, he submitted that the question for the Authority was not whether the second respondents had actual occupation of the Dalley Street premises, but whether they had a legal right to do so. Secondly, he submitted the Court should take into account the constitution of the Authority. He pointed out it was not made up of legal practitioners but, in the main, by pharmacists and the Authority’s state of satisfaction about the second respondents’ legal right to occupy the Dalley Street premises had to be judged from that perspective. Thirdly, he submitted that if the Authority made any error of law (which he did not accept it had), it did not relate to its construction of the provisions of Item 201(a), but to an error about the effect of the lease and the two extension agreements involving the authority or capacity of one co-owner to bind his other co-owners. In an administrative law sense, he submitted this latter error was not a reviewable error. Fourthly, Mr Flanagan submitted the Authority’s satisfaction about the second respondents’ legal right to occupy must be viewed against the whole of the evidence and in all the background circumstances, including the evidence and its satisfaction about the matters set out in the other clauses of Item 201 dealing with the use and accessibility of the premises and their availability for operation as a pharmacy within six months of any recommendation. Finally, Mr Flanagan relied upon the decision of Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16 (“SZMDS”) at [23], [40] and [121] and following, to submit that there was nothing to support a conclusion that the Authority had acted arbitrarily, capriciously, irrationally or illogically in deciding that it was satisfied that the second respondents had a legal right to occupy the Dalley Street premises.

32        In reply, Mr Gibson submitted that the decision in SZMDS involved a purely factual issue as to whether the applicant in that case met the criteria for a protection visa and the arbitrary or capricious nature of the decision had to be viewed in that context. However, he submitted, the Authority’s decision in this matter was arbitrary in the true sense of that word because it was based on a legally insupportable conclusion of fact. Mr Gibson submitted that there was no evidence before the Authority upon which it could draw an inference that the second respondents had paid rent for the Dalley Street premises, nor that they were in occupation of the premises throughout. He submitted such inferences would be pure speculation not rational inferences. Mr Gibson pointed out that the Authority did not state in its Reasons that it had relied upon Cl 12.4 of the lease, or an implied holding over under a monthly tenancy and it must be assumed that it did not rely on these matters. In response to Mr Flanagan’s submission that the error of law did not involve the construction of the statutory requirements under which it operated, but instead involved the effect of the documents before the Authority, Mr Gibson submitted that the error of law went to the heart of the statutory requirements. He submitted that, if there was an error of law which vitiated the conclusion of fact reached by the Authority, then that conclusion of fact, ie that they were satisfied about the second respondents’ legal right to occupy the Dalley Street premises, could not stand. He submitted that this was a jurisdictional fact and the Authority therefore had no jurisdiction to make the decision.

CONSIDERATION

33        Many of these submissions can be disposed of briefly. First, the question whether the second respondents were in actual occupation of the Dalley Street premises throughout and/or had paid the rent for those premises and/or had exercised any holding over rights under the lease are all irrelevant. The Authority did not mention any of these matters in its Reasons, let alone state that they were material to its decision. Instead, it is clear from the “Findings on Material Questions of Fact” section of its Reasons that the Authority made its decision based upon the existence of a “signed Lease between the lessors and the lessees, and … two agreements to extend the lease signed by both parties”. From these documents and other materials (see at [44]–[45] below), it concluded that the second respondents had a legal right to occupy the Dalley Street premises.

34        Secondly, there is nothing in the Authority’s Reasons to indicate that it misconstrued the meaning of the expression “a legal right to occupy”. Indeed, there is no indication from its Reasons that the Authority thought it was necessary to consider the meaning of that expression at all. It follows that the Authority did not commit an error by misconstruing the provisions of the legislation or rules under which it was operating. It follows further that it is unnecessary to consider Mr Flanagan’s detailed submissions about the meaning of the expression a “legal right to occupy”. Thirdly, I do not consider the constitution of the Authority is of any significance in this case. It may have been otherwise if it were a specialist Tribunal making a discretionary decision, but that is clearly not the case here: see at [22] above.

