Cooney v Holden[2007] QSC 53

SUPREME COURT OF QUEENSLAND

1. MULLINS J:    The applicants seek a review under the Judicial Review Act 1991 (“JRA”) of the decision of the respondent Mr Colin Holden, the chief executive officer of the Queensland Rural Adjustment Authority (“QRAA”), declining an application for assistance under the Queensland Vegetation Management Framework, Financial Assistance for Farm Businesses, Exit Assistance Scheme (“the exit assistance scheme”) which is an approved assistance scheme under the Rural and Regional Adjustment Act 1994 (“the Act”).   

Relevant legislation

2. The QRAA is a body corporate which represents the State established under the Act to deliver financial and other assistance and incentives primarily targeted at fostering the development of a more productive and sustainable rural and regional sector by giving assistance to rural or regional producers who have long term viability, but it is also an object of the Act that the QRAA will help persons leave rural or regional production: s 3 of the Act. Under s 8(1) of the Act, the QRAA’s primary function is specified as putting approved assistance schemes into effect by ensuring the schemes are properly and fairly administered and directly giving the assistance the schemes provide for. The requirements for an approved assistance scheme under the Act are set out in s 11 of the Act which specifies that an approved assistance scheme must be approved under a regulation.

3. The powers of the QRAA are set out in s 12 of the Act:

“12 Administering approved assistance schemes

(1) In administering an approved assistance scheme, the authority may—

(a) assess and decide applications for assistance under the scheme; and

(b) cancel the provision of assistance; and

(c) put conditions on the giving of assistance; and

(d) change the arrangements for the repayment of debts to the authority; and

(e) decline to deal with applications made by persons previously refused assistance under the scheme; and

(f) decide its own procedures; and

(g) keep operational accounts with financial institutions within Australia.

(2)However, in administering an approved assistance scheme, the authority must comply with—

(a) the contents of the scheme; and

(b) agreements entered into between the authority and persons receiving assistance under the scheme.”

4. Part 3A of the Act deals with review of decisions. Under s 13A of the Act a person who is dissatisfied by a decision of the QRAA under s 12(1)(a) to (e) of the Act in relation to an approved assistance scheme may apply to the chief executive officer for an internal review of the decision. The application for internal review must comply with s 13B of the Act. Section 13C of the Act sets out what the chief executive officer must do after receiving the application for internal review:

“13C Review decision

(1) The chief executive officer must, within 30 business days after receiving the application—

(a) review the decision (the original decision); and

(b) make a decision (the review decision) to—

(i) confirm the original decision; or

(ii) amend the original decision; or

(iii) substitute another decision for the original decision; and

(c) give the applicant notice (the review notice) of the review decision.

(2) If the review decision is not the decision sought by the applicant, the review notice must also state the reasons for the review decision.

(3) If the chief executive officer does not comply with subsection (1), the chief executive officer is taken to have made a decision confirming the original decision.”

The exit assistance scheme

5. On 21 May 2004 the Vegetation Management and Other Legislation Amendment Act 2004 (“Amendment Act”) commenced which substantially amended the Vegetation Management Act 1999 (“VMA”) and provided for regulation of the clearing of vegetation and the phasing out of broadscale “remnant vegetation” by 31 December 2006.    

6. The exit assistance scheme was approved by regulation made on 1 July 2004 to compensate land owners whose properties were no longer viable as a direct consequence of the Amendment Act.  The purpose of the exit assistance scheme is set out in full in clause 1:

“1 Purpose

To assist primary producers who are:

•without prospects of sustainable long term viability as a direct consequence of the implementation of the new vegetation management arrangements enacted through the Vegetation Management and Other Legislation Amendment Act 2004 and

•have taken the decision to adjust out of primary production or relocate their enterprise

The assistance will be through the purchase of their land in the Farm Business, and the facilitation of the disposal of the Farm Business consistent with the objectives of the Scheme.”

7. Relevant definitions for the purpose of the exit assistance scheme are set out in clause 4 and include:

“Area of land affected – means the area covered with vegetation that cannot be cleared under the legislation, regulations and assessment codes proclaimed on 21 May 2004 but which could have been cleared under the legislation, regulations and state assessment codes in place prior to that date.

