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Kathleen McEvoy and Chris Finn [*]
In all of the Australian States and Territories much of the traditional provision of public housing is shared with, and increasingly devolved to, private but subsidised and regulated, community housing organisations (housing co-operatives and housing associations).[1] While these community housing providers are generally subject to tenancy legislation (such as Residential Tenancies Acts) in respect of tenancy arrangements,[2] receipt of state funding generally means they are also subject to regulation of their internal governance.[3] This includes the decision making processes that apply in respect of the provision of housing, such as who to accept as tenants, acceptance or termination of membership of the organisation and whether and on what grounds a tenancy may be terminated. Effectively, this internal regulation is to ensure that applicants for and recipients of housing from community housing providers have similar protections as would be expected to apply in the provision of public housing, including fair and transparent decision making, and appeal processes to monitor this, as the housing is effectively provided from public funds.[4] In South Australia, for example, a person in dispute with a community housing provider on such issues may appeal against a decision on the ground that it is unreasonable, oppressive or unjust.[5]
Two acute issues arise from this confluence of public and private regulation.
The first arises from the fact that the private community housing provider has two types of relationship with the person to whom housing services are being provided. One is as a private landlord, generally governed through residential tenancy legislation, which prescribes the rights and responsibilities of private landlords and their tenants and provides means of resolving disputes concerning them.[6] The other relationship is established through the provision of publicly established housing services by the housing provider, bringing with it the expectation of proper process in the distribution of housing resources. That relationship is governed by arrangements, separate from residential tenancies legislation,[7] which are concerned with the governance of the housing provider and its conduct as such: requiring the housing provider to behave reasonably, fairly and justly, like a public body, and often subjecting the housing provider, in that context, to other external scrutiny. The defining of these relationships and the distinction between the two roles of the housing provider, provides the context and background for the consideration and application of administrative law principles to housing decisions.
The second issue is the nature of that public regulation. The relevant South Australian legislation[8] indicates that public administrative law principles, including those of procedural fairness, are applicable to decisions of the housing provider, enabling them to be subject to appeal if they are “unreasonable, oppressive or unjust”.[9] However, what does it mean to apply public administrative law principles to the provision of housing by a private, albeit community based and publicly funded, landlord? The central challenge is the appropriateness and capacity of administrative law principles to apply to private bodies.
This paper principally considers this second question, and essentially from the perspective of the application of South Australian legislation governing community housing.
This is a relatively new area for the application of administrative law but one of considerable significance and likely growth, especially given the shrinking of traditional public housing provision and its subsequent outsourcing to private bodies.[10] Such policy approaches are not limited to housing but extend, of course, to the provision of other services, traditionally provided publicly and now, increasingly, provided through private partnerships with government, involving significant government funding, and consequential regulation.
Community housing is rental housing provided for low to moderate or special needs households, managed by community based organisations whose operations have been at least partly subsidised or resourced by government.[11] Community housing falls between public and private housing but is generally closer to the former, as it represents a partnership between government and community managed housing organisations to provide affordable and appropriate housing. This partnership is generally reflected in the requirement to establish eligibility for such housing and in the sources of funding for such housing. The ultimate source of housing funding is to be found in the Commonwealth State Housing Agreement (“CSHA”).
Community Housing is typically provided by two types of organisations: housing co-operatives and housing associations.
Housing co-operatives are not for profit organisations that are fully tenant/member managed for and by people with similar housing needs and interests: these might be for single person households; people from specific cultural or linguistic backgrounds; low income families, or representing a variety of other interests. Housing Associations are generally not for profit organisations that manage housing for specific groups of people, usually those requiring specific housing assistance: for example, people with intellectual or physical disabilities; women survivors of domestic violence; young people at risk; people with mental health issues. Housing Associations are often linked with community based welfare or charitable organisations such as churches; they provide community managed housing linked to support services for the particular needs of their tenant base and are particularly focussed on high needs groups. A principal distinction between the two organisations is that the co-operative is self managed by its members, while the housing association is, at least to a degree, a commercial organisation which manages the housing provided and is specifically not tenant managed. Associations generally manage their own wait lists, segmented according to housing need and, increasingly, they are large and are professionally managed.[12]
All applicants for community housing must come within community housing eligibility criteria established pursuant to the CSHA: these comprise income, assets and needs tests. Individual community housing providers will also have their own specific criteria against which eligibility will also be tested.
In South Australia, housing co-operatives are registered[13] and incorporated[14] under the South Australian Co-operative and Community Housing Act 1991 and are required to operate and to establish Rules and By-Laws subject to approval by the relevant regulatory authority under the Act.[15] Regulation may be for the purpose of management of risk, to enable and support funding, to promote good practice and to prevent poor practice. Restraints on governance practices, including requirements that the community housing provider makes decisions in a transparent and fair manner, and subject to external review, support all these purposes of regulation: that is, the business activities of community housing are subject to regulation to the extent that they may put at risk the social objectives and benefits of community housing.[16] Among the risks addressed by regulation are those relating to the management of tenancies: rent setting, allocations and terminations reflect key public policy objectives for governments and significant risks for tenants. These risks in tenancy management mean that both governments and tenants (consumers) have immediate interest in ensuring access to appropriate dispute resolution processes.[17]
The general objectives and characteristics of community housing are fairly consistent throughout Australia. The general aims of community housing focus on affordability of housing, which still provides tenants with choice, security of tenure and quality housing. In addition, the aims are for fair and equitable access to housing services with flexible and responsive management processes that both accord respect and respect rights, and that enable and encourage participation in tenancy and management decisions; and which work in partnership with government and communities in developing sustainable housing and related services.[18]
These objectives for community housing, and the focus on regulation, together make it clear that community housing organisations are more than merely a structure for the provision of affordable housing. In South Australia, the Act defines a “housing co-operative” as an association which is formed on the basis of the principles of co-operation, principally to provide housing accommodation to its members.[19] The principles of co-operation include open and voluntary membership; fair and democratic governance; a not for profit structure; a commitment to providing education in the principles of co-operation; and co-operation among similar associations.[20]
All States and Territories are required by the Commonwealth State Housing Agreement to ensure that
Arrangements are in place for recognition of consumer rights and responsibilities, details of which are publicly available, and an identified process to action consumer complaints and review decisions. These arrangements will apply equally to State government service providers and to non-government service providers who receive funding under this Agreement.
In South Australia this requirement is legislatively recognised in respect of both State provided (“public”) housing (through the South Australian Housing Trust) and community housing (provided through housing co-operatives and housing associations) by the establishment of the Housing Appeal Panel.[21]
In other Australian jurisdictions the right of an external and independent appeal process for community housing decisions is not so clear or established. Only New South Wales[22] and Victoria[23] have formal processes to address appeals concerning community housing decisions, and in neither case are the decisions binding, but recommendatory only. There is no process in place in the ACT.[24] The only community housing decisions subject to appeal in the Northern Territory are those which come within the jurisdiction of the Residential Tenancies Tribunal. There is no external independent housing appeals process in Queensland. There is an internal review process within the Department of Housing in respect of public housing disputes; all community housing providers are required by their funding agreement to establish an internal complaints management process and members may make an application to the Supreme Court for declaratory or enforcement orders concerning rights and obligations.[25] Minimum requirements for community housing organisations apply and there is a complementary voluntary accreditation system. However, intervention by the Queensland Department of Housing in these internal processes appears to be rare and no applications to the Supreme Court appear to have been made. In Tasmania, a Housing Review Committee has been established by administrative action but with no legislative basis. It makes recommendations to the Director of Housing Tasmania but community housing is essentially regulated by individual funding agreements. In Western Australia, there are currently processes in place for a formal legislative framework for community housing; the proposal appears to be similar to that in place in Victoria. In the interim, community housing is regulated through individual funding agreements and a voluntary code of practice.
In most States and Territories[26] community housing is subject to residential tenancies legislation. This legislation is concerned with the landlord tenant relationship between the housing provider and the tenant and does not concern itself with the governance of the housing provider or its funding or regulatory relationships or requirements. Residential tenancies legislation in some jurisdictions does include specific provisions concerning community housing, but none deal with the public aspect of community housing and the issue of governance.
The most transparent and established system for external and independent review of public and community housing decisions is that in place in South Australia. The Housing Appeal Panel was placed on a legislative and determinative basis by amendments to the South Australian Housing Trust Act 1995, in 2007, and at the same time the Panel was given formal jurisdiction over community housing disputes.[27] The Housing Appeal Panel is empowered to consider community housing decisions where an appeal is made on the basis that a decision is “unreasonable, oppressive or unjust”.[28] Decisions concerning the landlord tenant relationship are made by the Residential Tenancies Tribunal.
Section 32B of the South Australian Housing Trust Act 1995 establishes the Panel and its general powers and jurisdiction. Section 84(a1) of the South Australian Co-operative and Community Housing Act 1991 directs that appeals under that Act are to be made to the Panel. Section 32B(13) empowers the Presiding Member of the Panel to establish procedures for hearing appeals, and section 32D(6) provides that the Panel must provide a written statement of its decision and the reasons for it, to all parties. There is no avenue for appeal from any of the decisions of the Panel, other than that it is, of course, subject to the general principles of judicial review.