35        Turning then to the applicant’s main ground of attack on the Authority’s decision. To recap, it was that there was “no evidence” before the Authority upon which it could be satisfied the second respondents had a legal right to occupy the Dalley Street premises. To make this attack, Mr Gibson placed sole reliance upon the “no evidence” ground stated in s 5(1)(h) of the ADJR Act. That section provides:

(1)    A person who is aggrieved by a decision to which this Act applies that is made after the commencement of this Act may apply to the Federal Court or the Federal Magistrates Court for an order of review in respect of the decision on any one or more of the following grounds:

…

(h)    that there was no evidence or other material to justify the making of the decision;

36        Section 5(3) of the ADJR Act provides:

(3)    The ground specified in paragraph (1)(h) shall not be taken to be made out unless:

(a)    the person who made the decision was required by law to reach that decision only if a particular matter was established, and there was no evidence or other material (including facts of which he or she was entitled to take notice) from which he or she could reasonably be satisfied that the matter was established; or

(b)    the person who made the decision based the decision on the existence of a particular fact, and that fact did not exist.

37        There is an unresolved question as to whether s 5(3) of the ADJR Act “limit[s] severely”, or expands, the operation of s 5(1)(h): see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 357–8 per Mason CJ. In Curragh Queensland Mining Ltd v Daniel (1992) 34 FCR 212 (“Curragh Queensland”) the Full Court adopted a restrictive interpretation of s(5)(3)(b): “… the language of [that section] shows that its concluding words do impose an additional requirement and the history of the section … tends to confirm that this is so”: see Curragh Queensland at 223. In Minister for Immigration and Multicultural Affairs v Rajamanikkam (2002) 210 CLR 222 (“Rajamanikkam”) the High Court was concerned with the equivalent to s 5(1)(h) and s 5(3) of the ADJR Act in the then current Migration Act (ss 476(1)(g) and 476(4) respectively). In that decision differing views were expressed about the effect of s 5(3): see Gleeson CJ at [30]–[34], Gaudron and McHugh JJ at [49]–[53], Kirby J at [103]–[108] and Callinan J at [151]. Aronson M, Dyer, B, Groves M, Judicial Review of Administrative Action (4th ed Thomson Reuters, 2009) (“Aronson”) at 4.385, argue that the judgment of Kirby J is inconsistent with a restrictive or cumulative interpretation of s 5(3) and it is therefore to the same effect as the judgment of Gaudron and McHugh JJ, with the result that, Rajamanikkam has, by majority, overruled Curragh Queensland on this interpretation question. In Australian Retailers Association v Reserve Bank of Australia (2005) 148 FCR 446; [2005] FCA 1707 (“Australian Retailers”) Weinberg J noted the discussion on this issue at [579] in the then current edition of Aronson, but did not express a view on it. However, in Sunchen Pty Ltd v Commissioner of Taxation [2010] FCA 21, Perram J at [38]–[40] has expressed his disagreement with the conclusion reached by Aronson. Fortunately, I do not consider I need to express an opinion on this question to dispose of this case. This is so because, with one reservation I will mention in relation to my alternative conclusion about the application of s 5(3)(a), the primary conclusion I have reached applies whatever approach is taken to the interpretation of s 5(3).

38        One thing is clear however, and that is that s 5(1)(h) has to be read in conjunction with s 5(3).

39        Mr Flanagan quoted these two provisions in his written submissions; however neither counsel made any detailed submissions about the way they were said to operate in this case. Nonetheless, both counsel did suggest that this case involved a jurisdictional fact issue. While neither expressly said so, he may have been alluding to a point made by Weinberg J in Australian Retailers where his Honour expressed the view that s 5(3)(a) of the ADJR Act was, in substance, a restatement of the doctrine of jurisdictional fact: see at [577]. French CJ recently described what that doctrine entailed in Plaintiff M70/2011 v Minister for Immigration and Citizenship [2011] HCA 32 at [57] as follows (case references omitted):

