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HOW CAN THE CHANCELLOR PROTECT COUNCIL AND ITS COMMUNICATIONS IN TODAY’S UNIVERSITY ENVIRONMENT?

Address to the 11th Annual University Governance & Regulations Forum on the theme “Developing new standards for a sustainable future”

on Monday, 5 September 2016 at the Swissotel, Sydney

by Dr Steven Stern, Adjunct Professor, College of Law & Justice, Victoria University1

Slide 1: The modern university

• It looks forward, not backwards • It creates new knowledge • It is no longer library of old knowledge • Increasingly grown to parallel industry and commerce • Remain unique • Special features not familiar to rest of society or courts

Reference: Pamela Madafiglio and John Birrell, “Foreword” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) vii The Federation Press, Leichhardt

Slide 2: Outline of this presentation

• University law - little substantive change • External environment in which universities operate – many significant changes • Corresponding effects on laws in their application to universities • However, do not confuse changes of quantitative character with changes of qualitative nature • Practical impact of distinction • Significant in the Chancellor protecting Council from unnecessary legal exposures to liability

Slide 3: Increased exposure to investigations and litigation: some significant examples

• Occupational Health and Safety legislation • Equal opportunity and anti-discrimination legislation • Privacy legislation • Competition and Consumer Act 2010 (Cth) • Australian Consumer Law • Cartel provisions • Fair Work Act 2009 (Cth)

1 BEc LLB (Mon) LLM PhD (Melb); CTA; Barrister-at-Law, List S Gordon & Jackson, Victorian Bar; Registered Tax Agent; Registered Trade Mark Attorney

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Slide 4: Student challenges

1. Bronwyn Olliffe and Anita Stuhmeke, “A National University Grievance Handler? Transporting the UK Office of the Independent Adjudicator for Higher Education (OIA) to Australia) (2007) 29 Journal of Higher Education Policy and Management 203:

Offices of the State Ombudsman are seeing an increased number of complaints from students.

2. Astor Hillary, “Australian Universities in Court: Cases, Costs and Consequences of Increasing Litigation” (2008) 19 Australasian Dispute Resolution Journal 156, 166:

During period of her research the number of higher education institutions doubled and the number of students increased threefold, the volume of litigation increased disproportionately by eight times.

3. Patty Kamvounias and Sally Vairnham, “Legal Challenges to University Decisions Affecting Students in Australian Courts and Tribunals” (2010) 34 Melbourne University Law Review 140 and 142:

In the context of universities as public bodies, student challenges to university decisions and student-university litigation has generally been unsuccessful for the students either on technical jurisdictional grounds or on the facts.

…

There have been a few successes by students in gaining access to information affecting their academic progress.

Otherwise, the case law in this area documents a series of failed proceedings for the students concerned.

The almost universal lack of success is either on technical grounds or on the facts. It is clear that litigation is not working for students. Neither can it be working for universities in terms of time, money and energy expended on fighting such claims in the courts

Slide 5: What has not changed? These include -

• Universities overwhelmingly established by Act of Parliament • “Private” universities tend to be “not-for-profit” • “Private” universities operate pursuant to Acts; e.g. Torrens University Australia Act 2013 (SA) • Statutes and regulations prescribe governance and management of universities • Significant amount of litigation involving universities • Universities often pioneered judicial law making • Long history of university “globalization” • Long history of university “vocational” education

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Slide 6: How new? E.g. Universities and litigation

1. Birmingham University v Federal Commissioner of Taxation (1938) 60 CLR 572 (exempt from tax on Australian sourced income as “charitable” public educational institution notwithstanding established outside Australia)

2. R v University of Sydney (1943) 67 CLR 95 (National Security (University Commissions) Regulations)

3. Orr v University of Tasmania (1957) 100 CLR 526 (neither statute nor contract prevented university from dismissing professor for conduct which rendered him unfit for office)

4. University of Western Australia v West Australian Trustee Executor & Agency Co Ltd (1961) 105 CLR 71 (University of Aberdeen’s claim that benefit of immunity of share of the University of Western Australia should be enjoyed equally between them denied)

5. University of NSW v Moorhouse (1975) 133 CLR 1 (University authorized reproduction which infringed copyright)

6. Ryde Municipal Council v Macquarie University (1978) 139 CLR 633 (rate exemption applies as use by university solely for its purposes)

7. University of Wollongong v Metwally & ors (1984) 158 CLR 447 (complaint of discrimination dismissed because State Act invalid as inconsistent with Commonwealth Act)

8. University of Newcastle v Chopra [1989] HCA 27; (1989) 85 ALR 321; (1989) 63 ALJR 397 (11 May 1989) (employee not a contributor for superannuation purposes)

9. Harradine v University of Adelaide (1990) 170 CLR 506 (party litigant must appear either personally or by counsel)

10. Griffith University v Tang (2005) 221 CLR 99 (exclusion from PhD candidature program not reviewable as not decision made under an enactment)

11. Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 214 ALR 349; (2005) 79 ALJR 839 (6 April 2005) (no findings of employee contributory negligence should have been made)

12. Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (5 August 2009) (ANU should not have been permitted to amend Statement of Claim after trial already commenced)

Slide 7: How new? Universities and globalization

1. Pamela Madafiglio and John Birrell, “Foreword” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) viii The Federation Press, Leichhardt:

Universities are subject to the range of challenges created by global circumstances

2. Birmingham University v Federal Commissioner of Taxation (1938) 60 CLR 572:

Exempt from tax on Australian sourced income as “charitable” public educational institution notwithstanding established outside Australia

3. University of Western Australia v West Australian Trustee Executor & Agency Co Ltd (1961) 105 CLR 71:

Incidence of the duties as between the only beneficiaries named in the will, University of Western Australia and University of Aberdeen, where under the Federal and State

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enactments alike, bequest to University of Western Australia enjoyed an exemption from duty and bequest to University of Aberdeen did not – University of Aberdeen claimed unsuccessfully that benefit of immunity of share of the University of Western Australia should be enjoyed equally between them

Slide 8: How new? Universities and national security: Defence Trade Controls Act 2012 (Cth)

1. Pamela Madafiglio and John Birrell, “Foreword” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) viii The Federation Press, Leichhardt:

Legislation such as the Defence Trade Controls Act 2012 (Cth) and its impact on the freedom of academics in relation to their research and dissemination of their findings is another example [of the new challenges for universities]

2. R v University of Sydney (1943) 67 CLR 95 (National Security (University Commissions) Regulations):

Counsel for the university took no part in the argument. Counsel for the Commonwealth argued in support of the regulations.

3. Per Latham CJ (dissenting) (at 103-4):

From the point of view of the effective defence of Australia it may be wise to increase the number of students in some faculties, and to decrease them in others.

The Regulations provide for determining the method of selecting students. It is important from the point of view of the war effort that, where only a limited number of students can be taken, those most capable of profiting and least likely to fail should be accepted in the universities. Further, the staff and equipment of our universities are not unlimited, and it is not unimportant to see that they are utilized to their full capacity by requiring them to take further students where thought desirable, and also to prevent them from being unduly burdened where too many students are desirous of entering upon a particular course.

… In my opinion the Regulations are valid.

4. Per McTiernan J (dissenting) (at 110):

The connection between the regulation 16 which is primarily attacked and the defence of the Commonwealth is obvious and direct. … The regulation is part of the very substance of the war effort.

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Slide 9: How new? Issue of Commonwealth regulation of higher education

1. Per Rich J (at 105):

In my opinion it is outside the power of the Commonwealth Parliament to exercise general control of education in the schools or universities of Australia, prescribe what children, and how many of them, shall attend the schools, the method of qualification for entrance, regulate the number of students entitled to matriculate, discriminate between faculties and restrict the number of students to be admitted to or enrolled in any faculty, determine the course of study and curricula in the various faculties of the universities, the nature and subjects of examinations, and set the standards for passing the examinations.

2. Per Williams J at (113-5):

The Constitution does not confer upon the Commonwealth any specific power to legislate with respect to education. This power is therefore reserved to the States by secs. 106 and 107 of the Constitution.

…

It is manifest that a university has facilities for research and for training men and women in subjects that appertain to defence. In so far as the Commonwealth makes even a prior use of these facilities in time of war there could be no objection if the ordinary curriculum has to be interrupted.

… A university must therefore carry on as best it can with such professors and other teachers as are not conscripted and with such supplies as it can obtain. The result may be that owing to a dearth of professors and other teachers or a curtailment of supplies it will become difficult or impossible for a university in one or more of its faculties to teach as many students as in times of peace, but this is a matter for the governing body of each university.

Once it is realized that the services of any professor or other member of the staff of any university or of any student desiring to matriculate in any university can be conscripted, it appears to me that it cannot conceivably aid defence even incidentally for the Commonwealth under colour of exercising the defence power to attempt to regulate the number of students who may be enrolled in any faculty or course of study or to prescribe the examinations or tests which they must pass in order to be eligible for admission to any faculty or course of study.

... it is an entirely different thing for the Commonwealth Parliament to claim that it can prevent a university prescribing its own standard for matriculation in the different faculties or accepting for enrolment students whose services are not available or availed of in the defence force or in any industrial or other undertaking associated with the prosecution of the war.

… If the Commonwealth in the exercise of the defence power can regulate the number of students who can be educated at a university it must also be able to regulate the

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number of children who can be educated in the schools and to prescribe the matters which will qualify them for admission. The Commonwealth Parliament is not entitled, in my opinion, under the defence power even in time of war to assume complete control of the systems of education operating in the States either in the universities or in the schools, or to prescribe what subjects shall be taught in the universities or in the schools, and what examinations shall be held to qualify for matriculation in the universities.

