Coutts v Commonwealth

157 CLR 91
59 ALR 699

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(Judgment by: Deane J)

Coutts
v Commonwealth

Court:

Judges: Mason ACJ
Wilson J
Brennan J

Deane JDawson J

Subject References:
Defence
Constitutional Law
Administrative Law

Hearing date: 22 August 1984; 23 August 1984
Judgment date: 20 June 1985

Sydney

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Judgment by:
Deane J

In May 1979 the late Graeme Richard Coutts ("the deceased"), who held a permanent commission as a Flight Lieutenant, was posted as an Administrative Officer to the R.A.A.F. base at Edinburgh in South Australia. He was serving in pay in that posting when, by letter of 26 October 1979, he was advised by the base's Senior Medical Officer that his "medical fitness and employment standard" were to be "formally considered." The letter afforded the deceased "an opportunity to comment on the effect of (his) medical disability on (his) medical fitness for referral to PMO/DGFHS (Principal Medical Officer/Director General Air Force Health Services) and/or the Employment Standard Committee". The deceased's response was a written statement which, although obscurely worded in some respects, made clear that he maintained that he was "fully fit for duty in the R.A.A.F. on any posting to any area". By letter of 6 December 1979 written on behalf of the Chief of Air Force Personnel, the deceased was informed that "as a result of (his) medical disability" it was "not possible" for him "to continue service" in the R.A.A.F. and that action would be taken for his "discharge under the provisions of Air Force Regulation 72(1) 'Medically Unfit for Further Service'".

Formal action to terminate the deceased's appointment was taken at a meeting of the Commonwealth Executive Council held on 27 March 1980. The minutes of that meeting record that His Excellency the Governor-General in Council approved a recommendation made on behalf of the Minister of State for Defence that "(i)n accordance with Air Force Regulations 628(1) and 72(1) the appointment" of the deceased "be terminated on medical grounds with effect the expiration of 29 April 1980". The Governor-General in Council also approved a further recommendation that "(i)n accordance with Air Force Regulation 86 Flight Lieutenant G. R. Coutts 044296 be placed on the Retired List with effect 30 April 1980". The termination of the deceased's appointment and the placing of his name on the retired list were notified in Commonwealth of Australia Gazette No. G14 of 8 April 1980.

The present proceedings were brought by the deceased against the Commonwealth in the original jurisdiction of this Court and were remitted to the Supreme Court of South Australia by consent. In them, the deceased alleged that the purported termination of his appointment was invalid for the reasons that the grounds stated in reg. 628 of the Air Force Regulations ("the Regulations") had not existed and that any power to terminate his appointment had not been exercised in accordance with the requirements of natural justice. The legal propositions underlying that allegation were spelt out in par. 11(b) of the deceased's statement of claim which asserted that the power to retire an officer pursuant to the Air Force Act 1923 (Cth) ("the Act") and reg. 628 or on the grounds stated in that regulation "may only be exercised if (those) grounds . . . exist and if the power is exercised in the manner required by the said Regulation and in particular in conformity with the requirements of natural justice".

In its defence (par. 9) the Commonwealth, while denying some of the deceased's factual allegations, raised a number of points of law in the nature of a demurrer to the whole of the statement of claim. Those points of law, in which the deceased is referred to as the "plaintiff", read as follows:

"(1) The plaintiff held his appointment in the Royal Australian Air Force solely at the pleasure of the Governor-General.

(2) The exercise of the powers of the Governor-General in terminating the plaintiff's appointment cannot be called in question or challenged in any way in a Court of law.

(3) That any procedures laid down by Regulation 628, by Regulation 72 and/or by any other Regulation in the Air Force Regulations relating to the termination of the appointment of an officer in the Air Force are only directory, and any failure of the defendant to comply with such Regulations does not enable the Plaintiff to call in question or to challenge the validity of the termination of his said appointment.

(4) That there was no contract of service between the plaintiff and the defendant which could be the subject of the plaintiff's claim for wrongful dismissal or for the other relief sought in his Statement of Claim herein."

