Applying Project Blue Sky – When Does Breach of a Statutory Requirement Affect the Validity of an Administrative Decision
APPLYING PROJECT BLUE SKY – WHEN DOES BREACH OF A STATUTORY REQUIREMENT AFFECT THE VALIDITY OF AN ADMINISTRATIVE DECISION?
Graeme Hill*
The High Court’s decision in Project Blue Sky v Australian Broadcasting Authority[1] sets out the approach to determine whether a failure to comply with a statutory requirement affects the validity of an administrative decision.[2]A
joint judgment of four members of the Court (McHugh, Gummow, Kirby and Hayne JJ) stated:[3]
An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect.Whether it is depends upon
whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is
ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every
act done in breach of the condition.
The joint judgment rejected the previous distinction between ‘mandatory’ and ‘directory’ statutory requirements, stating that this distinction merely recorded
a result that has been reached on other grounds. Instead, their Honours stated that a better test for determining the issue of validity is to ask whether
it was ‘the purpose of the legislation that an act done in breach of the provision should be invalid’.[4]
This paper attempts to give some content to this rather general test. I will use two cases as illustrations:
the first is the decision of the Full Court of the Federal Court in Kutlu v Director of Professional Services Review.[5]This
case held that a failure by the Minister to consult the Australian Medical Association (AMA) before appointing members of various Professional Services
Committees meant that the decisions of those committees were invalid; and
the second is the decision of the Victorian Court of Appeal in Director of Public Prosecutions v Marijancevic.[6]That
case considered whether a failure to swear an affidavit filed in support of an application for a search warrant meant that any evidence obtained under
that warrant was inadmissible.
I should acknowledge that the joint judgment in Project Blue Sky itself doubted whether it would be possible to lay down a more specific test.
Their Honours stated:[7]
Unfortunately, a finding of purpose or no purpose [to invalidate a decision] in this context often reflects a contestable judgment. The cases show various
factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule
that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.
Moreover, the usual difficulties in ascertaining legislative ‘intention’[8] are magnified in this context – very often the courts are imputing a legislative intention to a Parliament that has not addressed this issue.
[9]
For that reason, it could well be said that the Project Blue Sky test is no less conclusory than the ‘mandatory/directory’ test that it
rejected.[10]However,
while it is not possible to lay down any ‘decisive rule’, it is possible to draw some themes that emerge from the cases that have applied Project Blue Sky.
This discussion assumes that the relevant statute does not make any express provision for the consequences of breaching a statutory requirement
and it only considers the position of administrative decision-makers, not courts. The High Court has made it clear that the Project Blue Sky approach is not relevant when considering the effect of non-compliance with statutory requirements on the jurisdiction of courts.[11]
Project Blue Sky and case illustrations
The starting point is the factors used in Project Blue Sky itself to determine whether the breach of a statutory requirement in that case should
lead to the invalidity of the decision under consideration.
Project Blue Sky
The question in Project Blue Sky was the legal effectiveness of an Australian content standard made by the Australian Broadcasting Authority,
[12]
purportedly under s 122(2)(b) of the Broadcasting Services Act 1992 (Cth) (the Broadcasting Services Act).Under cl 9 of that
standard, Australian programs had to comprise 55% of all broadcasts between 6am and midnight. Section 160(d) of the Broadcasting Services Act required the Australian Broadcasting Authority to perform its functions in a manner consistent with Australia’s international obligations. One
of those international obligations was a trade agreement between Australia and New Zealand, which provided that Australia and New Zealand would
offer equal access and treatment to persons and services of the other country. The Australian content standard (or at least cl 9) clearly did not
provide equal treatment for Australian and New Zealand programs. The High Court held that cl 9 of the Australian content standard was contrary
to s 160(d) of the Broadcasting Services Act.[13]
The question then was, what was the effect of non-compliance with s 160(d) of the Broadcasting Services Act on the Australian content standard.
Section 160 provided that the Australian Broadcasting Authority ‘is to perform’ its functions in a manner consistent with the four listed matters (including
Australia’s international obligations).The joint judgment does not appear to have given much weight to this apparently mandatory (or obligatory) language.
However, in a related context, the High Court has stated that the fact that a statutory requirement is expressed by the use of ‘must’ is not conclusive.
[14]
In Project Blue Sky, the joint judgment relied on three other factors to conclude that a breach of s 160(d) of the Broadcasting Services Act did not render a decision invalid as such.
