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Article Excerpt
[Judicial review of administrative action has" traditionally had a procedural focus. This means that courts examine the procedure by which a decision is made, rather than the decision itself. A denial of natural justice is no exception to review--a person dissatisfied with an administrative decision has long been able to complain about the fairness of the decision-making process but not the fairness of the decision itself. English law has recently developed a doctrine of 'substantive unfairness' by which an expectation about the outcome of a decision-making process can be protected by the courts in a strong sense. The strength of the protection given under this new doctrine seems to blur the distinction between process and outcomes, which leads judicial review in a radical new direction. This article explains the English doctrine of substantive unfairness and considers whether it can and should be adopted in Australia.]
CONTENTS I Introduction II The Concept of Legitimate Expectations III Substantive Legitimate Expectations in England IV Coughlan: The Acceptance of Unfairness in Its Own Right V The Post-Coughlan Adjustment and Entrenchment of the Doctrine in England A The Refinement of Coughlan B 'Conspicuous Unfairness'--A Separate Head of Review or a Sign of Abuse of Power? C The Doctrinal Break between Estoppel and Public Law D The Separation of Powers E Observations on Coughlan and Its Progeny VI The Australian Reception of the Substantive Legitimate Expectation Doctrine A The Procedural Conception of the Legitimate Expectation Doctrine B The Rejection of Estoppel in Public Law C Unfairness in the Form of Inconsistent Treatment D Constitutional Objections to the Substantive Legitimate Expectation Doctrine E Can a Remedy for Serious Administrative Injustice Bypass Constitutional Objections to the Substantive Legitimate Expectation Doctrine? F What of the Constitutional Position at the State Level? G Reflections on Australian Objections to the Substantive Legitimate Expectation Doctrine VII Concluding Observations
I INTRODUCTION
Governments and their agents may create expectations regarding the manner in which administrative powers will be exercised. Expectations of this nature can be generated in many different ways, such as by the issue of policies or procedures to guide the exercise of discretionary powers. Expectations regarding the future exercise of administrative powers may also be generated by public statements or representations, perhaps even promises, or by adoption and regular application of a certain practice. But just as expectations about the exercise of administrative powers may be created, they may also be disappointed. They may be disappointed when a governmental agency has acted in breach of a promise or undertaking made to a particular person or to a class of persons. They may also be disappointed when a government agency has not applied current policy or guidelines in determining a particular case, and without good reason. In such a case, the complaint may be that the policy has been applied inconsistently, perhaps in a way which reflects improper discrimination. In other cases, an existing policy may be changed and a new one applied to the disadvantage of people who stood to benefit from the earlier policy and who may even have conducted their affairs in reliance upon it.
Courts in England and some other jurisdictions have recently accepted that there can be circumstances in which government agencies should be required to fulfil the legitimate expectations they have created. (1) This approach endows an expectation with a substantive quality because it enables the expectation to determine or strongly influence the outcome of, rather than simply the procedures for, administrative decision-making. Australian courts, in contrast, have generally taken the view that expectations about the exercise of administrative powers may only give rise to procedural rights. (2) On this view, an expectation about the exercise of an administrative power might, at best, oblige a decision-maker who intends to act contrary to that expectation to notify affected people and provide them with an opportunity to argue against that course. But the law in Australia imposes no restraints upon a decision-maker beyond these procedural requirements.
This article examines the different approaches governing legitimate expectations in England and Australia. It traces the development of the English approach by which courts can now require governments and their agencies to honour expectations they have created. The article also considers whether it is open to Australian courts to adopt a similar approach without violating fundamental constitutional principles. It will be argued that the increasing role of the Australian Constitution as a source of guiding principle in Australian judicial review, and the associated conceptions of the separation of powers and the limitations on judicial power that flow from the Constitution, preclude any judicial enforcement of substantive legitimate expectations in Australia. But first, attention must be given to some preliminary questions. What precisely is a 'substantive legitimate expectation'? How may it arise? And how does it differ from the more traditional 'procedural legitimate expectation'?