The term “jurisdictional fact” applied to the exercise of a statutory power is often used to designate a factual criterion, satisfaction of which is necessary to enliven the power of a decision-maker to exercise a discretion. The criterion may be “a complex of elements”. When a criterion conditioning the exercise of statutory power involves assessment and value judgments on the part of the decision-maker, it is difficult to characterise the criterion as a jurisdictional fact, the existence or non-existence of which may be reviewed by a court. The decision-maker’s assessment or evaluation may be an element of the criterion or it may be the criterion itself. Where a power is expressly conditioned upon the formation of a state of mind by the decision-maker, be it an opinion, belief, state of satisfaction or suspicion, the existence of the state of mind itself will constitute a jurisdictional fact. If by necessary implication the power is conditioned upon the formation of an opinion or belief on the part of the decision-maker then the existence of that opinion or belief can also be viewed as a jurisdictional fact.

40        The limits that apply to judicial review involving jurisdictional facts were stated by the High Court in the Australian Heritage Commission v Mt Isa Mines Ltd (1997) 187 CLR 297 (“Australian Heritage Commission”). There, the Court was required to consider a provision of the Australian Heritage Commission Act that required the Commission to enter a place on the Register of the National Estate “where [the Commission] considers that [a] place should be recorded as part of the national estate”. The Court accepted a submission put on behalf of the Commission at p 303 that: “the legislature has not made the authority of the Commission under [the relevant section] contingent upon the actual existence of a state of fact, as distinguished from the opinion or determination of the Commission that the facts do exist”. And, further, that: “[the relevant provision] is one of that category of laws whose operation is made conditional upon the opinion or satisfaction as to certain matters of a designated authority or person, with the consequence that the merits of the matter are not examinable upon judicial review. There is no reviewable error simply in making a wrong finding of fact”. To put the issue in jurisdictional fact terms, a little later in its decision at p 304, the High Court adopted the view of the dissenting judge below (Black CJ) that “the power of the Commission to enter a place upon the Register depended upon the Commission’s own view of the matter rather than the ‘objective’ ascertainment of a ‘jurisdictional fact’ …”.

41        In my view, the state of satisfaction required of the Authority in this case is in the same category as that required of the Commission in the Australian Heritage Commission decision. The decision the Authority was required to make was dependent on its own view as to whether it was satisfied that the second respondents’ had a legal right to occupy the Dalley Street premises. It was not dependent on the ascertainment of their legal right to occupy those premises as an objective fact. It follows, in my view, that approached from this perspective, it is not open to this Court to go behind the Authority’s clear statement that it was satisfied about the existence of the second respondents’ legal right to occupy the Dalley Street premises and decide whether or not that right existed as an objective fact.

42        The same conclusion can be expressed in the terms of s 5(3)(a) of the ADJR Act. That section applies where the decision is required by law to reach the decision “only if a particular matter was established”. In my view, this provision applies where the legislation prescribes that the decision can only be made if the particular matter concerned is established as an objective fact. In other words, it requires the objective ascertainment of that fact as a jurisdictional fact. That prescription is, of course, subject to the reasonableness qualification expressed in the concluding words of the section; as to which see [44]–[47] below.

43        In this case, the Authority was required by Rule 9 to be satisfied in its own mind as to whether the second respondents had a legal right to occupy the Dalley Street premises. Thus, the relevant prerequisite here was the Authority’s state of mind or satisfaction about that matter, not whether it existed as an objective fact. It follows that, whether s 5(3)(a) of the ADJR Act restricts or expands the operation of s 5(1)(h), that sub-section does not apply to the decision the Authority was required to make in this case.

