Greg Weeks: What to do about private bodies with public functions?: Australia’s continued ambivalence to the Datafin principle.

A few weeks ago, two judges of the Australian High Court (French CJ and Bell J) heard an application for special leave to appeal from the decision of the Full Court of the South Australian Supreme Court in Khuu & Lee Pty Limited v Corporation of the City of Adelaide.  That in itself is not surprising, given the volume of special leave applications heard by the Court each year.  Nor was Khuu & Lee, on its face, a remarkable case, being a challenge to the City’s decision not to renew the plaintiff’s licence to run a stall at the Adelaide Central Market.  Indeed, we ought not really to be surprised that the Court’s decision to refuse special leave has all but gone unnoticed – especially with Australians involved in decisions of note elsewhere in the world.

Khuu & Lee is not remarkable but for the fact that it continues Australia’s angst-ridden history in relation to the Court of Appeal’s decision in R v Panel on Take-overs and Mergers; ex parte Datafin plc [1987] 1 QB 815.  Much has been written on Datafin in Australia and a great deal of it has focused on the steady refusal of the High Court to engage with arguments on Datafin.  This is seen as particularly problematic for four reasons:


1. There is but one common law of Australia

The High Court firmly reminded the various intermediate courts of appeal within Australia several years ago that “there is a common law of Australia rather than of each Australian jurisdiction”.  As a consequence, State Supreme Courts which are asked to apply Datafin are often uncertain as to whether they could, where the existing case law is inconsistent and the High Court’s opinion is unknown.

There had been a slowly building body of case law at State level, including the judgments in the NSW Supreme Court of Mathews J in Typing Centre of New South Wales v Toose  and Campbell J in McClelland v Burning Palms Surf Life Saving Club.  The Victorian Supreme Court’s Appeal Division decided State of Victoria v The Master Builders’ Association of Victoriausing Datafin but it was a single judge decision by Shaw J in the New South Wales Supreme Court which really sparked interest in Datafin outside academic circles.  In Masu Financial Management Pty Ltd v Financial Industry Complaints Service Ltd, his Honour not only held that Datafin was part of Australian law but also purported to apply it against a private, industry-funded complaints service, which operated in the guise of a registered corporation.  This remains the only case in which an Australian court has granted a judicial review remedy by applying Datafin.

More recently in Chase Oyster Bar v Hamo Industries, Basten JA (one of Australia’s leading judicial minds, particularly on issues of administrative law) has cast doubt on both Masu and Master Builders, reasoning that neither decision “demonstrates the applicability of Datafin in Australia” and that to whatever extent Eames J had ‘applied’ Datafin in Master Builders, it was unnecessary to have done so.  The common law position could therefore be understood as being that the applicability of Datafin remained unsettled in Australia but the Victorian Supreme Court has retained a strong interest in considering it.  In CECA Institute, and also extra-judicially, Kyrou J has cast doubt upon some of Basten JA’s conclusions in Chase Oyster, stating that “no Australian decision had cast doubt on the applicability of Datafin in Australia” prior to Chase Oyster.  In Mickovski, Pagone J supported Kyrou J’s conclusion that “in the absence of High Court authority to the contrary, the decision in [Master Builders] was sufficient authority for the applicability of the Datafin principle in [Victoria]”.

In short, when Khuu & Lee was decided by the South Australian Full Court, the principle that there is but one Australian common law was looking decidedly shabby in regard to Datafin.  The High Court’s refusal to grant special leave has done nothing to ameliorate that situation.


2. The unhelpfulness of Australia’s statutory judicial review mechanism

The Administrative Decisions (Judicial Review) Act 1977 (Cth) was revolutionary at the time that it first took effect in 1980 and has been described as one of the great reforms in Australian law.  It has now, however, reached a point where many of its terms need revision, a conclusion shared by many Australian administrative lawyers from the academy and practice alike.  One of the provisions which is most commonly cited in support of this call for change is that the Federal Court is only able to conduct judicial review under ADJR of a decision of an administrative character made under an enactment.  This was crucial to the only High Court case to have mentioned Datafin.