II THE CONCEPT OF LEGITIMATE EXPECTATIONS
The scope of the duty to observe the requirements of procedural fairness is now extremely wide. It is well-settled that the duty extends to virtually every exercise of a statutory power which might have an adverse effect on an individual unless there is a very clear legislative indication to the contrary. (3) Therefore, in almost all cases the important question now is not whether the requirements of procedural fairness apply but what they require in a particular instance. But that was not always the case. During the evolution of procedural fairness, or natural justice as the doctrine was commonly called in this earlier period, many cases focused on the 'threshold question' of whether the doctrine applied. The answer to this preliminary question often depended on whether the courts could identify a particular reason or circumstance why natural justice ought to apply. The doctrine of legitimate expectation contributed to the expansion of the duty to observe the requirements of natural justice by extending the duty beyond the relatively narrow range of rights and interests to which natural justice had traditionally applied. (4)
The legitimate expectation doctrine was invoked in a range of cases, the common theme of which was the principle that when administrative officials had created or induced a belief in a person about the possible exercise of their powers, any change affecting this belief should be conditioned by the rules of natural justice. The earliest cases involved people who held a licence, permit or visa which entitled them to enjoy a particular benefit. (5) In these cases, it was held that the grant of the licence, permit or visa created an expectation in the grantee that they would enjoy that benefit for its expected duration and that the benefit would not be ended prematurely unless the person was granted the right to argue against that course. The legitimate expectation doctrine provided important procedural benefits in these cases, namely, the right to be notified of, and to be heard in opposition to, the revocation of an existing benefit.
As the legitimate expectation doctrine gained acceptance, it was invoked in a wider range of cases, which can be conveniently summarised into four categories. (6) The first was cases in which a person had relied upon a policy or norm of general application but was then subjected to a different policy or norm. The second category, which was a slight variation on the first, included cases in which a policy or norm of general application existed and continued but was not applied to the case at hand. A third category arose when an individual received a promise or representation which was not honoured due to a subsequent change to a policy or norm of general application. A fourth category, which was a variation on the third, arose when an individual received a promise or representation which was subsequently dishonoured, not because there had been a general change in policy, but rather because the decision-maker had changed its mind in that instance.
The legitimate expectation doctrine in these various manifestations was criticised as serving little purpose. More particularly, it was said to be a procedural device that added 'little, if anything, to the concept of a right.' (7) But proponents of the legitimate expectation doctrine suggested that it enabled natural justice to extend beyond 'enforceable legal rights' to 'expectations' of various sorts. (8) That possibility provided an important bridge by which the rules of natural justice could venture into new territory.
Despite the growing body of cases in which the legitimate expectation doctrine was invoked and an increasing acceptance of the doctrine's role in the evolution of the duty to observe the rules of natural justice, key questions about the doctrine remained. One difficulty arose from the frequently mentioned requirement that an expectation should be reasonable. (9) This requirement provided an apparently objective quality to the concept and, therefore, was thought to provide a useful limit by precluding the recognition of expectations that were somehow unrealistic or inappropriate. However, the logically related issue to any requirement of reasonableness, which has been a longstanding source of uncertainty, was whether an expectation ought to be assessed in subjective or objective terms. The requirement that an expectation be reasonable poses the question of 'reasonable according to whom?'
A second difficulty was whether a person who raised a legitimate expectation needed to also prove reliance upon it. (10) The point that underpinned any requirement of reliance was the extent to which the legitimate expectation doctrine, and administrative law more generally, should be influenced by considerations of estoppel. The possible influence of estoppel shrouded important related questions. To what extent is it appropriate to use private law concepts in the law that relates to the exercise of public powers? Can private law concepts be used in public law with any theoretical coherence when there is longstanding authority that crucial aspects of private law, particularly the right to damages, do not extend to public law? (11)
The final difficulty was the extent to which the legitimate expectation doctrine might extend to determining actual outcomes in administrative decision-making, as opposed to procedural requirements. An expectation of this last kind--a substantive legitimate expectation--is based on a promise or representation about an actual advantage or benefit. They can be distinguished from all forms of the traditional legitimate expectation (which are procedural legitimate expectations) because the latter are confined to the procedure to be followed before a decision is made. A majority of the Hong Kong Court of Final Appeal defined the substantive legitimate expectation doctrine in the following terms:
The doctrine recognizes that, in the absence of any overriding reason of law or policy excluding its operation, situations may arise in which persons may have a legitimate expectation of a substantive outcome or benefit, in which event failing to honour the expectation may, in particular circumstances, result in such unfairness to individuals as to amount to an abuse of power justifying intervention by the court. (12)
The substantive legitimate expectation doctrine commonly arises in two scenarios. The first is when a person who enjoys a benefit or advantage argues that they expect that the benefit or advantage will continue. In this instance, the substantive legitimate expectation can effectively preclude a decision-maker from exercising a discretionary power to revoke the benefit or advantage because revocation is only permitted in very limited circumstances. The other scenario is when a person does not yet enjoy a benefit or advantage but argues that they rightfully expect that it will be granted. In this instance, the substantive legitimate expectation can effectively force decision-makers to grant the benefit or advantage because the court can require decision-makers to take account of both the substantive legitimate expectation and the circumstances upon which it is based. The important quality in each form of substantive legitimate expectation is that it leads a court very close to determining the outcome of administrative decision-making, rather than only its procedure. This move from procedure to substance is a radical one that takes judicial review of administrative action well beyond its traditional boundaries. The next Part of this article explains how this radical step occurred in England and the subsequent refinements which have been made to that doctrine.