Slide 10: How new? Issue of role of University visitor having become obsolete

1. Pamela Madafiglio and John Birrell, “Foreward” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) vii The Federation Press, Leichhardt:

Perhaps nothing symbolizes the legal and social change universities have undergone more than the changed role of the University Visitor. … During the 1980s, uncertainties, particularly as to jurisdiction and remedies, led to reforms to confine the role to ceremonial only (with the exception of Western Australia)

2. Per Starke J (at 109-10):

sec. 17 of the Act … enacts that the Governor of New South Wales shall be the visitor of the university, with authority to do all things that that pertains to visitors … . It has been stated that this provision is obsolete … . At all events the university has no purpose to serve but the advancement of learning, and in the achievement of that purpose it will no doubt do all that is proper and possible in the circumstances.

Slide 11: What Investigations and Litigation Might Arise: Focus on the University’s Object

• The object of the University is the promotion, within the limits of the University’s resources, of scholarship, research, free inquiry, the interaction of research and teaching, and academic excellence: University of Sydney Act 1989 (NSW), s 6(1).

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Slide 12: What Investigations and Litigation Might Arise: academic matters quarantined

1. Thomson v University of London (1864) 33 LJ (Ch) 625, Kindersley VC (award of gold medal to another candidate an internal University matter)

2. Thorne v University of London [1966] 2 WLR 1080, Diplock LJ (whether law student’s examination papers negligently marked an internal University matter)

3. Patel v University of Bradford Senate([1978] 1 WLR 1488, [1978] 3 All ER 841 (ChD)), Megarry VC and [1979] 1 WLR 1066, [1979] 2 All ER 582, Court of Appeal (Court had no jurisdiction over whether student who had twice failed examinations should be readmitted)

4. Appointment of examiners wholly a matter of academic judgment in which court should not interfere (R v Judicial Committee ex parte Vijayatunga [1990] 2 QB 444 (CA); and R v Cranfield University ex parte Bashir [1999] ELR 317, [1999] EWCA Civ 995 (16 March 1999))

5. Clark v University of Lincolnshire and Humberside [2000] EWCA 129 (14 April 2000) Sedley LJ held that issues of academic or pastoral judgment are issues on which a university is equipped to consider “in breadth and in depth, but on which any judgment of the courts would be jejune and inappropriate” ([12]); and Lord Woolf MR held that a court “will not involve itself with issues that involve making academic judgments … The courts are far from being the ideal forum in which to resolve the great majority of disputes between a student and his or her university” [29] and [39]

Slide 13: Academic matters: does contract change matters?

• Patty Kamvounias, “Students and the Australian Consumer Law” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) 92 The Federation Press, Leichhardt:

Changes to government policies and approaches to higher education have resulted in a rapid expansion of the sector and a ‘marketization’ of the academy. Students are increasingly being characterized as ‘customers’ of the services provided by higher education institutions whether in the public or private sector.

• Clark v University of Lincolnshire and Humberside [2000] EWCA 129 (14 April 2000) per Sedley LJ at [12]:

The arrangement between a fee-paying student and ULH is such a contract: see Herring v Templeman [1973] 3 All E R 569, 584-5. Like many other contracts, it contains its own binding procedures for dispute resolution, principally in the form of the Student Regulations. Unlike other contracts, however, disputes suitable for adjudication under its procedures may be unsuitable for adjudication in the courts. This is because there are issues of academic or pastoral judgment which the university is equipped to consider in breadth and in depth, but on which any judgment of the courts would be jejune and inappropriate. This is not a consideration peculiar to academic matters: religious or aesthetic questions, for example, may also fall into this class. It is a class which undoubtedly includes, in my view, such questions as what mark or class a student ought to be awarded or whether an aegrotat is justified.

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Slide 14: Academic Matters: Australia

1. Griffith University v Tang (2005) 221 CLR 99, [2005] HCA 7 (3 March 2005) at [58] per Gummow, Callinan and Heydon JJ:

The apparent exclusion from justiciability of issues of academic judgment, including issues of competence of students appears not to depend upon the absence of contractual relations; rather, the basis appears to be that any adjudication would be inappropriate.

2. Per Kirby J (dissenting) at [165] and [166]:

The special position of universities: I recognise that universities are in many ways peculiar public institutions. They have special responsibilities, as the University Act envisages in this case, to uphold high academic standards about which members of the academic staff will often be more cognisant than judges. There are issues pertaining to the intimate life of every independent academic institution that, sensibly, courts decline to review: the marking of an examination paper; the academic merit of a thesis; the viability of a research project; the award of academic tenure; and internal budgets. Others might be added: the contents of a course; particular styles of teaching; and the organisation of course timetables. As Sedley LJ noted in Clark v University of Lincolnshire and Humberside, such matters are "unsuitable for adjudication in the courts ... because there are issues of academic or pastoral judgment which the university is equipped to consider in breadth and in depth, but on which any judgment of the courts would be jejune and inappropriate". Judges are well aware of such peculiarities. The law, in common law countries, has consistently respected them and fashioned its remedies accordingly.

