Public versus private

The High Court’s Cattanach v Melchior decision has attracted much attention both in the blogosphere and mainstream op-ed media. Angela Shanahan, Janet Albrechtsen and Sydney legal academic Regina Graycar have all published op-ed pieces about Cattanach (although not one of them has bothered to mention let alone discuss intelligibly the principal legal issue that was the subject of the decision).

However, another recent High Court decision may have much greater impact in the long run, but has received zero coverage in the media (or the blgosphere, for that matter). That’s probably because it’s seemingly about a somewhat arid, obscure administrative law principle, and the facts aren’t as emotive as seeking damages for a healthy, loved baby born as a result of a failed sterlisation. Neat Domestic Trading Pty Limited v AWB Limited [2003] HCA 35 (19 June 2003) was a dispute between a domestic and international grain trader (Neat) and the monopoly, privatised controller of Australian wheat marketing the Australian Wheat Board (now known as AWB Ltd and incorporated under the Corporations Law). Neat alleged that AWB had acted unlawfully by refusing its consent to the export of a particular shipment of wheat by exercising a discretionary power in accordance with a rule or policy without regard to the merits of the particular case. That is a well-recognised ground of judicial review, but the controversial question was whether a privatised company like AWB was subject to public law judicial review at all. Justice Kirby put the issue like this. After explaining the importance of the principle of courts having judicial review powers to ensure that bodies exercising public power act lawfully (that is, within those powers), Justice Kirby said:

This appeal presents an opportunity for this Court to reaffirm that principle in circumstances, now increasingly common, where the exercise of public power, contemplated by legislation, is “outsourced” to a body having the features of a private sector corporation. The question of principle presented is whether, in the performance of a function provided to it by federal legislation, a private corporation is accountable according to the norms and values of public law or is cut adrift from such mechanisms of accountability and is answerable only to its shareholders and to the requirements of corporations law or like rules.

Given the changes in the delivery of governmental services in recent times, performed earlier and elsewhere by ministries and public agencies, this question could scarcely be more important for the future of administrative law. It is a question upon which this Court should not take a wrong turning.


The predominant view in Australia has always been that private bodies (i.e. non-government agencies) are not in general subject to public law judicial review. Justice Lionel Murphy once proposed an ambitiously wide principle to govern when a body would be subject to the courts’ judicial review jurisdiction in Forbes v New South Wales Trotting Club Ltd (1979):

“When rights are so aggregated that their exercise affects members of the public to a significant degree, they may often be described as public rights and their exercise as that of public power. Such public power must be exercised bona fide, for the purposes for which it is conferred and with due regard to the persons affected by its exercise. …. There is a difference between public and private power but, of course, one may shade into the other.”

This potentially very broad concept of public power did not commend itself to the majority in Forbes, which nevertheless held that the NSW Trotting Club was bound to afford procedural fairness (natural justice) to a racegoer who was to be ‘warned off’ indefinitely from attending race meetings. However, that decision was at least reasonably consistent with a long line of cases which have held that members of clubs and other domestic bodies and tribunals are entitled to natural justice, even though they can in no sense be regarded as arms of government. Of course, this line of authority itself amounts to a blurring of the public/private distinction.

Murphy J’s approach to classifying highly aggregated (i.e. quasi-monopolistic) power as “public” would potentially result in dominant players like the News Limited group (which controls virtually all Australian capital city newspapers), and perhaps holders of scarce public broadcasting licences, being subject to public law accountability. No doubt that consequence of his reasoning didn’t escape Murphy J. However, it was an approach that didn’t commend itself even (or perhaps especially) to Murphy’s Labor colleagues in the Hawke government, given their commitment to deregulation and “economic rationalism”. Instead, they tended to take the view that market forces provide an adequate protection of the public interest, and that all privatised and corporatised service providers ought to be exempted from public law accountability mechanisms (including oversight by the Ombudsman and FOI legislation as well as judicial review). Under the prevailing neo-liberal orthodoxy, there are virtually no services or goods whose provision can be regarded as inherently “public”. That includes the provision of basic public infrastructure like roads, sewerage and electricity. Perhaps only core regulatory functions can be regarded as inherently “public”, although “economic rationalism” holds that even these functions may often be best performed by the private sector industry self-regulatory ‘codes of practice’ (although it’s a dogma now looking very sick indeed, as my co-blogger Christopher Sheil observes).

Although Australian courts have until now been reluctant to accept the proposition that private bodies may be subject to public law judicial review, the British courts have been far more willing to adapt judicial review to meet the challenge of privatisation. In R v Panel on Take-overs and Mergers; Ex parte Datafin Plc [1987] 1 QB 815, it was held that a non-statutory privately run panel performing some functions similar to those of Australia’s ACCC was subject to judicial review. In R v Jockey Club; Ex parte Aga Khan [1993] 1 WLR 909 it was held that the Jockey Club (a private quasi-regulator of horse racing roughly equivalent in function to the NSW Trotting Club) was also amenable to judicial review.