Regulation of existing function
The first factor was whether the statutory requirement regulated the exercise of functions already conferred, or was an ‘essential preliminary’ to the
exercise of a function. The joint judgment held that s 160 of the Broadcasting Services Act merely regulated an existing function, which ‘strongly
indicate[d]’ that a breach of s 160 should not invalidate a decision.[15]
No ‘rule-like quality’
The second factor was the nature of the statutory requirement. In Project Blue Sky, the joint judgment considered that the obligations imposed
by s 160 of the Broadcasting Services Act did not have ‘a rule-like quality’ that could easily be identified and applied:[16]
apart from s 160(d), the other considerations listed in s 160 concerned matters of policy.[17]The
joint judgment stated that when a function is to be carried out in accordance with matters of policy, ordinarily non-compliance will not affect the
validity of any decision;[18] and
in relation to s 160(d), the joint judgment observed that Australia’s international obligations may often be expressed in indeterminate language, that
describes goals to be achieved rather than rules to be obeyed.[19]
Public inconvenience
The third factor was the public inconvenience that would result if non-compliance meant that a decision was legally ineffective. The joint judgment:
considered that, in the light of the indeterminate nature of the obligations in s 160 of the Broadcasting Services Act, a finding that non-compliance
with s 160(d) invalidated a decision would cause public inconvenience. For example, the Australian Broadcasting Authority’s functions include allocating
and renewing licences. As part of these functions, the Authority designs and administers price-based systems for allocating licences; and
stated that non-compliance with s 160 was ‘far from fanciful’, and it was unlikely that the validity of a licence was to depend on whether the Australian
Broadcasting Authority had complied with s 160.[20]
For these reasons, the joint judgment held that the Australian content standard was not invalid, despite the breach of s 160(d) of the Broadcasting Services Act.
However, that was not the end of the matter. The joint judgment held that the standard, although not invalid, was unlawful. Accordingly, a person with
a sufficient interest could apply for a declaration that the relevant clause of the content standard was unlawful, and in an appropriate case could
apply for an injunction to prevent the Australian Broadcasting Authority from taking any further action in reliance on that clause.[21]This
approach seems to invalidate the Australian content standard with prospective effect only.[22]
Kutlu – failure to consult before appointing
My first case to illustrate the Project Blue Sky test is Kutlu.
The issues in Kutlu arose because in 2005 and 2009, the Minister did not consult with the Australian Medical Association (AMA) before making various
appointments under ss 84 and 85 of the Health Insurance Act. The agreed facts established that the Minister had not consulted with the AMA
before appointing three persons as Deputy Directors in January 2005, nor before appointing six persons as Panel members and three persons as Deputy
Directors in November 2009.[23]
Obligation to consult AMA before appointment (ss 84(3) and 85(3))
Part VAA of the Health Insurance Act establishes the Professional Services Review Scheme. In general terms, this scheme reviews and investigates
the provision of services by a person to determine whether the person has engaged in ‘inappropriate practice’. This investigation is undertaken first
by the Director of Professional Services Review (Div 3A), who may refer a matter to a Professional Services Review Committee (Div 4).
Committee members are drawn from a Professional Services Review Panel appointed under s 84.Some panel members are also appointed as Deputy Directors under
s 85.Both ss 84 and 85 require the Minister to consult with the AMA before appointing a medical practitioner as a panel member, or as a Deputy Director.
Section 84(3) provided:
(3)Before appointing a medical practitioner to be a Panel member, the Minister must consult the AMA. The Minister must make an arrangement with the AMA
under which the AMA consults other specified organisations and associations before advising the Minister on the appointment.
Section 85(3) imposed the same requirement on appointing a medical practitioner to be a Deputy Director.
Committees and their decisions invalid
The Full Court of the Federal Court held that the failure to consult, as required by ss 84(3) and 85(3) of the Health Insurance Act, meant both
that the appointment of those Committees was invalid, and that the decisions taken by those Committees were invalid.[24]
Rares and Katzmann JJ reasoned as follows.
although the Minister was not bound to accept the AMA’s advice, the consultation and advice required by ss 84(3) and 85(3) ‘can expose significant matters
for the Minister to consider about a prospective appointee as part of the deliberative process’.[25]The
advice of the AMA is a relevant, though not decisive, consideration for the Minister in deciding who to appoint;[26]
Part VAA provides for a system of peer review. The appointment process under ss 84 and 85 is intended not only to ensure public confidence in the decisions
of Committees, but also to ensure the confidence of the relevant professions and of the person who is being reviewed. This indicated that prior consultation
by the Minister was an ‘essential pre-requisite’ to the validity of the appointment of persons under those sections;[27]
the fact that s 96A made only limited provision for a Panel to continue without consent when a member is unavailable was an indication that Parliament
regarded the valid and proper constitution of a Committee as an essential and indispensible condition of any Committee’s exercise of functions under
the Health Insurance Act;[28] and
the fact that the invalidity of the appointments would cause public inconvenience was, on its own, suggestive of a legislative intention that failure to
consult would not lead to invalidity.[29]However,
these considerations did not displace the express words of ss 84(3) and 85(3).[30] The requirements of ss 84(3) and 85(3) had a rule-like quality that could be easily identified and applied.[31]The
scale of the Ministers’ failures to obey ‘simple legislative commands’ to consult the AMA was not likely to have been something that the Parliament
had anticipated. If the appointments were treated as valid, the unlawfulness of the Minister’s conduct would attract no remedy.[32]
Flick J reasoned to similar effect that:
although the fact that ss 84(3) and 85(3) stated that the Minister ‘must’ consult was only the beginning of the inquiry,[33] the use of mandatory language was still a ‘valuable guide’;[34]
an adverse finding from a Professional Services Review Committee would prejudicially affect the reputation and standing of the practitioner concerned.