Farm Business – is a business that involves primary production, which shall include, but not limited to the agricultural, aquacultural, horticultural, pastoral or apicultural industries, and is operated as either an owner operator, or as part of a family company or partnership.”

8. Clause 5 of the exit assistance scheme provides:

“5Assessment Criteria

1. 5.1 QRAA must be satisfied that:

•the Farm Business has a property which includes an area or areas of land affected;

•the Farm Business acquired the property or a contract for acquisition or usage of the particular land(s) was entered into prior to the 22/05/2003, being the date of the announced changes;

1. 5.2 the applicant has demonstrated that clearing of the area  of land affected was necessary to attain or maintain sustainable long term viability for:

1. 5.2.1 past viability, the previous capacity of the Farm Business to meet the following factors:

•the operating costs of the Farm Business

•the living costs of the farm family

•servicing of the Farm Business debts

• future capital requirements for plant and 

improvements

•investment in sustainable farming  systems

1. 5.2.2 potential viability, in addition to the above, the following factors:

•the scale and nature of the operations of the Farm Business

•development plans having regard to the productive capacity of the land holding(s) and capacity to finance the implementation of the plan

•the capital contribution of the applicant to acquire and develop the Farm Business;

•the long term economic trends which impact on the Farm Business;

•the provision of financial support for the Farm Business by lenders;

•the demonstrated technical, financial and business management performance of the producer

1. 5.3 the applicant has demonstrated that, as a direct consequence of the introduction of the new vegetation management arrangements, the Farm Business is not, or does not have the potential to be, a viable commercial operation taking into account the criteria listed above;

1. 5.4 the applicant has demonstrated that all secured creditors agree to allow the applicant to exit the Farm Business, and both the applicant and secured creditors are prepared to enter into an agreement approved by QRAA to transfer the title of the land holding(s) to NRM&E. The applicant must be able to transfer title to NRM&E and be prepared to agree to take no further equity interest in the land holding(s) thereafter; and

1. 5.5 the applicant has lodged an application with QRAA prior to any of the following having occurred:

•the settlement of sale of the Farm Business, or

•a mortgagee taking possession of the Farm Business; or

•the Farm Business being declared by a court to be bankrupt; or

•a served eviction notice , allowing where relevant, for due legal process to occur, unless failure to lodge was due to extenuating circumstances (excluding due legal and commercial practice) applying in relation to the applicant.

1. 5.6 under normal circumstances the primary producer is responsible for the contribution of the majority of his/her labour to the Farm Business enterprise and generates the majority or has the potential to generate the majority of income from that enterprise.

1. 5.7 the Farm Business will not receive (through the ballot process) a permit to clear vegetation in an area or areas of land affected, for which they are seeking financial assistance.”

The application under the exit assistance scheme

9. The applicants are the owners and operators of a 31,920 hectare sheep and cattle property known as “Tarko” (“the property”) located south west of Eulo in south western Queensland.

10. On 25 November 2005 Mr Graham Kenny of Devine Agribusiness as the applicants’ agent submitted an application for exit assistance under the exit assistance scheme. In summary, it was put that the applicants had been moving away from sheep and toward beef cattle which necessitated an increased reliance on improved pastures to maintain and improve the long term beef cattle carrying capacity of the property and, but for the Amendment Act, the applicants had intended to undertake a significant pasture development program on the property.  The application included a letter of advice from the Department of Natural Resources and Mines dated 3 October 2005 advising of the Department’s estimate that 11,750 hectares of the property may be affected by the Amendment Act.  

11. By letter dated 18 January 2006 Mr O'Dea, the lending manager of the QRAA, wrote to the applicants advising that their application for exit assistance had been declined by the Lending Committee of the QRAA because they were ineligible for assistance in terms of the scheme guidelines. The letter set out the following matters in support of the decision to decline assistance:

“Your application was given due consideration by the QRAA Lending Committee which acknowledges the significant area of land affected by changes to the vegetation management regulations.  However, the Committee cannot support your claim that, as a direct consequence of the introduction of the new vegetation arrangements, your enterprise is not or does not have the potential to be a viable commercial operation.  The Committee noted the supporting documentation provided with your Exceptional Circumstances interest subsidy review of July 2005 in which it was stated, on your behalf, that you have managed to remain viable and that, despite the continuing drought conditions, you have continued to meet your financial obligations including debt reduction.  QRAA subsequently approved your third consecutive year of interest subsidy support. 

