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K-Generation Pty Ltd & Anor v Liquor Licensing Court & Anor [2007] SASC 319

30 August 2007 Supreme Court of South Australia - Full Court

This version of the judgment has been prepared by: Dr Robert N Moles and Bibi Sangha
Underlining where it occurs is for editorial emphasis]

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Gray J - dissenting judgment (part two)

Is Judicial Review available for a Breach of Procedural Fairness?

Counsel for the Licensing Court submitted that a denial of procedural fairness by an inferior court does not constitute a distinct ground for the grant of an order of certiorari. Counsel further contended that a breach of procedural fairness by an inferior court does not constitute an error of jurisdiction, and so is not reviewable by a superior court.

Counsel for the Licensing Court submitted that an error of procedure is an error of law, and an inferior court is empowered to make errors of law without falling into jurisdictional error. It was submitted that judicial power, by its very nature, requires courts to determine questions of substantive law and procedure, and that a jurisdictional error is not committed merely because a superior court would determine the legal question differently. Counsel submitted that the test of jurisdiction for an inferior court concerns the power to enter into an inquiry, not the correctness of the conclusions drawn, so that jurisdiction is not lost by a court coming to a “wrong” decision. Thus, it was submitted, any error of procedural fairness by the Licensing Court does not constitute a jurisdictional error, and cannot ground an order in the nature of certiorari.

An examination of the history of the writ of certiorari, together with modern authority, leaves no doubt that a superior court can review an inferior court’s breach of procedural fairness. In Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 Lord Diplock observed: “Judicial review has I think developed to a stage today when without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds upon which administrative action is subject to control by judicial review. The first ground I would call “illegality,” the second “irrationality” and the third “procedural impropriety.”  That is not to say that further development on a case by case basis may not in course of time add further grounds. …I have described the third head as “procedural impropriety” rather than failure to observe basic rules of natural justice or failure to act with procedural fairness towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. But the instant case is not concerned with the proceedings of an administrative tribunal at all.”

It is relevant to note that procedural fairness is a sub-set of Lord Diplock’s “procedural impropriety”.  A breach of applicable rules of natural justice goes to a decision being improperly, rather than, as submitted by counsel for the Licensing Court, mistakenly, made – that is, the procedure is defective to the extent that a writ of certiorari might, in the court’s discretion, issue. An error in application of natural justice is an error destructive of the validity of the decision making process. In Craig v State of South Australia (1995) 184 CLR 163 the High Court, in a unanimous joint judgment, observed: “Where available, certiorari is a process by which a superior court, in the exercise of original jurisdiction, supervises the acts of an inferior court or other tribunal. It is not an appellate procedure enabling either a general review of the order or decision of the inferior court or tribunal or a substitution of the order or decision which the superior court thinks should have been made. Where the writ runs, it merely enables the quashing of the impugned order or decision upon one or more of a number of distinct established grounds, most importantly, jurisdictional error, failure to observe some applicable requirement of procedural fairness, fraud and “error of law on the face of the record”.”

It is relevant to note that the Court identified “jurisdictional error” and “failure to observe some applicable requirement of procedural fairness” as distinct established grounds that can each form the basis of a writ of certiorari. The High Court in Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 explored the relationship between want of jurisdiction and lack of natural justice. The Court was considering its power to review a decision under the Migration Act, in circumstances where a privative clause limited parties’ rights of review. Gaudron and Gummow JJ observed: “If an officer of the Commonwealth exercising power conferred by statute does not accord procedural fairness and if that statute has not, on its proper construction, relevantly (and validly) limited or extinguished any obligation to accord procedural fairness, the officer exceeds jurisdiction in a sense necessary to attract prohibition under s 75(v) of the Constitution.”