[35]
An ‘essential aspect’ of the scheme provided for in Pt VAA was that a practitioner’s conduct would be reviewed by practitioners who have been appointed
after consultation by the Minister.[36]That
is, non-compliance with the requirement to consult the AMA is not a mere technicality or mere formality, because the AMA played a ‘pivotal role’
in the scheme of Pt VAA;[37]
the medical practitioner whose conduct is being reviewed would be unable to determine whether the necessary consultation had occurred. This was not a case
where a practitioner could be expected to conduct his or her own independent investigation as to whether these requirements had been complied with;
[38]
and
arguments about ‘public inconvenience’ had the potential to be ‘self-justifying and circular’. Where there was uncertainty as to the presumed legislative
intention in circumstances where there has been non-compliance with a statutory provision, it is permissible to take account of the consequences of
one interpretation as opposed to another, including a consequence of ‘public inconvenience’.[39]In
this case, however, the requirements of ss 84(3) and 85(3) were clear, and there was no room to rely on ‘public inconvenience’ as an aid to statutory
construction.[40]Any
‘public inconvenience’ is something for which the Minister alone must remain accountable.[41]
Committees and decisions validated by legislation
The High Court granted special leave to appeal from the Full Court’s decision in February 2012,[42] but those proceedings were discontinued in May 2012.[43]
In June 2012, the Commonwealth Parliament enacted legislation to address the problem identified in Kutlu. Schedule 1 of the Health Insurance Amendment (Professional Services Review) Act 2012 (Cth) applies to a thing purportedly done under Pt VAA, VB or VII of the Health Insurance Act to the extent that the thing would be invalid
because a person was not appointed or validly appointed as a Panel Member or Deputy Director under Pt VAA of that Act (item 1(1)):
the thing purportedly done ‘is as valid and effective, and is taken always to have been as valid and effective, as it would have been had the person been
validly appointed as a Panel member or Deputy Director under that Part’ (item 1(2)); and
‘[a]ll persons are, by force of this subitem, declared to be, and always to have been, entitled to act on the basis that the thing purportedly done is
valid and effective’ (item 1(3)).
Marijancevic – failure to swear affidavits
The other illustrative case is Marijancevic. Unlike Kutlu, this was not a case where a person was seeking to invalidate a particular
administrative act. Rather, the issue in Marijancevic was the admissibility of evidence obtained pursuant to a search warrant, where the statutory
requirements for obtaining the warrant had not been complied with. The specific issue was whether that evidence should be admitted under s 138 of the
Evidence Act 2008 (Vic) (the Evidence Act).
In Marijancevic, the accused were charged in the County Court with various offences relating to drug manufacture and trafficking. Much of the
evidence against the accused was obtained from search warrants issued under the Drugs Poisons and Controlled Substances Act 1981 (Vic) (the
Drugs Act).During the course of the trial, it was found that the affidavits relied on to obtain the search warrants had not been sworn (as
required by s 81 of the Drugs Act),[44] but rather had been simply signed in the presence of a police inspector authorised to take affidavits.
The trial judge held that the breach of s 81 of the Drugs Act meant that the evidence had been obtained unlawfully and refused, in the exercise
of discretion, to permit this evidence to be admitted under s 138 of the Evidence Act. An appeal to the Court of Appeal was dismissed.
Evidence Acts 138
Section 138(1) of the Evidence Act provides that evidence obtained ‘in contravention of an Australian law’ is not to be admitted ‘unless the desirability
of admitting the evidence outweighs the undesirability of admitting evidence that has been obtained in the way in which the evidence was obtained.’
Without limiting the s 138(1) discretion, the court must take into account the matters listed in s 138(3):
(a)the probative value of the evidence;
(b)the importance of the evidence in the proceeding;
(c)the nature of the relevant offence, cause of action or defence and the nature of the subject-matter of the proceeding;
(d)the gravity of the impropriety or contravention;
(e)whether the impropriety or contravention was deliberate or reckless;
(f)whether the impropriety or contravention was contrary to or inconsistent with a right of a person recognised by the International Covenant on Civil
and Political Rights;
(g)whether any other proceeding (whether or not in a court) has been or is likely to be taken in relation to the impropriety or contravention; and
(h)the difficulty (if any) of obtaining the evidence without impropriety or contravention of an Australian law.
