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are reasonably practicable to ensure that the parties to the proceedings before it
˜understand the nature of the assertions made in the proceedings and the legal
implications of those assertions™.84 The extent of this obligation has not yet been
tested.
While many adjudicative tribunals have the power to undertake their own
investigations and to require the provision of information, the courts have been
276 AUSTRALIAN ADMINISTRATIVE LAW


reluctant to impose on such tribunals a duty to inquire further than the material
provided by the applicant. As Edmonds J commented in SZEGT v Minister for
Immigration and Multicultural and Indigenous Affairs,85 procedural fairness did
not require the RRT ˜to tell the appellant that the material he had put forward was
not sufficient and invite him to improve upon it™, nor did it require the Tribunal ˜to
take upon itself the role of acquiring further information to bolster the appellant™s
case™.86
The comment in VEAL noted above, that ˜the Tribunal was bound to make its
own inquiries and form its own views upon the claim which the appellant made™, is
the strongest statement that there may be, at least in some circumstances, an obli-
gation to obtain additional material. The extent of such an obligation was at issue
in Applicant M164/202 v Minister for Immigration and Multicultural Affairs.87 The
RRT had stated that the applicants™ claims lacked credibility, and that a number
of documents on which they relied could be disregarded, describing them as
contrived and self-serving. Those documents included purported extracts from
newspapers, from police station records, and letters. The majority (Lee and Tam-
berlin JJ) considered that the authenticity of the documents could have been
ascertained without difficulty, by requesting the Department to investigate. Lee J
noted that where the need for further inquiry is ˜obvious™, and there is no imped-
iment to the conduct of such an inquiry, the failure to exercise a power to inquire
may point to a denial of procedural fairness.88 Dowsett J dissented, finding that
the documents were not of such significance as to lead the tribunal to conduct its
own inquiries.89 For Dowsett J, the issue was whether there was any error in the
unwillingness of the tribunal to act upon the evidence of the applicants. There is
clearly further room to explore the extent to which VEAL imposes a positive obli-
gation on administrative decision makers who have the power to obtain further
information in addition to any provided by the person affected by their decision,
to exercise that power.
As noted above, it was stated in Alphaone90 that ˜adverse material™ from other
sources which is before the decision maker must be put to the person affected for
comment or rebuttal. Not all such material must be put, however, and Brennan J in
Kioa limited the requirement to material that is ˜credible, relevant and significant
to the decision to be made™.91 The judgment as to whether particular information
is ˜credible, relevant and significant™ must initially be made by the decision maker,
but this is subject to review by the courts. In Kioa Brennan J addressed the issue
of whether a decision maker could reach a decision without reference to such
material, and commented that such information creates a real risk of prejudice,
even if subconscious. This risk was at the heart of the High Court decision in VEAL.
In that case, the RRT had decided not to put the contents of an unsolicited (but
not anonymous) letter to an applicant, and noted in its decision that it had placed
no weight on the allegations made in the letter. The High Court noted that the
principles of procedural fairness in administrative decision-making focus upon
procedures rather than outcomes, and thus govern what a decision maker must
do in the course of deciding how the particular power given to the decision maker
277
PROCEDURAL FAIRNESS


is to be exercised. The decision maker could not dismiss information from further
consideration unless the information is ˜evidently not credible, not relevant, or of
little or no significance to the decision that is to be made™.92
The hearing rule requires that a person affected has an opportunity to put
information and submissions to the decision maker in support of an outcome
that supports his or her interests. The procedural focus of the principles of pro-
cedural fairness would suggest that they should have little to say about how the
decision maker considers the material put by the person affected. However, in
NAIS v Minister for Immigration and Multicultural and Indigenous Affairs93 the
High Court addressed this issue, in the context of an inordinate delay between
the oral hearing and the delivery of the decision. Callinan and Heydon JJ noted
that unfairness can spring not only from a denial of an opportunity to present
a case, but also from denial of an opportunity to consider it.94 Here, the RRT
had disabled itself from giving consideration to the presentation of the appli-
cant™s case, by permitting so much time to pass that it could no longer assess the
evidence offered.
Procedural fairness may also require a decision maker to respond to ˜a substan-
tial, clearly articulated argument relying upon established facts™. An illustration
of this proposition is provided by the decision of the High Court in Dranichnikov
v Minister for Immigration and Multicultural Affairs; Re Minister for Immigration
and Multicultural Affairs.95 The RRT had considered, and rejected, Dranichnikov™s
claimed fear of persecution in Russia based on his membership of a ˜particular
social group™, namely, businessmen in Russia. The majority of the High Court
held that Dranichnikov had in fact put his claim on the basis of membership of
a smaller group, namely business people who had protested publicly about state
sanctioned corruption, and that in failing to respond to that claim, the RRT had
denied him procedural fairness. As Kirby J noted, however, the tribunal™s gen-
erally inquisitorial procedure did not mean that a party before it could simply
present the facts and leave it to the Tribunal ˜to search out, and find, any available
basis™ for the applicant™s claim.96


Effect of breach

It has been clear at least since the High Court decision in Re Refugee Review
Tribunal; ex parte Aala97 that a breach of the requirements of procedural fair-
ness is a jurisdictional error. The courts take a dim view of legislative attempts
to protect decisions which can be so characterised from review.98 It is arguable,
however, that the courts are themselves limiting the consequences of having
taken the step of identifying a breach of the requirements of procedural fair-
ness. Procedural fairness is ultimately about opportunity: the opportunity to
deal with adverse material, and the opportunity to put forward the best possi-
ble case. Much of the discussion of the High Court in Re Minister for Immigra-
tion and Multicultural Affairs; ex parte Lam99 focussed on whether the alleged
278 AUSTRALIAN ADMINISTRATIVE LAW


breach of procedural fairness had deprived the applicant of possibility of differ-
ent outcome,100 or, as Gleeson CJ put it, whether ˜practical injustice™ had been
shown.
The suggestion of Gleeson CJ does not sit easily with many earlier judicial
comments that suggest that the effect of a breach of the hearing rule is irrelevant.
In Kioa, for example, the majority judges noted that it was unlikely that the
decision to deport would have been different had Mr Kioa had the opportunity to
comment on the adverse allegations, and Wilson J commented that the setting
aside of the decision represented ˜a very slender technical victory™.101 But this case
is one of many which reinforce the primacy of adherence to the requirements of
procedural fairness. Deane J commented:102

. . . the mere circumstance that there is no apparent likelihood that the person directly
affected could successfully oppose the making of a deportation order neither excludes
nor renders otiose the obligation of the administrative decision maker to observe the
requirements of procedural fairness. Indeed, the requirements of procedural fairness
may be of added importance in such a case in that they ensure an opportunity of raising
for consideration matters which are not already obvious.