The Housing Appeal Panel sits, generally, as a Panel of three[29] and provides consensus Panel decisions with written reasons within 14 days of the decision being made (generally on the day of the hearing).[30] Hearings are in private, with both parties given notice of the hearing. Hearings rarely proceed ex parte and applications are almost never determined on the papers alone.[31] Parties may have legal or other representation at the hearing, although this is not common. Parties do not give evidence on oath and, if witnesses attend, arrangements are made concerning their role in the hearing as agreed by the parties or as seems appropriate to the particular matter: “witnesses” are commonly brought to hearings as supporters, rather than independent witnesses. Parties put their cases to the Panel and are questioned by the Panel: cross questioning and discussion between the parties is permitted (indeed encouraged) but the Panel does not encourage or engage in cross examination. It is quite common for parties to reach a negotiated outcome.
In South Australia, community housing is subject to both public and private legislative regulation, and elsewhere in Australia, although the nature and degree of regulation varies, it is generally the case that the public and private dimensions of community housing are understood as separate.
The Residential Tenancies Act 1995 (SA) gives the Residential Tenancies Tribunal exclusive jurisdiction to hear and determine matters arising in relation to residential tenancies in SA.[32] The Act regulates the relationship between landlords and tenants in residential tenancies. It contains some special provisions concerning community housing organisations and housing associations.[33]
The South Australian Co-operative and Community Housing Act 1991 (SA) regulates community housing organisations and housing associations. It is concerned with the governance of those private housing providers, which function as landlords and in so doing establish relationships through tenancy agreements with tenants, which are then subject to the Residential Tenancies Act.
These two Acts regulate these housing providers for different purposes and in different ways, and provide different forums for the resolution of disputes. The Residential Tenancies Act governs the private tenancy relationship, where both parties have externally assessed rights and obligations, rarely dependent for their enforcement on anything other than objective establishment (for example, payment of rent, provision of required notice, establishment of breach of the agreement). On the other hand, the South Australian Co-operative and Community Housing Act 1991 essentially regulates the housing providers as corporate bodies established under that Act, including, by necessary implication, the means by which the housing provider can make housing related decisions in respect of its tenants and applicants for housing benefits. The Residential Tenancies Act governs the housing provider’s external relations with its tenants: the South Australian Co-operative and Community Housing Act is about the governance of the housing provider itself.
Disputes involving community housing organisations and housing associations and their tenants can be about governance, in which case the dispute is governed by the South Australian Co-operative and Community Housing Act; or they can be about the landlord/tenant relationship, in which case they are governed by the Residential Tenancies Act and come within the jurisdiction of the Residential Tenancies Tribunal. A dispute about governance comes within the jurisdiction of the Housing Appeals Panel.
If a community housing organisation or housing association serves a notice of termination authorised by the Residential Tenancies Act, the tenant may dispute the notice, or the landlord may seek to enforce the notice, by obtaining an order of possession. These applications are made to the Residential Tenancies Tribunal. The Tribunal will consider if the grounds asserted in the notice are established (arrears of rent, damage etc), or if the required notice has been given, or properly served, as required under the Act, and will make an appropriate Order.
If the tenant’s claim is that the decision to serve the notice is unreasonable, oppressive or unjust, then the concern is with the governance of the housing organisation, as it is required, by implication, to make decisions that are not unreasonable, oppressive or unjust by section 84(1)(ii) of the South Australian Co-operative and Community Housing Act. The tenant’s recourse then is to appeal to the Housing Appeal Panel, pursuant to section 84 of that Act. The appeal before the Housing Appeal Panel will consider whether the decision of the housing organisation was unreasonable, oppressive or unjust, but not if the grounds are made out for the purpose of an application pursuant to the Residential Tenancies Act. It may be that evidence that there are such grounds, such as arrears of rent, or damage to the premises, may be relevant to the decision as to whether the decision was unreasonable, oppressive or unjust, but the Housing Appeal Panel does not make a finding that the grounds are established.
The Housing Appeal Panel does not have jurisdiction to deal with an appeal if it would be more appropriately dealt with elsewhere.[34] However, there is no other body that can consider whether the action of a housing association is unreasonable, oppressive or unjust: this is not a consideration that can be raised under the Residential Tenancies Act 1995 before the Residential Tenancies Tribunal, which is concerned with compliance with the requirements of that Act, not specifically whether the landlord’s actions are “fair”.
The fundamental distinction between Housing Appeal Panel’s jurisdiction and that of the Residential Tenancies Tribunal is that the Tribunal addresses external and objective tenancy issues (where the “motive” of the landlord or the means by which the landlord has acted is rarely an issue); but the Housing Appeal Panel is concerned with the governance of the housing provider, which includes consideration that the housing provider can be challenged on the ground that its decision is unreasonable, oppressive or unjust. The housing provider is a private landlord but the properties administered by the provider represent public, not merely the provider’s (as landlord) own private assets and interests. It is this consideration which provides the policy underlay of the legislative right of a member or applicant for membership of a housing provider to challenge a decision of the provider on the ground that it is unreasonable, oppressive or unjust, and the implicit requirement of compliance with procedural fairness in decision making by the community housing provider. Decisions involving the distribution of public assets must be not unreasonable, oppressive or unjust, and because they represent the distribution of public benefits, they are subject to review, as are the decisions of a fully public housing provider.
It follows from these considerations that, while the Residential Tenancies Tribunal provides the forum where the private rights of the housing provider as landlord may be asserted, the Housing Appeal Panel is the venue in which the housing provider is held to the “public” duties imposed by its quasi public nature and legislative charter.
There is no general positive injunction imposed on community housing providers to make fair decisions. In South Australia, where the regulation is most specific and public, where a dispute arises between the community housing provider and a member, “a person or body exercising a power of adjudication in relation to the dispute must observe the rules of natural justice”.[35] However, in respect of other decisions which are likely to constitute the bulk of decisions made by the community housing providers, a requirement of “fairness” is implicit, enabling members and applicants for membership to appeal against decisions on the ground that they are “unreasonable, oppressive or unjust”.[36] There is, as yet, no judicial guidance as to the interpretation or application of these terms in the community housing context,[37] but the Housing Appeal Panel has had to consider their meaning and application in the majority of community housing applications it has heard. There is, however, some guidance to be found in the interpretation applied to similar terms in other statutory contexts.
Under section 140(1) of the Conciliation and Arbitration Act 1904 (Cth), rules for election of branch or federal office holders could not be “oppressive, unreasonable or unjust”. Deane J in Municipal Officers Association v Lancaster,[38] commented on the interpretation of these words:
There is nothing in the context of s. 140(1)(c) which would justify giving an expansive construction of the requirement that the conditions, obligations or restrictions imposed by the rules of an organization upon applicants for membership or members not be "oppressive, unreasonable or unjust". Those three words are used objectively in the clause and each of them is to be given its ordinary strong meaning. Plainly, their meanings overlap and definition is liable to adulterate the strength which the words possess. To be oppressive, a condition, obligation or restriction must be burdensome, harsh and wrongful (see, for example, Scottish Co-operative Wholesale Society v. Meyer [1959] A.C. 324, at p. 342; Re Jermyn Street Turkish Baths Ltd. [1971] 1 W.L.R. 1042; Allen v. Townsend [1977] FCA 10; (1977) 31 F.L.R. 431). To be unreasonable, it must be immoderate and inappropriate. To be unjust, it must be contrary to right and justice and to ordinary standards of fair play (see, for example, Re Kempthorne Prosser & Co.'s New Zealand Drug Co. Ltd. [1964] NZLR 49).[39]
A similar expression has been used widely elsewhere in the industrial context to describe the protection afforded under various Industrial Relations statutes against unfair dismissal, it is “harsh, unjust or unreasonable”.[40] The jurisprudence regarding this formulation is now longstanding and reasonably consistent across all Australian jurisdictions in which it is used.
The formulation itself has been described as consisting of “ordinary non-technical words which are intended to apply to an infinite variety of situations where employment is terminated”.[41] While the courts have been reluctant to be too prescriptive about the components of the expression, Commissioner Connor in Devey v Enacon Parking Pty Ltd [42] suggested:
• “harsh” as meaning too severe, having regard to all the circumstances of the case
• “unreasonable” as meaning immoderate, excessive or extravagant
• “unjust” as meaning unfair, inequitable, undeserved or biased
Further, the test is an objective one, to be applied using the natural meaning of the words.[43]
Perhaps the most authoritative statement regarding the interpretation of the “harsh, unjust or unreasonable” test can be found in the High Court’s judgment in Byrne v Australian Airlines Ltd.[44] McHugh and Gummow JJ considered the term “harsh, unreasonable or unjust” used in a federal award for airline employees, and expressed the opinion that:
termination of employment may be unjust because the employee was not guilty of the misconduct on which the employer acted, may be unreasonable because it was decided on inferences which could not reasonably have been drawn from the material before the employer, and may be harsh in its consequences for the personal and economic situation of the employee or because it is disproportionate to the gravity of the misconduct in respect of which the employer acted.[45]
It appears clear that the general view of expressions such as “unreasonable, oppressive, or unjust” is that, in the first place, the terms are disjunctive rather than conjunctive, as indicated by “or” rather than “and”, so that a decision may fall within any one of these criteria rather than within all of them;[46] and further, that such words are to be given their “ordinary strong meaning”, suggesting both that the concern is with serious deficiencies, not merely formal or trivial ones, and that it is a non-technical and flexible understanding of the words that applies.