This is where Neat Domestic Trading Pty Limited v AWB Limited is an interesting decision. Although the Court decisively agreed with the trial judge that AWB hadn’t committed the alleged reviewable legal error anyway, Chief Justice Gleeson and Justice Kirby both held that it was a body exercising public power notwithstanding that it was a private “for profit” company, and that it was therefore amenable to public law judicial review. Justices McHugh, Gummow and Hayne, on the other hand, held that AWB wasn’t susceptible to judicial review anyway, because “there is no sensible accommodation that could be made between the public and the private considerations which would have had to be taken to account if the 1989 Act were read as obliging AWBI to take account of public considerations.

Nevertheless, the majority Justices left open the general question of whether a private body could ever be subject to public law review in an appropriate case:

At the least, then, there is an intersection between the private and the public. A private corporation is given a role in a scheme of public regulation. The parties could point to no other federal legislation in which there was a similar intersection. If processes of privatisation and corporatisation continue, it may be that an intersection of this kind will be encountered more frequently. At its most general this presents the question whether public law remedies may be granted against private bodies. More particularly, do public law remedies lie where AWBI fulfils the role which it plays under the 1989 Act?

We would answer this second, more particular question, “No”. That answer depends in important respects upon the particular structure of the legislation in question. It is not to be understood as an answer to the more general question we identified.

Engaging in a bit of idle speculation, it might well be that the High Court will ultimately accept that private bodies exercising broad-ranging quasi-regulatory functions, and without a significant “for profit” aspect, are subject to public law judicial review. That could potentially include bodies like the Australian Jockey Club and State and Territory racing clubs, as well as the Australian Stock Exchange. Maybe “not for profit” local community associations and even political parties could be held to be amenable to judicial review where they act contrary to their own constitutions, even though the longstanding (but not invariable) approach of the courts has been that they’re immune to such review.

About Ken Parish

Ken Parish is a legal academic, with research areas in public law (constitutional and administrative law), civil procedure and teaching & learning theory and practice. He has been a legal academic for almost 20 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in the early 1990s.
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cs
cs
2022 years ago

Interesting post Ken. McHugh disappoints again! Meanwhile, Murphy J rules IMO. Incidentally, I couldn’t quite follow this sentence:

The parties could point to no other federal legislation in which there was a similar intersection.

Ken Parish
Ken Parish
2022 years ago

I think they mean where a private body is given such a specific function in legislation i.e. that its consent is required before the statutory regulator can permit export.

Yobbo
Yobbo
2022 years ago

Ken do you know anything more about this story other than the legal issues? I couldn’t find any recent news. Sounds like something the PGA would be involved in.

Ken Parish
Ken Parish
2022 years ago

Sam,

I don’t know anything other than what’s explained in the decision, but the WEA certainly does have a role. Gleeson CJ’s judgment quotes an explanatory memo as follows:
The most appropriate option is to legislate the export monopoly on wheat to an independent statutory body to be known as the Wheat Export Authority (WEA). For an initial period of five years the legislation will provide that the new grower company pool subsidiary has an automatic right to export wheat. Requests to export wheat from other than the grower company (as currently happens) would be managed by the WEA to separate regulatory and commercial functions.
The WEA must consult Company B about all requests for consent to export wheat. In the case of proposed exports in bulk, ie other than by means of bags or containers, a consent may not be given unless nominated company B has first approved the export. This requirement supports the automatic right given by the Bill to Company B to export wheat and reflects the importance of bulk exports in the overall marketing arrangements.”
The company B referred to was eventually spun off as AWB International, a wholly owned subsidiary of AWB Limited. The legislation as ultimately drafted reflected the memo in that it required the WEA to grant export permission to someone only with the consent of AWBI.

It was especially the fact that AWBI has such a central and express determinative role in the legislation that raised the question of whether a decision it took not to grant consent could be a “decision under an enactment”, which it must be to be reviewable under the federal Administrative Decisions (Judicial Review) Act (ADJR). My speculation about possible future extension of judicial review of non-statutory bodies (including ones not only not created by statute but not given express statutory roles in legislative decisions) arose from the general formulation of the questions and principles in the various judgments, and the fact that federal and state common law judicial review jurisdiction (as opposed to the Federal Court’s ADJR jurisdiction) doesn’t require that a decision must necessarily be made “under an enactment” to be reviewable.

Tiu Fu Fong
Tiu Fu Fong
2022 years ago

Administrative law isn’t my area, but I query whether decisions by the Australian Stock Exchange would be subject to judicial review. Unlike the AWB (which I understand is granted statutory monopoly powers – correct me if I’m wrong), the ASX is not granted any statutory powers by the Commonwealth and does not make any decisions pursuant to legislation. From a Corporations Act perspective, the ASX is just a market operator operating a FSRA licensed market.

Ken Parish
Ken Parish
2022 years ago

Tiu,

It’s certainly true that until now adminsistrative law review would not apply to non-statutory bodies like the ASX. However, in Britain, as my post pointed out, the common law has developed to cope with privatisation by making some such bodies amenable to judicial review, where they exercise monopolistic quasi-regulatory functions. the ASX is such a body, and some of the reasoning in the Neat v AWB decision suggests the possibility of the Australian common law moving in a similar direction. That was the central point of the post (but apparently not well explained).

Tiu Fu Fong
Tiu Fu Fong
2022 years ago

No. It was a case of me reading too quickly while gulping down my morning caffeine and missing the point of the post.

Hansel
Hansel
2022 years ago

Interesting concepts raised kenny.

I think you should all get a life!

Ken, looks like you need a girl mate.