Their Honours continued: “The issue always is whether or not there has been a breach of the obligation to accord procedural fairness and, if so, there will have been jurisdictional error for the purposes of s 75(v).” Gleeson CJ agreed with these observations: “I agree with what has been said by Gaudron and Gummow JJ as to availability of prohibition as a remedy, under s 75(v) of the Constitution, in a case of denial of procedural fairness, and as to the discretionary nature of the remedy.” In the same case, Kirby J observed: “With today’s eyes, we see clearly that a performance by a repository of statutory power (including a federal tribunal) of its functions in breach of the rules of procedural fairness is (at least where the breach is substantial) no true exercise of jurisdiction and power in accordance with law. Such a purported exercise therefore amounts to an excess of jurisdiction. The constitutional writ of prohibition is thus available to restrain it. Mandamus is also available to command the performance of the power and jurisdiction in accordance with law. A constitutional injunction and the ancillary writ of certiorari are available, where necessary, to ensure the effectiveness of the foregoing remedies.”

Similarly, Hayne J observed: “It is important to recognise that the duty to accord procedural fairness (no matter whether founded in the common law or in implication from statute) is a fetter upon the lawful exercise of power. The decision maker may affect the rights of the party who seeks the issue of a writ if and only if that party is accorded procedural fairness. That is, putting the matter in terms of jurisdiction, the authority to decide is an authority which may be exercised only if procedural fairness is extended. “In these circumstances it should be accepted that prohibition may issue to an officer of the Commonwealth if there has been, or will be, a denial of procedural fairness.”

Despite a privative clause, the High Court concluded that it had power, protected by section 75(v) of the Constitution, to review a breach of natural justice. That these statements were made in the context of the privative clause in the Migration Act does not detract from their relevance to the present case. Where a privative clause operates, the question of the breadth of the High Court’s constitutionally protected jurisdiction is enlivened. In the present case, where no privative clause operates, it is evident from the observations noted above that certiorari is available for a breach of natural justice. The Full Court of the Supreme Court of South Australia, in Craig v Workers Compensation Tribunal (2004) 90 SASR 490 held that although there had been a breach of natural justice, the Court could not review the breach because of the existence of an applicable privative clause. Such a finding in the context of a privative clause does not limit the general common law ambit of certiorari. The writ was not available to the Full Court in Craig, not because certiorari cannot be issued for breaches of natural justice, but because the jurisdiction of the Court, in that particular instance, only extended to a strictly construed want of jurisdiction in the inferior court concerned.

This Court has recently delivered judgment in Police & The State of South Australia v Lymberopoulos & Ors [2007] SASC 247 where the  following questions were considered: whether a failure by a magistrate to afford procedural fairness constitutes jurisdictional error; and if the first question is answered in the negative, whether an order in the nature of certiorari is available to quash the decision notwithstanding that the failure by the Magistrate did not amount to a jurisdictional error. Doyle CJ, with whom Bleby and Sulan JJ agreed, examined relevant case law, and concluded, in relation to the first question, that the failure to accord procedural fairness by the Magistrate did not have the effect of making the Magistrate’s decision one that was made without jurisdiction or in excess of jurisdiction. The Court held that, on the evidence before the Court, the Magistrate did not make a decision of a kind beyond his powers, did not do something that he lacked authority to do, did not misapprehend the nature of his function or power, and did not disregard any provision of the relevant Act that was the source of his power to review that particular case.

With respect to the second question, the Court held that a failure to comply with applicable requirements of procedural fairness was a basis for the making of an order in the nature of certiorari, even though the error made is not to be categorised as a jurisdictional error. The Court made several observations in relation to this point. By quashing a decision because of the manner in which it was made, a court does not enter upon the merits of the case – in Lymberopoulos, that would remain to be decided by the Magistrates Court. In judicial review proceedings, the Court is enforcing the requirement of legality. Second, the requirement to accord procedural fairness can be categorised as a restriction on the exercise of the power conferred on the Magistrates Court. Doyle CJ observed: “Although the requirement is not a condition of jurisdiction, it is analogous to those “imperative duties” and “inviolable limitations” the contravention of which results in jurisdictional error by a statutory decision maker:  Plaintiff S157/2002 at [34] Gleeson CJ and at [76] Gaudron, McHugh, Gummow, Kirby and Hayne JJ.”