Of course, there is a difference between insisting on adherence to the require-
ments of procedural fairness, and considering the consequences of an acknowl-
edged, or found, breach of those requirements.
Aala has been read as authority for the proposition that if a breach (other than
a trivial breach) of the hearing rule is established, the person affected is ordinar-
ily entitled to the grant of relief by the court unless the court is satisfied that the
breach could have had no bearing on the outcome.103 There is no general obliga-
tion on an applicant to show how an alleged breach of procedural fairness affected
the decision,104 and the courts are extremely reluctant to conclude that the
breach did not affect the outcome. In NAIS, for example, Callinan and Heydon JJ
held that it could be inferred from the tribunal™s delay that, in the absence of
contrary evidence, the tribunal had deprived itself of the capacity to properly
consider the applicants™ case “ and there was no contrary evidence. There may
be limits, however, as indicated in Lam where the applicant was unable to show
that he had done, or omitted to do, anything in reliance on the representation
made by the delegate.
It is not entirely clear whether the consideration of ˜practical injustice™ is prop-
erly a factor in determining whether there has been a breach of the requirements
of procedural fairness, or whether it is a matter for consideration in the exercise
of the discretion to grant or withhold a remedy. It probably makes little differ-
ence, other than in limiting appellate scrutiny of judicial review. The danger in
either approach is that consideration of the possibility of a different outcome
may allow the court to get too close to the merits of the decision under review.
The comments of Gaudron and Gummow JJ in Aala105 in this regard are signifi-
cant. Their Honours explained that: ˜The concern is with the observance of fair
279
PROCEDURAL FAIRNESS


decision-making procedures rather than with the character of the decision which
emerges from those procedures.™

The hearing rule has been historically focussed on the procedure adopted by an
administrative decision maker, rather than the substantive outcome. There are
indications, however, that at times the courts may stray towards some consider-
ation of the outcome of a case. The recent discussions of the consequences of a
breach of the hearing rule, in particular Gleeson CJ™s focus in Lam on the avoid-
ance of ˜practical injustice™, and secondly, the insistence in NAIS on an entitlement
to an opportunity to properly consider material put by a person affected, reflect
this risk.
The adversarial assumptions behind the discussion of the requirements of the
hearing appear to have been weakening, possibly because of the dominance of
migration cases in the courts, in particular applications for review of adverse
outcomes in the migration tribunals. How far this can be taken in other contexts
is an open question.
Articulation of the principles of procedural fairness through the judicial review
pathway is of necessity an ex post facto process, where, with the benefit of hind-
sight a court may point to an error made by the decision maker. The consequence
of this is, however, that there is little in the way of guidance to decision makers,
who should be assumed to be willing to comply with the demands of procedural
fairness. Procedural fairness is, as Gleeson CJ put it in Lam, focussed on ˜fair-
ness™ as a practical rather than abstract concept.106 It is, however, sometimes
difficult to identify what the practical requirements are. In this respect, little has
changed since Brennan J™s observation about the imprecision, and ex post facto
declaration, of the requirements of procedural fairness.
18
The doctrine of substantive
unfairness and the review of
substantive legitimate expectations
Cameron Stewart




Introduction

There are many roads to justice and administrative law is one of them. Modern
administrative law strives to protect the core values of the rule of law: certainty,
generality and equality.1 But it is a mistake to believe that administrative law can
provide the route to a just outcome in every case of unfair administration. There
are some journeys to justice that must be travelled by other paths than through
the legal system. The legitimacy of judicial review rests firmly on the notion that
judges must be occupied with legality, and that they should be wary of becoming
involved in the politics of policy making, which is the role of the executive. It
is a fatal mistake for lawyers to believe that they alone can achieve justice, and
that judicial review can and should be applied to all decisions in order to achieve
justice. Lawyers who believe this risk undermining the traditional role of judges,
damaging the legitimacy of the judicial branch of government and threatening
the very fabric of the rule of law.
Against this background, this chapter examines the doctrine of substantive
unfairness, which is also referred to as the doctrine of substantive legitimate
expectations. It is the most recently recognised head of judicial review. After a long
and difficult labour it was finally born of the Court of Appeal of England and Wales
in R v North and East Devon Health Authority; Ex parte Coughlan (˜Coughlan™ ).2 This
case recognised that the courts could not only review administrative decisions
that were procedurally unfair, but that the courts could also review a decision on
the grounds that the decision was substantively unfair in its outcome. As a result
of this finding the courts in the United Kingdom are now free to examine not only


280
281
SUBSTANTIVE UNFAIRNESS


the legality of a decision but also its merits, when the decision is considered to
be so unfair as to amount to an abuse of power.
This chapter maps out the limits of this form of review. It will begin by exam-
ining the history of attempts to have review of decisions which disappoint sub-
stantive legitimate expectations. It will then describe how these attempts were
consolidated in Coughlan and in later cases. The chapter will then assess whether
these types of review would be acceptable in Australian jurisdictions. The chapter
will argue against the adoption of the doctrine of substantive unfairness because
of the potential danger for this ground of review to improperly ask judges to
perform the administrative functions of the executive.



Separation of powers, procedural unfairness and
substantive unfairness

In modern administrative law there are two fundamental touchstones of judicial
review. The first of these is abuse of power (ultra vires), in both narrow and
broad (procedural) forms. Irrationality and unreasonableness are considered
in this schema to be abuses of power. Under the Wednesbury unreasonableness
principle3 a decision can be reviewed if it is so irrational or unreasonable that no
reasonable body could have come to that decision.
The second is the concept of procedural fairness, which protects legitimate
expectations through rules of natural justice.4 Procedural fairness must be accor-
ded when a person has a legitimate expectation that a decision will be made
after an appropriate hearing of the person™s views. Alternatively, procedural fair-
ness is due where a person enjoys a substantive benefit and expects that it will
continue. In such circumstances, if a decision is made to take away the benefit,
the decision maker is bound to hear the side of the person enjoying the benefit
before they make the decision. In Kioa v West,5 Gibbs CJ stated that procedural
fairness requires that:

when an order is to be made which will deprive a person of some right or interest or
legitimate expectation of a benefit, he is entitled to know the case sought to be made
against him and to be given an opportunity of replying to it.6

This traditional account of the role of administrative law shows that the law is
primarily concerned with the process of decision-making but not the outcome. One
of the primary reasons for this is to maintain a division between the policy-making
function of the executive and the legality-checking role of the judiciary. While
it is difficult to draw a completely bright line between these two functions, the
traditional approach has attempted to abide by the legality/merits distinction
so as to maintain the separation of powers. As stated by Spigelman CJ extra-
judicially:
282 AUSTRALIAN ADMINISTRATIVE LAW


The distinction between judicial review and merits review is a fundamental prin-
ciple of Australian administrative law. Although, as has sometimes been said, the
legality/merits distinction is not as clear as is often assumed, nevertheless the dis-
tinction is valid.
...
Judicial review is a manifestation of the integrity branch of government. Merits review
is a manifestation of the executive branch. The former seeks to ensure that powers are
exercised for the purpose, broadly understood, for which they were conferred and in
the manner in which they were intended to be exercised. Merits review, in the common
Australian formulation, is concerned to ensure that the ˜correct and preferable™ decision
is made in a particular case and that the fairness, consistency and quality of decision-
making is maintained. Such a function is part of the executive branch.7

The doctrine of substantive unfairness straddles both abuse of power and pro-
cedural fairness and challenges the traditional organisation of judicial review
principles and the legality/merits distinction. It is invoked in situations where a
person has an expectation that a benefit will be conferred or continued by gov-
ernment because the government has made a representation that the benefit will
be conferred or continued. Professor Craig has identified four types of situation
where this might arise:

1. A general norm of policy choice, which an individual has relied on, has been
replaced by a different policy choice;
2. A general norm or policy choice has been departed from in the circumstances in a
particular case;
3. There has been an individual representation relied on by a person, which the
administration seeks to resile from in the light of a shift in general policy;
4. There has been an individualised representation that has been relied on. The
administrative body then changes its mind and makes an individualised decision
that is inconsistent with the original representation.8

In these situations, the doctrine of substantive unfairness is employed to check
whether the impact of the decision is so substantively unfair that it amounts to
an abuse of power. It shifts the focus from the concern with legitimate procedural
expectations, and says that the law will also enforce legitimate substantial
expectations.
The ultimate justification for recognising unfairness as a ground of review
appears to be based on the principle of legal certainty, one of the three main con-
stituent elements of the rule of law concept: certainty, generality and equality.9
The principle of legal certainty requires that all law should be prospective, open,
clear and stable so as to help the subject be guided in ways to obey the law.10
But in inviting the judges to weigh up policy considerations, the doctrine of
substantive legitimate expectations necessarily involves the judge in engaging in
a form of policy formulation, which invariably results in unpredictable behaviour
and results. As such, substantive unfairness has a real potential to undermine the
judicial role and, through the undermining of legitimacy, damage the rule of law.
This will be examined further below.
283
SUBSTANTIVE UNFAIRNESS