It is clear that at the heart of this and similar phrases is the notion of procedural fairness, in a flexible and non-technical sense. Applying these considerations to the expression used in the South Australian community housing legislation provides some indications of the considerations that might be applied to decision making processes in community housing in determining if they are unreasonable, oppressive or unjust.
For a decision to be “unreasonable”, Deane J suggests it must be “immoderate and inappropriate”,[47] Connor C adds “excessive or extravagant”,[48] and McHugh and Gummow JJ contribute, “decided on inferences which could not reasonably have been drawn from the material before the employer”.[49] The Housing Appeal Panel has considered decisions to be “unreasonable” where they have been made when the affected party has had no opportunity to respond to information before the decision makers,[50] but “reasonable” where the decision is on the basis that the housing provider needs the premises for specific purposes under its Constitution,[51] or where the co-operative was not prepared to transfer a property to another organisation, as losing a property could threaten the viability of the co-operative,[52] or where the applicant is in breach of conditions of tenancy.
For a decision to be “oppressive”, Deane J suggests “burdensome, harsh and wrongful”.[53] The Housing Appeal Panel has recognised that a decision not to renew a tenancy agreement, or to reject an application for membership with the consequential effect that a tenancy will not continue, will always have a significant and negative impact on an applicant. However, that in itself is not enough to make the decision oppressive within the meaning of the Act. If the decision is made with due regard for procedural fairness and the decision is otherwise reasonable, so there is no element of “wrongfulness”, as suggested by Deane J, then it is difficult to characterise the decision as oppressive in the sense that it should be set aside.[54]
For a decision to be “unjust”, Deane J suggests it must be “contrary to right and justice and to ordinary standards of fair play”,[55] Connor C suggests “unfair, inequitable, undeserved or biased”,[56] and McHugh and Gummow JJ propose that this would be the case if the person affected was “not guilty of the misconduct” on which the decision maker acted.[57] The Housing Appeal Panel has also focussed on substantive and serious unfairness, concerned in particular with circumstances where the applicant has been given no opportunity to respond to allegations, which may be untrue, misconceived or incorrect,[58] or based on gossip, prejudice and assertion to which the applicant has no opportunity to respond.[59] The central feature of matters where the Panel has considered a decision to be unjust is that the decision has been made in the context of a real and substantive failure to comply with the requirements of procedural fairness.
The close knit and intimate nature of the relationships between members of housing co-operatives raises particular issues with the application of the rules of procedural fairness. There is no doubt that the doctrines of procedural fairness are applicable in this context; indeed this is specified by the South Australian statutory framework.[60] However, the application of these doctrines is, in many cases, difficult in the particular circumstances of co-operative decision making.
An initial difficulty arises because members of housing co-operatives seem often unaware of the requirements of the hearing rule. The notion that the basis upon which an adverse decision is likely to be made ought to be disclosed to the person likely to be adversely affected appears not to be well understood in many housing co-operatives.[61] There is significant provision of education and training on issues of co-operative management, including the application of the principles of procedural fairness, which is made available to co-operative members by their public sector regulatory agencies.[62] Despite the availability of this training, there often appears to be difficulty in assimilating and applying these principles to actual decision making within the co-operative.
One possible explanation for this ignorance of, or lack of compliance with, the requirement, is that co-operative members frequently hold particular beliefs about the nature of co-operatives as organisations, which they perceive as being in conflict with procedural fairness principles. For example, co-operative members not infrequently express the view at hearings that the kind of disclosure required by the procedural fairness hearing rule is inappropriate in a co-operative setting, as inconsistent with the imperative to maintain “principles of co-operation” and “co-operative relationships” within the organisation, which is seen as mandating a preference for conflict avoidance and maintenance of “face to face” relationships between members. This desire to maintain ‘good’ relationships often results in a willingness to act upon confidential complaints, the details of which are not disclosed, or inadequately disclosed, to the person complained against. Another manifestation appears in the apparently quite common practice of persons being asked to leave the room while their case is discussed by the other co-operative members or while an actual verbal complaint against them is being made.[63]
Further difficulties arise in communicating the nature of a complaint to the person complained against. Quite commonly, co-operatives take it for granted that the person against whom action is contemplated is already fully aware of the nature of the allegations made against them. Typically, moves to terminate the membership of a co-operative member arise in the context of a long standing dispute between a member and the co-operative. In such circumstances, particularisation of the allegations against a member accused, for example, of the somewhat indeterminate offence of “conduct detrimental to the interests of the co-operative”[64] is not infrequently seen as redundant, and complaints of a lack of specificity are seen as disingenuous or simply a means of delaying any decisive action being taken by the co-operative. The member may be told bluntly that he/she knows perfectly well what the dispute is about (and in general terms, this is likely to be true, but this supposition is not sufficient for compliance with the rule), or the co-operative may take the view there is no point in going over the same ground again as the members “know what he/she will say”.[65] Co-operatives may also avoid spelling out the chapter and verse of the allegations against a particular member due to a feeling that to do so might be perceived as harassment or bullying of that member.
Co-operatives and their members are in the unusual position of being service consumers as well as service providers. The burden on co-operative members in managing their properties and tenancies is significant, requiring a high level of trust and confidence to exist between the members, and this is generally one of the reasons why “compatibility”, a sharing of values and perhaps interests, is high among the requirements for membership, enabling the co-operative to select for “group cohesion”. Co-operatives’ selection processes will frequently include assessments based on personal values and beliefs concerning the likelihood of an applicant getting on well with existing members and being able to contribute effectively to the successful functioning of the group. These circumstances are ripe with possibilities for the failure of procedural fairness, especially where an applicant for membership is already housed by the co-operative and then has their application for membership rejected, and consequentially their tenancy terminated. The temptation in such circumstances is to avoid raising with the applicant what may be seen as their personal shortcomings, in an environment where personal dislike may have developed as the gap in shared values, or the “lack of fit”, was revealed.
When the issue of procedural fairness is raised at hearings, it is apparent that a further complication is that co-operative members often regard the application of principles of fairness as an unbalanced requirement. Co-operatives, through their representatives at hearings, express the view that the co-operative is required to comply with a set of rigid, even pedantic, rules when dealing with another member who, in the view of the majority of members, has strikingly and repeatedly failed to afford them similar courtesies. Co-operatives in this position often point to their limited resources and to the extensive nature of their voluntary commitment to the co-operative organisation and management, and suggest that there is a limit to which “legal niceties” can realistically be applied to their processes.[66] This is a serious issue for many co-operatives (and for many housing associations where staff are often under-resourced and stressed), and its resolution requires a nuanced understanding and application of the principle that the hearing rule is indeed flexible in its content.
In summary, difficulties with the application of the hearing rule in the context of the requirement that co-operative housing providers make decisions that are not unreasonable, oppressive or unjust can be sourced to a combination of ignorance of procedural fairness principles and a belief that it is inappropriate to fully apply them in the context of co-operative decision making. Similar difficulties arise with the application of the bias rule.
The bias rule requires that decision making be undertaken by an impartial decision maker.[67] However, this abstract principle poses considerable difficulties in the context of co-operative decision making. First, the normal principles of co-operative management require that all co-operative members take an active part in the management of the co-operative’s affairs, including attendance at both regular co-operative meetings and any special meetings, as well as taking an active role in the operations of the co-operative and working closely with other members. In this context, the practical result is that when a dispute between members arises, all members are likely to be involved in or at least familiar with that dispute and may well have had a say about it or been present in discussions at meetings. It is unlikely that there will be any members who are not familiar with the dispute and who have not themselves formed and, quite probably, expressed views on the rights and wrongs of the dispute. On the face of it, they are likely to have either “pre-judged” the issue to be decided or, from the point of view of any reasonable observer, to appear to have done so, and, on normal principles, they should be disqualified from involvement in the relevant decision. However, if the entire co-operative membership finds itself in this position, as is likely, it will be impossible to find an impartial decision maker within the organisation.
These difficulties are repeated when co-operatives provide “internal appeals” in relation to a challenged decision. Co-operatives are typically required by both framework legislation and by their own Rules and By-Laws to have an internal appeal mechanism which reviews decisions made prior to them being taken to any external body.[68] However, the membership of such internal review bodies is generally drawn from the co-operative itself. Inevitably, the members of the appeals committee will have been involved in the original dispute and are likely to have formed and expressed views on the matter. In addition, they will be aware of the views of other members of the review body, and of the expectations and perhaps the needs and imperatives of the co-operative as a whole. Indeed, they will usually have taken part in the decision which they are now required to review impartially. In this context at least, the well intended imposition of a requirement for internal appeal[69] seems unlikely to work effectively. Not infrequently, co-operatives ignore this requirement or observe it in the most perfunctory of fashions, in the not implausible belief that it could hardly be likely to make any difference to the outcome.[70]
Further difficulties with requirements for impartiality arise from the close knit nature of the relationships within co-operatives. These organisations are usually small in size, often with only a couple of dozen households (or even fewer) being involved. Typically, they are initially formed by a small group of like-minded friends who join together to achieve their common goal of affordable housing. Over the years those staying in the co-operative are likely to develop close friendships or, in less fortunate cases, strong enmities. Both lead to issues with the objectivity of decision making. Further complications can arise with second generation co-operative members, who may eventually seek their own membership of the co-operative and housing within it. Decisions about housing allocation and other matters within such a context are difficult to make with any clear objectivity and impartiality.