However, …, it is entirely "correct" of courts "to distinguish between the disciplinary type of case and the situation where what is in issue is pure academic judgment". In the present appeal, the respondent's claim fell squarely within the former class. Academic judgment is one thing. But where an individual who has the requisite interest is affected by disciplinary decisions of an administrative nature made by a university body acting according to its powers under a statute, outside the few categories peculiar to "pure academic judgment", such decisions are susceptible to judicial review. They are so elsewhere. They should likewise be so in Australia. An appeal to "academic judgment" does not smother the duties of a university, like any other statutory body, to exhibit, in such cases, the basic requirements of procedural fairness implicit in their creation by public statute and receipt of public funds from the pockets of the people.

Slide 15: Academic Matters: United States – use of academic matter concept to defend litigation

• Fisher v University of Texas at Austin 579 US (23 June 2016) per Kennedy J:

once a university gives ‘a reasoned, principled explanation’ for its decision, deference must be given to the University’s conclusion, based on its experience and expertise, that a diverse student body would serve its educational goals

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Slide 16: How new? Universities and intellectual property litigation

1. Pamela Madafiglio and John Birrell, “Foreword” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) vii The Federation Press, Leichhardt:

Of the many recent examples are issues relating to the ownership of property created by a university’s employees and students in the area of copyright, and in commercialization of research as demonstrated by the well-known case of UWA v Gray

2. University of Western Australia v Gray & Ors (No 20) (2008) 76 IPR 222; [2008] FCA 498 (17 April 2008):

Because an academic is engaged not solely to invent but also to research, and to seek external research funding, there can generally be no implied term allowing the University to take the intellectual property rights created by the academic in the course of employment; per French J

It is also not without significance, that Dr Gray was employed by a university, a statutory body established for public purposes. He was not merely an employee. He was, by virtue of the definition of the “university” in the UWA Act a member of it and linked historically by that definition to the idea of the University as a community of teachers and scholars. The statutory definition which incorporated that idea can be traced back at least to the 16th century statute by which Oxford University was incorporated. Per French J at 547 [1361]

3. University of Western Australia v Gray (2009) 82 IPR 206; [2009] FCAFC 116 (3 September 2009):

The distinctive nature of a university and the distinctive nature of an academic’s employment at a university were relevant factors in finding that the trial judge did not err in deciding that inventions which the academic made during the course of employment did not belong to the University: per Lindgren, Finn and Bennett JJ

4. University of Western Australia v Gray [2010] HCA Trans 11 (12 February 2010):

Gummow J refused the University’s application for special leave to appeal to the High Court noting that the Federal Court's finding did not give rise to any special leave ground and that it was not appropriate to re-examine the facts of the case or the questions of law that have already been determined by the Federal Court

Slide 17: Not so new! Universities and intellectual property: Victoria University case of 2004

• Victoria University of Technology v Wilson & Ors (2004) 60 IPR 392; [2004] VSC 33 per Nettle J:

French J in Gray at 548 [1366] said that: “The Victoria University case arose in a different factual context which gave rise to a breach of fiduciary obligations.”

Per Nettle J at 422 [104]: the mere existence of the employer/employee relationship will not give the employer ownership of inventions made by the employee during the term of the relationship. And that is so even if the invention is germane to and useful for the

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employer's business, and even though the employee may have made use of the employer's time and resources in bringing the invention to completion.

Per Nettle J at 426-7 [110]: the net effect of the evidence is that it was never been part of the activities of the School of Applied Economics to invent Internet based e-commerce systems. So far as the evidence goes, and it accords with one's expectations, the sort of research which had been undertaken down to late 1999 was confined to academic research of the kind that is directed to the preparation and presentation of peer reviewed learned papers.

Slide 18: Not so new! Universities and intellectual property: Monotti and Ricketson: 1994 to 2003

1. Anne Monotti with Sam Ricketson, Universities and Intellectual Property- Ownership and Exploitation (2003) 245 [6.59] Oxford University Press, Oxford:

… it will be unwise for a university to rely upon general principles if its intention is to claim title to inventions that are made by its academic employees during their working hours and using university facilities and funding. … it would be necessary to include an express term under which the researcher agrees to assign any invention that he makes not only in the performance of employment duties, but also in the course of using university funding and resources.