Third, in Craig v The State of South Australia the Court referred separately to jurisdictional error and to a failure to observe “some applicable requirement of procedural fairness”. The Court in Lymberopoulos considered that as procedural fairness is placed on an equal footing with the other quite distinct grounds for the making of an order of certiorari, this suggested that it is a free standing ground. Finally, the Court examined further case law consistent with this approach.

Although there was no breach of natural justice in the present case (because the duty had been excluded by section 28A of the Liquor Licensing Act), if there was a breach then this Court would have the power to grant judicial review and make an order in the nature of certiorari.

A Further Matter

During the course of argument the question arose as to whether the Commissioner of Police’s decision to certify the material as criminal intelligence could be the subject of judicial review. Both parties accepted that it would be possible to review that process. The question then arose as to whether section 28A would preclude the party seeking review from having access to the criminal intelligence or any material that would directly or indirectly disclose its contents. During the course of argument counsel for the Licensing Court at first said that section 28A had no application and that the protection available to the Commissioner of Police would be through a claim of public interest immunity. Later, that concession was withdrawn and the opportunity was given to counsel to provide written submissions on the topic. Those submissions have now been received and disclose that the Licensing Court wishes to hedge its bets. It argues that if the section is constitutionally valid, then section 28A would apply to any attempt to review the Commissioner’s classification decision. It was contended that if the Court was inclined to the view that the section was constitutionally invalid, then in those circumstances the decision would be reviewable without the protection of section 28A. It was then said that that would be a reason for concluding that the section was constitutionally valid, adopting the reasoning of the majority of the Full Court of Western Australia in Gypsy Jokers. These are unhelpful submissions. The section either has application or no application. The intent of Parliament was to preclude any but the named persons or entities from being able to access the criminal intelligence. Parliament was not content to leave it to a public interest immunity argument. The plain intent of section 28A was to limit access to criminal intelligence. Accordingly, it is my view that on any application to review the classification decision, the party seeking review will not be able to gain access to the material or have any information about its content.

Constitutional Validity

Counsel for the plaintiffs submitted that if section 28A operates to exclude the natural justice hearing rule, then it is constitutionally invalid as it requires the Licensing Court to exercise judicial power in a way that is repugnant to the nature of judicial power and so breaches Chapter III of the Constitution. Given that I have outlined above the way in which the natural justice hearing rule duty cannot be fulfilled concurrently with the duty imposed by section 28A, this constitutional challenge to section 28A must be considered. As earlier discussed, an examination of the statutory framework demonstrates that the Liquor Licensing Act requires the Liquor Commissioner and the Licensing Court to deny natural justice to parties before it, and requires the Supreme Court to uphold that denial. The issue to be addressed now is whether section 28A is constitutionally invalid as a result.

The General Principle

The general principle, in its most basic form, has been variously stated as the notion that Chapter III of the Constitution will operate to invalidate legislation that requires a federal court to exercise a function that is repugnant to the nature of a federal court, incompatible with federal judicial power, or inconsistent with the tradition of judicial power. An oft-quoted justification for this principle is the statement of the Privy Council in Attorney-General of the Commonwealth of Australia v The Queen [1957] AC 288 at 315 where their Lordships observed: “In a federal system the absolute independence of the judiciary is the bulwark of the constitution against encroachment whether by the legislature or by the executive. To vest in the same body executive and judicial power is to remove a vital constitutional safeguard.”

More recently, the Supreme Court of the United States in Mistretta v United States noted: (1989) 488 US 361 at 407 “The legitimacy of the Judicial Branch ultimately depends on its reputation for impartiality and non-partisanship. That reputation may not be borrowed by the political Branches to cloak their work in the neutral colours of judicial action.”

Over the years this general principle has been applied to a broader category of situations. The High Court established in Wilson v Minister for Aboriginal and Torres Strait Islander Affairs (1996) 189 CLR 1that it is not just federal courts that cannot be burdened with functions repugnant to the exercise of judicial power, but also federal court judges in their personal capacity. Soon after, the High Court held in Kable v Director of Public Prosecutions (NSW) (1996) 190 CLR 51that State courts invested with federal jurisdiction must also be free of functions that are incompatible with the fact that the State court is a repository of federal jurisdiction. It is a natural extrapolation from these two lines of authority to hold that judges of State courts cannot, in a personal capacity, be given functions that would undermine the integrity of their position of judges of courts invested with federal jurisdiction.