On appeal in Marijancevic, the areas of dispute were the factors in s 138(3)(d) and (e).It was common ground that the evidence had significant
probative value (s 138(3)(a));[45] that the exclusion of the evidence significantly weakened the case against the accused (s 138(3)(b));[46] and that one of the accused was charged with serious offences (s 138(3)(c)).[47]For
present purposes, the Court’s discussion of s 138(3)(d) – the gravity of the impropriety – is relevant.
Gravity of impropriety (s 138(3)(d))
The trial judge found that the gravity of the impropriety was of the ‘highest order’ (cf s 138(3)(d)).
The Court of Appeal agreed with the trial judge that failing to swear affidavits (as distinct from merely signing them) was a very serious error. The Court
stated that the importance of making an affidavit in support of a search warrant ‘can hardly be gainsaid’.[48]A
search warrant authorises what would otherwise be a trespass.[49]To
proffer to a magistrate material which is not sworn or affirmed in order to obtain a search warrant ‘has a tendency to subvert a fundamental principle
of our law’.[50]
In assessing s 138(3)(d), the Court made observations on the degree of seriousness of gravity that are potentially of broader application:[51]
at the least serious end of the spectrum of improper conduct is that ‘which did not involve any knowledge or realisation that the conduct was illegal and
where no advantage or benefit was gained as a consequence of that impropriety’;
in the middle of the range is conduct ‘which was known to be improper but which was not undertaken for the purpose of gaining any advantage or benefit
that would not have been obtained had the conduct been legal’; and
at the most serious end is conduct ‘which was known to be illegal and which was pursued for the purpose of obtaining a benefit or advantage that could
not be obtained by lawful conduct.’
The conduct in Marijancevic was only in the middle range, because it was not undertaken for the purpose of obtaining an advantage that could not
by proper conduct be obtained. The Court held that the trial judge’s reference to impropriety of the ‘highest order’ only meant that the conduct was
of such a high order as to justify the exclusion of the evidence.[52]
This analysis looks at the extent of and reasons for non-compliance. This analysis raises two factors: (1) the decision-maker’s knowledge of the non-compliance;
and (2) whether any advantage was obtained from the non-compliance. As discussed below, more recent cases suggest that there may be room to consider
the extent and consequences of non-compliance in applying Project Blue Sky (at least in some contexts).
In the result, the Court of Appeal refused to interfere with the trial judge’s exercise of discretion. However, the Court stated that ‘[i]t should not
be assumed that we would have made like findings or that we would have exercised the discretion in the same way had a finding of inadvertent or careless
conduct been made.’[53]
Affidavits validated by legislation
The evidence given in Marijancevic indicated that there was a widespread practice within Victoria Police of merely signing, rather than swearing,
affidavits. The Victorian Parliament enacted legislation to address this issue. The Evidence (Miscellaneous Provisions) Amendment (Affidavits) Act 2012 (Vic) (the 2012 Affidavits Act) inserted a new s 165 into the Evidence (Miscellaneous Provisions) Act 1958 (Vic).In general terms,
the new s 165 provides that:
if an affidavit signed before 12 November 2011 by a person and by a person duly authorised to administer oaths contains words indicating that the first
person states that the affidavit is made on oath or affirmation, then the words indicating that the first person states that the affidavit was made
on oath or affirmation are and are taken always to have been effective by way of oath or affirmation even if specified acts (such as making the oath
orally) were not done or did not occur (s 165(1));
a warrant, order, summons or other process issued or made in reliance on such an affidavit ‘is not invalid only by reason of the fact that, but for [s
165(1)], the affidavit would not have been duly sworn or affirmed’ (s 165(2); and
for the purposes of the prosecution of an alleged offence, the fact that, but for s 165(1), an affidavit would not have been duly sworn or affirmed ‘is
to be disregarded in determining whether evidence obtained in reliance, directly or indirectly, on that affidavit ought to be admitted’ (s 165(3)).
In Rich v The Queen,[54] the Victorian Court of Appeal rejected an argument that the 2012 Affidavits Act was contrary to the principle in Kable v Director of Public Prosecutions (NSW).
[55]
Kutlu and Marijancevic are striking decisions because, first, significant disruption would follow from invalidating the relevant administrative
actions and secondly, the breaches did not seem to be ones that would undermine the quality of the final decisions made (that is, the decisions by
the Professional Services Committee, or the contents of the affidavits made in support of the applications for search warrants).
Analysis of relevant factors
As with any question of statutory construction, it is necessary to start with the text.Back to Forum Articles