Substantive unfairness in the United Kingdom
before Coughlan

It is possible to view Coughlan as the result of a long line of decisions that
attempted to make a shift from procedural to substantive legitimate expecta-
tions. The shift began with Kruse v Johnson11 where Lord Russell of Killowen
stated that courts would review those decisions of a local council which were
manifestly unjust, partial, made in bad faith or so gratuitous and oppressive that
no reasonable person could think them justified.12
Later in R v Liverpool Corporation; Ex parte Liverpool Taxi Fleet Operators™
Association13 a council gave an undertaking not to increase the amount of taxi
licences without first allowing for consultation with the local taxi association. An
increase in licences occurred in breach of the undertaking. The Court of Appeal
described the duty of the council as one to act fairly, in accordance with statutory
duties and the public interest. Lord Denning MR pronounced that the council:

. . . ought not to depart from [the undertaking] except after the most serious consid-
eration and hearing what the other party has to say; and then only if they are satisfied
that the overriding public interest requires it. The public interest may be better served
by honouring their undertaking than by breaking it. This is just such a case.14

Liverpool Taxis was applied in Attorney General of Hong Kong v Ng Yuen Shiu15
where the Privy Council quashed a decision to deport an illegal immigrant. The
government of Hong Kong had published a general undertaking that it would not
deport such immigrants without first affording them an interview. In reliance
upon the undertaking the immigrant had come forward and was then deported
without any consideration of the merits of his case. The decision was quashed on
the basis that the government was bound by its undertakings as to the procedure
it would follow. Once again this was said to be on the basis that the undertak-
ing did not conflict with statutory duties. While some consider the decision to
merely reflect the requirements of procedural fairness, the decision meant that
there was a substantive right granted by the government from which it could not
resile.
While both these cases concerned legitimate expectations of continuing sub-
stantive rights, in Laker Airways Ltd v Department of Trade16 a connection was
established between the frustration of a legitimate expectation and an abuse
of power. In this case an airline attempted to estop the government from with-
drawing its licence after the government had represented that the licence would
continue. The government sought to cancel the licence by use of prerogative
power rather than by going through the statutory mechanism. This effectively
denied the airline the right to a hearing. While the decision recognised that an
estoppel could not hinder the formulation of policy it found that the government
had used its power by ˜the back door™17 to frustrate a reasonable reliance by the
airline that it would continue to enjoy its licence. Hence the decision to use the
284 AUSTRALIAN ADMINISTRATIVE LAW


prerogative was an abuse of power, given the legitimate expectations generated
by the statute.
These findings were repeated in HTV v Price Commission18 where there was an
inconsistent calculation of profit margins that affected a company™s entitlement
to price increases. As well as adopting the notion that disappointed legitimate
expectations could amount to abuse of power, Lord Denning MR added a proviso
that there must be no overriding public interest in acting unjustly:

It is not permissible for the [the Price Commission] to depart from their previous
interpretation and application where it would not be fair to do so . . . It cannot be
estopped from doing its public duty. But that is subject to the qualification that it must
not misuse its powers and it is a misuse of power for it to act unfairly or unjustly towards
a private citizen when there is no overriding public interest to warrant it.19

Similar reasons appeared in Ex parte Khan20 where the Secretary of State had
refused an entry clearance for a child to be allowed into the United Kingdom for
the purpose of adoption. The Secretary had made the decision based on grounds
which were not mentioned in the published policy regarding such adoptions.
Parker LJ said:

I have no doubt that the Home Office letter afforded the applicant a reasonable expec-
tation that the procedures it set out, which were just as certain in their terms as the
question and answer in Mr Ng™s case, would be followed . . . The Secretary of State is,
of course, at liberty to change the policy but in my view, vis-`-vis the recipient of such
a
a letter, a new policy can only be implemented after such recipient has been given a
full and serious consideration whether there is some overriding public interest which
justifies a departure from the procedures stated in the letter.21

One of the major decisions to establish a connection between legitimate expec-
tations, unfairness and abuse of power is R v IRC; Ex parte Preston.22 In this case it
was alleged that the Inland Revenue Commissioners had gone back on their side
of a bargain not to re-investigate a taxpayer. The House of Lords recognised that,
if such claims were made out, the unfairness of the exercise of a power would
amount to an abuse of power.23 In any event the allegation was not made out on
the facts as the taxpayer had not complied with his side of the agreement and was
not able to prove that the Commissioners had given an undertaking of the sort
alleged. However, as was seen above, the case is the primary authority for the
decision in Coughlan to merge unfairness and abuse of power. Lord Templeman
stated:

In principle I see no reason why the taxpayer should not be entitled to judicial review
of a decision taken by the commissioners if that decision is unfair to the taxpayer
because the conduct of the commissioners is equivalent to a breach of contract or a
breach of a representation. Such a decision falls within the ambit of an abuse of power
for which in the present case judicial review is the sole remedy and an appropriate
remedy . . . I consider that the taxpayer is entitled to relief by way of judicial review
for ˜unfairness™ amounting to abuse of power if the commissioners have been guilty of
conduct equivalent to a breach of contract or breach of representation on their part.24
285
SUBSTANTIVE UNFAIRNESS


Preston was built upon R v Board of Inland Revenue, ex parte MFK Underwriting
Agencies Ltd,25 where Bingham LJ, while finding for the tax authorities, stated
that clear and unequivocal representations could be relied upon. This was further
discussed in R v Inland Revenue Commissioners, ex parte Unilever plc,26 where the
Revenue Commissioners refused to exercise a discretion in favour of the taxpayer
to allow the submission of claims beyond the time limit (a discretion that had
been exercised for the previous 25 years). Sir Thomas Bingham MR stated that
the rejection of Unilever™s claims ˜in reliance on the time limit, without clear and
general advance notice, is so unfair as to amount to an abuse of power™. Simon
Brown LJ stated:

Unfairness amounting to an abuse of power as envisaged in Preston and the other
Revenue cases is unlawful not because it involves conduct such as would offend some
equivalent private law principle, not principally indeed because it breaches a legitimate
expectation that some different substantive decision will be taken, but rather because
either it is illogical or immoral or both for a public authority to act with conspicuous
unfairness and in that sense abuse its power. As Lord Donaldson MR said in R v ITC, ex
parte TSW: ˜The test in public law is fairness, not an adaptation of the law of contract
or estoppel™.27

Finally, in R v Ministry of Agriculture, Fisheries and Food; ex parte Hamble
(Offshore Fisheries Ltd),28 a case concerning a change in policy affecting the
purchase of fishing licences, Sedley J (as he was then) proposed that the role of
the court is to balance the unfairness of the decision against the public interest in
upholding the administrator™s decision, to determine whether the administrator™s
decision should stand.
After Hamble Fisheries it appeared the emerging doctrine of substantive unfair-
ness would not survive. In R v Secretary for the Home Department; Ex parte
Hargreaves29 the Court of Appeal criticised the decision of Sedley J in Hamble
Fisheries even going so far as to label it a ˜heresy™.30 The notion of review on sub-
stantive fairness grounds was rejected outright. The case concerned a claim by
prisoners that their expectations of home leave and early release were not ful-
filled after a change of policy. It was decided that the only legitimate expectation
that the prisoners had was that their application would be considered in the light
of existing policy. All three judges dispelled any notion of there being review on
substantive fairness grounds and found that the court could only be involved in
reviewing a policy change when it was Wednesbury unreasonable.