2. Anne L Monotti, “Ownership of Copyright in Traditional Literary Works within Universities” (1994) 22 Federal Law Review 341

3. Anne Monotti, “Who Owns My Research and Teaching Materials – My University or Me?” (1997) Sydney Law Review 425

4. Ann L Monotti, “Power to Modify the Vesting of Copyright in an Employer: Subsection 35(3) of the Copyright Act 1968 (Cth) and Australian Universities” [1997] 19(12) European Intellectual Property Review 715

5. Ann Monotti, “Universities and the Validity of their Claims to Student Intellectual Property Rights” (1998) 24 Monash University Law Review 145

6. Ann L Monotti, “Allocating the Rights in Intellectual Property in Australian Universities: An Overview of Current Practices” (1999) 27(3) Federal Law Reports 421

7. Ann L Monotti, ”Maximising the benefits from intellectual property in universities: awareness of our rights and obligations” (2000) 43(2) Australian Universities Review 23

8. Ann L Monotti, “University Copyright in the Digital Age: Balancing and Exploiting Rights in Computer Programs, Web-based Materials, Databases and Multimedia in Australian Universities” [2002] 24(5) European Intellectual Property Review 251

9. Ann L Monotti, “The Impact of the New Grace Period under Australian Patent Law on Universities” [2002] 24(10) European Intellectual Property Review 475

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Slide 19: Not so new! Universities and intellectual property: Copyright Act 1968 (Cth)

• Copyright Act 1968 (Cth), subsection 35(6):

Where a literary, dramatic or artistic work … or a musical work, is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work by virtue of this Part.

Slide 20: Not so new! Universities and intellectual property: 1952 case

• Stephenson Jordan & Harrison Ltd v MacDonald & Evans (1952) 69 RPC 10 per Evershed MR, Denning and Morris LLJJ, Court of Appeal:

Management engineering lectures for delivery to universities not part of contract of service but only accessory to it, as contrasted with a specific task for a particular client or customer, notwithstanding that lecturer paid to prepare and deliver lectures, employer arranged for typing of lectures, and employer made available its other resources for writing of lectures

Slide 21: Not so new! Universities and intellectual property: 1916 case

• University of London Press, Limited v University Tutorial Press, Limited [1916] 2 Ch 601 – at 611-2 per Peterson J:

A servant is a person who is subject to the commands of his master as to the manner in which he shall do his work. A person who is employed … at a fixed annual salary to supply weekly articles for a periodical is not a servant … , nor can a visiting physician of a hospital who, for an annual salary, undertakes to exercise his judgment, skill and knowledge in determining whether a patient can safely be discharged be properly described as a servant. … In the present case the examiner was employed to prepare the papers on the subject … . … He was free to prepare the questions at his convenience so long as they were ready by the time appointed for the examination and it was left to his skill and judgment to decide what questions should be asked, having regard to the syllabus, the book work, and the standard of knowledge to be expected at the matriculation examination. It is true that the University issued instructions to examiners for the conduct of the examination, but these instructions are only regulations framed with a view to securing accuracy in the system of marking. … In my judgment it is impossible to say that the examiners in such circumstances can be appropriately described as the servant of the University, or that he prepared these papers under a contract of service.

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Slide 22: Illustration of change by impact of external forces: a “constitutional corporation”?

• Constitution of the Commonwealth of Australia, section 51(xx):

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:

foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth

• Traditional view:

“That a corporation trades is clearly insufficient by itself to bring it within the classification of a trading corporation. Not only authority but common usage establishes this. A university may trade – its bookshop is an example of this – but if incorporated it is not because of its trading within the classification of a trading corporation”: The Queen v Trade Practices Tribunal: Ex parte St George County Council (1974) 130 CLR 533, 553 per Menzies J

Slide 23: Same test but different outcome with changing environment – “trading” corporation

• Quickenden v Commissioner O'Connor of the Australian Industrial Relations Commission [2001] FCA 303 (23 March 2001) – Black CJ, French and Carr JJ

• Questionable whether provision of educational services within statutory framework “trading” • Act creates liability for each student to University in respect of each course of study • Amount not fixed by University, but rather by the Minister • Concept of "trading" broad one • Doubtful, however, extends to provision of services under statutory obligation • To fix a fee determined by law • Lability for fee, on part of student, appears to be statutory. • However, this aspect of the claimed trading activities can be disregarded • Plain that other activities are trading activities and are substantial, non-trivial element • Allbeit not predominant element of what the University does • University was not established for the purpose of trading • At another time, closer to its creation, it may not have been possible to describe it as trading

corporation. • But at present, university does fall within that class

Slide 24: Analogous outcome with respect to “financial” corporation

• As to status of the University as a financial corporation that too is established on the evidence • Evidence showed in 1997 University earned $29 million investing funds in short term money

market • A further $19 million in buying short-term bills

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• The principal part of the University's current assets was committed to such activities • In 1997 approximately 5% of the total assets of the University were so employed. • These activities involved the loan of moneys to "outside" parties on a substantial scale • Financial activities did not have to be commercial in nature • Not necessary to involve financial dealings with customers and the like.

