DENTAL BOARD OF NSW v NIB HEALTH SERVICES PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL PRIESTLEY, MEAGHER and COLE JJA 22 March 1996, 30 May 1996 [1996] NSWCA 148 DENTAL BOARD determination — took into account impermissible factors — determination quashed — bias alleged — reasonable apprehension of bias probably established test for bias when statutory board comprised of necessarily interested persons. Priestley JA This appeal was argued at the same time as appeal No 40604/92, the reasons for judgment in which have just been handed down. In this appeal, as in the other, I agree with the orders proposed by Cole JA. My reasons for this are the same as those stated in the other appeal. Meagher JA I agree with the order proposed by Cole JA, and generally with his Honour's reasons. However, on the question of perceived bias, I do not agree with his Honour's tentative view. In my opinion, the ordinary reasonable man, once he realised that the Dental Board was constituted by Parliament in such a way that it would usually be dominated by practising dentists, would find it unexceptionable - and indeed, inevitable - that one or more of its members from time to time had strong views on the matters on which it deliberated. He would not perceive bias if this in fact happened. Maybe the average psychopath, to whose imaginary views modern courts seem to pay so much attention, would think otherwise. Cole JA This is an appeal by the Dental Board of New South Wales from the decision of Smart J delivered 11 July 1995 in which his Honour declared void the Board's determination made on 2 October 1992 refusing NIB Health Care Services' (NIB) application for it to employ or be associated with dentists in carrying on the practice of dentistry at dental health clinic in the Sydney Central Business District (CBD). His Honour also declared that the participation of Dr J W Dale, the then President of the Board, in the consideration and determination of the application gave rise to a reasonable apprehension of bias. Smart J directed that the Board determine the application according to law. On this appeal the Board challenged by grounds 1 and 2 of the notice of appeal the decision regarding apprehended bias. By grounds 3 and 4 it challenged the trial judge's finding that the Board took account of an irrelevant consideration, namely the anticipated economic effects of granting the application upon dentists in private practice, in circumstances where: "(a) Although the interests of dentists did not constitute the interests of the public generally or any section of the public, the effects of approving the application could have economic effects on dentists in private practice, with consequential effects on the interests of the public generally or a section of the public; and (b) There was no evidence to suggest that the board had taken account of the effect on dentists otherwise than in a legitimate manner in coming to its conclusion with respect to the application, and 2 UNREPORTED JUDGMENTS (c) His Honour had held that the respondent had not established that the decision was taken for purposes of or influenced by an attempt to protect the commercial interests of dentists in private practice." Ground 4 contended that Smart J erred in failing to hold that: "(a) It was permissible for the board to consider the effect of an approval on dentists in so far as that approval might affect the provision of dental services to the public or a relevant section of the public, and (b) The effect of the approval of the application on dentists in private practice was, in that context a relevant consideration and was properly considered by the Board " NIB relied on the trial judge's findings regarding bias and the taking account of irrelevant considerations to sustain the orders made. In addition, by a notice of contention, NIB argued that, having found that protection of the interests of dentists in private practice was one of three reasons which activated the Board, Smart J had misdirected himself in holding that it was necessary to find that the protection of the interests of dentists in private practice was the primary purpose of the Board before he could set aside the determination. It was contended that having found that consideration of the interests of dentists in private practice was an operative substantial and illegitimate purpose, the Board's decision was vitiated, event though the factor was not found to be the primary factor guiding the decision. Reliance was placed upon the decision of this Court in Warringah Shire Council v Pittwater Provisional Council. HISTORY OF THE APPLICATION On 4 November 1991 NIB made application to operate a dental care centre in the Sydney CBD. On 9 December 1991 the Board invited submissions concerning the participation of Dr Dale, the President of the Board. NIB objected to Dr Dale's participation on 23 December 1991. This was supported by detailed submissions of 6 March 1992. On 3 April 1992 the Board resolved that the fully constituted Board, would consider the application. Oral submissions by NIB were heard by the Board on | May 1992 but the Board did not consider the application until 2 October 1992. It resolved that the application be refused. The Board declined to give reasons but Finlay J directed on 28 October 1993 that reasons be given. The decision was published on 6 November 1992. FINDINGS OF SMART J Smart J found that there existed a reasonable apprehension of bias on the part of Dr Dale. This flowed from Dr Dale being an "implacable opponent of health funds being allowed to establish and operate dental clinics". That finding was based upon a great number of statements made by Dr Dale whilst President of the Australian Dental Association between September 1986 and December 1987. There was abundant material to support the trial judge' s finding that, at least during that time, Dr Dale was "vigorously pursuing his campaign" even after he had been appointed a member of the Dental Board in June 1987. Smart J found that "Dr Dale holds deep convictions not merely views". Regarding the taking account of an improper purpose, Smart J, after considering the published reasons of the Board, and the minutes of the Board meeting of 2 October 1992 which recorded the basis of opposition to or support for the application, made the following findings of fact concerning the factors which motivated the Board's finding: 1. (1992) 26 NSWLR 491 at 508-510, 520-521, 522-523. URJ DENTAL BOARD OF NSW v NIB HEALTH SERVICES PTY LTD (Cole JA) 3 "The economic interests of dentists received major attention during the discussion by Board members. There is emphasis in the reasons on the services already provided by dentists in private. The conclusion to be drawn from the observations of members and the Board's reasons is that the decision was made: (a) To protect the interests of dentists in private practice, and (b) The clinic would add nothing to the services already provided by private practitioners, and (c) The only benefit was small costs savings to a small group of people, being the contributors to the Ancillary Benefits Table who had easy access to the Clinic." Further, in relation to improper purpose his Honour found: "Tt is impermissible for the Board to consider the interests of dentists, other