It is considered that, in addition to the new vegetation management arrangements, the issues of continuing drought, low commodity prices and high debt load have influenced your decision to consider your adjustment out of primary production.”

12. Mr Kenny on behalf of the applicants by letter dated 3 February 2006 addressed to the respondent sought a review pursuant to s 13A of the Act of the decision made by the QRAA to decline the applicants’ application.

13. As a result of requesting the review, another employee of the QRAA, Mr Scott Wilson, prepared an assessment of the applicants’ application for exit assistance. That assessment is exhibit “GRK 12” to the affidavit of Mr Kenny filed on 15 September 2006. Mr Wilson made a recommendation on 2 March 2006 that the respondent adhere to the original decision.

14. In connection with the reconsideration of the decision, the respondent wrote to Mr Kenny on 13 March 2006, referring to the drought plan submitted in June 2005 by him on behalf of the applicants which indicated that the applicants could “sustainably service debts from the revenue generated by the enterprise” and that on that basis, an Exceptional Circumstances subsidy of $20,400 was provided to the applicants. On the basis that Mr Kenny’s submission under the exit assistance scheme some six months later suggested that “the enterprise is now not viable”, Mr Kenny was requested to advise “how such a turnaround in circumstances could occur in that 6-month period”.

15. Mr Kenny responded by letter dated 22 March 2006. There were three points made in the letter. The first was directed at the means by which the applicants had made their debt reduction during the drought conditions which was as a result of income derived from the applicants’ management of the adjoining property and contract income. It was emphasised that the application for exit assistance was in respect of “the property or farm business enterprise” which was that operated on the property and in respect of which other sources of income were not relevant in any assessment of the viability of the property under the exit assistance scheme. The second point that was made relied on a distinction between the objective of the Exceptional Circumstances scheme and that of the exit assistance scheme. Reference was made to the purpose of interest subsidy support under the Exceptional Circumstances scheme to assist farmers “who would otherwise have prospects of long term profitability and sustainability, but for exceptional conditions arising from drought which has detrimentally affected the farmer’s income, leading to financial difficulty”. This was contrasted with the objective of the exit assistance scheme which was to enable primary producers to exit a property or farm business enterprise “where there are no longer any prospects of long term viability as a direct consequence of the introduction of new vegetation management arrangements”. It was submitted that the property could have achieved a commercially viable return to the applicants (without recourse to income generated from other sources such as management fees in respect of the adjoining property) with extensive property development had it not been prohibited by the Amendment Act.  The last point that was made in the letter was that different timeframes were involved under the Exceptional Circumstances scheme and the exit assistance scheme.  It was pointed out that the Exceptional Circumstances scheme is specific to a designated Exceptional Circumstances event, whereas exit assistance scheme is concerned with the effect on a property of the absolute ban on development which has been imposed forever.  The point was also made that when the applicants’ last Exceptional Circumstances application had been prepared, the applicants did not appreciate how the codes that were introduced by the Amendment Act for assessment of applications for non-broadscale vegetation management activities would be interpreted, but in the period that preceded the making of the exit assistance application, experience had shown that the assessment of outstanding ongoing purpose applications meant that ongoing purposes were not accessible or feasible options to the extent necessary to maintain the current level of productivity on the property in the longer term.          

16. In connection with the respondent’s review, Mr O'Dea prepared for the respondent an undated report (“the O'Dea report”) which made comments on information provided in Mr Kenny’s letter of 22 March 2006. The respondent has acknowledged that he had the O'Dea report before him when undertaking the review. The applicants did not become aware of the O'Dea report until after the respondent made his review decision.

17. The O'Dea report summarised applications made previously by the applicants to the QRAA and that it had been stated a number of times previously by the applicants that they had capacity to be viable given normal seasons and prices and had put forward cash flows in support of that position. This report extracted from the Exceptional Circumstances application made by the applicants of May 2003, the following statement under the heading of “Development”:

“There has been no extensive land development carried out on the ‘Tarko’ aggregation as these country types are not well suited to extensive development.  Mulga regrowth is controlled through the strategic grazing of sheep.  Recent drought conditions has led to extensive pushing of Mulga, for stock feed.”