Slide 25: TEQSA’s constitutional basis

TEQSA Act relies on Commonwealth’s legislative powers with respect to:

• Foreign corporations • Trading or financial corporations formed within the limits of the Commonwealth • Matters incidental to execution of any power vested in the Commonwealth • For the government of any territory • Any other Commonwealth legislative power to the extent that the Commonwealth has relied, or

relies, on the power to establish a corporation

Section 8

Slide 26: To what extent does TEQSA Act exclude State or Territory laws?

Section 9

• Higher education providers not required to comply with State or Territory law • Purporting to regulate provision of higher education • However, exclusion does not apply • To extent that this law establishes the provider or entity

Slide 27: Why “carve out” from exclusion of State laws?

New South Wales, South Australia and Western Australia v Commonwealth (1990) 169 CLR 482

• Commonwealth has no power to legislate for incorporation of trading or financial corporations • No power to form corporations or bring them into existence • “Formed within the Commonwealth” excludes process of incorporation itself • Therefore, internal governance outside Commonwealth legislative powers • Consistent with Huddart, Parker & Co Ltd v Moorehead (1909) 8 CLR 330 • Which decided that Commonwealth had no power to incorporate corporations • As at 1990, had stood for 81 years

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Slide 28: Other sources of “carve out” from application of Commonwealth regulation

Re Australian Education Union; Ex Parte Victoria (1995) 184 CLR 188, at 233

• Per Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ • Critical to a State’s capacity to function as a government • Ability to determine number and identity of those it wishes to engage at higher levels of

government • To determine terms and conditions on which those persons shall be engaged • Officers and employees who clearly fall within this group include: • Ministers, ministerial assistants and advisers, heads of department and high level statutory

office holders • Implied limitation protects States from exercise by a Commonwealth body of power to fix

minimum wages and working conditions in respect of such persons and possibly others as well

Slide 29: Where universities established as Bodies Politic by their State Acts

1. Example: University of Melbourne Act 2009 (Vic), ss. 6(1)(a) and 9(2)(b):

The University of Melbourne is a body politic and corporate

2. Contrast Torrens University Act 2013 (SA), s 4:

4- Recognition of University

(1) The University is a body corporate invested with full juristic capacity and unfettered discretion, subject to the laws of this State, to conduct its affairs in the manner it thinks fit.

(2) The University is not an instrumentality or agency of the Crown.

3. Peter W Hogg, Liability of the Crown in Australia, New Zealand and the United Kingdom (1971) 204-11 The Law Book Company Limited, Sydney:

Shield of the Crown

When Parliament creates a public corporation (or a new office outside the central government departments) it often becomes necessary to decide whether the corporation (or official) enjoys the attributes of the Crown or of a Crown servant in addition to the attributes conferred upon it by its constituent statute. …

… The legal issue is whether the nature of the relationship between the corporation and the Crown entitles the corporation to the particular Crown attribute which is claimed.

…

while the absence of control by the executive is “always decisive”, the “existence of control by the executive, however rigid, is not alone sufficient” …

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A public corporation may be a Crown servant in the exercise of certain of its functions and an independent body in the exercise of other of its functions.

4. Pamela Madafiglio and John Birrell, “Foreword” in Sally Varnham, Patty Kamvounias and Joan Squelch (eds), Higher Education and the Law (2015) viii The Federation Press, Leichhardt

These days, it may be that a university can be a public authority for one purpose but not another, and there are increasing areas where the public (educational) versus the private (commercial) capacity of the university comes to the fore.

Slide 30: University Objects

University of Melbourne Act 2009 (Vic), s 5: The objects of the University include -

(a) to provide and maintain a teaching and learning environment of excellent quality offering higher education at an international standard;

(b) to provide vocational education and training, further education and other forms of education determined by the University to support and complement the provision of higher education by the University;

(c) to undertake scholarship, pure and applied research, invention, innovation, education and consultancy of international standing and to apply those matters to the advancement of knowledge and to the benefit of the well-being of the Victorian, Australian and international communities;

(d) to equip graduates of the University to excel in their chosen careers and to contribute to the life of the community;

(e) to serve the Victorian, Australian and international communities and the public interest by— (i) enriching cultural and community life; (ii) elevating public awareness of educational, scientific and artistic developments; (iii) promoting critical and free enquiry, informed intellectual discourse and public debate

within the University and in the wider society; (f) to use its expertise and resources to involve Aboriginal and Torres Strait Islander people of

Australia in its teaching, learning, research and advancement of knowledge activities and thereby contribute to— (i) realising Aboriginal and Torres Strait Islander aspirations; and (ii) the safeguarding of the ancient and rich Aboriginal and Torres Strait Islander cultural

heritage; (g) to provide programs and services in a way that that reflects principles of equity and social

justice; (h) to confer degrees and grant other awards; (i) to utilise and exploit its expertise and resources, whether commercially or otherwise.

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Slide 31: Some relevant examples of what University Act otherwise does?

