Re Santa Sabina College By Its Trustees Sister Margaret Gannon, Sister Margaret Cameron, Sister Grace Belcher, and Sister Marie Therese Weeks v the Honourable Senator Susan Ryan, Minister of Education of the Commonwealth of Australia [1985] FCA 2 (17 January 1985)

FEDERAL COURT OF AUSTRALIA

Re: SANTA SABINA COLLEGE by its trustees SISTER MARGARET GANNON, SISTER
MARGARET CAMERON, SISTER GRACE BELCHER, and SISTER MARIE THERESE WEEKS
And: THE HONOURABLE SENATOR SUSAN RYAN, MINISTER FOR EDUCATION FOR THE
COMMONWEALTH OF AUSTRALIA
No. G370 of 1984
Administrative Law
58 ALR 527

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Beaumont J.

CATCHWORDS

Administrative Law - Judicial Review - decision as to level of funding assistance to be provided to recently amalgamated primary and secondary schools - definition of "non-systemic school" - construction of s.24 - whether discretion unduly fettered.

States Grants (Schools Assistance) Act, 1983 ss.3, 24 Schedule 8

Cooper Brookes (Wollongong) Pty. Ltd. v. Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297 - con.

R. v. Secretary of State for the Environment; Ex parte Brent London Borough Council (1982) 1 QB 593 - con.

HEARING

SYDNEY
17:1:1985

ORDER

1. Order that the following decisions be set aside:

(a) the decision of Peter Darcy Tannock as delegate of the respondent made on 6 April 1984 whereby the said Peter Darcy Tannock determined in pursuance of s.24(6) of the States Grants (Schools Assistance) Act, 1983 ("the Act") that the level of assistance for Santa Sabina College in 1984 shall be Group 2;

(b) the decision of the respondent made on 23 May 1984 approving the recommendation of the said Peter Darcy Tannock that Santa Sabina College, Strathfield, remain in Group 2 for 1984;

(c) the decision of the respondent made on 13 September 1984 that the appeal by Santa Sabina College, Strathfield, be rejected and that the School's subsidy level be confirmed as Group 2 for 1984.

2. Order that the matters to which each of the said decisions relate be referred to the respondent for further consideration.

3. Refuse declarations 3 and 4 as asked in the amended application for an order for review dated 18 December 1984.

4. Order that the respondent pay one-half of the applicants' costs of the application.

DECISION

By their amended application for an order of review brought under the Administrative Decisions (Judicial Review) Act, 1977 ("the Judicial Review Act"), the applicants, as trustees of Santa Sabina College ("the College") seek judicial review of certain decisions made by or on behalf of the respondent Minister under the provisions of the States Grants (Schools Assistance) Act, 1983 ("the Act").

2. The College, a school for girls, has been conducted by the Dominican Sisters, a Catholic Order, at Strathfield, N.S.W. for some 90 years. The Dominican Sisters conducted the College as a combined primary and secondary school until 1957, when, for administrative reasons, it was decided to segregate the primary sector into a separate school known as Santa Maria del Monte School ("the School"). From 1957 to 1983, the Dominican Sisters conducted the College and the School as separate institutions, providing secondary and primary education respectively.

3. In 1983, it was decided for administrative and educational reasons, that as from 1 January 1984 the College and the School would "amalgamate". It is not clear from the evidence what formal steps, if any, were involved in the process of amalgamation. It will suffice for present purposes to describe the practical effect of the merger which has occurred. Although the School continues to operate from its own premises approximately opposite the College campus and has retained its own staff, the School has become the junior school of "Santa Sabina College", and the applicants, as trustees, conduct both the former institutions as one body providing education at both primary and secondary levels. At the time the decision to amalgamate was made, it was contemplated that the amalgamation would create a school of some l,260 pupils and necessitate major administrative, financial and educational reorganisation. To date, no educational reorganisation has occurred. A degree of financial reorganisation has been proceeding. In her evidence, which I accept, Sister Rosemary Lewins, the College Principal, described the rationale of the amalgamation thus:

"It was to give a clearer administrative

structure to the junior school in the event
that we no longer continue to have a sister
as the principal ... There was a question
about whether we were going to continue with
the school and after consultation and a long
period of consideration the decision was made
that it would continue, and its security
could be ensured by allowing an overall
authority to be given to the principal of
Santa Sabina."

