Administrative law updater: How to construe statutory schemes

What is the problem decision-makers face?

It is often said that it is impermissible to use regulations as a basis for interpreting the legislation under which those regulations are made. The correct approach is first to construe the legislation to understand the scope of the delegated authority to make regulations, and then construe the regulations with a view to ascertaining whether that falls within or outside of the delegated power. Although, as a general proposition, this remains the case, what happens when legislation and regulations have been introduced contemporaneously as part of a legislative scheme?

How did Australaw affect this?

In Australaw Pty Ltd Pty Ltd v Minister for Families and Social Services [2020] FCA 227, the Federal Court considered the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 and the National Redress Scheme for Institutional Child Sexual Abuse Rules 2018 made under the Act.

Justice Abraham determined that, as the Act and the Rules had been introduced at the same time as components of a legislative scheme, it was permissible to have regard to the Rules when construing particular provisions of the Act. This was not strictly speaking the same as using the Rules to determine the scope of the operation of the Act, which, as the Applicant argued, would remain impermissible.

The facts and decision in Australaw

Under the National Redress Scheme, the National Redress Scheme Operator has an obligation imposed by section 48(1) of the Act to pay redress payments “to” the person entitled to redress where that person has accepted the redress payment. The Applicant was a legal practice and was a “legal nominee” for persons who had made applications for redress. Section 48(2) of the Act also provided that the Rules "may prescribe matters relating to the payment of redress payments". Section 33(2) of the Rules required that any redress payment be paid to an account that "the person holds with a financial institution" or that "the person has nominated in writing to the operator".

The Applicant relevantly argued that the obligation to pay the redress payment to the person could be complied with by making a payment to an account held by a legal nominee of the person (eg. the Applicant's trust account). In the alternative, the Applicant argued that if section 33(2) of the Rules purported to prohibit a redress payment being paid into a solicitor’s trust account, it was inconsistent with the Act and accordingly invalid. The Respondent submitted that Parliament, in section 48(2), expressly provided that the statutory duty to pay redress payments to a person would be subject to additional prescription in the Rules, and that any ambiguity about the manner of paying a person was removed by section 33(2) of the Rules.

Justice Abraham agreed with the Respondent, and upheld the validity of section 33(2) of the Rules. Her Honour reasoned:

"to consider the Rules in this case is not to construe the Act by reference to them, but rather to see the Act and the Rules operating together as a legislative scheme: see also SZVBN v Minister for Immigration and border Protection (2017) 254 FCR 393 at [153]. In any event, the Act and the Rules together form a scheme, prepared contemporaneously to commence at the same time."

Justice Abraham observed that the Applicant's preferred reading of section 48(1) of the Act was "artificial and strained". In her view, the Applicant was seeking to divorce section 48(1) from its context, which relevantly included section 48(2). It was part of the relevant context that section 48(2) empowered the Rules to prescribe matters relating to the payment of redress payments. Justice Abraham determined that section 33(2) of the Rules validly prescribed the method of payment by the Operator of the redress payment, which must be to a bank account held by the person themselves.

After Australaw, here's what you need to remember

The decision in Australaw does not displace the accepted position that it is impermissible to use rules or regulations to expand the construction of a piece of legislation under which they are made. However, the decisions affirms that rules enacted contemporaneously with legislation as part of a legislative scheme properly form part of the context within which the legislation may be construed. This is especially the case where the legislation explicitly empowers the rules or regulations to prescribe particular matters.

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