18. The O'Dea report drew attention to the claim in the exit assistance scheme application that the applicants had intended to undertake a significant pasture development program which was put on hold as a result of the moratorium on development applications that commenced in May 2003, but that there had been no indication in the Drought Management Plan of May 2003 in the Exceptional Circumstances application that the applicants were intending to undertake or saw any potential for significant pasture development.

19. The O'Dea report also commented on the relevance of off-farm income and that although it was taken into consideration during the Exceptional Circumstances period, it was relevant for the Exceptional Circumstances application for interest subsidy that the farm business have the capacity in its own right to meets its commitments on a return to normal seasonal conditions and it was pointed out that was how the applicants portrayed their situation in their May 2003 Drought Management Plan, as that provided for the farm business in its own right generating a surplus after meeting all commitments by 2007/2008. Mr O'Dea’s report observed that the applicants’ point about lack of appreciation of how the Amendment Act would affect vegetation management on the property at the time the Exceptional Circumstances application was prepared in July 2005 was “not considered admissible information in this appeal”.  The conclusion in the O'Dea report was that the prior information given to the QRAA by the applicants did not support their current contention that they are without prospects of sustainable long term viability as a direct consequence of the implementation of the new vegetation management arrangements.

20. On 10 May 2006 the respondent made handwritten notes on the sheet which contained Mr Wilson’s recommendation dated 2 March 2006. The respondent’s notes stated:

“Main argument appears to be that when EC was approved it was on the basis of management fees being received supporting the business.  While this was the case during the EC period the major factor was our and client’s view that the enterprise was viable in its own right (ie without management fees).  There appears to be conflicting views provided as to whether development was ever to be undertaken which therefore brings into question whether the introduction of the legislation has been the main influencer, assuming there is a question mark over viability.  In summary, I am of the view that given reasonable seasons and stock numbers the enterprise remains viable.  Recommendation supported.  Decline.”

21. By letter dated 11 May 2006 the respondent advised the applicants that he adhered to the previous decision to decline their application for exit assistance on the basis that he was not satisfied that they were “without prospects of sustainable long term viability as a direct consequence of the implementation of the new vegetation arrangements”. The respondent expanded on this conclusion in that letter as follows:

“I refer you to the QRAA decisions to approve Exceptional Circumstances (EC) assistance in July 2003, June 2004 & August 2005 and advise that the requirements for determining long term sustainable viability under EC are consistent with those under Vegetation Management-Exit.  The EC decisions were made on the information you provided indicating that, given a return to normal seasonal conditions and commodity prices, your farm business had the capacity to return to a position of sustainable long term viability.  Your Drought Management Plan of May 2003 accompanying your initial EC application indicated that off-farm income would continue to be necessary during the drought, in conjunction with the EC assistance provided by QRAA, to enable you to meet all of your commitments.  Based on the information presented this opinion has not altered.

I have also noted there has been no indication, prior to your Exit application, that there was any need or intention to undertake significant pasture development in order to maintain viability.  To the contrary, your Drought Management Plan stated that the country types on ‘Tarko’ are not well suited to extensive development.  On this basis I am not convinced that the introduction of the new Vegetation Management Legislation has impeded any proposed development activities on ‘Tarko’.”

Preliminary point

22. One of the criteria in clause 5.7 of the exit assistance scheme is that the relevant business “will not receive (through the ballot process) a permit to clear vegetation in an area or areas of land affected, for which they are seeking financial assistance”. The applicants did not apply for such a permit. The respondent argues that it is therefore impossible for the applicants to establish that they “will not receive” such a permit through the ballot process and that is a complete answer to the application.

23. Under clause 8.5 of the exit assistance scheme, an applicant for exit assistance must identify whether an application for a clearing permit under the ballot process has been made. If the applicant has entered the ballot process, the application for exit assistance will not be assessed until it is known that the applicant has been unsuccessful in the ballot process. The making of an application for a permit through the ballot process therefore affects the timing of the assessment of the application for exit assistance.

24. As a matter of construction of the exit assistance scheme, it is not a condition precedent to the making of an application for exit assistance that the applicant has applied through the ballot process for a permit to clear vegetation. The criterion in clause 5.7 will be satisfied if an application for the permit was made through the ballot process and was unsuccessful, but likewise it will also be satisfied if no application was made for a permit through the ballot process, as it follows in that case that the relevant business will not receive a permit through the ballot process.