NEAT Domestic Trading v AWB Ltdconsidered a statutory grant of monopoly power made for the purpose of exporting Australian wheat through a ‘single desk’.  The dealings of the Australian Wheat Board Ltd subsequently became notorious but this matter was simply about whether it was subject to judicial review under the ADJR Act for having exercised its statutory power to refuse permission to any other body seeking to export wheat.  The majority reasoned that, as a corporation incorporated under the Corporations Law of Victoria, AWB Ltd had no duty to anybody but its shareholders.  It was therefore not making decisions “under an enactment” but under the power inherent to bodies corporate.  Gleeson CJ reached the same conclusion but added that he considered that it was wrong to say that AWB Ltd was able to act for purely selfish reasons, since it held power that was to be used in the “national interest”.

In his dissent, Kirby J gave consideration to Datafin in the High Court (with the exception of a brief footnote reference in Kirby J’s judgment in Breckler).  With respect, his Honour’s attempt to force the principle from Datafin into the narrow language of the ADJR Act was doomed to fail, a view confirmed by later judicial consideration of the “under an enactment” requirement and academic consideration of NEAT.

Barring the unlikely event that the Administrative Review Council’s review of Judicial Review in Australia recommends sweeping changes to the ADJR Act which are then enacted by the hung Commonwealth Parliament, the ADJR will not provide a way out for people who wish to plead the Datafin principle.


3. Australia’s Constitutional constraints

The Australian Constitution provides the High Court with an entrenched minimum judicial review jurisdiction in s 75(v).  This jurisdiction is mirrored for the Federal Court under s 39B(1) of the Judiciary Act 1903 (Cth).  The problem that this causes for plaintiffs who want the court to apply Datafin is that relief under both provisions is limited to relief “sought against an officer or officers of the Commonwealth”.  Matthew Groves has recently considered this section with regards to outsourcing government responsibilities, such as operating detention centres for asylum seekers whose claims are unprocessed.

The problem is that the case which gives us the definition of “an officer of the Commonwealth”, R v Murray; ex parte Commonwealth, was decided in 1916.  When Isaacs J stated that the meaning of “officer” was uncomplicated, that it was simply one who held an “office” under the Commonwealth, frequently remunerated by the payment of a salary, his Honour would not have dreamed of the many tasks that are now outsourced by government to private actors.  NEAT was only brought as an ADJR case because it would not have succeeded under s 39B.

I do not suppose that the High Court means for this to cause the steady decline of the promise of judicial review in s 75(v); it surely regards judicial review as pertaining to the exercise of public power rather than only to exercises of power whose source is public.  It is simply – and understandably – reluctant to broaden the scope of a Constitutional term, particularly where to do so would risk conflict with established private law principles.  This was an issue which concerned the South Australian Full Court in Khuu & Lee.


4. The Relevance of Datafin’sFacts

There can be no doubt that Datafin was a creature of its time.  It is almost unimaginable for a contemporary Australian audience that there could be a body which wielded a “giant’s strength” but which had “no visible means of legal support” – or, one assumes, constraint.  Certainly, the Australian Takeovers Panel is constructed on very different lines.

And there’s the rub: it is fatuous to look for a set of facts to which Datafin will apply.  Twenty-five years after the Court of Appeal’s decision, there has not been an Australian case which is on all fours with Datafin.  This is not a problem in itself; after all, Wednesbury unreasonableness is very much a part of Australian law, though almost never applied.  The problem is rather that, while some judges have been prepared to push the nature of precedent further than others to apply it, Datafin is better seen as having started a conversation rather than opened a door, in the manner of cases like Donoghue v Stevenson or Woolwich Equitable Building Society v IRC.

If there is to be a broader application of the principle behind Datafin in Australia, there are two basic requirements.  The first is that the federal bars to jurisdiction be removed, either by statutory amendment of ADJR and s 39B, or by the High Court re-evaluating the meaning of “officer of the Commonwealth”, or both.  The second is that the High Court sets a precedent which is capable of being followed by State Supreme Courts.


Greg Weeks is a Lecturer in Law at the University of New South Wales