The above points of law and the points of law raised by par. 11(b) of the deceased's statement of claim were referred by a Master to the Full Court of the Supreme Court of South Australia for determination as a preliminary issue. The Full Court (Walters and Matheson JJ., Jacobs J. dissenting) (1983) 33 SASR 529 determined them adversely to the deceased and ordered that his action be dismissed. The present appeal was brought by the deceased, by special leave, from the judgment and order of the Full Court in that regard. Subject to the effect of the provisions of reg. 628(1) to which reference is subsequently made, the deceased did not seek to deny the validity of the first and fourth of the above points of law raised by the Commonwealth and, apart from the effect of that sub-regulation, it has been common ground that the deceased's appointment in the R.A.A.F. was at the pleasure of the Governor-General and was not the subject of a civil contract between the deceased and the Commonwealth. After the argument of the appeal had been completed in this Court and judgment had been reserved, the deceased died. His widow, who is the person named as executrix of his will, has been substituted as appellant.

The law governing the relationship between the Crown and those in the Defence Force of this country is now largely regulated by statutory instruments in the form of Acts of the Commonwealth Parliament and Regulations made thereunder. While the provisions of those statutory instruments should be read against the background of established common law rules defining the traditional relationship between the Crown and members of the armed services (cf. The Commonwealth v. Welsh (1947) 74 CLR 245 , at p 268 ; Marks v. The Commonwealth (1964) 111 CLR 549 , at p 573 ), they must be construed according to ordinary principles of statutory construction. In particular, their meaning and effect are not to be overriden or distorted because of assumed conformity with common law rules which were developed in other times to control - or to keep outside the law - the privileges and aspirations of those who served in the military forces of the Crown or the East India Company and which reflected notions of the Royal prerogative of the command of the army which are of little or no contemporary relevance in this country. It is true that the command in chief of the naval and military forces of the Commonwealth is vested by the Constitution (s 68) in the Governor-General as the Queen's representative. That role is, however, essentially a titular one: see Sir Ninian Stephen, "The Governor-General as Commander in Chief", graduation address at the Joint Services Staff College, Canberra, 21 June 1983. It is also true that the provisions of statutory instruments governing the appointment and service of members of the Defence Force are largely structured around powers conferred upon the Governor-General. Those powers are not, however, the ancient prerogative powers of the command of the army: see per Windeyer J., Marks (1964) 111 CLR, at pp 564-565 . They are statutory powers which are exercisable by the Governor-General with the advice of the Executive Council (Acts Interpretation Act 1901 (Cth), s 16A) and which are defined and controlled by the provisions of the statutory instruments which confer them.

The relevant statutory provisions in the present case are the various provisions of the Act and the Regulations which deal with the commission, appointment, cancellation of commission, termination of appointment and retirement of an officer. The relationship between particular provisions of the Regulations is at times obscure and was the subject of helpful analysis in the judgments in the Full Court of the Supreme Court. The focal provisions are those of regs. 45(1), 32 and 72(1).

Regulation 45(1) deals with the appointment and promotion of officers:

"The Governor-General may in accordance with such conditions and subject to such qualifications or requirements as are provided for by these Regulations, by instrument in writing -

(a) appoint persons to be officers of the Air Force; and

(b) promote officers of the Air Force, and may issue commissions to persons so appointed."

It can be seen that reg. 45(1) draws a distinction between the appointment of a person as an officer and the issue of his or her commission. This distinction, which is at times blurred in the Regulations, is of relevance for the purposes of the present case. While an officer is deemed to be commissioned on the date of his or her appointment (reg. 45(1AA)), the actual issue of a commission follows the appointment and, unless and until it is cancelled, the commission survives the termination of the appointment. A person's appointment is to service in pay as an officer: cf. the provisions of the present reg. 46. The commission is the formal warrant of his or her rank.

Regulation 32 corresponds with the provisions of s 13 of the Defence Act 1903 (Cth) which were made applicable to members of the Air Force by s 3(1) of the Act and s 5 of the Defence Act. It provides:

"The appointment or promotion of an officer under these Regulations shall not create a civil contract between the Crown or the Commonwealth and the officer."

Regulation 72(1) provides:

"An officer shall hold his appointment during the pleasure of the Governor-General, but the commission of an officer shall not be cancelled except for cause and after he has had notice in writing of any complaint or charge made, and of any action proposed to be taken against him and has been given the opportunity of making such statement as he thinks fit regarding the cause."

The combined effect of the above provisions of the Regulations in their application to the deceased was that the basis of his appointment was statutory and not contractual and that his appointment to service in pay was merely during pleasure. The deceased had no statutory or contractual right to insist that his appointment as an active officer continue beyond the pleasure of the Governor-General acting with the advice of the Executive Council. While the Regulations contain no express provision authorizing the Governor-General to terminate the appointment of an active officer, a general discretionary power to terminate such an appointment at any time is plainly implicit in the provision of reg. 72(1) that an officer shall hold his or her appointment during pleasure.