These, then, are some of the difficulties that arise with the practical application of the principles of procedural fairness to decision making within housing co-operatives. It is not proposed that procedural fairness ought not to apply to the decisions of housing co-operatives, nor that these difficulties are incapable of resolution. Nonetheless, they do pose particular difficulties which need to be addressed with a sensitivity to the practical operation and concerns of housing co-operative organisations.
An initial and obvious proposal for a solution is better education for co-operative members and housing association managers. There is no doubt that housing co-operative members need to be more conversant with the principles of fair decision making and the requirements of the hearing rule, in particular. All housing co-operative members must appreciate that when contemplating making an adverse decision, such as membership termination, notice of the decision and the basis upon which it might be made must be disclosed to the person to be affected. The person potentially adversely affected has a clear right to know what is alleged against them, as well as to respond to those allegations prior to any decision being made. Further, the decision should be made by as impartial a decision maker and process as is possible.
However, a prescription for further and better educative efforts may well be greeted with some bemusement by the various regulatory oversight bodies. There is little doubt that a great deal of effort is already devoted to the training and support programs and other quite extensive educative activities made available to co-operatives and their members.[71] Continuing training is often stipulated as a requirement of co-operative membership and is either directly provided or overseen by the regulatory bodies.
One additional source of direct and empirical information for housing co-operatives and associations may be the written determinations of bodies such as the Housing Appeal Panel.[72] As noted above, these bodies generally sit in private and their determinations are not publicly available, although of course they are made available to the parties, who can choose to distribute the reasons and decisions. While the current practice properly preserves the privacy of the parties to a dispute, it can have a negative effect in that an important source of normative information for co-operatives and associations is not available to them. It may strike a more productive balance to maintain the privacy of actual hearings but to subsequently publish the final determinations, so that the reasonings contained therein are available to provide a useful source of guidance to co-operatives. The public sector regulatory bodies can adopt a significant role here in disseminating information concerning the outcomes of hearings, to the organisations they oversee, so that they can have a normative effect.[73]
It must be recognised that the requirements of procedural fairness are far from the only matters that housing co-operative members must grasp in order for their co-operative to function effectively. Indeed, many would argue that there are other more important requirements. An essential is that the co-operative manage its financial affairs appropriately. A typical co-operative with perhaps 12-24 properties at its disposal might therefore be managing a portfolio valued at anything between $3–$10 million of public money. A larger Housing Association with perhaps 5–100 properties will be responsible for a correspondingly larger amount of public money. The value of these properties must be maintained and appropriate maintenance and tenancy records must be kept. From time to time, old properties need to be disposed of and new ones acquired. Rents and maintenance contributions must be collected and duly dealt with. Maintenance must be regularly scheduled and carried out. These are the roles, in the private housing market, of rental property managers, who are paid for their work, which is done in a professional environment. Most members of housing co-operatives, however, are not professional property managers, and they are at best generally available to undertake these roles on a part-time basis only. Co-operatives operate for the benefit of low paid or disadvantaged people, who often have disabilities or disadvantages keeping them from the workforce, and often these members may have little relevant education, general background or experience in business matters.
Housing co-operatives are also required to hold regular meetings, which must be properly run and accurately minuted, as legislatively required, as the co-operatives are incorporated bodies under the relevant legislation[74]. All these functions are required to be performed in an open, transparent and fully accountable fashion. All are undertaken by volunteers, often not well equipped to do so. Against this background, it is perhaps understandable that in some circumstances co-operatives may see procedural shortcuts as acceptable, particularly when dealing with someone they perceive to be the cause of a long standing aggravation. It may be that different considerations should apply in relation to housing associations, as these are generally larger, professional bodies[75] which employ people to manage their housing ventures. While it is not suggested that managers in such organisations are the equivalent to private rental property managers, unlike the members of co-operatives they are employed to undertake this work. Members of housing co-operatives do receive significantly subsidised rent in return for their role in property management.
As well as these considerations, the nature of housing co-operatives is such that they may be dominated by members who have very clearly defined views concerning the overarching social and political purposes of their co-operative, which may often be characterised as more holistic than simply the provision of housing (for example, as a women only housing organisation eschewing practices that might be identified by reference to male norms). In those circumstances a proposal that decisions are required to be addressed in a particular manner may often be resisted, with such proposals characterised as lacking understanding of the realities of the particular co-operative or of community housing in general. Accordingly, there may be a strong press within the co-operative to reject external prescriptions about how decisions within the co-operative should be made, including that of procedural fairness.
Considering these matters, effective education for housing co-operative members is likely to remain an ongoing and difficult process. However, these considerations also raise the question of whether decision-making in housing co-operatives poses special issues in terms of defining the requirements of procedural fairness. The hearing rule, at least in terms of its content, is admittedly flexible. Is there a case that the requirements of the rule ought to be applied in a more relaxed fashion to housing co-operative decision making?
The argument for a particularly flexible understanding of the rules of procedural fairness in the context of housing co-operative decision-making appears very strong, taking into account the particular nature of co-operative membership, the voluntary nature of administrative roles within a co-operative and the usually necessarily close knit relationships among co-operative members.
It is well established that the content of the hearing rule is flexible and varies with the nature of the circumstances.[76] For example, in NCSC v Newscorp[77] the investigatory and preliminary nature of inquiries undertaken by the NCSC meant that the requirements of procedural fairness were considerably curtailed. It was not necessary to disclose full information to News Corporation’s lawyers at that preliminary stage, as there would be a subsequent full trial of any allegations against it prior to any possible imposition of a penalty. Similarly, in O’Rourke v Miller[78] the High Court held that an opportunity for cross examination was not required in the particular circumstances of a decision to dismiss a probationary constable because, in the view of the Court, there was no significant issue as to the credibility of the witnesses in question. More generally, in Chen Zhen Zi[79], the Federal Court declined to lay down a general rule that procedural fairness always required an oral hearing before the determination of refugee status applications, precisely because the nature of a fair hearing is inherently flexible.
These cases reinforce the principle that procedural fairness is, of its nature, flexible. There are few decided cases closely analogous to co-operative decisions challenged in administrative review bodies, such as the Housing Appeal Panel: this reflects, perhaps, the fact that these disputes are, almost exclusively, about low cost housing for low income tenants; the disputes rarely proceed to a court. The absence of such cases in courts does not, of course, reflect the importance of the provision of secure and appropriate housing for such parties, which still deserves and requires a proper process to ensure that the rights and entitlements of the least advantaged in the community are not sidelined or ignored. However, the general principle of the flexibility of the rule is consistently asserted by the courts and is clearly applicable to the decision making environment of community housing.
Procedural fairness is often described as requiring at a minimum that a person have adequate notice that an adverse decision against them is contemplated; that they know the case against them; and that they have a reasonable opportunity to respond to any adverse allegations.[80]
In the housing co-operative decision making context, it is clear[81] that these requirements must still be met, but there is no reason why they cannot be satisfied by fairly informal processes. For example, a decision would not generally be considered unfair because of a minor failure to comply with timelines set out in co-operative Rules or By-Laws. Rather, such timelines can be regarded as representing guidelines rather than fixed rules; the substantive question is whether the person affected had an adequate opportunity to prepare a response.
In similar vein, it is not necessarily always appropriate to insist that a person must receive detailed written notice of allegations. Here, a great deal will depend upon the facts of the particular case. Where there is a longstanding dispute, the nature of that dispute will often be clear to all involved. In such a case, it may be sufficient that the person concerned be notified that his/her conduct is considered to constitute “conduct detrimental” to the interests of the organisation, and that termination of membership is contemplated unless the person can adequately defend his/her behaviour.
Further, although the right to respond to allegations is a central aspect of the hearing rule, the process involved need not be elaborate. It is essential that a person have the opportunity to contest the facts alleged, or to argue that admitted behaviours do not amount to conduct justifying termination of membership. Frequently, however, there is surprisingly little dispute as to the facts.[82]
Two examples of matters where the rules of procedural fairness were applied by the Housing Appeal Panel in South Australia in a relatively flexible manner are the following:
In G v S Co-operative Inc (HAP0721) there had been no formal compliance by the Co-operative with its Rules and By-Laws in that required periods of written notice had not been provided. However the Housing Appeal Panel considered that the applicant had not been deprived of procedural fairness as he had been aware of the allegations in detail, and of the relevant dates, and the non compliance with its Rules had not deprived the applicant of any substantive rights.
In F v T Co-operative Inc (HAP0831) as the applicant’s appeal was received outside the time period specified in its rules, the Co-operative refused to accept the appeal. The period for making the appeal, however, was over the Christmas/New year holiday period, and although even taking into account public holidays the appeal was lodged slightly out of time, the Housing Appeal Panel considered that it was appropriate there be some flexibility in the time limits under those circumstances and where there was no reason to extend the time period by a few days: here the appeal was at most 5 days late, at best, two days late – not weeks or longer. Inflexibility in imposing time limits, where the time is not greatly exceeded and time is not of the essence, is likely to be unreasonable. The Co-operative’s decision to refuse to accept the appeal was overturned, but the Housing Appeal Panel considered that the hearing before it, as an independent external appeal process, cured the defect in the Co-operative’s processes.