4. (It has been necessary to deal with the nature of the relationship between the College and the School in some detail because one of the applicants' submissions, shortly stated, is that the Minister committed an error of law by failing to segregate the School from the College for funding purposes. The process of amalgamation was the subject of correspondence from the College and the School and the Commonwealth Schools COmmission ("the Commission") in the middle of 1983 to which reference will be made later.)

5. Although the Court is only concerned with certain narrow legal questions which are said to arise out of the dispute which has developed between the parties, it is necessary to refer to the history of the dealings between the parties in order to understand the context in which the legal questions, which involve of the true construction of s.24 of the Act, arise for determination. It is hardly necessary to say that, in the exercise of its jurisdiction under the Judicial Review Act, the Court is concerned only with the questions of law raised by the parties for determination. Matters of policy and the general merits of the matter in hand are exclusively for the Executive and not the Court to determine.

6. The history of the dispute commences with a "guidelines" statement outlining Government policy with respect to general resources programs for government and non-government schools made in the House of Representatives by the then Minister for Education, the Hon. Wal. Fife, M.P. on 4 June 1981. Mr. Fife then said that the Government would meet its election commitments to maintain the percentage link between its general recurrent grants and average government standard costs and to compress the existing six subsidy levels to three. The three groups were to be classified thus:

Group 1: Schools whose expenditure from private sources

is equal to or above 51 per cent of government
schools standard costs.

Group 2: Schools whose expenditure from private sources

lies in the range of 31-50 per cent of
government schools standard costs.

Group 3: Schools whose expenditure from private sources

is 30 per cent or less of government schools
standard costs.

7. In his statement, Mr. Fife then gave the following commitment, which has been referred to in the evidence as the "Fife guarantee":

"... the Government recognises that some
non-systemic non-government schools would be
reclassified to a lower subsidy level as a
result of the above changes. The Minister,
on the advice of the Schools Commission and
its State Planning and Finance Committees,
will permit those schools to remain at a
higher subsidy level for up to two years
until they adapt their resources to the new
arrangements. The Government will review any
cases where this is not achievable within two
years."

8. The administrative arrangements for the Commonwealth program for funding schools are administered by the Commission. Three Acts of Parliament determine the responsibilities of the Commission and the forms of direct financial assistance by the Commonwealth to schools in Australia. The Commonwealth Schools Commission Act, 1973 deals with the functions and responsibilities of the Commission. The Commission carries these out through its general resources and specific purpose programs, for which funds are provided by the Act and the States Grant (Education Assistance - Participation and Equity) Act, 1983. These Acts specify the funds to be provided and associated conditions set by the Commonwealth for government and non-government schools.

9. By letter dated 7 December 1981, the Commission informed the College that the Government had decided to implement a number of changes to its general recurrent subsidy scheme for non-government schools in 1982. Reference was made to the three funding groups already mentioned. The procedure for placing schools in one or another of these groups was described. The College was informed that, primarily because of its "Schools Recurent Resource Index" (SRRI), it had been transferred to Group 3 for recurrent funding purposes in 1982. Assessment procedures for 1983 were also outlined. Although a number of changes were foreshadowed but the Fife guarantee was affirmed.

10. Although no formal evidence of the fact was tendered, it appears from other material that the School was, indeed, transferred into Group 3 for recurrent funding purposes in 1982. During 1982 and subsequent years, correspondence was exchanged between the parties on the general question of the College's comparative need for Commonwealth funding and on a number of specific matters not presently material. The Commission foreshadowed the possibility of a reassessment of the College's grading for funding purposes. However, in 1983, the College and the School remained in Groups 3 and 2 respectively for Commonwealth recurrent funding purposes.

11. By letter dated 16 April 1983, the College informed the Commission that the Dominican Order was studying the feasibility of amalgamation of the College and the School. Because the proposal would significantly alter the size and structure of the College, a deferment of the Commission's reassessment of the College's category was requested so that accurate information regarding the amalgamation could be provided.

12. By letter dated 30 June 1983, Sister Lewins wrote to the Commission:

"I would like to refer you to our letter
dated, April 16, 1983 and to a meeting with
the Schools Commission on June 6, 1983, in
which I raised the question of a major
reorganisation of Santa Sabina College and
Santa Maria del Monte Primary School at
Strathfield.

A decision has now been made and will be
implemented that the two schools will become
one entity. Planning for the implementation
of this decision has already begun. We
believe that this decision will rationalise
some of our educational resources and lead to
an improvement in adminstrative and financial
management. Obviously a merger between the
two schools will require careful long-term
planning, and structures have yet to be
determined.