The deceased's appointment, being at pleasure, could have been determined without reason being formulated or assigned: see Malloch v. Aberdeen Corporation (1971) 1 WLR 1578 , at pp 1582, 1596; [1971] 2 All ER 1278 , at pp 1282, 1295. . If the purported termination of it had been merely because it was in accordance with the pleasure of the Governor-General that it not continue, the deceased would have been faced by some formidable obstacles in seeking to establish in legal proceedings that the termination was ineffective by reason of an absence of necessary grounds or of a failure to observe the requirements of procedural fairness traditionally referred to as the rules of natural justice: cf. Marks v. The Commonwealth (1964) 111 CLR, at p 586 ; Reedman v. Hoare (1959) 102 CLR 177 , at p 181 ; Ridge v. Baldwin [1964] AC 40 , at pp 65-66 . As has been seen however, the purported termination of the deceased's appointment was not expressed to be because it was the pleasure or discretionary decision of the Governor-General acting with the advice of the Executive Council that it not continue. The purported termination was expressed to be made "(i)n accordance with" the provisions of both reg. 628(1) and reg. 72(1).

Regulation 628(1) provides:

"Where a member -

(a) is not in need of hospital treatment;

(b) is, in the opinion of the confirming medical authority, unfit for further service; and

(c) is capable at the time of engaging in civilian employment, the member shall be retired or discharged at the earliest possible date after the opinion of the confirming medical authority has been expressed."

There are several matters relating to the wording of reg. 628(1) of which specific mention should be made. One is that, by definition (reg. 4(1)), "member" includes "any officer". Another is that, as Jacobs J. pointed out in his judgment in the Full Court of the Supreme Court, the word "discharge" should be read as referring to a "member" who is not an officer while the word "retired" should be read as referring to an officer. A third is that, contrary to a submission advanced on behalf of the Commonwealth, the provisions of s 628(1) are not self-executing. They do not provide that, if the specified circumstances exist, the member's service is automatically terminated. They provide that he or she "shall be retired or discharged at the earliest possible date after the opinion of the confirming medical authority has been expressed" (emphasis added). What the sub-regulation envisages is an administrative decision that the specified circumstances exist followed by subsequent administrative action retiring or discharging the member. The fourth, and most important, matter is that examination of the provisions of reg. 628(1) makes clear that they are mandatory in their nature. If the specified circumstances exist in the case of a particular officer, it is a mandatory requirement that he or she be retired. The termination of the appointment of an officer consequent upon a conclusion that the case is within the provisions of reg. 628(1) cannot properly be seen as involving the mere exercise of a discretionary power to terminate an appointment during pleasure. To the contrary, no real exercise of discretion is involved at all. If the facts of the particular case are such that it comes within those provisions, all that is involved is compliance with the requirement that the officer "shall be retired at the earliest possible date" regardless of whether other considerations might, if retirement had been discretionary and not mandatory, have balanced the scales in favour of his or her retention.

The Regulations contain no express prescription of the procedural steps to be followed in complying with the requirement that an officer to whom reg. 628(1) applies shall be retired. The appropriate procedure would appear to be termination of the officer's appointment to service in pay and transfer of his or her name to the Retired List. That is the procedure which was sought to be followed in the case of the deceased. The letter of 6 December 1979, with its reference to "Medically Unfit for Further Service" and its statement that it was not "possible" for the deceased to continue in service, plainly indicates that the conclusion was reached that the deceased's case came within the provisions of reg. 628(1) and that, that being so, it was recognized as mandatory that the deceased be retired in accordance with the requirements of that sub-regulation. The approach adopted was to retire the deceased by terminating his appointment ("in accordance with" reg. 628(1)) pursuant to the power of termination which is implicit in the provision of reg. 72(1) that an officer shall hold his or her appointment "during the pleasure of the Governor-General". It was submitted by Mr. Doyle Q.C., who appeared for the deceased on the hearing of the appeal, that that approach was mistaken in that termination of an appointment in accordance with reg. 628(1) involves the exercise of a distinct power to terminate which is implicit in the sub-regulation's requirement that the relevant officer be retired at the earliest possible date and which is different in nature from the general discretionary power implicit in reg. 72(1). While there is obvious force in that submission, it appears to me that the preferable view is that which was acted on in the case of the deceased, namely, that the provisions of reg. 628(1) operate through the power to terminate implicit in reg. 72(1). Ultimately, however, nothing turns in the present case on this point. Regardless of whether reg. 628(1) should be construed as containing an independent power to terminate an appointment in the designated circumstances or whether it should be seen as operating through the power to terminate implicit in reg. 72(1), its effect is to introduce a mandatory requirement that the appointment of an officer be terminated in any case where the designated circumstances exist. Put differently, regardless of whether reg. 628(1) operates independently or through reg. 72(1), it operates as an effective disqualification of an officer from continued service in that, where its conditions of operation are satisfied, the appointment of an officer to service in pay must be terminated as a matter of course at the earliest possible date. On either view, the question which lies at the heart of the appeal is whether the validity of a purported exercise of a power to terminate an appointment in perceived compliance with the requirements imposed by reg. 628(1) is liable to be impugned in judicial proceedings either on the ground that the particular case does not come within the provisions of reg. 628(1) at all or on the ground that requirements of procedural fairness have not been observed. Three particular considerations have been suggested as requiring, either individually or in combination, a negative answer to that question. They are: that the deceased's appointment was during pleasure, that the power to terminate it was exercisable by the Governor-General and that the deceased's appointment was to service as an officer in the Defence Force. I shall consider these particular considerations in the order in which I have mentioned them.