III SUBSTANTIVE LEGITIMATE EXPECTATIONS IN ENGLAND
The decision in R v North and East Devon Health Authority; Ex parte Coughlan ('Coughlan') (13) marked the decisive English acceptance of substantive legitimate expectations, or substantive unfairness as it is known in England. However, key elements of the doctrine were developed 15 years earlier in the House of Lords decision in Re Preston ('Preston'). (14) Preston alleged that he had reached an agreement with tax authorities by which he would pay an amount of tax and withdraw his outstanding claims, and the tax authorities would cease investigating him. The claim failed because Preston could not prove the existence of any agreement or undertaking, but the House of Lords made it clear that if an agreement or undertaking had been proven Preston could have sought judicial review of its breach on the ground of 'unfairness'. Their Lordships rested this conclusion on a curious blend of public law fairness and private law estoppel. They concluded that the tax authorities were obliged by statute to act 'fairly'. This obligation would, in some cases, prevent the tax authorities from acting in a manner that could amount to a breach of contract, or the breach of a representation that would give rise to an estoppel, if the tax authority making the representation were a private firm rather than a public authority. (15) If the tax authorities acted unfairly according to these principles, which were guided to an uncertain extent by estoppel, the resulting decision would amount to an abuse of their statutory powers. (16)
Several comments can be made about the Preston case. First, the House of Lords placed no reliance upon the requirements of natural justice, which suggests that their Lordships conceived 'fairness' as something quite distinct from natural justice. Once 'fairness' is separated from natural justice, it is a small conceptual step to accept that it could form an independent ground of judicial review as appears to have later happened with substantive unfairness. (17) Secondly, fairness in this sense has a strong connection with private law, notably estoppel. The reasoning of the House of Lords suggests that fairness, in a form enforceable against a public official, would arise in situations similar to those of equitable estoppel. (18) Thirdly, the House of Lords did not suggest that this new form of fairness could enable or require a public official to act beyond or contrary to the limits of their statutory powers. Accordingly, fairness could not be used to enforce an ultra vires agreement or undertaking. Even if an undertaking or agreement was within power, it would not become automatically enforceable. Their Lordships made it clear that the tax authorities could not simply make a binding promise regarding the exercise of their powers (in the form of failing to pursue a claim). Such a promise or undertaking would normally conflict with the basic duty of tax authorities to collect revenue, (19) though the Lords made it clear that there could be special circumstances in which it would be unjust or unfair for the tax authorities to enforce this basic duty. (20) Their Lordships suggested that the decisive factor was whether enforcement of a liability by tax authorities would breach an undertaking or agreement. (21) On this view, the tax authorities could resile from an undertaking or representation if new evidence arose or the circumstances of the case changed significantly, but outside of those instances any attempt to resile from an undertaking could amount to an abuse of power.
The suggestion that unfairness could amount to an abuse of power foreshadowed the rise of substantive unfairness as a separate ground of judicial review, but it also raised several questions. Perhaps the most important was why or how unfair behaviour by a public official could amount to an 'abuse of power' sufficient to constitute a separate ground of review and attract judicial relief. Professor Paul Craig argues that the content and circumstances of the representations of the public official are crucial: unfairness can be transformed into an abuse of power that is an error of law if the representations create expectations that are normatively justified and lead to reliance on the part of the person affected. (22) Unfairness of this kind differs from the traditional procedural legitimate expectation in two ways. First, it requires a subjective belief on the part of the person affected, though the requirement of normative justification overlays an objective element. Secondly, the requirement of reliance, or detrimental reliance to use the language of estoppel, suggests that a representation alone is not enough--the representation must have had an effect on the mind or behaviour of the person affected. However, later English cases illustrate that neither of these considerations have proven essential.