We request again that Santa Sabina College
and Santa Maria del Monte not be assessed
separately, by the Schools Commission.

We will be prepared to submit information as
one school, as soon as administrative
procedures are clarified.

We are confident that we will have the
support and consideration of the Schools
Commission in this matter, as we believe that
educational gains will flow from the merger."

13. On 5 July 1983, Sister Kathleen Maher, Principal of the School, also wrote to the Commission:

"We wish to advise you that as from June 28th,
1983 our school will be a junior component of
Santa Sabina College, situated at 90 The
Boulevarde, Strathfield. This section will
retain the name 'Santa Maria del Monte'.

In forwarding our separate returns to be read
in conjunction with Santa Sabina's we await
your direction regarding future procedures."

14. By letter dated 16 August 1983, the Commission informed the College that the Minister had accepted the Commission's recommendation that the final placement for the College for 1983 should be in Group 3. The letter concluded:

"As you have indicated that your school will
be amalgamating with another school in 1984,
the combined school's subsidy level for that
year will need to be assessed on the basis of
the amalgamated operation. The Commission's
State Office will contact you shortly in this
regard."

15. By letter to the College dated 23 January 1984, the Commission referred (in anticipation as it turned out) to "the classification of Santa Sabina College as a combined primary and secondary school for Commonwealth general recurrent grants for 1984". A copy of the document school information form (RG12) was forwarded for completion. This was returned completed, dated 3 April 1984. Under the name, "Santa Sabina College", details of the operation of a combined primary and second school were given. For the 1984 year, a total of 1275 students was indicated, with 448 in the primary section and 827 in the secondary section.

16. On 4 April 1984, Ms. P.M. Karmel, Acting Assistant Commissioner, General Recurrent Resources Branch of the Commission, reported to the Chairman of the Commission on the application for approval to be given for the "formation of a single school" by the amalgamation of the College and the School, the new combined school to be known as Santa Sabina College Strathfield. Without any explication of the point, the report stated, inter alia:

"Pending the outcome of a subsidy level
re-assessment of the combined school, it is
proposed that it be provisionally funded at
Group 2 rates in 1984."

17. On 6 April, 1984, in accordance with the recommendations in Ms. Karmel's report, Dr. P.D. Tannock, the Chairman of the Commission, acting as delegate of the Minister (pursuant to s.76 of the Act) made the following determinations:

"(a) under section 24(7) of the Act, the list
of non-systemic schools be varied by the
removal of Santa Maria Del Monte school
at Strathfield;

(b) under section 3(17) of the Act, the
approved authority for the new Santa
Sabina College shall be the Principal;
and

(c) under section 24(6) of the Act, the
level of assistance for Santa Sabina
College in 1984 shall be Group 2."

18. The Act did not come into force until 21 December 1983. By s.24(1)(a) of the Act, a reference, in s.24, on and after 1 January 1984 to the list of non-systemic schools is to be read as a reference to the list of non-systemic schools in force for the purposes of s.22 of the States Grants (Schools Assistance) Act, 1982. The list of non-systemic schools in force as at 6 April 1984 was published in the Commonwealth of Australia Gazette dated 3 October 1983. In that list, the School and the College were placed in levels of assistance Groups 2 and 3 respectively.

19. By s.24(6) and (7) of the Act, it is provided:

"(6) The Minister may, having regard to any
change in the need of a school for financial
assistance under this section for the purpose
of meeting recurrent expenditure of the
school in respect of the year 1984, vary the
list of non-systemic schools by specifying,
in the instrument of variation, in respect of
the school a different level, being a level
of assistance set out in column 1 of Schedule
8, at which financial assistance is to be
provided under this section to the school for
the purpose of meeting recurrent expenditure
of the school in respect of the year 1984.

(7) The Minister may vary the list of
non-systemic schools for the purpose of
correcting clerical errors or making
alterations of a formal kind."

20. Schedule 8 is in these terms:

"
SCHEDULE 8

RECURRENT EXPENDITURE - LEVELS OF ASSISTANCE
FOR NON-GOVERNMENT SCHOOLS

Column 1 Column 2 Column 3

Level of Amounts per Amounts per
assistance primary secondary
school school
student student

$ $
1a ...... 270 428
1b ...... 360 571
2 ........ 545 866
3 ........ 741 1177"

21. By letter dated 16 April 1984, Dr. J.F. McMorrow, Acting First Assistant Commissioner of the Commission informed the College of Dr. Tannock's determinations and confirmed that it would be necessary for the combined school's subsidy level for 1984 to be assessed on the basis of the amalgamation. He added: "On the grounds that Santa Maria del Monte was funded at one level lower than Santa Sabina in 1983, the combined school has been provisionally placed in Group 2 pending the completion of the review.".