Coughlan and the formulation of
substantive unfairness31

It was not long before Hargreaves itself became under fire. Coughlan (a decision of
the Court of Appeal which had a much different coram from that in Hargreaves)
not only accepted the doctrine of substantive unfairness but cemented it into
British public law.
286 AUSTRALIAN ADMINISTRATIVE LAW


The facts of Coughlan were perfect for those who advocated the doctrine
of substantive unfairness: a person whose case evoked sympathy and a clearly
broken promise with devastating effects. Pamela Coughlan brought proceed-
ings for review of the decision of the North and East Devon Health authority
(˜the authority™) to close the facility in which she resided (˜Mardon House™). Miss
Coughlan was tetraplegic, doubly incontinent and required nursing aid in respect
of regular catheterisation and with breathing difficulties. She had been moved to
Mardon House, from an earlier home, on the promise that Mardon House would
be her home for life (or until she wished for alternative accommodation).
The decision to close Mardon House was based on a new care policy that
preferred to move patients away from institutional settings and into community
settings. Importantly, the effect of the policy change was to move patients away
from National Health Service (NHS) services (which are free) and towards local
authorities (who charge for care services, subject to means testing).
In making its decision the authority did consider the promise made to
Ms Coughlan (and others) that Mardon House would be their home for life. A con-
sultation paper stated that these promises needed to be weighed in the decision-
making process against the authorities™ other clinical and financial responsi-
bilities. After considering the recommendations of the consultation paper, the
authority unanimously decided to close and sell the facility and move the patients
into community care settings.
Coughlan challenged the decision on a number of grounds. The most impor-
tant one for present purposes was that the authority had not properly accounted
for the effect of its broken promise upon her when they made the decision to
close Mardon House. It was argued that the authority had mistakenly treated its
obligations to her as being to provide care generally rather than as an obligation
to provide care at Mardon House. As such the decision ignored the legitimate
expectation of Miss Coughlan.
The Court of Appeal accepted this argument. The Court decided that, while the
decision itself was rational and logical, to remove Miss Coughlan was substantively
unfair and hence illegal. Following Preston, the Court found that abuse of power
included not only the usual Wednesbury claim, claims of bad faith, improper
purpose and irrelevant considerations, but also situations where an authority,
by an otherwise lawful decision, reneges on a promise to a limited number of
individuals.32 For example the Court stated:

Abuses of power take many forms. One, not considered in the Wednesbury case, was
the use of a power for a collateral purpose. Another, as the cases like Preston now make
clear, is reneging without adequate justification, by an otherwise lawful decision, on a
lawful promise or practice adopted towards a limited number of individuals. There is
no suggestion in Preston or elsewhere that the final arbiter of justification, rationality
apart, is the decision maker rather than the court.33

On this basis the Court of Appeal was ready to accept judicial review of the
fairness of an outcome.34 The Court then proceeded to analyse the fairness of
287
SUBSTANTIVE UNFAIRNESS


the outcome of the decision to close Mardon House. The test was formulated as
whether the need of the health authority to move Ms Coughlan to a local facility
was of greater weight than its promise that Mardon House would be her home for
life.35 In that sense the review of the fairness of the outcome was determined by
weighing the public interest in closing Mardon House against the private interest
of Ms Coughlan in staying.
Coughlan™s dismissal of the findings in Hargreaves and the acceptance of the
Laker and Preston lines of authority have now established substantive unfairness
as a form of abuse of power, generated by a disappointed legitimate expecta-
tion. After Coughlan it was possible to break down the doctrine of substantive
unfairness into the following elements:

1. A representation has been made by a decision maker concerning the conferral,
or continuance, of a substantive right.36 Alternatively, the representation may be
about the manner of exercise of a power which would affect substantive rights.37
The representation may also have been generated by prior conduct (such as con-
tinued practice or published policy) rather than a representation;38 the represen-
tation was made to an individual or a small group of people.39 If the statement was
published, the benefit can be claimed by the class of people specifically affected
by the statement;40
2. The representation was made by the decision maker for its own purposes;41
3. The representation was made lawfully by a person with actual or apparent author-
ity to make it;42
4. It was relied upon by the claimant to his or her detriment;43
5. By honouring the promise the decision maker would not be acting outside of its
power or be acting inconsistently with its statutory duties;44
6. A decision to dishonour the promise was equivalent to a breach of contract or
estoppel in private law;45
7. There was no compelling public interest in the promise being dishonoured.46
Among the factors to be considered is whether the impact of honouring the promise
would merely be financial.47



The use of the doctrine post-Coughlan
Coughlan had an immediate effect on the limits of judicial review. Its relevance
quickly spread beyond those situations involving the closure of health services
and a large body of case law now exists where the doctrine of substantive unfair-
ness has been brought to bear.


(i) Decisions to close, or not provide, hospital and support services
Coughlan was of obvious relevance to decisions to close hospital and support
services. In R v Merton, Sutton and Wandsworth Health Authority; ex parte Perry48
a decision to close a care home was overturned on the basis that the authority had
failed to have regard to the promise which it had made not to close it. In contrast,
in R (Collins) v Lincolnshire Health Authority49 a decision to deny a home for life
288 AUSTRALIAN ADMINISTRATIVE LAW


to a disabled person was not overturned because the decision was motivated by
a desire to serve the best interests of the disabled patient by having her live in a
community setting. There were no medical or social reasons for her living in the
home and it was the assessment of her carers that she would benefit substantially
from the move.
Claimants have also struggled with the threshold issue of whether there was a
promise actually made to provide a home for life. In R (Core) v Brent, Kensington
and Chelsea and Westminster Mental Health NHS Trust50 there was no promise to
provide permanent accommodation and the residence was only ever intended to
be used on an interim basis. In R (on the application of C, M, P and HM) v Brent,
Kensington and Chelsea and Westminster Mental Health NHS Trust51 the evidence
of a promise was found to be unconvincing and unsatisfactory so that no promise
could be established.
Issues of detriment were discussed in the case of Bibi v Newham LBC.52 In
this case the housing authority had promised to provide permanent housing to
two families within 18 months, under the authority™s mistaken belief that it was
legally bound to do so. The authority later resiled from its promise and considered
that the promise was not a relevant consideration in its assessment of whether to
provide permanent accommodation. The families sought to enforce the promise
using the doctrine of substantive unfairness. One of the arguments raised against
the families was that they had not detrimentally relied on the promise of the
authority and had not changed their position in response to it.
Schiemann LJ (giving the court™s judgment) stated that detrimental reliance,
while relevant, was not a necessary component of the doctrine:53

In our judgment the significance of reliance and of consequent detriment is factual, not
legal . . . In a strong case, no doubt, there will be both reliance and detriment; but it
does not follow that reliance (that is, credence) without measurable detriment cannot
render it unfair to thwart a legitimate expectation . . .
...
In our view these things matter in public law, even though they might not found an
estoppel or actionable misrepresentation in private law, because they go to fairness and
through fairness to possible abuse of power. To disregard the legitimate expectation
because no concrete detriment can be shown would be to place the weakest in society at
a particular disadvantage. It would mean that those who have a choice and the means
to exercise it in reliance on some official practice or promise would gain a legal toehold
inaccessible to those who, lacking any means of escape, are compelled simply to place
their trust in what has been represented to them.

He then found that the authority™s failure to consider the promise was an
abuse of power and he ordered that the decision of the authority be remade in
consideration of the promise.