IV COUGHLAN: THE ACCEPTANCE OF UNFAIRNESS IN ITS OWN RIGHT
On one view, Preston did not represent a radical development in English law because it drew together the threads of many earlier English decisions which had invoked either estoppel or other arguments to conclude that fairness could, in some cases, require either procedural protection of a strict standard or something more. (23) Further such cases arose after Preston and some even relied on the connection established in Preston between unfairness and abuse of power, but none elaborated on that connection in any significant way. (24) The point was decisively revisited by the Court of Appeal of England and Wales in Coughlan, (25) where it was held that there can be situations in which expectations generated by promises or representations made by public authorities must be fulfilled. The substantive legitimate expectation doctrine was recognised in the form foreshadowed in Preston--substantive unfairness as a form of abuse of power--which marked a significant departure from the procedural legitimate expectation doctrine.
The circumstances of the Coughlan case were as follows. In 1971, Ms Coughlan was badly injured in a car accident. She was hospitalised in New Court Hospital from 1971 to 1993, when she and other residents of the hospital were persuaded by the health authority to move to Mardon House. Ms Coughlan was told that Mardon House would be her 'home for life', (26) but in 1998 the health authority decided to close Mardon House and relocate its residents. The health authority had regard to the undertaking it had given to Ms Coughlan and the others but concluded that better services could be provided to all concerned in other institutions. Ms Coughlan sought judicial review of this decision.
The Court of Appeal held that, having regard to the undertaking given in 1993 and Ms Coughlan's reliance upon it, the decision to close Mardon House was unfair and thus an abuse of power. The Court of Appeal reached this conclusion by use of a threefold approach to the promises, representations and legitimate expectations that could arise from government action. This taxonomy was not used to describe or explain the character of each expectation, but rather to distinguish the different questions that each sort of expectation might pose for the court. The first category was expectations for which the government would only be required to 'bear in mind its previous policy or other representation, giving it the weight it thinks right, but no more, before deciding whether to change course.' (27) The court would apply the Wednesbury standard of unreasonableness to these expectations, (28) and would only overturn a decision if satisfied that it was entirely irrational or unreasonable. The second category of expectations was those in which a government's 'promise or practice induces a legitimate expectation of, for example, being consulted before a particular decision is taken.' (29) In these instances, the court would require consultation with a person affected in accordance with the expectation, after which the expectation could be disregarded if there were appropriate reasons to do so and if that decision was within power.
These categories are not controversial. In the first category, the court is required to apply the various grounds of review that could be encompassed under the rubric of rationality. In the second category, the same principles would apply but with the added requirement to observe the requirements of procedural fairness as determined by the circumstances of the case at hand. (30) The standard of review would usually be stricter in the second category because the requirements of procedural fairness would inevitably dictate closer attention to the circumstances and expectations of the person affected. But both categories provide little more than a convenient label for the traditional procedural legitimate expectation, and point to the different ways in which a court can examine the process of decision-making. Both categories also presume that the court will apply conventional grounds of review in any application for judicial review.
But the third category of expectation identified by the Court of Appeal was quite different. According to the Court, the operation of this third form of expectation can be described thus:
Where the court considers that a lawful promise or practice has induced a legitimate expectation of a benefit which is substantive, not simply procedural ... the court will in a proper case decide whether to frustrate the expectation is so unfair that to take a new and different course will amount to an abuse of power. Here, once the legitimacy of the expectation is established, the court will have the task of weighing the requirements of fairness against any overriding interest relied upon for the change of policy. (31)
The Court of Appeal left no doubt that an expectation falling within this last category could be recognised in judicial review. (32) More particularly, when a public official had created an expectation of a substantive benefit and then acted contrary to that expectation, the court could find that conduct to be an abuse of power and, therefore, unlawful. In a superficial sense, this reasoning breaks no new ground in judicial review because it suggests that the court simply determines the validity of an administrative decision by reference to a ground of judicial review (abuse of power). The significance lay in the way that this ground was applied. The Court of Appeal accepted that the lawfulness of any attempt to renege on a promise, or change the policy upon which an expectation was based, would depend on whether the court was satisfied that there was an 'overriding' interest or reason to do so. (33) The Court made clear that this balancing of individual and wider public interests, which would determine whether the public could override the personal, would take account of the fairness of any outcome. (34) According to this view, attention is directed to an issue previously beyond the scope of judicial review: the fairness or merits of the ultimate decision.