22. On 27 April 1984, for the reasons it then gave, the New South Wales Planning and Finance Committee of the Commission recommended to Ms. Karmel that, for general recurrent grants purposes in 1984, the College be funded at Group 2". On 19 May 1984, Dr. Tannock reported to the Minister on the 1984 subsidy level reassessment of the College. After referring to the amalgamation and the College's funding history, Dr. Tannock made an assessment of the combined operation resulting from the amalgamation by reference to budget estimates provided by the College. The recommendation and reasoning of the New South Wales Planning and Finance Committee were outlined. The report concluded:

"Summary

It is clear from examination of the budget
data provided by the school, together with
the observations of the Planning and Finance
sub-committee during its recent inspection,
that the school has the typical
characteristics and operating style of a
Group 2 school. At Group 2 funding it is
expected that the school would achieve a
small recurrent surplus in 1984 which would
be supplemented by capital fees of some
$155,000. At Group 3 rates the school fails
the income test and would achieve an
estimated recurrent surplus of $394,000 in
1984.

I therefore recommend that Santa Sabina
College, Strathfield, remain in Group 2 for
1984. The school would still have the right
of appeal against Group 2 funding; however,
as in other similar cases, any appeal would
need to be based on significant changes to
the school's circumstances since submitting
material earlier this year."

23. On 23 May 1984, the Minister approved Dr. Tannock's recommendation. By letter dated 25 May 1984, the College was informed of Dr. Tannock's decision that, for general recurrent grant purposes, the College should remain in funding Group 2 for 1984. A statement of reasons, being those which were adopted by the New South Wales Planning and Finance Committee, was attached. The basic consideration relied upon was expressed in these terms:

"An examination of the combined school's
characteristics (pupil-teacher ratio, SRRI,
fee levels and recurrent expenditure other
than teachers' salaries) for 1984, 1985 and
1986 indicated that it displays all the
characteristics of a Group 2 school."

24. By letter to the Commission dated 13 June 1984, for reasons it then gave, the College challenged the Commission's reasoning and foreshadowed an "appeal" against the Commission's decision. The letter was delivered to the Commission at a meeting between the parties held on 14 June 1984 when the College representatives further developed their case before the Commission's representatives. By letter to the Commission dated 10 July 1984, the College requested a review of the Commission's decision. In its reasons for challenging the decision, the College joined issue with the approach adopted by the Commission on most points. Amongst other things, the College contended that the earlier grading of the School at Level 2 was itself not justified. Notwithstanding this ontention, the College indicated that it was "prepared to accept continued funding of the primary department at Level 2 and the secondary department at Level 3, if this decision is acceptable to the Schools Commission. The resulting financial loss can be covered through current resources".

25. On 26 July 1984, a meeting of the Commission's Finance Investigation Group, consisting of members of the New South Wales Planning and Finance Committee and members of the Commission's secretariat, resolved that it recommend that the College continue to receive Group 2 funding for 1984 "on the basis that (the) school continued to display predominantly Group 2 characteristics even though a revised budget had been presented and that the recurrent and capital operations could be accommodated". Dr. Tannock was informed of this recommendation by a report from the Committee dated 15 August 1984. On 22 August 1984, a meeting of a panel of the Commission chaired by Dr. Tannock considered the College's application for review. The meeting had before it a paper prepared by the Commission's secretariat. The paper recited the history of the matter, including the recent recommendation by the New South Wales Planning and Finance Committee. The paper analysed the financial standing of the College and offered the following conclusion:

"The school's budget estimates have been
examined over the period 1984-1986. The
school's planned operating pattern over this
period is stable, and is in most respects
typical of schools classified as group 2
schools. The Branch supports the PFC
recommendation confirming group 2 funding for
1984 as being equitable when compared with
other schools. The Branch also supports the
PFC view that the school has the capacity to
accommodate the reduction of grants in 1984
(amounting to some $260,000 or $202 per
student from Commonwealth funds).

The school has indicated that it would be
prepared to accept a continuation of the 1983
situation whereby the primary sector is
funded at group 2 and the secondary at group
3 for 1984. The Branch does not support this
proposal for reasons outlined in Appendix 2."