Natural Justice and the Exercise of Judicial Power

Before considering this submission in detail, it is first necessary to establish what functions a court invested with federal jurisdiction is unable, by virtue of Chapter III, to be required to exercise. The requirement to withhold relevant adverse information to an applicant, in breach of a person’s right to procedural fairness, and the ability to make determinations on issues affecting a person’s rights and interests and to do so without giving reasons, are functions that have the capacity to undermine the integrity of the federal judiciary. Chapter III of the Constitution establishes the federal judiciary. Section 71 of the Constitution provides: “The judicial power of the Commonwealth shall be vested in a Federal Supreme Court, to be called the High Court of Australia, and in such other federal courts as the Parliament creates, and in such other courts as it invests with federal jurisdiction. The High Court shall consist of a Chief Justice, and so many other Justices, not less than two, as the Parliament prescribes.”

The foundation of Chapter III of the Constitution is the doctrine of separation of powers between the judiciary and the executive and legislature. The importance of an independent judiciary to our society cannot be underestimated. [Editor: this should read overestimated] In Re Tracey; Ex parte Ryan (1989) 166 CLR 518 at 580 Deane J observed: “To ignore the significance of the doctrine or to discount the importance of safeguarding the true independence of the judicature upon which the doctrine is predicated is to run the risk of undermining, or even subverting, the Constitution’s only general guarantee of due process. The implications of the doctrine are far-reaching. The power to adjudge guilt of, or determine punishment for, breach of the law, the power to determine questions of excess of legislative or executive power and the power to decide controversies about existing rights and liabilities all fall within the concept of judicial power. The Executive Government cannot absorb or be amalgamated with the judicature by the conferral of non-ancillary executive functions upon the courts. Nor can the Executive itself exercise judicial power and act as prosecutor and judge to punish breach of law by executive fiat or decree. The guilt of the citizen of a criminal offence and the liability of the citizen under the law, either to a fellow citizen or to the State, can be conclusively determined only by a Ch. III court acting as such, that is to say, acting judicially. For its part, the Parliament cannot legislate either to destroy the entrenched safeguards of Ch. III or to itself assume the exercise of judicial power.”

Similarly, in Polyukhovich v Commonwealth (1991) 172 CLR 501 at 606-607 (footnotes omitted). Deane J observed: “The main objective of the sometimes inconvenient separation of judicial from executive and legislative powers had long been recognized at the time of the federation. It is to ensure that “the life, liberty, and property of the subject [is not] in the hands of arbitrary judges, whose decisions [are] then regulated only by their own opinions, and not by any fundamental principles of law” (Blackstone, Commentaries, 17^th ed. (1830), vol. I, p. 269; and see, to like effect, Story, Commentaries on the Constitution of the United States(1833), §1568). That objective will, of course, be achieved only by the Constitution’s requirement that judicial power be vested exclusively in the courts which it designates if the judicial power so vested is exercised by those courts in accordance with the essential attributes of the curial process (cf. Re Tracey; Ex parte Ryan). Indeed, to construe Ch. III of the Constitution as being concerned only with labels and as requiring no more than that the repository of judicial power be called a court would be to convert it into a mockery, rather than a reflection, of the doctrine of separation of powers. Common sense and the provisions of Ch. III, based as they are on the assumption of traditional judicial procedures, remedies and methodology …, compel the conclusion that, in insisting that the judicial power of the Commonwealth be vested only in the courts designated Ch. III, the Constitution’s intent and meaning were that that judicial power would be exercised by those courts acting as courts with all that that notion essentially requires. Accordingly, the Parliament cannot, consistently with Ch. III of the Constitution, usurp the judicial power of the Commonwealth by itself purporting to exercise judicial power in the form of legislation. Nor can it infringe the vesting of that judicial power in the judicature by requiring that it be exercised in a manner which is inconsistent with the essential requirements of a court or with the nature of judicial power.”

