05 June 2020

Avoid delegated legislation for bullish policy decisions – key takeaways for government decision makers following the decision in Brett Cattle

This article was written by Annabel Griffin, Rebekha Pattison and Rebecca Vieceli.

The decision in Brett Cattle Company Pty Ltd v Minister for Agriculture [2020] FCA 732 (Brett Cattle) was handed down by the Federal Court on 2 June 2020 and has been welcomed by industry groups.

In this case, the Federal Court found that a 6-month order banning live export to Indonesia by the former Minister for Agriculture was invalid, and that the Minister committed the tort of misfeasance in public office in effecting the ban.

This decision has significant implications for public officials on two fronts:

  • likely increased scrutiny of (and increased risk of a finding of invalidity for) the means used to implement policy decisions, and the reasons and advice underpinning such decisions; and

  • potentially an increase in the number of (successful) actions brought against decision makers for the tort of misfeasance in public office.

Historically, successful claims for misfeasance in public office included an element of ‘malice’ on the part of the decision maker. However, the Brett Cattle decision recognises that it is sufficient for a decision maker to be recklessly indifferent to the invalidity of their decision and the harm that it may cause.

We’ve outlined below the facts and the two key issues before the court, saving you the time of reading the 153-page judgment! We also outline below some key takeaways for government decision makers.

Facts

  • In May 2011, Four Corners aired an ‘expose’ on the inhumane treatment and slaughter of Australian cattle exported to Indonesia.

  • As a result of public outcry following the Four Corners broadcast, on 7 June 2011, then Minister for Agriculture Senator Joe Ludwig initially ordered that Australian cattle could not be exported to 12 Indonesian abattoirs that had been identified as engaging in inhumane practices, unless the abattoir was able to satisfy the Minister that its practices met an internationally recognised animal welfare standard (First Order).

  • However, political pressure led to the Minister making a second order that banned the export of livestock to Indonesia for a period of 6 months (Live Export Ban). Importantly there were no exceptions to the Live Export Ban.

  • The First Order and the Live Export Ban were both enacted under delegated legislation.

  • Brett Cattle Company Pty Ltd (Brett Cattle) was a cattle exporter and transporter, and one of a number of businesses affected by the Live Export Ban. Brett Cattle claimed to have lost the opportunity to sell more than 2,700 head of cattle into the Indonesian market in 2011 as a result of the Live Export Ban, and to have suffered losses of more than $2.4 million.

  • Brett Cattle was the representative plaintiff in a class action brought against the former Agriculture Minister, contending that the Live Export Ban was invalid and that in making the invalid Live Export Ban, the Minister committed the tort of misfeasance in public office. Both the Minister and the Commonwealth were named as Respondents in the class action.

  • On 2 June 2020, the Federal Court found that the Live Export Ban was invalid, that the Minister committed the tort of misfeasance in public office, and as a result, that the applicants were entitled to compensatory damages from the Commonwealth.

  • There has been no indication yet of whether the Commonwealth plans to appeal this decision.

Issues before the Court

1. Validity of the Live Export Ban

  • Pursuant to section 7 of the Export Control Act 1982 (Cth) and regulation 3 of the Export Control (Orders) Regulations 1982, the Minister had the power to prohibit the export of livestock (including to a specified place) absolutely or subject to conditions. It was using this power that the Minister made the First Order and ultimately, the Live Export Ban.

  • There were no express limits on the Minister’s discretionary power to prohibit the export of livestock under these sections. However, when exercising this power and creating delegated legislation (i.e. by making an export prohibition order), the Minister still had to exercise his power within its proper limits and in a way that was reasonably appropriate and adapted to achieve the object of the power in the particular circumstances. This required the Court to consider if the Live Export Ban was a proportional response to the circumstances.

  • In his decision, Rares J applied the constitutional proportionality test for statutes from McCloy v NSW[1] as a tool for determining the proportionality of the Live Export Ban. His Honour noted that the McCloy test set out “at least three stages” for assessing proportionality, which were suitability, necessity, and adequacy in balance.

  • His Honour held that the Live Export Ban failed at both the necessity and adequacy in balance stages of the McCloy test, and was therefore invalid. The following factors were relevant to the Court finding the Live Export Ban was disproportionate and therefore invalid:
    • Although the purpose of the Live Export Ban was to enable the Government to develop a regime for addressing concerns about the inhumane slaughter of livestock, this could have been achieved without resorting to the “sledgehammer” of a total prohibition.

    • The Court was particularly critical of the fact the Live Export Ban did not include an exception for where “closed loop” export systems could be achieved (systems in which livestock are tagged and traced from the point of leaving the country to the point of slaughter) and where all parties in the system have achieved compliance with recognised animal welfare standards, particularly when a similar exception was included in the First Order.

    • Further, the Live Export Ban “capriciously and irrationally” prevented a large number of exporters from carrying on their lawful businesses, even where those businesses did not involve, or could have prevented, livestock being treated inhumanely. The Minister was found to have been aware that there were businesses that did, or could quickly, operate using closed loop systems at the required animal welfare standards.