26. Appendix 2 was in these terms:

"Proposed (sic) By the School to Accept Group
2 for Primary and Group 3 for Secondary

The school has indicated that it is prepared
to accept continued funding of the primary
sector at group 2 and the secondary sector at
group 3 if this decision is acceptable to the
Commission.

The Act is worded such that the Minister may
authorise payments of such amounts as the
Minister determines, being amounts that do
not exceed the product of eligible enrolments
and the amounts specified in the legislation
for each funding group.

While technically it would be possible to
place the school in group 3 and pay group 2
rates in respect of primary enrolments, this
provision in the Act is not intended to
introduce arbitrary funding amounts somewhere
between those that have been legislated.
(This could be seen as a premature
introduction of the advantages of the twelve
category scheme for one school only). The
purpose of this provision is to accommodate
schools which are entitled to less than a
full year's grant eg. where a school opens or
closes during the year.

For this reason and also the questions it
raises about consistency of treatment of
other schools, the Branch does not support
this approach."

27. Appendix 2 was apparently referring to s.24(9) of the Act. So far as presently relevant it, provides:

"The Minister may authorize the payment to a
State under this section, by way of financial
assistance to the State in respect of
recurrent expenditure of a non-systemic
school situated in a State, being a school
that is included in the list of non-systemic
schools, of such amounts as the Minister
determines, being amounts that do not exceed,
in the aggregate, the sum of the following
amounts:

(a) an amount equal to the product of
the amount specified in column 2
of Schedule 8 opposite to the
level of assistance in column 1 of
that Schedule that is the level of
assistance specified in the list
of non-systemic schools in
relation to the school and the
number of students receiving
primary education at the school
on the date ... that is the schools
schools census date for that State
or is such other date as the Minister,
in special circumstances, determines
in relation to the school;

(b) an amount equal to the product of
the amount specified in column 3
of Schedule 8 opposite to the
level of assistance in column 1 of
that Schedule that is the level of
assistance specified in the list
of non-systemic schools in
relation to the school and the
number of students receiving
secondary education at the school
on the census date;

..."

28. The minutes of the meeting of the Commission show that the meeting agreed that "the school's operating pattern is in most respects typical of schools classified as Group 2". The meeting decided that the funding for the College for 1984 be confirmed at Group 2.

29. On 7 September 1984, Dr. Tannock reported to the Minister on the College's application for review which he described as an "appeal" provided for by the administrative provisions of the Commonwealth General Recurrent Grants Program. The Minister was advised of the full history of the matter to date and of the Commission's recommendation that the appeal be rejected. The point made in Appendix 2 was restated to the Minister in substantially the same terms. On 13 September 1984, the Minister approved the Commission's recommendation. The College was informed of the Minister's decision by letter dated 20 September 1984.

30. In the Commonwealth of Australia Gazette dated 11 October 1984, there was published the following notice:

"States Grants (Schools Assistance) Act 1983

GENERAL RECURRENT GRANTS TO NON-SYSTEMIC
SCHOOLS

I, James Frederick McMorrow, delegate of the
Minister of State for Education and Youth
Affairs, in accordance with section 24(5) of
the States Grants (Schools Assistance) Act
1983 hereby approve the gazettal of the
attached updated list of approved
non-systemic schools for the purposes of
receiving general recurrent grants in respect
of 1984 under the Act.

Where a year is shown in brackets after the
school name, it represents the year in which
the school came into existence for the
purposes of section 24(9)(c) of the aforesaid
Act.

J.F. McMORROW

24.8.84.

NON-SYSTEMIC REGULAR SCHOOLS
New South Wales ..."

31. The name "Santa Sabina College" appeared under Level of Assistance 2. The name "Santa Maria del Monte" did not appear in the Gazette notice.

32. By letter dated 11 October 1984, the Minister wrote to the College in response to a request made by the College in an earlier letter that the Minister give personal attention to the matter. After referring to the outcome of the appeal, the Minister concluded:

"While I appreciate that you may be
disappointed with the result I should like to
assure you that I have given the school's
case my close personal attention.

I believe it is important that I convey to
you my confidence in the manner in which the
Commonwealth Schools Commission prepared the
documentation in relation to this matter.
There are no grounds to believe that this was
done in other than a comprehensive and
objective manner."