The fact that an appointment is during pleasure does not mean that the exercise of a statutory power to terminate it will necessarily be immune from attack even where the power is a truly discretionary one which may be exercised at any time and without reason being assigned. As Lord Wilberforce pointed out in Malloch (1971) 1 WLR, at p 1597; (1971) 2 All ER, at pp 1295-1296 , the very possibility of dismissal without reason being given may, in some circumstance, make "it all the more important" for the person dismissed "to be able to state his case and, if denied the right to do so, to be able to have his dismissal declared void". Be that as it may however, any such immunity would logically be restricted to a termination of the appointment pursuant to the exercise of the discretionary power to dismiss at pleasure. It would not extend to a case such as the present where the statutory provisions pursuant to which the appointment is terminated operate, in a case to which they are applicable, to override the discretionary nature of the ordinary power of dismissal by requiring termination regardless of the pleasure of the person during whose pleasure the appointment is held. In such a case, the effect of the statutory provisions is to deprive the appointee of the legitimate expectation that his or her appointment will only be terminated pursuant to a discretionary decision in the exercise of which the decision-maker will be able (regardless of whether compellable) to take into account all relevant considerations, including considerations of personal circumstances and hardship. Prima facie, one would not presume a legislative intent that the person whose appointment has been terminated in purported obedience to the requirement of such statutory provisions should be deprived of the ordinary right to challenge the validity of the termination of his or her appointment on the ground that his or her case was not within the statutory provisions at all or on the ground that requirements of procedural fairness were applicable and had not been observed.

Nor does the fact that a statutory power is exercisable by the Governor-General in Council necessarily preclude a purported exercise of the power being made the subject of attack in judicial proceedings. It has become almost commonplace to assign to the Governor-General with the advice of the Executive Council routine administrative powers which, when exercised, may directly affect the rights and legitimate expectations of individual citizens: cf. the comments of Stephen J. in relation to the Victorian Governor in Council in F.A.I. Insurances Ltd. v. Winneke (1982) 151 CLR 342 , at p 353ff . If such a power is purportedly exercised by the Governor-General with the advice of the Executive Council in pursuance of statutory provisions which are simply inapplicable to the relevant case, there is no reason in principle why the validity of its exercise should be immune from attack in the courts at the suit of a person directly affected and aggrieved: see, generally, the discussion of reviewability of decisions of a representative of the Crown in Reg. v. Toohey; Ex parte Northern Land Council (1981) 151 CLR 170 . Likewise, the consideration that a power is so exercisable is but one factor to be taken into account in determining whether it was the legislative intent to exclude the application of the ordinary requirements of natural justice or procedural fairness. In that regard, the following comments of Gibbs C.J. in F.A.I. Insurances Ltd. v. Winneke (1982) 151 CLR, at p 349 , with which I agree, are equally in point to a purported exercise of a statutory power by the Governor-General acting with the advice of the Executive Council:

"The fact that the Governor in Council is the authority which grants the approval provides no ground for excluding the rules of natural justice. In exercising the power given by s 72 the Governor does not act personally or as a representative of the Crown exercising any of its prerogatives. He acts on the advice of his Ministers, and it is to be expected that such advice will be based upon the recommendation of the Minister in charge of the Department concerned. It would be to confuse form with substance to hold that the rules of natural justice are excluded simply because the power is technically confided in the Governor in Council. I can see no reason in principle why the rules of natural justice should not apply to an exercise of power by the Governor in Council, who is of course not above the law."