Bias issues often arise in housing co-operative decision as a consequence of the close knit nature of the relationships between members, and the fact that disputes often evolve over a period of time and may involve all or many of the co-operative members. Because of these circumstances, it could be argued that the principle is simply inapplicable in this context. There is a recognised exception to the bias rule, the so called “necessity” principle, which recognises that a statutory requirement that necessary processes be carried out is not to be frustrated by the unavailability of an impartial decision maker.[83] While courts are reluctant to accede to this principle except in very clear cases, it will be applied where there is simply no alternative.[84] It might be argued that this may be the case with community housing decisions, at least at the level of primary decision-making within a co-operative. However, despite this consideration, there are circumstances in community housing where the bias rule can clearly apply. For example, where a complaint is made by one co-operative member against another, it is fair and reasonable to exclude the complainant from any actual vote which might adversely affect the other party.[85]
Consistent with the rule against bias, a co-operative should make every effort to entrust decisions to the most disinterested persons to be found within its membership, promoting a strong understanding and culture of recusal from decision making where there is a conflict of interest. It follows that it is better in terms of fairness that the membership of any internal review body within a co-operative should not be fixed. Rather, members with as little at stake as possible should be chosen on an ad hoc basis to constitute such a review body for each matter as it arises.
Alternatively, a co-operative could identify a separate appeals committee membership, with those members excluded from participation in any decisions which they might subsequently be called upon to review. This would lessen the obvious pre-judgment issues but, given the close knit nature of co-operative relationships and the fact that disputes are likely to develop over months or even years, it is not realistic to consider that the members would be able to avoid any involvement in the matter prior to an appeal being made. It might also be argued that dividing-up the co-operative in this fashion and setting up hierarchies within it, is at odds with the co-operative ethos and purpose of such organisations and assumes that co-operative decisions and actions that might cumulatively impact adversely will all be pre-identifiable.
Another possibility is to establish a review committee comprised of persons entirely outside the co-operative, in this way members of various co-operatives could provide such services to one another. This could alleviate the bias issues associated with the review process, while maintaining a level of review which might resolve the dispute.[86]
Many co-operatives, however, see the requirement for internal review as simply too burdensome upon the resources of co-operatives. Hearing an appeal is time consuming and is likely to deepen existing divisions among those involved. Quite a high level of skill is required for the management of an appeal process, quite apart from the procedural fairness issues. The lack of these skills, coupled with the complexity of interpersonal issues and conflicts of interest, suggest that insisting on such an internal process is doomed to failure. Even with willingness to put processes in place to ensure procedural fairness, the process might fail. If there is resistance to any requirement of process, failure seems certain.
In the light of this, the final possibility is to remove the requirement for an internal appeal process prior to seeking full external merits review. This would have the advantage of simplicity, shortening the overall length of time it would take to make a decision and to exhaust all possible avenues of appeal. It might be argued that an intermediate and internal level of appeal adds little real value to the process and simply delays its final resolution. Given the reality that it seems all but impossible to remove some level of real or at least ostensible bias from co-operative decision making, this only strengthens the argument for a genuinely independent external review body, such as South Australia’s Housing Appeal Panel.
However, there may be some reluctance to adopt this approach. Local resolution of disputes is recognised as a significant aspect of community housing, both to empower the members and strengthen the community of the co-operative, and to support the development of strategies and strengths for conflict management. Emphasis on local and democratic decision-making has always been a feature of community housing, taking responsibility for managing and resolving disputes and learning both to manage and learn from conflict are important elements of co-operative living. Until 2007, parties to a community housing dispute in South Australia were required to engage in mediation processes before they could access an external formal dispute resolution process; this was removed from the South Australian legislation in 2007 on the basis that mediation processes at such a late stage of the dispute and on a mandated rather than voluntary basis, were unlikely to be successful. The requirement for internal review was maintained as a central element in community co-operative living, as reflected in the “Model Rules” prescribed in South Australia. Removal of this emphasis on the value of informal and local dispute resolution might be seen as going to the heart of co-operative housing principles, but its attractiveness as a solution to a significant and difficult aspect of proper management underlines the fundamental difficulty of applying public administrative law principles to what at least one side regards as merely private arrangements; perhaps the removal of the internal appeal process would provide a valuable means to enable increased awareness of this public dimension.
Engagement of the external public sector regulator to provide a review process is also not a satisfactory way of addressing this dilemma. The regulator has its own interests and obligations to manage community housing organisations’ practices. It views these both from the perspective of managing risk in the interests of the government as funder and itself as the regulator[87] and also from the perspective of its role to support and encourage independent management through advice and training. In these circumstances, the public sector regulator could not be seen as either independent or disinterested in the outcome. Neither the community housing organisation nor the applicant could be confident of an appeal process (even an internal one) managed by the regulator.
It seems that, although certain adjustments may be able to be made, decision-making in housing co-operatives will still often fall short, in terms of compliance with both the hearing rule and the bias rule. It seems difficult if not impossible to entirely alleviate those failings. It seems the only way to ensure procedural fairness is through a genuinely independent merits review mechanism for the decisions made by these bodies, so that there can be some review and oversight of such decision-making, with some concomitant normative value for the co-operative, and the possibility of curing any procedural defects by an external and independent hearing process.
External merits review of these decisions can also present some difficulties.
(i) Procedural fairness in the appeal hearing
In principle, any experienced appeal body ought to have no difficulty in ensuring that procedural fairness is provided for within its own external merits review hearings. However, practical and procedural difficulties are not uncommon.
Existing legislation and practices do not provide for pre-hearing conferences where the issues in dispute might be narrowed and clarified and appropriate evidence identified. In reality, arranging such pre-hearing processes is often not practical, especially if the matter is urgent and the parties are not readily available. Additionally, the Panel does not sit full time so there may be restrictions on listing matters at short notice.[88] However, without such arrangements, parties may arrive at a hearing ill prepared, relying on second and third-hand hearsay and without key documents. Even more fundamentally, parties may sometimes be at cross purposes as to the basic issues between them.[89] Nevertheless, they will expect the Appeal Panel to resolve the matter and usually in a single hearing. One benefit of the preceding internal appeal process is that it may address these issues to some extent, as in requiring a review of relevant documentation and ensuring that all the issues have been identified. This would constitute a cogent argument in favour of retaining it.
The processes of any independent appeal body must be such as to address these issues. It is not generally appropriate to require pre-hearing conferences or “pleadings” in these cases; parties are rarely represented, and any significant judicialisation of the process is not desirable. However, to conduct a fair and effective hearing, the issues must be clarified prior to the hearing so that both parties may address them, both in preparation and in the availability of witnesses and documentation. Without such preparedness an adjournment may be necessary, often adding to the tensions in the relationship, probably reducing the opportunity for a negotiated outcome, and possibly creating additional difficulties if processes elsewhere, such as in the Residential Tenancies Tribunal, are awaiting the outcome of the hearing. Managing parties’ expectations and capacities at a hearing is a significant aspect of providing them with procedural fairness; external appeal bodies need to be particularly aware of the possibilities of perceptions of bias if the process appears particularly more demanding of one party (who may be significantly less prepared) rather than the other. Despite these difficulties, an independent appeal body is required to make the correct and preferable decision and to reach that outcome by means of demonstrably fair processes, which may require processes that are sometimes not welcomed by the parties.
(ii) Jurisdictional thresholds
Independent appeal bodies may face some jurisdictional hurdles before undertaking review. One example is delineation of responsibilities between an external review body, such as the Housing Appeal Panel and another body to which an application asserting private rights may have been made, such as the Residential Tenancies Tribunal. This is discussed above and is a matter that has caused some angst amongst a number of co-operatives and associations. Not infrequently, these bodies, having lodged an application for vacant possession with the Residential Tenancies Tribunal in assertion of their rights as private landlords, will treat the intervention of the Housing Appeal Panel on the application of the tenant/member, as an unwarranted intrusion, failing to take into account their additional quasi–public responsibilities.[90]
The other jurisdictional requirement may be in the stipulation of an internal appeal process as a pre-condition of seeking external merits review.[91] The Housing Appeal Panel has interpreted this requirement broadly, so that it is not deprived of jurisdiction by arguments that an internal appeal was procedurally flawed or by parties indefinitely precluding its jurisdiction.[92] Merits review jurisdiction is invoked even by an inadequate or flawed internal appeal process and the existence of the external independent jurisdiction provides the ultimate cure for any previous procedural failings. There is, as yet, no judicial guidance on the correctness or wisdom of this approach. The South Australian Regulations appear to suggest that an applicant may choose to appeal to the internal Appeals committee of the co-operative, or may choose to make a direct application under section 84 of the South Australian Co-operative and Community Housing Act 1991.[93]
(iii) Appropriate remedy
Finally, there is the question of appropriate remedy. A typical issue arising on merits review occurs where a co-operative has decided to terminate the membership of a member on the grounds of “conduct detrimental to the interests of the co-operative”. In cases where the external review body agrees with that assessment, no particular issues are raised as the “correct and preferable” decision is simply to affirm the original decision of the co-operative. This resolves the dispute between the parties. However, on occasions the external review body will take the view that the decision of the Co-operative did not constitute the correct and preferable decision and may decide to substitute a different decision, namely, a decision not to terminate the membership. The practical effect of such a decision may be, however, not to resolve the dispute, but to leave it simmering or indeed to exacerbate it. The Co-operative is unlikely to consider that the member is, contrary to its previous and strongly held opinion, now a valued member of its organisation, and the reinstated co-operative member may both see their conduct as vindicated and be left with a considerable degree of resentment arising from the entire process. This is hardly a recipe for an ongoing constructive and co-operative working relationship.