33. In the proceedings, review is sought of the following decisions:

(a) The decision of Dr. Tannock acting as delegate of the Minister whereby Dr. Tannock made the following determinations under the Act:

(i) that pursuant to s.24(7) of the Act, the list
of "non-systemic" schools be varied by the removal
of the School;

(ii) that pursuant to s.3(17) of the Act, the
approved authority for the new Santa Sabina College
shall be the Principal; and

(iii) that pursuant to s.24(6) of the Act, the
level of assistance for the College in 1984 shall
be Group 2.

(b) The decision of the Minister made on 23 May 1984 approving the recommendation of Dr. Tannock that the College remain in Group 2 for 1984.
(c) The decision of the Minister made on 13 September 1984 that the appeal by the College be rejected and that the College's subsidy level be confirmed as Group 2 for 1984.
(d) The decision of Dr. McMorrow, acting as delegate of the Minister, made pursuant to s.24(5) of the Act to approve the gazettal of a list of approved non-systemic schools for the purpose of receiving general recurrent grants in respect of 1984 under the Act, insofar as the said list omitted the name of the School.

34. The grounds of the application, as stated in the amended application for an order for review are as follows. First, that in making the decisions and each of them the Minister or her delegate committed an error of law in the course of the conduct of the said decisions, namely the error of failing to treat the College (a secondary school) and the School (a primary school) as separate "non-systemic" schools for all purposes under the Act; secondly, that in making her decision of 13 September 1984 the Minister gave effect to an erroneous view of the law, namely the true construction of s.24(9) of the Act in that she failed to construe the said provision as entitling her to approve payment to a State by way of financial assistance to the State in respect of recurrent expenditure of the College so as to permit of payments at the Level 2 rate for the School and at the Level 3 rate for the College; and finally, that the making of the decision was an improper exercise of the power conferred by the enactment in pursuance of which the decision was made for the reason that the decision involved the exercise of a discretionary power in accordance with a rule or policy without regard to the merits of the particular case, namely a rule that the power to authorise payments of less than the maximum amount, pursuant to s.24(9) would only be exercised in the case of schools open for less than a full year.

35. The applicants claim an order that each of the decisions be set aside; an order referring the matters to which each decision relates to the Minister for further consideration; a declaration that for the purposes of the Act the College, insofar as it provides secondary education, is one "non-systemic" school and the School, insofar as it provides primary education, is another "non-systemic" school; and a declaration that each of the said schools is entitled to separate consideration of its requests for financial assistance for the year 1984.

36. The applicants advance two distinct arguments. In the first place they submit that, as a matter of statutory construction, the Act requires that for the purposes of s.24, the College and the School should have been treated separately, despite the amalgamation. The submission is put as a pure question of law in terms of the operation of the statute independently of the aspirations or intentions of the parties. The suggestion is that the operation of the statute is such that the facts of the case, in particular, the College's invitation to the Commission to treat it on the footing that there was a combined primary and secondary operation, are beside the point. In short, it is put by the applicants that whatever legal consequences may flow from the amalgamation for other purposes, so far as the Act is concerned, the amalgamation was ineffective in the sense that the Commission was bound to approach the matter upon the basis that it was required to consider two distinct institutions for funding purposes - the College, a secondary school, on the one hand and the School, a primary school, on the other.

37. The construction of the Act so contended for is said to derive from the definition of "non-systemic school" to be found in s.3(1) in these terms:

"Unless the contrary intention appears ...
'non-systemic school' means a non-government
primary school, or a non-government secondary
school, that is not a systemic school."

38. The applicants' argument is simple enough. It is that the use of the work "or" in this definition indicates that an institution can be either a primary school or a secondary school but cannot be both.

39. In my opinion, the argument should be rejected. For one thing, the Act, read as a whole, comes to schools, as institutions, as it finds them. The statute, in the exercise of the power conferred upon the Commonwealth Parliament by s.96 of the Constitution to grant financial assistance to the States, makes no attempt to change the legal or financial character of the schools to which it applies. Even if the Commonwealth had the constitutional power to effect any such change, a doubtful matter except perhaps by the imposition of a term or condition to that effect, none is here suggested (cf. Attorney-General for the State of Victoria (at the relation of Black) v. The Commonwealth of Australia [1981] HCA 2; (1981) 146 CLR 559 at p 584). The Act merely defines "school" in s.3(1) as including certain institutions and excluding other bodies not presently material. No attempt is made to define exhaustively or with any precision what a "school" is. The inference clearly is that the Act comes to the schools in Australia as it finds them both in terms of formal character and financial structure.