Section 71 vests “judicial power” in the High Court and other courts invested with federal jurisdiction. The High Court has recognised that the term “judicial power” is difficult to define. In Davison R v Davison (1954) 90 CLR 353 Dixon CJ and McTiernan J observed: “Many attempts have been made to define judicial power, but it has never been found possible to frame a definition that is at once exclusive and exhaustive.”

Rather than attempt to define the phrase “judicial power”, it is more appropriate to examine its characteristics. In Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd (1970) 123 CLR 361 Windeyer J observed: “Lord Guest and Lord Devlin in 1968, in a dissenting judgment in a case in the Privy Council to which I shall refer later, said: “Judicial power is a concept that is capable of clear delineation. It has to be, since it is the basis of a constitutional requirement and legislation which falls on the wrong side of the line can be completely avoided. It has been considered many times in relation to those constitutions, particularly the Australian, which provide for the separation of powers.” But, although the concept can be delineated and this Court has often had to say on which side of the line a matter falls, the question can give rise to deep controversy. … The concept seems to me to defy, perhaps it were better to say transcend, purely abstract conceptual analysis. It inevitably attracts consideration of predominant characteristics and also invites comparison with the historic functions and processes of courts of law.”

It is clear, though, that the sections in Chapter III of the Constitution do more than simply allocate federal power. In Leeth v Commonwealth (1992) 174 CLR 455 at 486-487 Deane and Toohey JJ observed: “They also dictate and control the manner of its exercise. They are not concerned with mere labels or superficialities. They are concerned with matters of substance. Thus, in Ch.III’s exclusive vesting of the judicial power of the Commonwealth in the ‘courts’ which it designates, there is implicit a requirement that those ‘courts’ exhibit the essential attributes of a court and observe, in the exercise of that judicial power, the essential requirements of the curial process, including the obligation to act judicially.”

Similarly, in Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 Deane and Toohey JJ observed: “No part of the judicial power of the Commonwealth can be exercised either by a body which is not a Ch.III court or in a manner which is inconsistent with our traditional judicial process.”

These principles have long been recognised by the High Court. In Federal Court of Bankruptcy; Ex parte Lowenstein (1938) 59 CLR 556 at 567 Latham CJ, with whom Rich J agreed, observed: “If a power or duty were in its nature such as to be inconsistent with the co-existence of judicial power, it might well be held that a statutory provision purporting to confer or impose such a power or duty could not stand with the creation of the judicial tribunal or the appointment of a person to act as a member of it.”

This foreshadowed the decision of Kirby; Ex parte Boilermakers’ Society of Australia (1956) 94 CLR 254 at 296 where Dixon CJ, McTiernan, Fullagar and Kitto JJ observed: “It has been found impossible to escape the conviction that Chap. III does not allow the exercise of a jurisdiction which of its very nature belongs to the judicial power of the Commonwealth by a body established for purposes foreign to the judicial power ... and that Chap. III does not allow a combination with judicial power of functions which are not ancillary or incidental to its exercise but are foreign to it.”

Similarly, Williams J observed: “In relation to Chap. III the doctrine means that only courts can exercise the judicial power of the Commonwealth, and that nothing must be done which is likely to detract from their complete ability to perform their judicial functions. The Parliament cannot, therefore, by legislation impose on the courts duties which would be at variance with the exercise of these functions or duties and which could not be undertaken without a departure from the normal manner in which courts are accustomed to discharge those functions.”