25. The preliminary point is not the complete answer to the application as submitted by the respondent.

Nature of review decision

26. Under Part 3A of the Act the respondent is required to review the original decision of the QRAA which is the subject of the review application. On the review the respondent is not limited to the material that was available for the making of the original decision: s 13B(1)(b) of the Act.

27. The possible decisions that the respondent can make on the review that are set out in s 13C(1)(b) of the Act of confirming, amending or substituting another decision for the original decision are consistent with the respondent embarking on a decision-making process that requires him to look at all the material that is before him to decide the outcome of the application for exit assistance. There is nothing that remains to be decided in relation to the application for exit assistance after the respondent has undertaken his review. That the respondent expresses his decision in relation to the application by reference to the effect of his decision on the original decision does not mean that he limits his review to deciding whether or not he agrees with the original decision. It is an independent decision making process.

28. The question on which the respondent had to satisfy himself is expressly set out in clause 5.3 of the exit assistance scheme. The respondent had to be satisfied that “the applicant has demonstrated that, as a direct consequence of the introduction of the new vegetation management arrangements, the Farm Business is not, or does not have the potential to be, a viable commercial operation”, taking into account the criteria listed in clause 5.2 of the scheme.

Grounds for review

29. The grounds set out in the amended application are extensive, but were refined on the hearing of the application. The grounds that were pursued were:

1. the respondent denied the applicants’ procedural fairness by not giving them a reasonable opportunity to be heard on critical adverse material contained in Mr O'Dea’s report that was provided to the respondent for the purpose of the internal review;

2. the respondent did not take into account the applicants’ explanation for a change in their assessment of the viability of the property;

3. the respondent erroneously relied on the fact that in previous dealings with the QRAA the applicants had not advised the QRAA of their development plans; and

4. the respondent misunderstood the nature of his obligation to make an independent decision on the internal review and asked himself the wrong question.

Lack of procedural fairness in respect of the O'Dea report

30. The content and scope of procedural fairness must be evaluated by reference to the legislative context and the nature of the decision-making process required to be undertaken by the respondent. It is pertinent that the respondent is a public servant and not undertaking an adjudicative role. See Kioa v West (1985) 159 CLR 550, 584-585.

31. The applicants complain that prior to making the review decision, the respondent had before him the O'Dea report and that Mr O'Dea was a member of the Lending Committee of the QRAA which made the original decision. Mr O'Dea was an employee of the QRAA performing his functions in providing an analysis of the relevant information, including Mr Kenny’s letter of 22 March 2006, for the purpose of the respondent’s consideration of the applicants’ application. Mr O'Dea’s analysis was adverse to the applicants in the sense that he reached a conclusion that the information provided by the applicants in other applications to the QRAA did not support the applicants’ contention that they were without prospects of sustainable long term viability as a direct consequence of the implementation of the new vegetation management arrangements. There was no additional factual material as such in Mr O'Dea’s report. The applicants were on notice that the respondent was considering the contents of earlier applications made by the applicants to the QRAA in respect of the property. Even acknowledging the obligation of the QRAA under s 8(1)(a) of the Act to ensure the scheme is “properly and fairly administered” and the obligations that govern his decision-making role at common law, the respondent was not precluded from considering the work of other employees of the QRAA in assessing the applicants’ application (even an employee who was associated with the original decision), provided the respondent embarked on the independent decision-making process required of him in conducting the review.

32. The applicants were fully acquainted with the factual material that was before the respondent on the application. Fairness did not require the contents of the assessments done by employees of the QRAA for the purpose of assisting the respondent in his review role to be brought to the notice of the applicants before the respondent made the review decision: Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576, 591.

Failure to take into account the applicants’ explanation for change in their assessment of viability of the property

33. Under s 13C(2) of the Act, the notice given by the respondent of the review decision must state the reasons for the review decision. That invokes s 27B of the Acts Interpretation Act 1954 that requires the instrument giving the reasons to set out the findings on material questions of fact and refer to the evidence or other material on which those findings were based.  The respondent did not comply with this obligation.