    • Relatedly, the total prohibition of export to Indonesia had an operation that was unequal in its impact on industry, because exports could continue to countries or markets outside of Indonesia, regardless of their standards of animal welfare. Importantly, all of the Minister’s advice was in respect of a worldwide ban, and not the Indonesia-specific ban that was ultimately implemented.

    • Finally, it was not the intention of Parliament that the power in s7 of the Export Control Act could be used “indiscriminately, capriciously, unreasonably or so as to cause unnecessary disruption to such lawful trade or economic loss on those engaged in it”.

2. Liability for misfeasance in public office

  • Misfeasance in public office is a tort which imposes liability on individual government decision makers who, in the course of their duties, ‘intentionally’ inflict harm (usually economic harm) on another person.
  • The traditional elements of the tort of misfeasance in public office are that:
    • a person holds a public office;

    • the person purports to exercise a power in the course of their official duties;

    • the exercise of the power was invalid or unlawful; and

    • the exercise of the power was accompanied by a form of ‘bad faith’ (including intention, malice or recklessness); and

    • the exercise of the power results in loss.
  • Having already found that the Live Export Ban was invalid, Rares J was also satisfied that the Minister was recklessly indifferent as to his power to make the Live Export Ban. Further, that the Minister either knew of, or was recklessly indifferent to, the immediate and unjustifiable economic injury that the Live Export Ban would produce.

  • The Court was particularly critical of the Minister’s failure to obtain specific advice about the lawfulness of the Live Export Ban in the form it was enacted, instead the Minister had obtained only general advice about his powers and options.

  • Rares J found that the Minister was aware that there were at least a small number of companies that could comply with international animal welfare standards and conduct their business in a closed loop system. Despite this, the Minister failed to obtain advice about whether the proposed order would be invalid because it did not include an exception for such companies and would cause those companies economic harm.

  • Specifically, Rares J held that when making the Live Export Ban, the Minister knew that:
    • the Live Export Ban would prohibit cattle exports to Indonesia with no exceptions, in an industry that was worth approximately $400 million in the preceding year;

    • industry representatives had told him that there were supply chains in Indonesia that had, or readily could be, adjusted to use a closed loop system and have animal welfare standards that were at least consistent with Australian standards;

    • he had no Departmental advice to make an export prohibition order in a form that affected only exports to Indonesia;

    • he had no legal advice that he could lawfully make the Live Export Ban in the form it was enacted; and

    • there was a real risk that, if the Minister made an export prohibition order in the form of the Live Export Ban, it might be invalid,

but notwithstanding these factors, the Minister still made the Live Export Ban. The Court found that the Minister deliberately took the risk that the order could be invalid, but he “did not care”.

  • On the issue of loss suffered by Brett Cattle, His Honour included only provisional findings as to damages, and permitted the parties to consider the appropriateness and correctness of the methodology and calculation included.

Takeaways for government decision makers

For want of proportionality…

The crux of this decision is Rares J’s finding that the Live Export Ban was invalid because it was not a proportionate response to the animal welfare concerns associated with live animal exports. This was particularly so, the Court found, in the absence of an exception for businesses that could operate using a closed loop system and meet international animal welfare standards.  As a consequence, by acting recklessly as to the validity the Live Export Ban and the harm it could cause, the Minister was liable for misfeasance in public office.   

Historically, successful claims for misfeasance in public office included an element of ‘malice’ on the part of the decision maker. However, the Brett Cattle decision recognises that it is sufficient for a decision maker to be recklessly indifferent to the invalidity of their decision and the harm that it may cause.

In light of the current economic circumstances and given the number of high-profile policy decisions currently being reviewed or reversed, this decision may encourage plaintiffs to bring misfeasance actions (including class actions) against government decision makers, particularly where economic damage has been suffered.

Minimising legal risk

To minimise the risk of legal challenge (and potential liability for the tort of misfeasance in public office), government decision makers should consider:

  • where possible and appropriate, implementing major policy decisions by legislation, instead of relying on delegated legislation

  • seeking specific advice (including legal advice) on the validity of the particular form that a policy decision will take, not just general legal or policy advice about options for implementing policy decisions

  • when making policy decisions that will adversely impact people or businesses, whether less restrictive options will achieve the same ends

Watch this space

Case law to date has shown that challenges to delegated legislation on the grounds of unreasonableness or lack of proportionality alone are relatively rare with successful challenges rarer still. Even the High Court has expressed divergent views as to the relevant test to apply for determining validity and proportionality for delegated legislation (see Adelaide Corporation[2]).

To this end, it wouldn’t be surprising if the Commonwealth decided to appeal this decision.

 


[1] (2015) 257 CLR 178.

[2] Attorney-General (SA) v Adelaide Corporation (2013) 249 CLR 1

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