(ii) Decisions to cease funding of assisted education places
Similar issues to those raised in the ˜home for life™ cases arise in cases where
promised education funding is withdrawn. In R v Secretary of State for Educa-
tion and Employment; ex parte Begbie54 the Blair-led opposition in the British
289
SUBSTANTIVE UNFAIRNESS


parliament had made an election promise that children already holding places
under a state-funded assisted places scheme would continue to receive support
in their education although there was some confusion as to whether this would
apply through primary and secondary school. Some weeks later, after the Blair
government was elected, it became clear that funding was to be only in relation
to primary school places. It was argued by Begbie™s parents that this was a broken
promise which was substantially unfair.
In finding against the parents Laws LJ recognised that ˜abuse of power has
become, or is fast becoming, the root concept which governs and conditions our
general principles of public law™.55 In summarising the types of decisions that are
affected by Coughlan he stated:

In some cases a change of tack by a public authority, though unfair from the appli-
cant™s stance, may involve questions of general policy affecting the public at large or
a significant section of it (including interests not represented before the court); here
the judges may well be in no position to adjudicate save at most on a bare Wednesbury
basis, without themselves donning the garb of the policy-maker which they cannot
wear.
In other cases the act or omission complained of may take place on a much smaller
stage, with far fewer players. Here, with respect, lies the importance of the fact in
Coughlan that few individuals were affected by the promise in question. The case™s
facts may be discrete and limited, having no implications for an innominate class of
persons. There may be no wide-ranging issues of general policy, or none with multi-
layered effects, upon whose merits the court is asked to embark. The court may be able
to envisage clearly and with sufficient certainty what the full consequences will be of
any order it makes. In such a case the court™s condemnation of what is done as an abuse
of power, justifiable (or rather, failing to be relieved of its character as abusive) only if
an overriding public interest is shown of which the court is the judge, offers no offence
to the claims of democratic power.
There will of course be a multitude of cases falling within these extremes, or sharing
the characteristics of one or other. The more the decision challenged lies in what may
inelegantly be called the macro-political field, the less intrusive will be the court™s
supervision. More than this: in that field, true abuse of power is less likely to be found,
since within it changes of policy, fuelled by broad conceptions of the public interest,
may more readily be accepted as taking precedence over the interests of groups which
enjoyed expectations generated by an earlier policy.56

After analysing the situation at hand, Laws LJ found that no abuse of power
had occurred. The primary reason was there was no real change of policy, just a
misrepresentation though incompetence, which was later corrected.
Both Peter Gibson LJ and Sedley LJ (in concurring with Laws LJ) agreed that
detrimental reliance was not a necessary condition but that it would be common in
most successful cases of disappointment of a substantive legitimate expectation.

(iii) Prisoners™ conditions and parole
Given the findings in Hargreaves and the way that decision was adversely affected
in Coughlan, it is not surprising that prisoners soon looked to Coughlan for
290 AUSTRALIAN ADMINISTRATIVE LAW


assistance in their claims. Myra Hindley, one of the infamous moors murderers
who was gaoled for life, sought to use Coughlan to argue that she had an expec-
tation of some date of release.57 The House of Lords found that she had never
been given any assurance about her tariff or told when she would be released, so
no legitimate expectation could arise.
Similar disappointment followed in R (Vary) v Secretary of State for the Home
Department58 where prisoners, whose security classification had been upgraded
by a change of policy (with the consequence that they were moved to a closed
prison under tighter security), sought to overturn the decision on the grounds of
a substantive legitimate expectation. The court found against the prisoners on
the grounds that there was no clear representation or promise made to them.
Secondly, the policy change was justified by the public interest of maintaining
public confidence in the prison system. The finding in Hargreaves that prisoners
only have limited legitimate expectations in relation to the effect of changes of
policy concerning early release was repeated.

(iv) The making of ex gratia payments
Decisions concerning the making of ex gratia payments by government has also
been attacked using Coughlan, albeit with little success. In R v Ministry of Defence,
Ex Parte Walker59 a sergeant in the British army argued that he should have been
paid an ex gratia payment for being in combat during his service for the UN in
Bosnia. He was among a group attacked in Bosnia and as a result he suffered an
amputation of his leg. He applied for compensation under a scheme for service
persons injured by crimes of violence when serving overseas. He was denied
compensation under the scheme on the basis that he was injured in a wartime
operation, and hence his injuries did not come under the scheme. The House of
Lords upheld the decision. No direct representation had been made to Sgt Walker
and the House found that he was entitled to have the policy in force at the
time of the incident applied to him and to be given the opportunity to make
representations that he was in the scheme and outside the exclusion. Both of
these requirements had been satisfied.
Similar problems arose in R (on the application of Mullen) v Secretary of State
For the Home Department.60 Mullen had been wrongfully imprisoned on a
charge of bomb-making. After his release he sought ex gratia compensation for
his imprisonment, but after considering his application the Secretary of State
refused to pay him. The House of Lords refused to find any abuse of power,
given that Mullen had been given an opportunity to voice his claim with the
Secretary.
In Association of British Civilian Internees Far East Region v Secretary of State for
Defence61 World War II internees of the Japanese also failed in their application for
review of a decision of the Secretary of State concerning ex gratia payment. The
Secretary had announced a scheme whereby internees would be paid £10 000 but
when the scheme was finalised the categories of claimant were much reduced by
a requirement the claimant be a British citizen. An association of internees sought
291
SUBSTANTIVE UNFAIRNESS


to review the decision on the grounds that the policy was substantively unfair.
The claim failed. There was no clear and unambiguous statement regarding who
would be eligible. The court also considered that the lack of detrimental reliance
was highly relevant to the issue of whether the policy was unfair. Another issue
considered was the large expenditure of the scheme. The court stated that: ˜It is
for the democratically elected government and not the courts to decide how
public funds should be spent and how scarce resources should be allocated
between competing claims.™62 This is an interesting counterpoint to Coughlan
where the fact that the implications were purely financial was a reason in favour
of review.

(v) Environmental law and planning decisions
Decisions by local councils and environmental authorities have also been
reviewed using the Coughlan test. In R v East Sussex County Council; Ex Parte
Reprotech (Pebsham) Ltd63 the House of Lords accepted that the doctrine may
apply to planning law. This case concerned a representation by a council plan-
ning officer that further planning approval was not needed for a waste processing
plant, a plant to be used to generate electricity. However, Lord Hoffmann (giv-
ing the judgment of the House) felt that the representation did not satisfy the
requirements for determination under the relevant Act, and hence could not
found a claim based on substantive unfairness. He explained:

There is of course an analogy between a private law estoppel and the public law concept
of a legitimate expectation created by a public authority, the denial of which may
amount to an abuse of power: see R v North and East Devon Health Authority, ex parte
Coughlan [2001] QB 213. But it is no more than an analogy because remedies against
public authorities also have to take into account the interests of the general public
which the authority exists to promote.64

The claimant™s arguments were stronger in the case of Rowland v the Environ-
mental Agency, although also doomed to fail.65 Here the claimant, Mrs Rowland,
was a land owner who enjoyed the private use of a stretch of the Thames River,
referred to as Hedsor Waters. The water course had been treated by the authori-
ties as private for over 150 years, but a ruling of the environmental agency placed
that private ownership in doubt. The claimant argued that she had a substan-
tive legitimate expectation that her rights to private use over the water course
would be continued. The Court of Appeal reiterated the requirement that the
representation made by the authority under the Coughlan ruling must be within
the authority™s power to make (intra vires). The evidence was accepted that the
power to grant private use and extinguish public navigation rights did not exist
in the authority or its forebears. As such the claim for substantive legitimate
expectation had to fail.
While concurring with this finding, May LJ gave an impassioned plea for
opening up the doctrine of substantive unfairness to include ultra vires repre-
sentations. He believed that the outcome for Mrs Rowland was unfair and that
292 AUSTRALIAN ADMINISTRATIVE LAW


the limitation of substantive unfairness to intra vires representations worked
hardship. May LJ reviewed the arguments of Professor Craig that in such cases
compensation might be payable to the claimant as a way of offsetting the hard-
ship. Nevertheless, May LJ felt such orders could not be made as they would
amount to judicial legislation.66