• Who the University consists of: s 4(3); e.g. Council, staff, graduates, students, emeritus professors

• Establishes Council as the governing body prescribing its functions and primary responsibilities: s 8

• Prescribes membership of Council; s 11 • Provides for the Minister to determine the remuneration and fees payable to Council members

who are not government employees: s 16 • Provides that it is the Council which establishes an Academic Board or equivalent and

determines its powers, functions and membership: s 20 • Provides for the Minister to approve university statutes with respect to any matter relating to

the University and any person entering on University land or other property, or using University facilities: ss. 28 to 34

• Provides for the appointment of the Chancellor, at least one Deputy Chancellor, the Vice-Chancellor and that the university statutes and regulations may provide for the appointment of an Acting Vice-Chancellor and Deputy Chancellors: ss. 24 to 27

• Provides that the Minister may acquire compulsorily any land for the purposes of, or in connection with, the University: s 36

• Requires prior Ministerial approval before the University may dispose of significant interests in land: s 37

• Provides that the University’s borrowing powers are within the limits and upon the conditions as to security or otherwise, as the Treasurer from time to time approves after consultation with the Minister: s 45

• Provides that the Minister determines the University’s commercial activities and promulgates guidelines in accordance with which they are to be conducted: ss. 3, 52 to 60

• Provides for fines to be imposed by the University: s 61

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Slide 32: Primary responsibilities of University Council; ss. 8(3) and 58

• The primary responsibilities of the Council include— (a) appointing and monitoring the performance of the Vice-Chancellor as chief executive

officer of the University; (b) approving the mission and strategic direction of the University and its annual budget

and business plan; (c) overseeing and reviewing the management of the University and its performance; (d) establishing policy and procedural principles for the operation of the University

consistent with legal requirements and community expectations; (e) approving and monitoring systems of control and accountability of the University,

including those required to maintain a general overview of any entity over which the University has control within the meaning of section 3 of the Audit Act 1994;

(f) overseeing and monitoring the assessment and management of risk across the University, including university commercial activities;

(g) overseeing and monitoring the academic activities of the University; (h) approving any significant university commercial activities.

• The Council must ensure that Ministerial guidelines are complied with in relation to a university commercial activity.

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Slide 33: Ultra vires rule applicable to universities as statutory corporations

1. Bonanza Creek Gold Mining Company, Limited v The King [1916] AC 566, at 584 per Viscount Haldane delivering the judgment of the Privy Council:

Where the Acts incorporating the universities do not provide that as bodies corporate they possess the general capacity of a natural person, the doctrine of ultra vires applies.

2. Re The Honey Pool of Western Australia (No 2) (1988) 14 ACLR 621 per Nicholson J:

The powers of a corporation created by statute are limited and circumscribed by the statute which regulate it, and extend no further than is expressly stated therein, or is necessarily and properly required for carrying into effect the purposes of its incorporation, or may be fairly regarded as incidental to, or consequential upon, those things which the legislature has authorized. What the statute does not expressly or impliedly authorize is to be taken to be prohibited.

A provision such as the body corporate “is capable of doing and suffering all such acts and things as bodies corporate may lawfully do or suffer”, does not have the effect of vesting in the body corporate the freedom to act as if it were without statutory powers.

A provision such as the body corporate has the “power” “to undertake and carry on business transactions, and to do all other things, which are necessary or convenient to be done by the body corporate for giving effect to this Act” (i.e. the Act by or under which it has been incorporated), does not widen the powers or purposes of the Act or the means of carrying them out.

3. University of Melbourne Act 2009 (Vic), s. 58(2)

The failure of the Council to ensure compliance with a guideline in relation to a university commercial activity does not of itself invalidate any commercial agreement entered into, or action taken, by the Council or the University in respect of a university commercial activity to which the guideline relates

Slide 34: Compulsory investigative access to premises, data, information and inquisition

• Requiring persons to give information etc. (e.g. TEQSA Act, ss. 63 to 69 • Searches of premises (e.g. TEQSA Act, ss. 70 to 76) • Obligations and incidental powers of authorized officers (e.g. TEQSA Act, ss. 77 to 82) • Occupier’s rights and responsibilities (e.g. TEQSA Act, ss. 83 and 84) • General provisions relating to seizure (e.g. TEQSA Act, ss. 85 to 89) • Warrants (e.g. TEQSA Act, ss. 90 to 93) • Authorized officers and identity cards (e.g. TEQSA Act, ss. 94 and 95) • Powers of issuing officers (e.g. TEQSA Act, ss. 96 and 97)

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Slide 35: Protection and utilization of University communications

1. Esso Australia Resources v Commissioner of Taxation [1999] HCA 67; (1999) 201 CLR 49, 91 [108] per Kirby J

Corporations which were already subject to many legal requirements could, with minimal imagination, readily present documents as being for a dual purpose - to receive legal advice (perhaps in-house) and also to effect a corporate or administrative purpose. A larger privilege would typically be accorded to the corporation than an individual.