See also per Stephen J. (1982) 151 CLR, per Mason J. (1982) 151 CLR, per Aickin J. (1982) 151 CLR, per Wilson J. (1982) 151 CLR and per Brennan J. (1982) 151 CLR.

Nor does the consideration that the deceased's appointment was to service in the Defence Force necessarily lead to the consequence that the purported termination of it was immune from attack either on the grounds that the circumstances were not within reg. 628 (1) or that requirements of natural justice were applicable and had not been observed. As has been said, the meaning and effect of the Regulations is not to be overriden or distorted because of assumed conformity with traditional common law rules. The Governor-General's powers to terminate the appointment of an officer are statutory. They are derived from the Regulations under which such an appointment is made. An exercise of those powers is not to be assumed to enjoy immunity from being questioned or examined in the courts of the land simply because the exercise of the old prerogative powers of the command of the army may arguably have operated to place the members of the armed services largely outside the protection of the ordinary law: see the article by Professor Nettheim, "Do Members of the Armed Forces Have Any Rights in Their Employment?", Federal Law Rev., vol. 5 (1973). In that regard, there is an obvious need "to view warily the notion that common law remedies should, upon grounds of alleged public policy, be denied to those who serve the Crown": see Groves v. The Commonwealth (1982) 150 CLR 113 .

The termination of the deceased's appointment brought to an end his career in the Air Force. It deprived him of the opportunity of continuing to earn his livelihood in the manner of his choice. It was purportedly effected by the exercise of a statutory power in perceived obedience to a statutory direction. It involved the formation of an opinion by the "confirming medical authority" about the deceased's fitness or unfitness for further service and, in the light of that opinion, a decision about whether the case came within the provisions of reg. 628(1). The ordinary and strong presumption is that the requirements of natural justice are applicable in respect of the exercise of such a statutory power entailing such consequences and that the person directly and adversely affected is entitled to challenge the validity of the purported exercise of the statutory power on the ground that those requirements had not been observed or on the ground that the case was not within the relevant statutory provisions at all. There is nothing in the provisions of the Regulations which expressly negates or overrides that presumption. For the reasons which have been given, the requirements of natural justice are not excluded by reason of, or by reason of a combination of, the considerations that the deceased's appointment was during the pleasure of the Governor-General, that the power to terminate the appointment was vested in the Governor-General and that the appointment which the deceased held was to service as an officer in the Defence Force of the Commonwealth. Nor, in my view, is there any other consideration or anything in the provisions of the Regulations which has that implied effect. It follows that the requirements of natural justice or procedural fairness were applicable in respect of the termination of the deceased's appointment and that the deceased was entitled to attack the validity of that purported termination in the present proceedings on the ground that those requirements had not been observed or on the ground that the provisions of reg. 628(1) were not applicable to the circumstances of his case.

In the result, I would uphold the validity of the points of law raised by the deceased in par. 11(b) of his statement of claim and I would overrule the second and third of the points of law raised by the defence in par. 9 of its defence. The first and fourth of the points of law raised in par. 9 of the defence provided of themselves no answer to the deceased's claim. That being so, the appeal should be allowed and the order of the Full Court of the Supreme Court that judgment be entered for the Commonwealth should be set aside.

The question whether the circumstances were in fact such that the provisions of reg. 628(1) required that the deceased's appointment be terminated and the question whether requirements of natural justice were in fact observed were not raised by the points of law which were referred to the Full Court of the Supreme Court. Unless the matter can be resolved by agreement between the parties, those questions remain to be determined on the hearing of the action. It would however seem appropriate to indicate that, in accordance with what was said in this Court in F.A.I. Insurances Ltd. v. Winneke (1982) 151 CLR, at pp 350, 355-356, 366, 369-372, 381-384, 400-401, 414-418 , natural justice required that the deceased be given an adequate opportunity of being heard by the actual decisionmakers as distinct from the Governor-General acting with the advice of the Executive Council. In the present case, that would appear to have involved an entitlement of the deceased to have been afforded an appropriate opportunity of being heard at two levels. The first level was by the "confirming medical authority" on the question whether or not the opinion should be formed that the deceased was unfit for further service. The second level was by the person or persons responsible for determining whether or not, in the light of the opinion of the "confirming medical authority", the circumstances were such that reg. 628(1) required that the deceased be retired.