One possibility is to advocate for the pragmatic reality of a “no fault” separation from the co-operative at the instance of either party. Co-operative members already enjoy that right, in that they can choose to leave the co-operative at any time. But can a co-operative rid itself of a member it no longer desires – without having to demonstrate fault on their part? This is hardly a trivial issue for a co-operative; the capacity of the members to get on together and have respect and trust for each other is significant given that they must together manage the co-operative. “Getting on together” is not only a significant social and political value of those who choose to live in co-operatives: it is a practical necessity.
This possibility poses a considerable dilemma. On the one hand, “no fault” co-operative-initiated separation places individual co-operative members at considerable risk of being deprived of their subsidised co-operative housing, without being demonstrably in breach of either their tenancy or membership agreement. Adoption of this suggestion means that a majority of a co-operative membership can, if it so chooses and with or without good reason, rid itself of members whom it finds inconvenient or difficult to deal with, or just does not like. Apart from the unfairness to the individual concerned, such an outcome is difficult to reconcile with the principles of co-operation underpinning such organisations and with the principles of fair decision making. Such a model could also be open to manipulation by dominant members of the group and susceptible to any form of discrimination, lawful or unlawful.[94] This is not an acceptable means of governing the distribution of what are ultimately public assets, merely moved to private hands for administration, and it is the failure to recognise the public, as well as the private, dimensions of community housing that can lead to the assertion of private interests at the expense of public interests. It is to avoid such possibilities of impropriety that the regulatory and governance provisions are included in the South Australian legislation. If a co-operative is not ultimately required to have good reasons for a decision to terminate an individual’s membership, then any querying of fairness in the decision making process seems quite redundant. There would be little or nothing for an external review body to review.
However, the alternative presents its own difficulties. If grounds are required for a membership termination, there will be instances where an external review body will not be satisfied that those grounds have been made out and will overturn the decision to terminate. This compels the co-operative and the estranged member, perhaps both unwillingly, back into one another’s arms, presumably to resume their dispute. This outcome too is unsatisfactory.
Another possible remedy is to direct the transfer of the premises, subject to the tenancy, to some other administrative unit, generally a housing association. Indeed, this is increasingly a remedy sought by applicants unhappy with the administration of their co-operative, and often in circumstances where there is a split in the co-operative. This can be viewed as a productive “win/win” outcome: the problem is resolved, both for co-operative, in the form of ridding itself of an unco-operative or troublesome member, and for the applicant, who is not left homeless or suffering the loss of rent subsidy provided by community housing.
However, a co-operative will often resist this suggestion; losing a property means it may be weakened in terms of numbers and income, which may make the co-operative unviable both in terms of funding and in terms of administrative capacity. Further, although generally less problematical, a recipient association must be found. The most significant obstacle to this resolution, however, is in the enforcement of such a direction. In South Australia, although the decisions of the Housing Appeal Panel are determinative and supported by legislation, an order of the Panel in these terms has proved exceptionally difficult to enforce. If the co-operative does not comply with the order, enforcement is left to the regulatory body. The co-operative as an incorporated entity is the registered proprietor of the property and may be restricted in its capacity to alienate property.[95] It may be the case that the only way to require compliance with such an Order is through intervention in the co-operative’s affairs by the regulatory body.[96]
However, and despite these remedial difficulties, requiring decision making conduct to comply with procedural fairness is clearly the path that must be chosen. First, this is legislatively mandated. A body such as the Housing Appeal Panel in South Australia is given a full merits review power; it can make any decision and adopt any alternative course of action that was open to the original decision making body, the co-operative or association.[97] These alternatives clearly permit a finding that grounds for the relevant decision did not exist.[98] The fact that grounds are indeed required is itself significant and denies the possibility of a “no fault” expulsion. Co-operatives are clearly required to show reasons for termination of a membership, usually either “conduct detrimental” or a breach of the rules of the co-operative, so that the member can respond effectively as part of the decision making process. A finding that one of these grounds is made out does not require a decision to terminate membership but provides a statutory basis for exercising the power to do so. Co-operatives, however, once satisfied that a ground exists, will usually move to terminate membership rather than consider a lesser alternative or give the member a second chance.[99] An independent review body is perhaps more likely to consider whether other avenues might exist.
These alternatives might include orders directed to the parties specifying particular actions each is to take: including mediation or specific orders to do with attendance at co-operative meetings; maintenance or other matters in dispute; or to impose, for example, a period of probation with specific requirements attached. An independent body such as the Housing Appeal Panel cannot usually make orders directed to third parties, such as the public sector regulator; but it can order the actual parties to approach such a body seeking specified assistance, such as training or meeting facilitation. It is, of course, for the regulatory body to supervise the performance of the Panel’s orders. Alternatively, the Appeal Panel could make orders and adjourn the matter for a period of time for further applications as necessary but generally it will be preferable for all parties, for a determinative order to be made and for the dispute - so far as the Appeal Panel is concerned – to be resolved.
The experience of the Housing Appeal Panel highlights some of the difficulties that arise when “public” responsibilities and “private” rights and remedies run together. Community housing organisations exist in a legal environment which is neither clearly public nor wholly private, but which is a sui generis hybrid of both. Hence, difficulties arise when these organisations seek to assert their “private” rights as landlords without considering their “public” responsibilities as providers of public and social housing. The confusion and lack of understanding of the double dimension of responsibility and interests is well illustrated in this area where an essential service such as housing is provided in a context that is both public (through the funding and regulation of the service provider) and private (in the relationship of the service provider and the consumer). Disentangling the public and private interests and then balancing them to ensure both are appropriately accommodated, is a particularly fraught task in the context of community housing, where disputes and difficulties in the private relationship are endemic because of the nature of both the service and the consumers, and regulation of the public relationship is essential both because of the centrality of the service to a civil and productive community and the high level of funding invested.
There is quite a high level of accountability demanded of community housing bodies, particularly housing co-operatives. They are accountable to their public sector regulators for their overall management of financial and property resources and to both regulatory bodies and appeal bodies, such as the Housing Appeal Panel, for the public aspects of their individual decisions and decision making processes. They may also be required to defend their “private” tenancy management decisions in the Residential Tenancies Tribunal. Essentially they are required, in the pursuit of their private interests as landlords, to perform the tasks of professional rental managers, and as recipients of public funding and the providers of housing pursuant to that, to make decisions in the disinterested and informed manner of a public service body. Both these roles are to be performed with the additional complication that the co-operative as service provider and landlord is also the service consumer and tenant. This complex and difficult accountability network places considerable demands upon volunteer and under resourced memberships and requires a context-sensitive, non-technical approach when reviewing the decisions they make.
The approach to fairness requirements illustrates this necessity. While it is axiomatic that the decisions made by community housing organisations in relation to memberships and tenancies must observe the principles of procedural fairness, those principles need to be understood and applied in a flexible fashion, sensitive to the practical environment in which such decisions are made. This environment of confluent public and private interests illustrates the complexity and difficulty of transferring the essentially public concept of procedural fairness to what is certainly regarded by the decision makers as a private environment and suggests that both the understanding and application of the rules of procedural fairness are still dynamic.
Endnotes
[*] Kathleen McEvoy is Associate Professor, Law School, University of Adelaide. Chris Finn is Senior Lecturer, School of Law, University of South Australia. The authors are respectively, the Presiding Member and a Member of the South Australian Housing Appeal Panel. The views expressed in this article are their own and not the views of the Panel. However, as indicated in this article, some of their observations draw on matters that have come before the Housing Appeal Panel. This paper was presented at the 2009 AIAL National Administrative Law Forum, Canberra, 6 August 2009.
The authors are grateful for the research support of David Jordan, and any errors in this paper are not ascribable to him but to the authors.
[1] See documents and discussion on the website of the South Australian regulator, Community Partnerships and Growth, http://www.communityhousing.sa.gov.au/site/page.cfm (accessed 27 July 2009)
[2] For example, Residential Tenancies Act 1995 (SA)
[3] See South Australian Co-operative and Community Housing Act 1991 generally and, in particular, Part 7, Funding, and sections 22 (registration); 37 (rules of natural justice to apply); and section 84 (appeals). In other States and Territories there is less extensive legislative regulation of community housing but similar requirements of governance matters are reflected in funding agreements with the community housing providers.
[4] Appeal procedures in Australian States and Territories and processes in place are discussed below.
[5] South Australian Co-operative and Community Housing Act 1991 section 84, enables applications against decisions of a co-operative housing body to be made to the Housing Appeal Panel on these grounds.
[6] In most States and Territories the landlord/tenant relationships in community housing is governed by Residential Tenancy legislation. In SA, NSW and the ACT this jurisdiction is conferred on a specialist tribunal; in Victoria in the general administrative tribunal VCAT; and elsewhere the jurisdiction is exercised in small claims jurisdictions.
[7] Legislation in South Australia, in funding agreements elsewhere – see further discussion below.
[8] South Australian Co-operative and Community Housing Act 1991. Elsewhere similar regulatory principles are contained in funding agreements with States or Territories, where the funding is provided subject to the Commonwealth State Housing Agreement which mandates the requirement for an appeal process to be contained in such housing funding arrangements.
