In G & M Nicholas Pty Ltd v Minister for Finance and Deregulation (2009) 174 FCR 471, Cowdroy J of the Federal Court of Australia set aside a decision of the Minister for Finance and Deregulation (Finance Minister) which declined an act of grace payment to the applicants and remitted the matter to the Finance Minister for redetermination.

Background

The second and third applicants, Mr and Mrs Nicholas, were the directors of the first applicant, G & M Nicholas Pty Ltd (formerly known as Medtest Pty Ltd (Medtest)). On 16 November 2005, the applicants applied to the Finance Minister for an “act of grace” payment pursuant to section 33 of the Financial Management and Accountability Act 1997 (Cth) (FMA Act). Section 33 authorises such payments in “special circumstances” that would not otherwise be authorised by law or required to meet a legal liability.

The “special circumstances” claimed by the applicants were the harm and loss suffered by them as a result of the comments made and actions taken by various government officials (including the Minister for Health) in relation to the performance and standards of the Medtest laboratory, between 2000 and 2003. The first applicant claimed $2,624,323 for loss and damage, and the second and third applicants claimed $250,000 and $125,000 respectively.

The first decision by the Finance Minister’s delegate to decline the application was challenged by the applicants and remitted for redetermination on 13 June 2006. Between June 2006 and August 2007, the applicants’ solicitor and the Finance Minister exchanged correspondence relating to the applicants’ complaint that important facts had been omitted from the Summary History prepared for the Finance Minister by the Special Claims Unit of the Department of Finance and Deregulation and provided to the applicants. By undated letter (apparently written on 21 December 2007), the Finance Minister declined the application for an act of grace payment (the Decision). A Statement of Reasons was provided, at the request of the applicants, on 4 February 2008. The Statement of Reasons included an itemised list entitled “Evidence or Material upon which the Findings were Based”, which included an “Issues Paper” and a “Question Time Brief” (QTB). Neither the Issues Paper nor the QTB had been provided to the applicants.

Grounds of review and decision

The applicants relied on two grounds in the application for judicial review of the Decision: a denial of procedural fairness and a failure to consider all of the applicant’s claims. As an alternative to the second ground, the applicants also raised a third ground, namely, that the Finance Minister had erred by assuming that any award by him in favour of the applicants could infringe on parliamentary privilege.

In relation to the first ground, the applicants alleged that they were not given the opportunity to address material which was adverse to their application, in particular the material in the QTB. The Finance Minister submitted that procedural fairness did not require that every piece of information that might potentially be used adversely to another person’s interest must be provided. It was also submitted that there was a broad discretion in section 33, as a result of which no occasion arose to engage the rules of procedural fairness.

His Honour considered the scope of section 33 and noted that it provides no indication of the manner in which the Finance Minister is to exercise the discretion and the power to grant an act of grace payment is unconfined. However, his Honour stated that:

“the width of such power does not have the consequence that the rules of procedural fairness have no application to the Finance Minister when exercising his discretion under s 33”.

His Honour found that the authorities establish that:

“in general, natural justice will demand that the party to be affected by a decision must be given an opportunity to deal with matters which are adverse to their interests and are credible, relevant and significant to the decision”.

The information in the QTB was before the Finance Minister when he made his decision and his decision was based upon the Issues Paper containing a summary of the QTB. His Honour noted that:

“...such information related to a critical issue for the applicants in their claim for an act of grace payment since the conduct of the Minister for Health both inside and outside of Parliament was the subject of a major complaint and criticism by the applicants. No opportunity was provided to the applicants to comment upon the QTB summary and they were not provided with an opportunity to be heard on an issue which was credible, relevant and significant to the Finance Minister’s decision.”

His Honour found that the failure to provide the QTB summary to the applicants was a breach of the rules of natural justice.

His Honour rejected the second ground and found that the entirety of the Minister for Health’s conduct had been taken into account by the Finance Minister when he made the Decision.

In relation to parliamentary privilege, his Honour observed that the Finance Minister’s reasons for the Decision contemplated the conduct of the Minister for Health both within and outside of Parliament. Accordingly, he rejected the applicants’ allegation that the Finance Minister considered that he was not prevented from taking into account any conduct of the Minister for Health because of parliamentary privilege.

As a result of his finding in relation to the first ground, his Honour remitted the Decision to the Finance Minister for redetermination.