44        Even if I am incorrect in this conclusion and s 9 of the Rules is to be construed as requiring the Authority to reach its decision only if the relevant particular matter, ie the second respondents’ legal right to occupy the Dalley Street premises, was established as an objective fact, I consider the Authority had before it evidence and other material from which it could be reasonably satisfied of that matter, within the terms of the concluding words of s 5(3)(a). The evidence it had before it included the lease document and the two documents dated 9 December 2009 and 22 October 2010. The other material it had before it included the information and submissions contained in the letter dated 25 October 2010 from the second respondents’ solicitors: see at [14] above. Among other things, the solicitors said in that letter that: “we attach copies of Agreements between our client and the landlord of the premises which are the subject of the application to extend the lease beyond the expiry date, … the agreements for extension relate to periods of less than three (3) years. Accordingly, to be enforceable the agreements are not required to be in any particular format, nor in fact are they required to be in writing. It is submitted that the documents attached establish the Applicant’s right to occupy the premises both at the time of Application and on the date of its consideration by the Authority.” (emphasis added)

45        While the statements in the solicitors’ letter were in the nature of submissions rather than evidence (on the distinction between evidence and other material see: Aronson at 4.375 and the authorities referred to), I consider the Authority was entitled to take notice of them as “other material”. And, it is apparent from the Authority’s Reasons that it did rely upon the solicitors’ letter in this way. It did that by describing the two attached documents in its Reasons in the same or similar terms as the solicitors did in their letter, that is, as: “two agreements to extend the lease”: see at [19] above.

46        I would add that I consider this conclusion is valid whether or not the second respondents’ solicitors were correct, as a matter of law or fact, in their submissions to the Authority that the two attached documents constituted agreements to extend the lease. This is so because, under this approach to the requirements of Rule 9, the critical question is whether the Authority acted reasonably in making its decision based, at least in part, on those submissions, not whether the solicitors were correct in what they said. It is in this respect that the restrictive/expansive approach to the interpretation of s 5(3)(a) may result in a different outcome. Depending on the perspective one takes, this would be so if the “reasonableness” proviso in the concluding words of s 5(3)(a) were to apply to validate the decision notwithstanding that the particular matter cannot be established as an objective fact. However, since I am expressing this as an alternative conclusion and my primary conclusion is to the opposite effect, I do not propose to embark on an examination of whether this is so. I should add that this does not mean that the applicant in this case is necessarily left without a remedy if the solicitors were incorrect as a matter of fact, or law. That remedy may lie in s 5(3)(b), if he is able to meet its requirements (see further below).

47        It follows that, even if the Rules required a particular matter, viz the legal right to occupy the Dalley Street premises, to be established as an objective fact, before the Authority could validly make the decision, there was sufficient evidence, or other material, before the Authority from which it could be reasonably satisfied that that fact had been established. It also necessarily follows from this conclusion that Mr Gibson’s submissions that the Authority’s decision was arbitrary must be rejected.

48        A somewhat different difficulty arises for the applicant when it comes to s 5(3)(b) of the ADJR Act. That section focuses on the existence of a “particular fact” upon which the decision is based, rather than the establishment of a “particular matter” that is required by law to be established before the decision can be reached.

49        In Curragh Queensland the Full Court held that a decision was based upon the existence of a particular fact where that fact was “critical to making the decision” (at 220). Further, it held that s 5(3)(b) did not require the identification of a single particular fact that was the foundation of the decision but could apply where there was a number of particular facts provided that those facts were truly part of a “link in a chain of reasoning” upon which the decision was based (at 220–1). As Weinberg J observed in Australian Retailers (at [597]) this aspect of the decision in Curragh Queensland is not affected by the decision in Rajamanikkam; to the contrary, there is majority support for it: see Gleeson CJ at [33], Kirby J at [115]–[118] and Callinan J at [140].

50        As I have already observed above (at [33]), it is clear from its Reasons that the existence of the lease and the two agreements to extend the lease were all facts that were critical to the Authority’s chain of reasoning to its ultimate decision that the second respondents had a legal right to occupy the Dalley Street premises. So, the question posed by s 5(3)(b) in this case, is whether those particular facts did not exist.