34. The respondent did, however, set out his reasoning process in some detail in his letter of 11 May 2006. It was submitted by Mr Plunkett of Counsel who appeared with Mr Fenton of Counsel for the applicants that where no proper reasons were given in circumstances where there was a failure to comply with the duty to give reasons, the Court should be cautious about concluding that the relevant considerations were taken into account. The difficulty with that approach is that it overlooks that the applicants themselves failed to take advantage of s 32 of the JRA to request a statement of reasons. 

35. It is a matter of looking at the decision that the respondent made (as set out in his letter of 11 May 2006) and the documents that were before him to determine whether it is possible to conclude that the respondent did fail to take into account a relevant consideration.

36. Mr Kenny put forward in his letter of 22 March 2006 the applicants’ explanation for the change in their assessment of the long term viability of the property between making the latest Exceptional Circumstances application and making the application under the exit assistance scheme. It is argued by the applicants that the respondent failed to take the applicants’ explanation into account as a relevant consideration, particularly because Mr O'Dea in his report was dismissive of that explanation and had suggested it should be ignored. It is clear from the respondent’s letter of 11 May 2006 that he was cognisant that it was for the applicants to demonstrate to his satisfaction that the applicants were without prospects of sustainable long term viability as a direct consequence of the Amendment Act.  In the letter of 11 May 2006 the respondent expressly acknowledged that he considered the information contained in the applicants’ application for exit assistance and the letters from Mr Kenny, including that of 22 March 2006 which contained the explanation for the applicants’ change in their assessment of the long term viability of the property.

37. The respondent’s decision depended on what of the material before him was accepted by him. It cannot be concluded that the respondent did not consider the applicants’ explanation for the change in their assessment of the long term viability of the property. That explanation was one piece of material that was inconsistent with other material before the respondent. It was a matter for the respondent whether he accepted it or not or what weight he gave to it. Despite Mr O'Dea’s suggestion to the respondent that the explanation put forward by the applicants as to why they had changed their assessment of the long term viability of the property was “inadmissible”, the respondent has stated that he took into account the letter of Mr Kenny in which that explanation was offered.

38. The applicants also argue unreasonableness on the basis that if the respondent had taken into account the applicants’ explanation for the change in their assessment of the long term viability of the property (as set out in Mr Kenny’s letter of 22 March 2006), he would have been bound to conclude that the property was without prospects of sustainable long term viability and not to have done so was unreasonable. The area of the property affected by the Amendment Act was clearly before the respondent.  The assertion of the applicants that 93% of the property would be affected as a result of the interpretation of the codes made under the VMA was a matter for the respondent to decide whether he accepted or not.  It was for the respondent to give the weight he considered appropriate to relevant factors that he found were made out.  A court is required to proceed with caution when reviewing an administrative decision on the ground of unreasonableness: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24, 41-42.  There is no basis for a finding of unreasonableness as claimed by the applicants.

Taking into account failure of the applicants to disclose development plans in previous dealings with QRAA

39. The fact that the applicants had not previously disclosed their development plans in the Exceptional Circumstances applications (and their assertion in one of the applications that the “country types” found on the property was not suited to extensive development) was an evidentiary matter that the respondent was entitled to consider in determining whether he was satisfied on the relevant issue. The fact that it may not have been strictly necessary for the applicants to include in an Exceptional Circumstances application details of all long term development plans for the property did not preclude the respondent from considering the contents of those applications which related to the farm business conducted on the property in respect of the application under the exit assistance scheme. The applicants were able to and did make submissions to the respondent about the relevance of the contents of the earlier applications. The applicants cannot succeed on this ground.

Whether the respondent made an independent decision on the question in issue

40. This is determined by considering the contents of the review decision, as set out in the letter of 11 May 2006, in the context of the documents that were before the respondent. The endorsement made by the respondent on Mr Wilson’s recommendation indicates that the matter was actively considered by the respondent.

41. The respondent expressed his review decision in terms of adhering to the original decision which, arguably, conforms with the manner of expressing the outcome of the review that is contemplated by s 13C of the Act. There is nothing in the review decision to suggest that the respondent did not undertake the independent decision making on the review that is required of him.

Order

42. The applicants have been unsuccessful in establishing any of their grounds for review of the respondent’s decision. It follows that the application for statutory order of review should be dismissed. Costs should follow the event, but I invite the parties to make submissions on costs, before any order is made.