(vi) Immigration decisions
The doctrine of substantive legitimate expectation has also had a large impact
on the practice of immigration law. It was first mentioned by the House of Lords
in Secretary of State for the Home Department v Zeqiri.67 In this case an ethnically
Albanian Kosovar, Zeqiri, sought review of the decision of the Secretary to remove
him to Germany for consideration of his appeal for asylum. Zeqiri argued that
he had a legitimate expectation that he would not be sent to Germany for pro-
cessing, at least until the test case immigration appeal had been heard of another
Kosovar. The House rejected this argument, primarily on the basis that no repre-
sentation had been made that the Secretary would act in this way. Nevertheless,
Lord Hoffmann stated that representations may create obligations. The issues of
whether such obligations arise must be determined ˜in the context in which it is
made. The question is not whether it would have founded an estoppel in private
law but the broader question of whether . . . a public authority acting contrary
to the representation would be acting “with conspicuous unfairness” and in that
sense abusing its power™.68
Later in Secretary of State for the Home Department v R (on the application of
Rashid)69 the Court of Appeal employed this definition of ˜conspicuous unfair-
ness™ to overturn a decision not to grant asylum to an Iraqi Kurd, Rashid. Rashid™s
initial application for refugee status was not dealt with under the correct policy.
Had it been so dealt with he should have been granted asylum. When this error
was sought to be corrected, the policy had then changed, given that events had
progressed in Iraq. Again his application was refused.
Rashid argued that the decision was an abuse of power. The Court of Appeal
agreed. While there was no specific representation that he would be given asylum,
the court found that there was a legitimate expectation that the Secretary of State
would apply his asylum policy to Rashid™s claim. Pill LJ stated that it did not matter
whether the claimant knew of the exact policy or not. Dyson LJ agreed, finding
that there had been conspicuous unfairness due to the flagrant and prolonged
incompetence of the decision makers. Given no reason for why the Secretary
departed from the policy, there was no argument that there could be a public
interest which overrode the unfairness to Rashid.
A similar finding occurred in R (Mugisha) v Secretary of State for the Home
Department70 where an informal policy had been adopted to give Rwandan
nationals four years exceptional leave to remain even after they had failed to
successfully claim asylum. The claimant had not been given the benefit of this
policy, although the Secretary for a long time disputed the claimant™s national-
ity, and the claimant was himself rather non-compliant with the investigations.
293
SUBSTANTIVE UNFAIRNESS


Following Rashid, Smith J found that there was conspicuous unfairness in the
decision of the Secretary not to grant four years exceptional leave.
However not all changes of policy in the immigration context seem to have
generated findings of substantive unfairness. In Thomson and Ors, R (on the
application of ) v The Minister of State for Children,71 a case similar in some respects
to Ex parte Khan, a change to the overseas adoption policy was challenged as being
substantively unfair. The claim failed on the basis that none of the statements
relied on by the claimants amounted to a promise or commitment by the Secretary
of State that pending cases would continue to be processed under the published
procedures.
The final case for review is Abdi and Nadarajah v Secretary of State for the Home
Department.72 This case was a combined appeal of two decisions involving claims
for asylum. The relevant basis of appeal for this chapter™s purpose was that the
claimants believed that the Secretary had not applied a policy which allowed
claimants to stay if they had family residing in the United Kingdom. In the case
of Abdi this argument failed as the Secretary was able to show that the policy
did not apply to her as a claimant. However, in Nadarajah the Court of Appeal
took a different tack and in doing so restated some fundamental principles of
substantive legitimate expectation.
Nadarajah™s argument was that his claim for asylum was made at a time when
his wife also had made a claim. Under the family policy at that time he made his
request he should have been entitled to remain in the United Kingdom until his
wife™s claim was finalised. Later the policy was changed so that it did not apply
to family members of those whose asylum claims were not finalised. Nadarajah
argued the failure to apply the earlier policy originally, coupled with the decision
to now apply the revised policy, was a breach of his legitimate expectations. The
difficulty for this argument was that Nadarajah was not aware of the policy at
the time he made his request to stay.
Laws LJ reviewed the authorities on substantive unfairness, particularly the
decision in Bibi, which discussed a change of policy and a lack of concrete detri-
ment. His Lordship felt the pull of both sides™ arguments. On the one hand
the policy did not seem to have been applied consistently; but on the other
the Secretary™s decision was based on a good faith interpretation of the pol-
icy, which was not questioned by the applicant until after the decision was
made.
On the balance Laws LJ found in favour of the Secretary, and held that there
was no abuse of power. But in doing so Laws LJ felt uncomfortable with the
subjective balancing of interests. In his conclusions he stated:

Principle is not in my judgment supplied by the call to arms of abuse of power. Abuse of
power is a name for any act of a public authority that is not legally justified. It is a useful
name, for it catches the moral impetus of the rule of law. It may be, as I ventured to put
it in Begbie, ˜the root concept which governs and conditions our general principles of
public law™. But it goes no distance to tell you, case by case, what is lawful and what is
not.73
294 AUSTRALIAN ADMINISTRATIVE LAW


Laws LJ, instead of relying on abuse of power, sought to justify review on the
basis of a principle of good public administration:

The search for principle surely starts with the theme that is current through the legiti-
mate expectation cases. It may be expressed thus. Where a public authority has issued
a promise or adopted a practice which represents how it proposes to act in a given area,
the law will require the promise or practice to be honoured unless there is good reason
not to do so. What is the principle behind this proposition? It is not far to seek. It is said
to be grounded in fairness, and no doubt in general terms that is so. I would prefer to
express it rather more broadly as a requirement of good administration, by which public
bodies ought to deal straightforwardly and consistently with the public . . . Accordingly
a public body™s promise or practice as to future conduct may only be denied, and thus
the standard I have expressed may only be departed from, in circumstances where to
do so is the public body™s legal duty, or is otherwise, to use a now familiar vocabulary, a
proportionate response (of which the court is the judge, or the last judge) having regard
to a legitimate aim pursued by the public body in the public interest. The principle that
good administration requires public authorities to be held to their promises would be
undermined if the law did not insist that any failure or refusal to comply is objectively
justified as a proportionate measure in the circumstances.74

By basing judicial review on a principle of good administration, Laws LJ stated
that there was no need to differentiate between procedural and substantive expec-
tations. Rather the issue was one of proportionality:

This approach makes no distinction between procedural and substantive expectations.
Nor should it. The dichotomy between procedure and substance has nothing to say
about the reach of the duty of good administration. Of course there will be cases where
the public body in question justifiably concludes that its statutory duty (it will be statu-
tory in nearly every case) requires it to override an expectation of substantive benefit
which it has itself generated. So also there will be cases where a procedural benefit may
justifiably be overridden. The difference between the two is not a difference of principle.
Statutory duty may perhaps more often dictate the frustration of a substantive expecta-
tion. Otherwise the question in either case will be whether denial of the expectation is
in the circumstances proportionate to a legitimate aim pursued. Proportionality will be
judged, as it is generally to be judged, by the respective force of the competing interests
arising in the case. Thus where the representation relied on amounts to an unambiguous
promise; where there is detrimental reliance; where the promise is made to an individ-
ual or specific group; these are instances where denial of the expectation is likely to be
harder to justify as a proportionate measure . . . On the other hand where the government
decision maker is concerned to raise wide-ranging or ˜macro-political™ issues of policy,
the expectation™s enforcement in the courts will encounter a steeper climb. All these
considerations, whatever their direction, are pointers not rules. The balance between an
individual™s fair treatment in particular circumstances, and the vindication of other ends
having a proper claim on the public interest (which is the essential dilemma posed by the
law of legitimate expectation) is not precisely calculable, its measurement not exact.75


(vii) Summary on the UK position
It remains to be seen whether Laws LJ™s attempt to found a principle of good
administration as the basis for the doctrine of substantive unfairness will be
295
SUBSTANTIVE UNFAIRNESS


successful. In any event it is clear that, given the use of public policy valuation
in the doctrine of substantive unfairness, the legality/merits distinction does not
figure in the English law of substantive unfairness. What is also clear is that the
cases following Coughlan have shown a general relaxation of the requirement for
a statement to be made to a small group, and for the claimant to have suffered
detrimental reliance.