[9] Section 84 South Australian Co-operative and Community Housing Act 1991
[10] See http://www.communityhousing.sa.gov.au/site/page.cfm?u=432#e626 (accessed 27 July 2009), for a Discussion Paper, A New Vision for Community Housing for South Australia, which outlines many of these developments and likely changes.
[11] See, A Regulatory Framework for Community Housing in Australia, Volume 1; Risk Management, Final Report, Robyn Kennedy and Co Ltd, December 2001, National Community Housing Forum, definition adopted at page 3. Community housing does not generally include crisis housing but it does include long term supported housing and boarding and lodging arrangements.
[12] For the definitions used in South Australia, see the website of the regulatory authority in South Australia, Community Partnerships and Growth, and in particular http://www.communityhousing.sa.gov.au/site/page.cfm?u=155 (accessed 27 July 2009)
[13] Section 22
[14] Section 23
[15] Sections 6A and 7
[16] Legislative regulation of community housing is strongly developed in South Australia through the South Australian Co-operative and Community Housing Act 1991, but (although there are some legislative provisions) in most other States and Territories regulation is largely through funding agreements.
[17] See n 11 above, at pages 16–18.
[18] National Community Housing Standards Manual, The Aims of Community Housing, 1999
[19] Section 3(1) South Australian Co-operative and Community Housing Act 1991
[20] See section 3(2) South Australian Co-operative and Community Housing Act 1991. Housing Associations, on the other hand, are essentially defined on the principles of service.
[21] See section 32B South Australian Housing Trust Act 1995, and section 84(a1) South Australian Co-operative and Community Housing Act 1991. The HAP has operated since 1993 but was only placed on a legislative and determinative basis in 2007, at which time it was also given jurisdiction in respect of community housing disputes. Prior to this such disputes were determined by ad hoc committees of review established by the Minister as required.
[22] Housing Appeals Committee established as a Ministerial Advisory Committee, which makes recommendations to the community housing provider. A voluntary accreditation system and a performance based registration system are in place in NSW.
[23] Pursuant to Part VIII of the Housing Act 1983 (Vic) all community housing providers are required to establish an internal complaints procedure (section 97). If the matter is not resolved, a reference to the Registrar of Housing Agencies can be made (section 98(1)) and the Registrar may issue written directions to remedy the matter complained of. However, this is not formally enforceable.
[24] Where the community housing provider is the head tenant of Housing ACT
[25] Cooperatives Act 1997 (Qld), sections 82, 83 and 86, and Housing Act 2003 (Qld).
[26] This does not appear necessarily to be the case in Queensland where community housing providers are not required to be registered in such a manner as to bring them within the relevant Queensland legislation.
[27] Prior to this, the Panel had exercised delegated power from the community housing regulator to determine community housing disputes pursuant to the South Australian Co-operative and Community Housing Act 1991
[28] Section 84(1)(ii) South Australian Co-operative and Community Housing Act 1991. There are also other grounds for appeal under the Act: Section 84(1)(a)(i) permits a member to appeal in relation to a dispute between themselves and another member, or with the co-operative, although no basis for the appeal is prescribed; section 84(1)(a)(iii) enables an appeal by a member “who is the subject of any action of a prescribed kind taken by the co-operative against a member”. There are no “prescribed actions” to date.
[29] The Panel can sit with two members only: see section 32B(12), but this is an unusual occurrence.
[30] The Panel members are not appointed on a full time basis and generally the Panel is scheduled to sit for one day per week, hearing both public and community housing appeals.
[31] The only circumstances in which this occurs is where the matter is clearly outside the Panel’s jurisdiction or where an urgent interim Order is required: see section 84(7) South Australian Co-operative and Community Housing Act 1991
[32] Section 24 Residential Tenancies Act 1995 (SA)
[33] See section 82 of the Residential Tenancies Act 1995 (SA)
[34] See section 84(11) South Australian Co-operative and Community Housing Act
[35] Section 37 South Australian Co-operative and Community Housing Act 1991
[36] Section 84(1)(a)(ii) South Australian Co-operative and Community Housing Act 1991
[37] This formulation also appears in section 41A(1)(c) of the Strata Titles Act 1988 (SA) and in various Ombudsman statutes.
[38] [1981] FCA 151; (1981) 54 FLR 129.
[39] above n.38 at 165.
[40] See eg: section 170 CE of the Workplace Relations Act 1996 (Cth); section 84(1) of the Industrial Relations Act 1996 (NSW); section 73 of the Industrial Relations Act 1999 (QLD). See also section 29(1)(b)(i) of the Industrial Relations Act 1979 (WA) which deals with employees “harshly, oppressively or unfairly dismissed”.
[41] Bostick (Australia) Pty Ltd v Grogevski [No 1] (1992) 36 FCR 20.
[42] unreported, IRC, NSW, Connor C, 1886 of 1995, 13 December 1995.
[43] AWU-FIME Amalgamated Union v Conagra Wool Pty Ltd (1995) (unreported decision of the IRCA heard before Parkinson JR who gave judgment on 15/09/1994).
[44] (1995) 185 CLR 410.
[45] Above n 44 at 465.
[46] See Minchin and Gorman v St Jude’s Child Care Centre (19673) 40 SAIR 106 per Olsson J at 116, and further, Full Bench of the Industrial Relations Commission in Outboard World Pty Ltd (t/as Budget Waste Control (Sydney)) v Muir (1993) 51 IR 167.
[47] Above n 38
[48] Above n 42
[49] Above n 45
[50] D v Z Housing Association (HAP0872)
[51] As above n 50
[52] I v Q Co-operative Inc (HAP0927).
[53] Above n 38
[54] In G v S Co-operative Inc (HAP0721) the co-operative decided to reject an application for membership. This meant the applicant lost the tenancy. The Housing Appeal Panel considered that the decision was not unreasonable, oppressive, or unjust because the co-operative had significant and clearly explained reasons for making the decision; the applicant was aware of the concerns and had been given opportunities to respond to them and redress them; and the co-operative had proposed alternatives to the applicant to assist him.
[55] Above n 38
[56] Above n 42
[57] Above n 45
[58] In B v Y Co-operative Inc (HAP0819) the co-operative refused membership because its members thought the applicant was unfriendly and disengaged. He was not present when these views were discussed and was unaware of them. The applicant suffered from a form of autism which made it difficult for him to appear sociable. When the co-operative became aware of this at the hearing it determined to reconsider its decision and the applicant was accepted as a member of the co-operative. The Panel considered the original decision to be unjust.
[59] See A v X Co-operative Inc (HAP0735), described in n. 61 below.
[60] See section 37 South Australian Co-operative and Community Housing Act 1991
[61] Numerous matters before the Housing Appeal Panel indicate this. In part it is a feature of lack of understanding of the requirements of procedural fairness, and in part both disinclination to act in what is seen as a confrontational manner, and in part lack of the professional skills required to address such issues in a constructive and disinterested manner: see for example, A v X Co-operative Inc (HAP0735) and B v Y Co-operative Inc (HAP0817). In A, the Co-operative was advised not to be confrontational or to ask personal questions, and so failed to make clear to an applicant for membership that it was questioning her concerning a health issue it believed might impact on her capacity to undertake functions in the co-operative; in B, the Co-operative was not prepared to raise with the applicant his perceived lack of friendliness, so he had no opportunity to explain his health issues prior to the decision being made. In both cases, the applicants were unaware of what was being taken into account in the decision making process. In A, the decision of the co-operative was reversed (there were other significant issues in this case) and the applicant’s membership status was reinstated; in B, the co-operative conceded the deficiency and decided to reconsider the application with the applicant present.
[62] The provision of education is one of the “principles of co-operation” defined in section 3(2) of the South Australian Cooperative and Community Housing Act 1991, and in South Australia significant training and education opportunities are provided by the regulatory authority: see http://www.communityhousing.sa.gov.au/site/page.cfm?u=405 (accessed 2 July 2009)
[63] In B v Y Co-operative Inc (HAP 0817) and in C v X Co-operative Inc (HAP0011) the applicants were not members of the Co-operatives but their applications for membership were being considered. As they were not members they were required to attend meetings, but to wait outside the meeting where their membership applications were being considered, and they had no opportunity to respond to any matters discussed at the meetings concerning their applications. Both applications were successful on appeal, but in both cases the co-operative representatives told the hearing that if they had heard the applicant’s responses it was likely a different decision would have been made at the meeting. Both cases were resolved by agreement with the applicants having their applications reconsidered in open meetings.
[64] This expression is generally used in co-operative Rules and By-Laws as a ground for termination of membership; the Model Rules contained in Schedule 4 of the South Australian Co-operative and Community Housing (General) Regulations 2007 specifies this as a ground for membership termination in clause 12(1)(d), and termination of membership is one of the mandatory provisions for Rules.
[65] In D v Z Housing Association (HAP0872) the Housing Association told the Housing Appeal Panel that it considered that putting the allegations on a Notice of Termination to the tenant was sufficient notice to the tenant as they “knew what he would say if they spoke to him about it”.
[66] In E v Z Housing Association (HAP0833) the Association representatives told the Housing Appeal Panel they were too overworked to consider responding to an application for an internal review. This issue is frequently raised in hearings.
