Australia: How the rules of procedural fairness may apply to private organisations

Last Updated: 29 September 2013
Article by Peter Sise and Lara O'Rorke

Key Points:

Private organisations may have a duty to observe procedural fairness when making a decision affecting an individual's rights, interests or legitimate expectations.

On 22 August 2013, James Hird commenced legal proceedings in the Supreme Court of Victoria against the Australian Football League alleging, among other things, that the AFL had denied him procedural fairness in connection with the charge laid against him under the AFL Player Rules, and would continue to deny him procedural fairness when that charge was heard and determined by the AFL Commission (the proceedings were later discontinued).

This case raises an interesting issue: when must private organisations (as opposed to statutory bodies) observe the rules of procedural fairness, particularly in relation to internal disciplinary hearings?

What is procedural fairness?

The common law has recognised, a duty to accord a person procedural fairness (also known as "natural justice") when making a decision that affects their rights, interests or legitimate expectations, at least in certain circumstances. The duty only arises if the decision affects a person individually rather than as a member of the public or a class of the public. Also, the duty may be removed by the clear manifestation of a contrary statutory intention.

Breach of a similar duty is a ground for judicial review under the Administrative Decision (Judicial Review) Act 1977 (Cth) and State and Territory legislation (in this article we'll be looking at the application of the common law duty in private contexts, outside of the realm of traditional judicial review).

The duty to accord procedural fairness consists of three key rules:

  • the hearing rule, which requires a decision-maker to accord a person who may be adversely affected by a decision an opportunity to present his or her case;
  • the rule against bias, which requires a decision-maker not to have an interest in the matter to be decided and not to appear to bring a prejudiced mind to the matter; and
  • the "no evidence" rule, which requires a decision to be based upon logically probative evidence.

The precise requirements of procedural fairness will depend on the circumstances of each case, including the nature of the inquiry, the subject-matter being dealt with and the rules under which the private body is acting.

When must a private organisation accord procedural fairness?

Although the duty to accord procedural fairness developed at common law to ensure the fairness of the decision-making processes of courts and public authorities, it can apply to private organisations when making decisions affecting its members, and even non-members.

There is some uncertainty about whether procedural fairness applies to private organisations by virtue of an implied term in the rules governing the organisation, or for reasons of public policy. The prevailing view however is that the duty arises from the rules of the organisation "being construed on the basis that fair procedures are intended, but recognising the possibility that express words or necessary implication in the rules could exclude natural justice in whole or part" (McClelland v Burning Palms Surf Life Saving Club (2002) 191 ALR 759 per Campbell J at [97]).

On this basis, one must examine the rules of a private organisation to determine whether, and the extent to which, it must observe the rules of procedural fairness. Where the organisation's rules or regulations are silent on this point, there is a presumption that the rules of procedural fairness apply.

Examples of when a private organisation has been held to owe a duty to accord procedural fairness

In the past, the following private organisations have been held to owe a duty to accord procedural fairness in the following circumstances:

  • the Appeals Board of the Football Federation Victoria in relation to its decision to deduct championship points from the South Melbourne Football Club in the Victorian Premier League;
  • the "Player Agent Licensing Committee" of Football Federation Australia Pty Ltd (being the governing body of association football in Australia) in relation to its investigation and sanctioning of a licensed player agent for breaching its regulations;
  • a land co-operative registered under the Co-operatives Act 1992 in respect of its decision to expel one of its members from land owned by the co-operative;
  • the Royal Australian and New Zealand College of Psychiatrists (a company limited by guarantee), in respect of its decision not to elect a doctor as a fellow of the college in circumstances where such election was a recognised mark of professional competence which carried the right of recognition under the Health Insurance Act 1973 (Cth) and the Mental Health Act 1986 (Vic);
  • the Gosford Seventh Day Adventist Church (an unincorporated association) in respect of its decision to debar a person from the church in connection with an investigation into alleged sexual misconduct;
  • a life-saving club (an association incorporated under the Associations Incorporation Act 1984 (NSW)), in respect of its decision to expel a member from the club; and
  • the Disciplinary Tribunal of the Victorian Football League in respect of a decision affecting a professional footballer.

In the past, it has been held that the following private organisations did not owe a duty to accord procedural fairness in the following circumstances:

  • Broughton Anglican College, a private school registered under the Education Act 1990 (NSW) which was conducted by the Campbelltown Anglican Schools Council (a body corporate constituted under the Anglican Church of Australia (Bodies) Corporate Act 1938 (NSW)), in respect of a decision to expel a student; and
  • the trustees of a superannuation fund constituted under the Gas and Fuel Corporation Act 1950 (Vic).

It is important to note that it is the rules of a private organisation, not its identity, that determines whether it must accord procedural fairness when making a decision affecting a person's rights, interests or legitimate expectations.

Does the duty to accord procedural fairness require a public hearing?

Part of James Hird's case involved a claim that any hearing of the charge against him must be conducted in public.

The requirements of procedural fairness differ between public tribunals and private tribunals, particularly in relation to the no bias rule. As a general rule, judicial proceedings and quasi-judicial proceedings conducted under statute should be conducted in public. This rule does not, however, apply to the conduct of private tribunals and does not appear to form part of the rules of procedural fairness.

That said, given that the requirements of procedural fairness vary from case to case, it is impossible to rule out the possibility that a private tribunal may be required to conduct a public hearing in certain circumstances.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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