The doctrine of substantive legitimate expectations
in Australia

The doctrine of substantive unfairness has received a far less favourable wel-
come in the Australian context, most probably because of the concern with the
separation of powers, as enshrined in Australia™s federal Constitution.
There has been some cautious discussion of the Preston line of cases but
all these decisions were based primarily on procedural rather than substantive
expectations.76 The High Court™s initial consideration of substantive unfairness
also highlighted the importance of limiting judicial review to the procedural
aspects of the decision. In Attorney General (NSW) v Quin77 Mason CJ rejected
substantive protection of expectations on the grounds that it would ˜entail curial
interference with administrative decisions on the merits by precluding the deci-
sion maker from ultimately making the decision which he or she considers most
appropriate in the circumstances™.78 However Mason CJ did leave open the pos-
sibility of substantive protection being afforded if it could be done ˜without detri-
ment to the public interest intended to be served by the exercise of the relevant
statutory or prerogative power™.79
Brennan J™s views were far less hopeful for any such review. He reasoned:

The merits of administrative action, to the extent that they can be distinguished from
legality, are for the repository of the relevant power and, subject to political control, for
the repository alone . . . If courts were to postulate rules ostensibly related to limitations
on administrative power but in reality calculated to open the gate into the forbidden
field of merits of its exercise, the functions of the courts would be exceeded.80

Gummow J also rejected unfairness as a ground of review in Minister for
Immigration, Local Government and Ethnic Affairs v Kurtovic.81 Gummow J had
two main objections to the concept:

First, the question of where the balance lies between competing public and private
interests in the exercise of a statutory discretion goes to the merits of the case, and is
thus one for the decision maker, not the courts, to resolve. Secondly, a conclusion that a
representation or decision is ultra vires ordinarily will preclude its effectiveness. An ultra
vires representation is not a mere factor in favour of which the scales of judicial balancing
might be allowed to swing, but peremptorily forecloses such deliberations. If the view
of Lord Denning MR [in Laker] were adopted, one would be entitled to wonder why
judicial balancing might not replace the doctrine of ultra vires altogether . . . Accordingly,
in my view, ˜unfairness™ . . . is not a ground of judicial review.82
296 AUSTRALIAN ADMINISTRATIVE LAW


After Quin there was still the possibility of a change in doctrine, but con-
cerns about upgrading legitimate expectations into expectations which might be
enforced, substantively by courts, were still present. In Minister for Immigration
and Ethnic Affairs v Teoh83 Mason CJ and Deane J were concerned that expecta-
tions attracting a duty to accord procedural fairness might be made into ˜rules of
law™ by automatically compelling the decision maker to act in accordance with
the expectations.
The Full Federal Court confirmed that this fear was still present and rejected
a claim of substantive unfairness in Minister for Immigration and Ethnic Affairs
v Petrovski84 which involved a representation as to citizenship. Petrovski had
been born in Australia but had not become an Australian citizen as his father
was a Consul-General of Yugoslavia. He had been given an Australian pass-
port and that passport had been renewed. However, when he sought per-
manent residency status for his wife and her daughter, he was informed
that he was not a citizen. His application for citizenship failed because he
lacked necessary qualifications. The Full Federal Court found that the Depart-
ment of Immigration and Ethnic Affairs had clearly made grossly negligent
misrepresentations about Petrovski™s citizenship. The Full Court declined to
find for Petrovski even though there were no overriding public policy con-
siderations and the decision appeared to be operational in effect. Moreover,
in his discussion of authorities Tamberlin J found that Mason CJ™s com-
ments in Quin related solely to procedural fairness rather than substantive
entitlements.85
Later, in Barratt v Howard,86 a case concerning the dismissal of a senior public
servant, the Full Federal Court stated that: ˜The weight of authority lies against
the use of legitimate expectation to support enforcement of substantive rights.
Rather, it generates an entitlement to procedural fairness.™87
After Coughlan was decided, there were arguments raised again that the doc-
trine might find a foothold in Australia. In Daihatsu Australia Pty Ltd v Deputy
Commissioner of Taxation88 Lehane J proceeded on the basis that the doctrine
may be available in Australia, but found no evidence to support the claim. In
Shergold v Tanner the Full Federal Court noted that Coughlan style of review was
not yet available in Australia.89
However, any lingering doubts about the availability of substantive unfair-
ness as a ground of judicial review were finally removed by the High Court in
Re Minister for Immigration and Multicultural Affairs; Ex parte Lam.90 In this
decision a deportee unsuccessfully argued that the immigration authorities had
failed to investigate the effects of his deportation on his children, even after they
had promised to so investigate. All judges appeared to accept that expectations
by a person about future administrative action, however legitimate, could only
generate rights to procedural fairness if they are to be disappointed; not to have
those expectations fulfilled. Gleeson CJ™s judgment recognised that the bound-
ary between a procedural and a substantive expectation were not always clear
but he cautioned against a course which would lead to ˜converting a matter of
297
SUBSTANTIVE UNFAIRNESS


procedure into a matter of substance, and a matter of expectation into a matter
of right™.91
The joint judgment of McHugh and Gummow JJ also confirmed the position in
Quin and Teoh that the doctrine of legitimate expectations was procedural only,
and that English authority would not be followed. The standards in Coughlan
were said to ˜fix upon the quality of the decision-making and thus the merits of
the outcome™.92
Following Lam, there have still been some attempts in Australia to rely on
Coughlan, all of which have failed.93 Notably, the Bali nine convicted drug traf-
fickers argued unsuccessfully for a substantive legitimate expectation that the
Australian Federal Police would not have acted in such a way as to expose them
to the death penalty in Indonesia.94


Conclusion: should the UK or Australian position on
substantive unfairness be preferred?

The above review of both the UK and the Australian positions has highlighted a
deep divergence between the approaches adopted in each jurisdiction. I argue
that the Australian approach is superior. This is for two reasons.
The first reason is that the UK doctrine of substantive unfairness asks the
courts to be involved in assessing the merits of the decision. On its own this is not
so fatal a criticism, especially given that a kind of merits review already arguably
exists under the Wednesbury unreasonableness principle. However, in Wednes-
bury unreasonableness judges are limited to a strict rationality assessment,95
whereas under Coughlan judges are asked to examine the merits of adminis-
trative decisions and how individual interests are to be balanced with public
interests.
The question should be asked whether judges are really equipped to make
such decisions. Because of the finite and individualised nature of judicial review
claims, judges can never be given a total policy picture of why a decision has
been made as it has. In Coughlan, for example, the implications of upholding the
promise for life was considered to be ˜merely™ financial. With respect, judges are
not in a position to assess the financial implications of policy choices, particularly
in areas like health, where there are scarce enough resources to meet basic health
care needs. In the past, courts have rightly been extremely reluctant to question
decisions with financial implications.96 Such decisions are almost always held
to be non-justiciable and for good reason: judges are not financial administra-
tors. They have not been chosen for that role. Nor do they have the skills to
perform it.
The second argument against substantive unfairness as a ground of judicial
review is that there is no concrete way for the public interests to be weighed
under the Coughlan principles before it can objectively be said that there has
been an abuse of power. The test under Coughlan remains highly subjective. This
298 AUSTRALIAN ADMINISTRATIVE LAW