[67] Livesey New South Wales Bar Association [1983] HCA 17; (1983) 151 CLR 288; Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507
[68] In South Australia, the Regulations made pursuant to the South Australian Co-operative and Community Housing Act 1991 prescribe certain “Model Rules” for Co-operatives, and set out some mandatory Rules. These include a requirement to have an appeals committee within the Co-operative (Reg 20(g) of the South Australian Co-operative and Community Housing (General) Regulations 2007, and in Schedule 4 of those regulations the Model Rules are set out, including Clause 13, Appeals and conflict resolution, which requires the Co-operative to have a By-Law constituting an Appeals Committee, and “establishing the means to assist in the resolution of conflict between members”. A member aggrieved by a decision of the co-operative has a right to appeal to the Appeals committee and, in addition, has a right to appeal to the Housing Appeal Panel pursuant to section 84 of the Act. It is a requirement of the Commonwealth State Housing Agreement for an appeal or review process in place to review decisions of housing providers funded pursuant to that Agreement, so this is a general feature of housing funding agreements in all States and Territories.
[69] See n.43 above
[70] See E v Z Housing Association above n. 66 (HAP0833). In F v T Co-operative Inc (HAP 0831), where the Co-operative representatives told the HAP that as a small co-operative all the members had already had their say and had made up their mind so there was no point in an internal review of the decision already made by them.
[71] The extensive schedule of training programs offered by the South Australian regulatory agency is available at http://www.communityhousing.sa.gov.au/site/page.cfm?u=170 (accessed 27 July 2009)
[72] Section 32D South Australian Housing Trust Act 1995
[73] In South Australia the regulatory body also (by agreement with the parties at the hearing) receives copies of the decision and reasons of the Housing Appeal Panel, and provides a regular summary of the decisions and main issues arising, which are distributed widely to all co-operatives and published on its website: see http://www.communityhousing.sa.gov.au/site/page.cfm?u=462 (accessed 27 July 2009)
[74] Section 22 South Australian Co-operative and Community Housing Act 1991
[75] Often (but not always) the corporatised arm of a charity or church, such as Anglicare or Red Shield
[76] Kioa v West [1985] HCA 81; (1985) 159 CLR 550, per Mason CJ at 584 see also Mobil Oil Australia v FCT [1963] HCA 41; (1963) 113 CLR 475 Per Kitto J at 504
[77] NCSC v News Corporation [1984] HCA 29; (1984) 156 CLR 296.
[78] O’Rourke v Miller (1985) 156 CLR 342
[79] Chen Zhen Zi v MIEA [1994] FCA 985; (1994) 48 FCR 591
[80] See, for example, P Cane & L McDonald, Principles of Administrative Law (OUP 2008) at 135.
[81] Pursuant to both the requirement in section 37 South Australian Co-operative and Community Housing Act 1991, and the general common law requirement.
[82] For example, in C v X Co-operative Inc (HAP0011) there was no dispute on the facts that led to the decision to reject the application for membership, just the interpretation placed on them: the matter settled when the parties heard each other’s concerns at the hearing, which they agreed was their first opportunity to hear each other as the applicant had been excluded from the meeting which had rejected her application.
[83] Laws v Australian Broadcasting Tribunal [1990] HCA 31; (1990) 170 CLR 70
[84] In F v T Co-operative Inc (HAP0831) the respondent co-operative only had a membership of 4, excluding the applicant, and all had been involved in making the decision. In addition, the period in which the internal review panel should have been convened was over the Christmas/New Year holiday period, and the likelihood of convening an appeal panel with external members from other co-operatives in this period, without undue delay, was very low.
[85] Stollery v Greyhound Racing Control Board [1972] HCA 53; (1972) 128 CLR 509. In A v X Co-operative Inc (HAP0735), the issue before the co-operative in deciding the applicant’s membership essentially arose from a conflict between the applicant and another co-operative member. That member excluded himself from the decision making process, but his partner was a member of the internal review process, and the member himself (who was described as “the respondent” by the co-operative’s internal review) had moved the non-acceptance of the applicant’s membership.
[86] Even this option is not always a possible alternative: in F v T Co-operative Inc (HAP0831), above n.84, where no appeal panel with external members could be convened within the prescribed time period because it was over the Christmas/New Year period.
[87] See South Australian Co-operative and Community Housing Act 1991
[88] As in South Australia
[89] In both C v X Co-operative Inc (HAP0011) and B v Y Co-operative Inc (HAP0819) when the parties heard each others’ cases at the hearing they agreed on a resolution of the appeals whereby the co-operative would reconsider the application from the applicant: in both cases, clearly, these were hearings which could have been avoided, along with the stress and cost to both the applicant and the co-operatives (and the public cost) in the matter proceeding to the hearing.
[90] This was most apparent in A v X Co-operative Inc (HAP0735). This matter involved a dispute concerning the rejection of a membership application from an applicant already housed by the co-operative, so the rejection of the application ensured the end of the tenancy. The tenant did not vacate at the end of the tenancy so the Co-operative applied to the Residential Tenancies Tribunal for vacant possession. The tenant appealed to the Housing Appeal Panel on the ground that the decision to reject the membership application (which led to the consequence of the non-renewal of the tenancy agreement) was unreasonable, oppressive or unjust. The Housing Appeal Panel took jurisdiction to address this issue and the Residential Tenancies Tribunal adjourned the hearing of the application before it. The Co-operative complained to the Housing Appeal Panel and lobbied extensively (to peak housing bodies, the Ombudsman and the Minister of Housing) to prevent the Housing Appeal Panel exercising its jurisdiction, and refused to comply with any of the Orders made by the Housing Appeal Panel. However, as the Residential Tenancies Tribunal appreciated the parallel jurisdictions, the tenant remained in occupation as the Housing Appeal Panel found that the decision concerning her application had been made without consideration of the rules of procedural fairness and was therefore unreasonable, oppressive and unjust; it reversed the decision, subject to certain conditions. This dispute has been the subject of five hearings before the Housing Appeal Panel and remains unresolved because of the failure of the respondent co-operative to appreciate the nature of the regulation that applies to it and to comply with the requirements of procedural fairness.
[91] See n 23 above
[92] Community housing Rules or By-Laws generally place a time limit on the convening of internal appeals, after which (in South Australia) the applicant can make a direct application to the Housing Appeal Panel: see proposed Appeals Model By-Law proposed in South Australia: http://www.communityhousing.sa.gov.au/site/page.cfm?u=184 (accessed 27 July 2099)
[93] See Schedule 4, South Australian Co-operative and Community Housing (General) Regulations 2007, clause 13(3).
[94] In A v X Co-operative Inc (HAP0735) a co-operative decided to refuse membership to an applicant tenant on the ground that some members believed the applicant had a “superior attitude” and held prejudicial views concerning other members of the co-operative. The applicant had also had an ongoing conflict with another member. These concerns were never put to the applicant and the Housing Appeal Panel reversed the co-operative’s decisions and ordered that the application for membership be reconsidered in 6 months time. The member with whom the applicant had the conflict absented himself from the meeting at which the application for membership was reconsidered. The application was again rejected, but the co-operative, by a vote of 7/1, agreed to transfer the applicant’s house subject to her tenancy, to a housing association, so that the applicant was no longer part of the co-operative but was not homeless. Subsequently, the member with whom the conflict had arisen (an office bearer) objected to this decision and at a special resolution meeting held to determine the transfer he persuaded the membership to reverse the decision, which it did, with a vote of 1/7. The outcome of this meeting was characterised at the subsequent hearing as the co-operative setting itself up as a private club with the entrants determined solely by the existing membership.
[95] Section 28(1) of the South Australian Co-operative and Community Housing Act 1991enables a registered housing co-operative to acquire, hold, deal with and dispose of real property, but section 28(2) provides that it cannot dispose of real property without an authorisation by special resolution of the co-operative.
[96] See Part 9 South Australian Co-operative and Community Housing Act 1991, but note that non- compliance with an order of the Housing Appeal Panel is not specifically identified as a ground for intervention in section 71(2).
[97] See section 84(6)(d) South Australian Co-operative and Community Housing Act 1991
[98] Housing providers often argue that they do not need to provide grounds for termination of a tenancy, as notice of termination of a tenancy without grounds is possible under the Residential Tenancies Act 1995: see section 83, and in any event the fact that a tenant has ceased to be a member of a co-operative is also a ground for termination of a tenancy agreement: section 82. This argument is put before the Housing Appeal Panel as a decision to terminate membership generally is generally consequential upon a decision to refuse or terminate membership, and the decisions are frequently conflated. This was argued in D v Z Housing Association (HAP0872) where the applicant had been housed for 8 years contrary to the Association’s Constitution. The parties then fell out; the Association decided to terminate the tenancy and did not give reasons. The Housing Appeal Panel considered this unreasonable and oppressive.
[99] The Housing Appeal Panel has seen some examples of where co-operatives have considered alternatives. Many co-operatives are conscious of the importance of fairness and make reasonable and objective decisions: see B v Y Co-operative Inc (HAP0011) and B v Y Co-operative Inc (HAP0819) where alternatives were proposed at the hearing by the parties and acted upon, and other cases where the history of the dispute shows numerous attempts and proposals by co-operatives to accommodate the needs of members and applicants: see F v T Co-operative Inc (HAP0831), where numerous adjustments were made to the applicant’s obligations to address her medical condition and her child care needs; and H v R Co-operative Inc. (HAP0722) where the Co-operative tolerated ongoing bullying, interference and harassment from the applicant and made constructive and supportive arrangements for her tenancy appreciating her behaviour was a consequence of her medical condition.
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