His Honour further observed that non-judicial functions can be imposed on a court provided that the functions are not “functions which courts are not capable of performing consistently with the judicial process.” The question that arises from this is what it means to “act judicially”, or in a manner consistent with “our traditional judicial process”, and whether a court that does not afford procedural fairness to a party before it can still be said to be acting in accordance with the judicial power that has been vested in it by the Constitution. The High Court has had occasion to consider whether affording natural justice to parties is an essential element of the exercise of judicial power. If it is an element of the judicial power, then it is protected by Chapter III of the Constitution. In Harris v Caladine (1991) 172 CLR 84 Gaudron J considered the meaning of the phrase “judicial power”, including as one element the application of the rules of natural justice: “Judicial power is usually defined in terms of its subject matter, but it is a power that, for complete definition, requires description of its dominant and essential characteristic, namely, that it is exercised in accordance with that process which is referred to as “the judicial process”. Thus, in general terms, it is a power which cannot be exercised until the “tribunal which has power ... is called upon to take action” (Huddart, Parker), which (subject to limited exceptions) proceeds by way of open and public inquiry, which involves the application of the rules of natural justice and which is directed to ascertaining “the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined”: Tasmanian Breweries, per Kitto J. This characteristic imports a requirement that a court delegate its powers and functions only to persons and on terms designed to ensure that the judicial process will be observed. Thus, for example, a particular power or function cannot be delegated to a person having an interest in the matter or on terms permitting of its being exercised secretly or arbitrarily.”

Gaudron J further articulated this proposition in Re Nolan; Ex parte Young (1991) 172 CLR 460 observing: “It is important to bear in mind that an essential feature of judicial power is that it must be exercised in accordance with the judicial process. … Importantly for present purposes, those features include open and public enquiry (subject to limited exceptions), the application of the rules of natural justice, the ascertainment of the facts as they are and as they bear on the right or liability in issue and the identification of the applicable law, followed by an application of that law to those facts.”

Her Honour elaborated on the importance of an open and public inquiry: “The determination in accordance with the judicial process of controversies as to legal rights and obligations and as to the legal consequences attaching to conduct is vital to the maintenance of an open, just and free society. Quite apart from the public’s right to know what matters are being determined in the courts and with what consequences, open and public proceedings are necessary in the public interest because secrecy is conducive to the abuse of power and, thus, to injustice. Moreover and more directly, the judicial process protects the individual from arbitrary punishment and the arbitrary abrogation of rights by ensuring that punishment is not inflicted and rights are not interfered with other than in consequence of the fair and impartial application of the relevant law to facts which have been properly ascertained. “By reason of the interests which the judicial process protects, that process is properly to be seen as partaking of the same fundamental importance as the democratic process.”

In the present case, the judicial process has been subverted by the fact that the plaintiffs were not told what the case against them was, and were not given any meaningful reasons for the decision against them. As Gaudron J has articulated, the judicial process is meant to protect the individual from the arbitrary abrogation of rights. Justice cannot be seen to be done when a court is required to make decisions affecting people’s rights without disclosing adverse information and the reasons for the decision – the court is exercising power that is not compatible with the fact that it has been vested with judicial power under the Constitution.

Further support can be found from the observations of Mason CJ, Dawson and McHugh JJ in Leeth v The Commonwealth, where their Honours observed: “It may well be that any attempt on the part of the legislature to cause a court to act in a manner contrary to natural justice would impose a non-judicial requirement inconsistent with the exercise of judicial power, but the rules of natural justice are essentially functional or procedural and, as the Privy Council observed in the Boilermakers’ Case, a fundamental principle which lies behind the concept of natural justice is not remote from the principle which inspires the theory of separation of powers.”

Deane and Toohey JJ observed: “Thus, in Ch III’s exclusive vesting of the judicial power of the Commonwealth in the “courts” which it designates, there is implicit a requirement that those “courts” exhibit the essential attributes of a court and observe, in the exercise of that judicial power, the essential requirements of the curial process, including the obligation to act judicially. At the heart of that obligation is the duty of a court to extend to the parties before it equal justice, that is to say, to treat them fairly and impartially as equals before the law and to refrain from discrimination on irrelevant or irrational grounds.