40. Although the Act must accept the school institution as it is, the application of the Act to a school in its primary education aspect, if any, may differ in certain respects in its application to the school in its secondary aspect, if any. So much emerges from the provisions of s.24 and Schedule 8 already mentioned. To the same effect are the definitions, in s.3(1), of "non-government primary school" and "non-government secondary school". These definitions which, in turn, are picked up in the definition of "non-systemic school" itself, are as follows:

"'non-government primary school' means-

(a) a non-government school in a State
at which primary education is
provided or a proposed
non-government school in a State
at which primary education is to
be provided; or

(b) in the case of a non-government
school at which primary education,
and also education other than
primary education, are provided -
that school in so far as it
provides primary education

...

'non-government secondary school' means-

(a) a non-government school in a State
at which secondary education is
provided or a proposed
non-government school in a State
at which secondary education is to
be provided; or

(b) in the case of a non-government
school at which secondary
education, and also education
other than secondary education,
are provided - that school in so
far as it provides secondary
education." (Emphasis added.)

41. In the present case, which is concerned only with the 1984 year, there was only one school known as the Santa Sabina College, notwithstanding that the School had both primary and secondry departments or sections. For that year, there existed only one institution with a single financial structure. The fact that staff and pupils were confined to one or other of these departments or sections does not, in my view, detract from the existence of a single entity, upon amalgamation, known as Santa Sabina College offering education at both primary and secondary levels. Although it would be open to the trustees in the future to segregate the School into two distinct schools, primary and secondary, this cannot affect the position in the 1984 year. In that year, for the purposes of s.24 of the Act, only one school existed. In my opinion, the literal meaning of the definition of "non-systemic" school should not be construed, for the purposes of s.24, so as to effect a notional subdivision of an existing school into two distinct sections, one primary and one secondary. To effect such a conversion, the clearest language would be required and, in my view, it would not be proper to infer any such intention, at least so far as s.24 is concerned, from a definition provision of general application. I think the more likely intention was that a subsidy provision such as s.24 was intended to take the School in its existing structure (cf. Cooper Brookes (Wollongong) Pty. Limited v. Federal Commissioner of Taxation [1981] HCA 26; (1981) 147 CLR 297).

42. Even if the applicants were right in their construction of the statute, there are strong discretionary reasons, having regard to the form in which the application for funding was made, why the Court should decline to intervene under the Judicial Review Act on this branch of the argument (see Lamb v. Moss [1983] FCA 254; (1983) 49 ALR 533 at pp 546 et seq.). However, since I cannot accept the applicants' substantive argument as a matter of construction, it is unnecessary to express a concluded view on the discretionary defence.

43. The applicants' second argument is that the approach taken by the Minister and her advisors regarding the scope of the discretion available to the Minister under s.24, in particular, s.24(9), was unduly narrow and thus misconceived the statutory function vested in her under that provision. In essence, the submission is that an inference should be drawn that the Minister adopted the approach first enunciated in the Commission paper identified as Appendix 2 and thereby committed herself to a view of her discretion under s.24, especially s.24(9), which was too rigid in the circumstances. In short, it is said, an error of law justiciable under the Judicial Review Act arose when the Minister failed to recognise the true width of her discretion under both s.24(6) and (9).

44. The first question which arises, being one of fact, is whether the Minister did actually hold the opinion outlined in Appendix 2 or whether she held some wider view of her statutory function. In my opinion, in the absence of any evidence, documentary or otherwise to the contrary (see Minister for Immigration v. Arslan (1984) 55 ALR 361 at p 364), it is proper to infer from the Minister's approval of the Commission's approach both generally and specifically in her letter dated 11 October 1984, that she embraced at least the thrust of the notion advanced in Appendix 2 that the only circumstance in which the Minister may make a grant in a sum less than the appropriate amount specified in Schedule 8 is where the school is not conducted for the whole of the year in question.

45. As a matter of statutory construction, there can be little doubt that s.24(9) does vest a discretion in the Minister to pay less than the amount specified in Schedule 8. The provision speaks of "such amounts as the Minister determines". In Black's Case, supra, in discussing the legislation, Gibbs, J. (as he then was) said (at p.587):

"The amount payable in each case depends on
the discretion of the Minister subject to
specified statutory limits."