51        The differences of opinion expressed in Rajamanikkam about the restrictive/expansive interpretation of s 5(3) did not arise in relation to the interpretation of s 5(3)(b). It is reasonably clear from Rajamanikkam that, in order to succeed under s 5(3)(b), an applicant must show that the particular fact in question did not actually exist: see at [32] per Gleeson CJ, [115] and [119] per Kirby J, cf [55]–[56] per Gaudron and McHugh JJ. Weinberg J expressed this requirement in Australian Retailers at [580] in the following terms:

The last element of s 5(3)(b) operates to confine the “no evidence” ground to a case where the applicant can actually negative the fact on which the decision was based. It requires the applicant to adduce evidence positively establishing the contrary to the “fact” that it is alleged the decision-maker based its decision on, and in respect of which it is claimed there is no supporting evidence or other material. Meeting this second limb of s 5(3) can be extremely difficult. The mere absence of evidence as to a fact will not establish its non-existence. As Aronson notes, at 244:

“Further second limb questions have concerned whether it covers: a decision-maker’s finding of a fact’s non-existence; a state of affairs rather than a specific fact; predicted facts rather than just past facts; a decision-maker’s disbelief (either wholly, or to the relevant level of persuasion) of an assertion of facts; or a refusal to exercise a statutory power, rather than a decision to exercise it.” (footnotes omitted)

See also MLC Investment v Federal Commissioner of Taxation [2003] FCA 1487 at [92]–[93] per Lindgren J.

52        This means that in this case, to succeed, the applicant must actually negative the critical facts upon which the decision was based: the lease and the two agreements to extend the lease. Because of this, most (if not all) of the decisions on this question have, like Australian Retailers above, proceeded on the basis that the applicant has to “adduce evidence positively establishing the contrary to the ‘fact’” concerned. This highlights the major difficulty the applicant has under s 5(3)(b) of the ADJR Act in this case. He has not adduced any evidence addressing these critical facts in this case. Instead, his case under s 5(3)(b) was limited to making submissions, through his counsel, that the Authority’s finding that there were agreements to extend the lease of the Dalley Street premises was based on a “legally insupportable conclusion of fact”. To be specific, Mr Gibson submitted that Mr Evans did not have the authority of his other co-owners to act as an agent to enter into the agreements to extend the lease and/or he did not have the capacity as one co-owner to bind the other co-owners in relation to their interests in the Dalley Street premises.

53        In my view, there is a number of defects in this approach. To begin with, even if these legal principles are as clear as Mr Gibson suggests, the applicant has not adduced any evidence to show that the critical facts described above did not exist, eg to show there was in fact no lease, or no agreements to extend it. This defect becomes even more apparent when these legal principles are examined more closely. I do so hereunder.

54        On the agency issue, Mr Evans clearly did represent to the second respondents that he had the authority to make the two agreements to extend the lease, because both documents state that: “On behalf of [the other co-owners] and myself, Lionel Scott Evans, we agree to extend the lease…”. On its face, this representation was made by the agent, Mr Evans, and not by the principal, the four co-owners. As Mr Gibson pointed out in submissions, ordinarily the consequence of that is the agent cannot by his own representation as to his authority create a relationship of principal and agent so as to bind the principal. However, in the circumstances of this case where Mr Evans was himself one of the co-owners and therefore a part of the principal, I do not consider the position is quite so clear. In this situation, depending on the factual circumstances, Mr Evans may have been placed in a position where he had ostensible authority to act on behalf of the four co-owners. Whether he did would depend on all the relevant factual circumstances, as Sundberg J outlined in Pola (one of the authorities relied upon by Mr Gibson) as follows:

In general, no formality is necessary for the appointment of an agent to act on behalf of his principal: Field v Shoalhaven Transport Pty Ltd [1970] 3 NSWR 96 at 103. It is only necessary that the principal and agent consent to that relationship: Garnac Grain Co Inc v HMF Faure and Fairclough Ltd [1968] AC 1130 at 1137. The consent need not give rise to a contract between them: Williston on Contracts 3rd ed (1959) at 186. The existence of agency may often be established from the words of the parties and the circumstances of the particular case, and may be implied from prior habits or from a course of dealing between the parties where the agent has repeatedly been permitted to perform similar acts in the past: Busby v Walker (1956) 84 So 2d 304. If the facts fairly disclose that one party is acting for or representing another by the latter’s authority, the agency exists: Field at 103. Thus the consent of the principal may be implied where he places another in such a situation that a reasonable man would understand the other to have the principal’s authority to act on his behalf, or where the principal’s words or conduct, coming to the knowledge of the agent, are such as to lead to the reasonable inference that he is authorising the agent to act for him: Pole v Leask (1863) 33 LJ Ch 155 at 161-2. With respect to the agent’s consent, if the principal requests another to act for him with respect to a matter, and indicates that the other is to act without further communication and the other consents so to act, the relation of principal and agent exists. If the other does the requested act, it is inferred that he acts as agent unless the circumstances indicate otherwise: Restatement 2d, Agency at 83 and Williston at 186.

The creation of agency does not depend upon the principal’s conscious intention to confer upon another authority as agent. Rather, if a principal intentionally does certain acts the legal effect of which is the creation of authority of an agent in another, that authority will exist regardless of the motives of the parties: Busby v Walker at 308. Thus in Garnac Grain at 1137, Lord Pearson, with whom the other Law Lords agreed, said that principal and agent “will be held to have consented if they have agreed to what amounts in law to such a relationship, even if they do not recognise it themselves and even if they have professed to disclaim it” on this.

55        This shows that on this agency issue, the legal principle for which Mr Gibson contends cannot be applied without considering the various factual issues that will fall to be considered in determining whether Mr Evans had the ostensible authority to act as agent for his other co-owners and himself.

56        On the capacity of a co-owner issue, I do not consider the authorities to which Mr Gibson referred support the proposition for which he contended, viz that one co-owner cannot bind his or her other co-owners. Indeed, as I read those authorities, the proposition he puts is expressed as an exception to a principle to the opposite effect, as follows: “... joint tenants or tenants in common must submit to an encumbrance or interest created over the commonly held land by another co-owner unless it improperly interferes with their own rights to the land”: see Stenberg at [60], referring to Allen Taylor at [34]. Whether this improper interference exception arose in this case would obviously depend upon all the factual circumstances. Further, since it is an exception, the person relying upon it – in this case the applicant – would bear the onus of establishing that it applied. Further still, it would be difficult, if not impossible, to see how the applicant could discharge that onus without adducing any evidence to establish the necessary factual foundation for it, viz the improper interference. Thus, given the absence of any such evidence in this case to establish this exception, it must follow that Mr Evans had the legal capacity to bind his other co-owners to the two agreements to extend the lease. Moreover, if that is so, it would not matter whether or not Mr Evans had been separately, duly authorised as an agent to act for the four co-owner principals in making the two agreements to extend the lease.

57        So, in summary:

a.    I do not consider that Mr Gibson is correct in his submissions about Mr Evans’ lack of capacity to bind his fellow co-owners;

b.    In the absence of evidence to show a factual foundation for the improper interference exception, Mr Evans would have had the capacity to bind his fellow co-owners;

c.    In absence of evidence to show Mr Evans did not have ostensible authority to act as an agent for the other co-owners, I do not consider the applicant has shown he did not in fact have such authority;

d.    It follows from either or both of the conclusions above and/or the absence of any evidence to negative their existence, that the applicant has not shown that the critical facts upon which the Authority based its decision did not exist.

58        The applicant has therefore failed to establish his case under s 5(3)(b) of the ADJR Act.

    Conclusion

59        For these reasons, the applicant has failed to establish his “no evidence” ground under s 5(1)(h) of the ADJR Act read, as it must be, in conjunction with ss 5(3)(a) and (b) of that Act. The applicant’s application for judicial review of the Authority’s decision must therefore be dismissed.

Associate:

Dated:     29 September 2011