Accordingly, the dominant purpose test creates substantial protections to corporations and their officers.

2. Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 (12 May 2004):

An accountant’s report prepared by PricewaterhouseCoopers was held to attract legal professional privilege where prepared and made for the dominant purpose of the client corporation obtaining legal advice.

Consequently, if the proper precautions are taken to ensure that a corporation’s processes comply with the requirements for attracting legal professional privilege, an exchange of emails between say two accountants employed by the corporation or between a manager of the corporation and an employee accountant or between an employee accountant and an outside accountancy firm is capable of attracting legal professional privilege where it can be shown that the dominant purpose of this communication was to refine instructions for putting to an in-house lawyer employed by the corporation, seeking legal advice from that in-house lawyer.

3. State of New South Wales v Bettair Pty Ltd & Ors [2009] FCA 1293 (12 November 2009)

Communications between a client and a third party in either direction can be covered by legal professional privilege where made for the dominant purpose of the client seeking or obtaining legal advice:

Provided a communication is made with the dominant purpose of the client seeking or obtaining legal advice, we see no reason why privilege should not protect communications between the client and third parties whose knowledge is desirable or necessary for the client to obtain the legal advice the client desires, as in this case: Ibid [40].

Provided the parties are working together consensually, under a regime of confidentiality, to formulate and finalise instructions or other communications to outside solicitors or to the corporation’s in-house lawyers (where those in-house lawyers themselves attract legal professional privilege), communications between different departments and personnel within a corporation or between corporate personnel and outside experts or other potential witnesses should attract legal professional privilege: Ibid [37]

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Slide 36: How these could become critical for Council?

1. Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (No 4) [2015] FCA 1092 (23 October 2015)

This case demonstrates the potential financial exposures to the modern corporation in corporate communications such as internal emails becoming available for use as evidence against the corporation in litigation and investigations. It illustrates the exposures of untidy documentation. A huge amount of money was at stake.

2. Neil Chenoweth, “Chevron’s total tax bill may be more than $600m … then the real problem starts” (Friday, 23 October 2015) Australian Financial Review 1

The Federal Court ruling enforces assessments by the Tax Office of $180 million for the 2003-08 tax years plus a 25 per cent penalty plus interest that takes the bill to $269 million. Other costs will push the total higher.

…

Chevron's Achilles heel in the court case was the plethora of internal emails explaining how the tax dodge worked.

If there is a lesson oil majors will have learned from this case, it's the need to keep the paperwork tidy.

Slide 37: What acts or omissions can put them in jeopardy?

1. Daniels Corporation International Limited v Australian Competition and Consumer Commission (2002) 213 CLR 543

The High Court held that section 155 of the Trade Practices Act 1974 (Cth) (now section 155(7B) of the Australian Competition and Consumer Act 2010 (Cth)) did not impliedly abrogate the client’s legal professional privilege.

It was said to be far from obvious that the retention of legal professional privilege would significantly impair the ACCC’s functions: Ibid 560 per McHugh J.

A contention was rejected that section 155 would become inoperative, futile or useless if a person to who section 155 applied could refuse to produce documents because they were protected by legal professional privilege. Ibid 563-4 per McHugh J and 567 per Kirby J

2. Corporate Affairs Commission (NSW) v Yuill 1991) 172 CLR 319 (“reasonable excuse” did not comprehend legal professional privilege)

Yuill focuses on the public interest in providing a regulator with all relevant information: e.g, Australian Securities and Investments Commission Act 2001 (Cth), s 1(2) – regulatory objectives.

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The majority of the High Court in Yuill recognised that the maintenance of legal professional privilege would restrict the Commission’s powers of investigation: Brennan, Dawson and Toohey JJ, Gaudron and McHugh JJ (dissenting).

Privilege would thereby prejudice the public interest in protecting investors and creditors.

In handing down judgment in Daniels, it was considered in the High Court that the decision in Yuill did not assist the ACCC. The context, history and purpose of section 155 of the then Trade Practices Act 1974 (Cth) were so different from section 295 of the then Companies (New South Wales) Code that Yuill furnished no assistance.

Compare: ASIC Information Sheet 165: Claims of legal professional privilege at http://download.asic.gov.au/media/1339100/infosheet-165-legal-professional-privilege.pdf

3. Corporations Act 2001 (Cth), ss.9 and 57(2)(a)

A “corporation” does not include:

(a) a public authority; or (b) an instrumentality or agency of the Crown in right of the Commonwealth, in right of

a State or in right of a Territory.

Slide 38: Conclusion

• Act and legislation by or under which University established crucial • Ensure Council records reflect its statutory charter • Focus on attracting University law to counter application of laws to universities • Focus on scholarship and research interacting with teaching to produce academic excellence • Finance, resources and administration generally should be deployed to promote that objective • Give ‘reasoned, principled explanation’ for decisions as to how they serve educational goals • To minimize impact of rapidly changing external environment