In Grollo v Palmer (1995) 184 CLR 348 Gummow J, although finding as a matter of statutory construction that the duty of confidentiality imposed by the legislation did not extend to the discharge of functions as a judge exercising the judicial power of the Commonwealth, expressly stated that but for that conclusion, his Honour would have accepted the submission by the applicant that the impugned provisions of the Act amounted to an impermissible undermining of the Boilermakers’ doctrine.  With respect to the nature of judicial power, his Honour observed: “An essential attribute of the judicial power of the Commonwealth is the resolution of such controversies by the means described so as to provide final results which are delivered in public after a public hearing, and, where a judge is the tribunal of fact as well as law, are preceded by grounds for decision which are animated by reasoning. An objective of the exercise of the judicial power in each particular case is the satisfaction of the parties to the dispute and the general public that, by these procedures, justice has both been done and been seen to be done. Accordingly, the rules as to reasonable apprehension of bias in their application to the courts have, at their root, the doctrine of the separation of the judicial from the political heads of power. Those rules govern the conduct of other decision-makers also but their paradigmatic application is to the exercise of judicial power. Their Lordships somewhat understated the position when observing in the Boilermakers' Case that the fundamental principle which makes a combination of actor and judge appear contrary to natural justice “is not remote from that which inspires the theory of the separation of powers”.”

In the same case, McHugh J observed: “Open justice is the hallmark of the common law system of justice and is an essential characteristic of the exercise of federal judicial power. Participation in secret, ex parte administrative procedures that approve the acts of federal law enforcement officers by those who hold federal judicial office contravenes the spirit of the requirement that justice in the federal courts should be open; it weakens the perception that the federal courts are independent of the federal government and its agencies. Much of the litigation in the Federal Court is between the ordinary citizen and the federal government and its agencies. The maintenance of public confidence in the independence and impartiality of the Federal Court judges in hearing disputes between the citizen and the government and its agencies is contingent upon the public perception that the judges of the federal courts are impartial and entirely independent of the executive arm of government. That public perception must be diminished when the judges of the Federal Court are involved in secret, ex parte administrative procedures, forming part of the criminal investigative process, that are carried out as a routine part of their daily work.

In Kable v DPP (NSW), McHugh J specifically identified natural justice as being one of the essential elements of judicial power protected by Chapter III of the Constitution, observing: “Because the State courts are an integral and equal part of the judicial system set up by Ch III, it also follows that no State or federal parliament can legislate in a way that might undermine the role of those courts as repositories of federal judicial power. Thus, neither the Parliament of New South Wales nor the Parliament of the Commonwealth can invest functions in the Supreme Court of New South Wales that are incompatible with the exercise of federal judicial power. Neither Parliament, for example, can legislate in a way that permits the Supreme Court while exercising federal judicial power to disregard the rules of natural justice or to exercise legislative or executive power. Such legislation is inconsistent with the exercise of federal judicial power. However, the Act does not seek to interfere with the invested federal jurisdiction of the Supreme Court. On its face it is directed to the exercise of State, not federal, jurisdiction. But for present purposes that is irrelevant. The compatibility of State legislation with federal judicial power does not depend on intention. It depends on effect. If, as Gibbs J pointed out in The Commonwealth v Queensland, State legislation has the effect of violating the principles that underlie Ch III, it will be invalid.” [emphasis added by Gray J]

In Nicholas v The Queen (1998) 193 CLR 173 Gaudron J observed: “Judicial power is not adequately defined solely in terms of the nature and subject matter of determinations made in exercise of that power. It must also be defined in terms that recognise it is a power exercised by courts and exercised by them in accordance with the judicial process. Thus, as was said in Chu Kheng Lim v Minister for Immigration, the Parliament cannot make “a law which requires or authorises the courts in which the judicial power of the Commonwealth is exclusively vested to exercise judicial power in a manner which is inconsistent with the essential character of a court or with the nature of judicial power”.”

“In my view, consistency with the essential character of a court and with the nature of judicial power necessitates that a court not be required or authorised to proceed in a manner that does not ensure equality before the law, impartiality and the appearance of impartiality, the right of a party to meet the case made against him or her, the independent determination of the matter in controversy by application of the law to facts determined in accordance with rules and procedures which truly permit the facts to be ascertained and, in the case of criminal proceedings, the determination of guilt or innocence by means of a fair trial according to law. It means, moreover, that a court cannot be required or authorised to proceed in any manner which involves an abuse of process, which would render its proceedings inefficacious, or which brings or tends to bring the administration of justice into disrepute.”