than in relation to the effects that would impact upon "non-dentists" (that is the public generally or a section of the public other than dentists). Applications are to be granted where good and sufficient reason is shown that approval will benefit *non-dentists". It is an irrelevant consideration that approval may adversely affect dentists in private practice where there is no implication for *non-dentists*." and later "The terms of discussion at the Board meeting indicate that the effects of health fund clinics on the interests of dentists in private practice were prominent in the minds of the Board's members. On balance, NIB has established that the Board took account of an irrelevant consideration, that is, the anticipated economic effect on dentists in private practice. This could not be described as a consideration which made no material difference. The decision of the Board is ultra vires." THE APPEAL In my opinion grounds 3 and 4 argued on appeal fail, and the point of contention raised by NIB succeeds. The consequence is that the orders of Smart J should be upheld. The reason for this may be shortly stated. Smart J made a finding of fact which I have quoted regarding the matters which motivated the Board to reach the decision it did. It is true, as Smart J noted, that the protection of the interests of dentists in private practice was not referred to in the formal reasons delivered by the Board. Nonetheless it was open to Smart J to make the finding of fact that he did if it was permissible for him to have regard to the minutes of 2 October 1991 which recorded the discussion which resulted in the decision being taken that day to refuse the application. In my opinion Smart J was entitled to consider the discussion by the various members of the Board in the process of reaching their decision and preliminary to the vote to reject the application. A tribunal of fact, when determining the reason for a decision, is not bound by the formal statement of reasons for decision. Were it otherwise decisions could rarely be challenged upon the basis that regard was had to immaterial or irrelevant considerations, or that a decision was reached for an improper purpose. It was not submitted on behalf of the Board that Smart J was not entitled to consider the minutes of meetings at which the decision was reached: rather it was submitted that greater regard should be had to the formal published reasons for decision than to the discussion which occurred preliminary to the vote. For reasons which I have expressed in NIB Health Care Services Pty Ltd v Dental Board of New South Wales delivered today, it was impermissible to have regard to the protection of the interests of dentists in private practice. As it has 4 UNREPORTED JUDGMENTS been found that was taken into account, Smart J's finding that an irrelevant consideration which could not be described as a consideration which made no material difference to the decision must be upheld. Grounds 3 and 4 thus fail. Additionally, the decision in Warringah Shire Council makes clear that where there are mixed purposes which motivate a decision, if one impermissible purpose is "a substantial purpose" as that expression is used in Thompson v Randwick Municipal Council,? the decision is tainted by that improper purpose. Having found that the protection of the interests of dentists in private practice was one of three reasons guiding the Board's decision, that test is satisfied and the ground of contention made out. BIAS I have found the issue of perceived bias in this case difficult. The Dental Board is a creature of statute. The Parliament determined that the Board is to comprise of nine members, five of whom are to be dentists elected by dentists and the remaining four to be appointed by the Governor and comprising a person nominated by the Faculty of Dentistry at the University of Sydney, a barrister or solicitor nominated by the Minister and a nominee of the Minister from the Department of Health, and as a representative of consumers.3 The President is to be a dentist+. Thus the Parliament must have anticipated that the President and the majority of the Board would reflect the interests and approaches of dentists. They could be expected to hold views, even strong views, concerning matters affecting the profession, and practice of it. As was said by the High Court in Re Polites5: "Qualification for membership cannot disqualify a member from sitting." There it was made clear that the undemanding tests of perception of bias enunciated in Livesey v New South Wales Bar Association:® "[C]annot be pressed too far when the qualifications for membership of a tribunal are such that the members are likely to have some prior knowledge of the circumstances which give rise to the issues for determination or to have formed an attitude about the way in which such issues should be determined or the tribunal's powers exercised." Nonetheless it was found that Dr Dale had maintained at least during 1986 and 1987 a determined campaign against health funds being permitted to open dental clinics, principally because it would affect the livelihood of dentists in private practice. Further, in relation to another application by NIB to open a clinic in Newcastle, litigation to which Dr dale was a party had been resolved upon the basis that he would not sit on the hearing of a new application. That seems to be an acceptance by him of the inappropriateness of him doing so. And further still, the Dental Board had thought that the question of whether Dr Dale should sit was of such consequence that it sought advice from the Solicitor General and a Queen's Counsel regarding whether he should so, and held a full Board meeting to debate that question. All this tends one to the view that it is incongruous of the Board now to contend that a reasonable, fair minded, informed member of the public might not have a reasonable perception that the decision of the Board chaired by Dr Dale might be biased. (1950) 81 CLR 87 at 105-106. S8 Dentists Act 1989. Schedule 1, R1. Re Polites Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78 at 87. (1983) 151 CLR 288 at 293-294. AnNRwWN URJ DENTAL BOARD OF NSW v NIB HEALTH SERVICES PTY LTD (Cole JA) 5 One can accept that the test propounded in Livesey may need some qualification in circumstances where the Parliament has prescribed a board which can reasonably be regarded as representing the views or sectional interests of dentists. The question to be asked is probably whether a reasonable fair minded informed observer might have a reasonably apprehension that Dr Dale might not fairly consider arguments advanced for and against the granting of approval having regard to the factors which are permitted to be considered by s5(5)(a) of the Act. I incline to the view that the decision of Smart J holding such a reasonable apprehension of bias was established was correct. However, in light of my views in relation to the other grounds of appeal, and the notice of contention, it is unnecessary that I express a final view. I would propose that the appeal be dismissed with costs. Counsel for the appellant: J Basten QC Solicitors for the appellant: HK Roberts (Crown Solicitor) Counsel for the respondent: RV Gyles QC/JE Thomson Solicitors for the respondent: Sparke Helmore