46. In my opinion, the view espoused in Appendix 2 and ultimately endorsed by inference at least by the Minister fails to afford s.24(9) its true width. Although the fact that a school was not operated for part of a year would undoubtedly justify the payment of less than the amount specified in Schedule 8, it would be wrong to regard this as the sole circumstance which could justify a departure by the Minister from the amounts prescribed in the schedule. It follows, in my view, that the discretion afforded by s.24(9) to pay less than the specified amount was unduly fettered in the present case (see R v. Clarkson; Ex parte Australian Telephone and Phonogram Officers' Association [1982] HCA 5; (1982) 39 ALR 1 at pp 9-10; Howells v. Nagrad Nominees Pty. Limited (1982) 43 ALR 283 at p 301; pp 306-7; De Smith's Judicial Review of Administrative Action, 4th Ed. at p 312).

47. What follows from this error? The applicants are not, in any direct sense, seeking to challenge the power of the Minister to pay less than the prescribed amount in the exercise of her discretion under s.24(9). The applicants' real complaint is directed at the exercise of the Minister's discretion under s.24(3) and (6). They say that in determining the level at which financial assistance is to be provided, the Minister, in having regard to the need of the School for such assistance, wrongly took into account the circumstance that she had no power in this case to pay anything less than the amounts specified in Schedule 8. According to the applicants, this was a fundamental misconception which vitiated the exercise of the several powers under s.24 employed in this instance.

48. On the other hand, the Minister submits that even if an unduly narrow view of the Minister's discretion under s.24(9) was taken, this was not an error that was operative in any relevant sense. The suggestion is that the Minister would have been justified in taking the course she did even if the heresy of Appendix 2 had not been adopted.

49. Although there is a considerable force in the submission put on behalf of the Minister, in the absence of evidence from the Minister or her advisors that the views advanced in Appendix 2 had and could have no impact upon the decision to exercise the several powers under s.24 in fact employed in this case, the inference urged that the erroneous construction of s.24(9) which was adopted had no operative effect upon the steps in fact taken should not, I think, be drawn. To the contrary, if any inference is open, it is that such a fundamental consideration did have a significant bearing on the decisions which were made. True it is that Appendix 2 is framed more or less as an afterthought. But, in my view, the history of the matter, especially in the formative period of April and May 1984, shows that the Minister's advisors, when considering the appropriate level of grading for the College, assumed an entitlement to be paid at Schedule 8 rates. Certainly the possibility that anything less may be paid was never adverted to. If it had been, a different process of reasoning may well have been adopted. It follows, in my opinion, that the several decisions under s.24(6) to vary the level of assistance for the College to Group 2 were made under a misconception of the statutory function involved.

50. The Minister again appeals to the discretion of the Court. She relies, in particular, upon her letter of 11 October 1984 and submits that even if the matter were remitted for further consideration, the result would be unchanged.

51. It is not for the Court to speculate or suggest the ultimate fate of the applicants' application for subsidy. The Minister may well prove to be right in the long run. Yet the authorities show that a party in the position of the applicants is entitled to have his case put again to the Executive in the present circumstances: it is enough that it is possible that the Minister may change her mind (see British Oxygen Co. Limited v. Minister of Technology [1970] UKHL 4; (1971) AC 610 at pp 624-5; R. v. Secretary of State for the Environment; Ex parte Brent London Borough Council (1982) 1 QB 593 at p 646). Accordingly, I propose to grant the applicants certain of the limited relief they seek.

52. Since I have rejected the applicants' first submission but upheld their second argument, I propose to order that the applicants receive only one-half of their costs.

53. I make the following orders under s.16 of the Judicial Review Act:

1. Order that the following decisions be set aside:
(a) the decision of Peter Darcy Tannock as delegate of

the respondent made on 6 April 1984 whereby the
said Peter Darcy Tannock determined in pursuance of
s.24(6) of the States Grants (Schools Assistance)
Act, 1983 ("the Act") that the level of assistance
for Santa Sabina College in 1984 shall be Group 2;

(b) the decision of the respondent made on 23 May 1984

approving the recommendation of the said Peter
Darcy Tannock that Santa Sabina College,
Strathfield, remain in Group 2 for 1984;

(c) the decision of the respondent made on 13 September

1984 that the appeal by Santa Sabina College,
Strathfield, be rejected and that the School's
subsidy level be confirmed as Group 2 for 1984.

2. Order that the matters to which each of the said decisions relate be referred to the respondent for further consideration.
3. Refuse declarations 3 and 4 as asked in the amended application for an order for review dated 18 December 1984.
4. Order that the respondent pay one-half of the applicants' costs of the application.