These principles have been endorsed by the High Court in Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 where Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ observed in a joint judgment: “Judicial power involves the application of the relevant law to facts as found in proceedings conducted in accordance with the judicial process.  And that requires that the parties be given an opportunity to present their evidence and to challenge the evidence led against them. It is contrary to the judicial process and no part of judicial power to effect a determination of rights by applying the law to facts which are neither agreed nor determined by reference to the evidence in the case.”

Recently in Thomas v Mowbray [2007] HCA 33 the High Court considered, among other issues, whether legislation that allowed a Federal Magistrate to authorise a control order against an individual was constitutionally invalid. Gummow and Crennan JJ defined the issue as: “It may be accepted for present purposes that legislation which requires a court exercising federal jurisdiction to depart to a significant degree from the methods and standards which have characterised judicial activities in the past may be repugnant to Ch III. Do the provisions of the Code concerning interim control orders oblige issuing courts to act in a manner inconsistent with the essential character of a court or with the nature of judicial power?  It then becomes necessary in the present case to consider the complaints which the plaintiff makes respecting the processes and outcome of applications for interim control orders.”

The majority in Thomas held that the legislation in question was constitutionally valid. Gleeson CJ concluded: class=MsoFootnoteReference> lang=EN-AU style='font-size:14.0pt;line-height: 150%'> “Finally, it was argued that, even if Div 104 confers judicial power, it purports to require that power to be exercised in a manner inconsistent with the essential character of a court or inconsistent with the nature of judicial power. This argument fails. We are here concerned with an interim control order which was made ex parte, pursuant to subdiv B, but, as has been pointed out, in the ordinary case a confirmation hearing would have been held before now. Applications for control orders are made in open court, subject to the power to close the court under the court’s general statutory powers. The rules of evidence apply. The burden of proof is on the applicant. Prior to the confirmation hearing, the subject of a control order is given the documents that were provided to the Attorney-General for the purpose of seeking consent to the application for the interim order, together with any other details required to enable the person to respond (s 104.12A). The confirmation hearing involves evidence, cross-examination, and argument (s 104.14). The court has a discretion whether to revoke or vary or confirm the order (s 104.14). An appeal lies in accordance with the ordinary appellate process that governs the issuing court's decisions. The outcome of each case is to be determined on its individual merits. There is nothing to suggest that the issuing court is to act as a mere instrument of government policy. On the contrary, the evident purpose of conferring this function on a court is to submit control orders to the judicial process, with its essential commitment to impartiality and its focus on the justice of the individual case. In particular, the requirements of s 104.4, which include an obligation to take into account the impact of the order on the subject's personal circumstances, are plainly designed to avoid the kind of overkill that is sometimes involved in administrative decision-making. Giving attention to the particular circumstances of individual cases is a characteristic that sometimes distinguishes judicial from administrative action.”

“We are not concerned in this case with particular issues as to procedural fairness that could arise where, for example, particular information is not made available to the subject of a control order or his or her lawyers. Issues of that kind, if they arise, will be decided in the light of the facts and circumstances of individual cases. We are here concerned with a general challenge to the validity of Div 104. That challenge should fail.”

Gleeson CJ emphasised that the rules of evidence applied, and the subject of the control order was given the material that was relied on in support of the control order – in essence, the hearing assumed the character of a judicial hearing. In the present case, it is these safeguards that are missing. Affording a person whose rights will be affected by a court’s decision an opportunity to respond to adverse claims is so fundamental to a fair hearing that legislation which requires a court invested with federal jurisdiction to exercise judicial power without affording this aspect of the natural justice hearing rule is inconsistent with the integrated federal judiciary established by Chapter III of the Constitution. The operation of the Liquor Licensing Act involved the independent judiciary in incompatible activities, cloaking injustices with the semblance of judicial propriety.

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