A key criticism of this approach is that the Court of Appeal provided no guidance on how or when an exercise of power may become an 'abuse'. The Court of Appeal simply asserted that it was the role of the Court to determine whether conduct amounting to an abuse of power existed and 'for the court to say whether the consequent frustration of the individual's expectation is so unfair as to be a misuse of ... power.' (35) Within this conception of the Court's role in detecting an abuse of power, the only clear touchstone appears to be that the decision is one that the Court does not think should stand. On this view, review on the ground of substantive unfairness amounting to an abuse of power contains no discernible legal principle.
The reasoning of the Court of Appeal might also be criticised for usurping or infringing upon the role of the executive by drawing a court too close to the merits of administrative decision-making. The Court of Appeal was clearly mindful of this issue when it accepted that governments could, in some circumstances, change or resile from statements or policies, though it maintained that any such action would be subject to review for abuse of power. According to the Court of Appeal, the freedom granted to the executive within the broad limits of abuse of power 'recognises the primacy of the public authority both in administration and in policy development but it insists, where these functions come into tension, upon the adjudicative role of the court to ensure fairness to the individual.' (36)
The balance that this passage appears to strike is arguably an illusion. The freedom that the Court of Appeal seemed willing to grant to executive action was significantly undercut by its emphatic assertion that it was for a court, not the executive government, to determine whether conduct by the executive had given rise to an abuse of power and whether there was a sufficient countervailing public interest to allow the decision to stand. The assumption by the Court of Appeal of the role of balancing or assessing questions of public interest in administrative decision-making is apt to lead the judiciary deep into the territory of the executive arm of government.
Mark Aronson, Bruce Dyer and Matthew Groves identify a common thread between the apparent absence of principle in Coughlan and the potential of the case to draw courts towards merits review. They conclude that Coughlan 'maximised judicial discretion at the cost of legal certainty.' (37) They suggest that the problems arising from Coughlan and its progeny
are partly semantic, but largely much more profound.... The vast bulk of judicial review applicants want substantive outcomes, not procedural outcomes, and the courts have traditionally refused them this. That is the province of merits review. (38)
But the theoretical divide between judicial and merits review should not obscure the practical effect judicial review may have. Judicial review clearly has the potential to affect the ultimate or substantive outcome of administrative decision-making. (39) The balancing exercise adopted in Coughlan was radical because it drew the Court directly towards the final stage of decision-making.
A final point worth noting about Coughlan was the obvious tension that arose when the Court of Appeal attempted to simultaneously recognise the controversial nature of its reasoning while also leaving the way open for the expansion and refinement of the substantive legitimate expectation doctrine. The Court of Appeal sought to minimise the possible controversy of its reasoning by suggesting that the recognition of substantive legitimate expectations was not a large doctrinal step because the wider concept of abuse of power in which it was based had become well-settled with cases such as Preston. (40) At the same time, however, the Court of Appeal acknowledged that the evolution of the legitimate expectation doctrine, whether substantive or procedural, might help to clarify the very concept of abuse of power from which it was drawn. The Court of Appeal explained that the
[l]egitimate expectation may play different parts in different aspects of public law. The limits to its role have yet to be finally determined by the courts. Its application is still being developed on a case by case basis. Even where it reflects procedural expectations, for example, concerning consultation, it may be affected by an overriding public interest. It may operate as an aspect of good administration, qualifying the intrinsic rationality of policy, choices. And without injury to the Wednesbury doctrine it may furnish a proper basis for the application of the now established concept of abuse of power. (41)
This passage invites several comments. First, the Court envisaged that the substantive legitimate expectation doctrine could expand but hesitated to predict the possible direction of that growth. It could even be argued that the suggestion by the Court that the substantive legitimate expectation doctrine might expand on a case-by-case basis anticipated that at least some of that expansion would occur on a pragmatic rather than principled basis. A second and logically related question is exactly which doctrine might evolve--the substantive legitimate expectation doctrine or the abuse of power doctrine? The passage quoted suggests that the former might provide coherence to the latter. But how can the substantive legitimate expectation doctrine be drawn out of the abuse of power doctrine and then advanced as a basis for the very doctrine from which it was drawn? This...
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