much was expressly recognised by Laws LJ in Abdi and Nadarajah. Merely stating
that a decision is an abuse of power says nothing about why a judge believes
it has become so. While the test is said to be a balancing one, it is impossible
to provide guidance on what will tip the balance. If substantive unfairness is
justified by reference to the principle of legal certainty, one can surely question
the legitimacy of this doctrine.
Law LJ™s reformulation of Coughlan as a case on the principle of good adminis-
tration, with respect, does not address the arbitrary nature of this form of judicial
review. To paraphrase Laws LJ: Good administration, like abuse of power, goes
no distance to tell you, case by case, what is lawful and what is not. There is,
therefore, an undeniable irony that, in attempting to provide legal certainty, the
English courts have adopted an arbitrary and unpredictable rule, that cannot on
its own terms satisfy the rule of law™s preference for legal certainty.
Returning, then, to the issue of separation of powers that was raised earlier in
this chapter, it can be argued that the doctrine of substantive legitimate expec-
tation offends the basic notion of separation of powers. As stated by Brennan J
in Quin, the doctrine of substantive unfairness
would effectively transfer to the judicature power which is vested in the repository, for
the judicature would either compel an exercise of the power to fulfil the expectation
or strike down any exercise which did not. A legitimate expectation not amounting to
a legal right would be treated as though it were, and changes in government policy,
even those sanctioned by the ballot box, could be sterilized by expectations which the
superseded policy had enlivened.97

In his extrajudicial writings, Gleeson CJ has argued that judicial legitimacy is
based on the judiciary limiting the exercise of their powers to the purposes for
which they were conferred. The legality/merits distinction, while battered and
bruised, still serves a useful purpose:
The difference is not always clear cut; but neither is the difference between night and
day. Twilight does not invalidate the distinction between night and day and Wednesbury
unreasonableness does not invalidate the difference between full merits review and
judicial review of administrative action.98

The maintenance of the legality/merits distinction is therefore of key impor-
tance. To maintain it, Australian courts must continue to reject the doctrine of
substantive unfairness.
19
The impact and signi¬cance of Teoh
and Lam
Alison Duxbury—




There are many similarities in the factual and legal foundations of the High
Court cases of Minister for Immigration and Ethnic Affairs v Teoh1 (Teoh) and Re
Minister for Immigration and Multicultural Affairs; Ex parte Lam2 (Lam). Both Teoh
and Lam concern individuals who were facing the revocation of their Australian
entry visas, and consequently deportation, due to drug offences. In challenging
these decisions, both Mr Teoh and Mr Lam claimed that they had been denied
procedural fairness on the basis that they had a legitimate expectation that a
course of conduct would be pursued by officers of the Department of Immigration
and Multicultural/Ethnic Affairs. Both men were fathers of Australian citizens
and provided testimonials to the effect that it was in the best interests of their
children that they remain in Australia rather than be returned to their country of
origin. At this point the similarities end.
The High Court™s decision in Teoh was ˜taken to the streets™3 due to the impor-
tance attached by the Court to Australia™s ratification of an international treaty,
the Convention on the Rights of the Child,4 in domestic law. Lam did not excite
any public controversy (except perhaps amongst administrative lawyers). Teoh
was regarded as a significant development in the doctrine of legitimate expecta-
tions in Australian administrative law, whereas Lam appeared to spell a retreat
from the concept. In Lam, the High Court dealt extensively with the decision in
Teoh, despite the fact that counsel for the applicant did not seek to rely upon the
earlier decision and neither party attempted to reopen the case. This factor, as
well as the similarities between the cases, indicates that they need to be under-
stood together. This chapter will outline the facts and context of the High Court™s
judgments in Teoh and Lam before exploring the impact and significance of the
decisions in two areas “ first, the relationship between international law and Aus-
tralian administrative law; and secondly the duty to accord procedural fairness.

299
300 AUSTRALIAN ADMINISTRATIVE LAW


The facts and context of Teoh and Lam

The cases of Teoh and Lam are part of what has been termed ˜a titanic struggle™
between the Australian government and the judiciary over the power to review
executive decisions that fall within the ambit of the Migration Act 1958 (Cth).5 The
Commonwealth Parliament has passed legislation squarely aimed at limiting the
potential for judicial review of certain types of migration cases.6 The High Court
has proved adept at restricting the scope and application of such legislation.7
For the most part, this struggle between the government and the courts has been
focussed on the review of decisions to deny, or in some cases grant, refugee status
to an individual. Neither Teoh nor Lam involved the review of refugee applications
but concerned another aspect of executive power over migration that has excited
controversy in recent years “ the deportation of residents as a result of criminal
convictions.
Teoh was a Malaysian citizen who had resided in Australia since 1988 on a
temporary entry permit. In July of that year, he married an Australian citizen,
Jean Helen Lim, who was the mother of four children. Following their marriage,
the couple had three more children. Teoh applied for permanent resident status
prior to the expiration of his temporary entry permit; however, while his applica-
tion was pending he was convicted of the importation and possession of heroin
and sentenced to six years™ imprisonment. In January 1991, Teoh was informed
by an officer of the Department of Immigration and Ethnic Affairs that his appli-
cation for permanent residence had been denied on the basis that he could not
meet the ˜good character™ requirement pursuant to the Department™s policy guide-
lines. According to this policy an applicant for resident status must be of ˜good
character™ “ a relevant issue being ˜whether the applicant has a criminal record™.8
Facing deportation, Teoh applied for review of the decision and attached a num-
ber of testimonials to the effect that he was a concerned father and was the
only person who could keep the family together.9 The Immigration Review Panel
rejected his application, finding that in view of Teoh™s criminal record the com-
passionate grounds did not compel a waiver of policy.10
Teoh challenged the decision of the Panel in the Federal Court. The basis of his
challenge was three-fold: (1) that the delegate had failed to accord procedural
fairness, (2) that the delegate had failed to take into account a relevant considera-
tion, and (3) that the delegate had taken into account a policy without considering
the merits of the case.11 On appeal to the Full Court of the Federal Court, and sub-
sequently the High Court, Teoh successfully argued that Australia™s ratification of
the Convention on the Rights of the Child (CRC) created a legitimate expectation
that decision makers would abide by the provisions of the CRC in decisions which
affect children.12 Article 3(1) of the CRC provides that: ˜In all actions concern-
ing children, whether undertaken by public or private social welfare institutions,
courts of law, administrative authorities or legislative bodies, the best interests of
the child shall be a primary consideration.™ The majority of the High Court held
that if officers of the Department did not intend to give effect to this legitimate
expectation then Teoh should have been given a notice and an opportunity to be
301
THE IMPACT AND SIGNIFICANCE OF TEOH AND LAM


heard on why that course of action should not be taken.13 Although the decision
was hailed in some circles as a positive step, the government was quick to con-
demn the result and took steps14 to nullify any further consequences of the case.
The High Court was again called upon to consider the requirements of pro-
cedural fairness in the context of an application to review a visa decision on the
basis of an applicant™s criminal record in Lam. Mr Lam was a Vietnamese citizen
who arrived in Australia as a refugee at the age of thirteen, and was granted
a transitional (permanent) visa. While in Australia he committed many crimi-
nal offences, including trafficking in heroin, and was sentenced to eight years
imprisonment. As a result of his criminal activity, an officer of the Department of
Immigration and Multicultural Affairs wrote to Lam stating that his visa may be
cancelled pursuant to s501(2) of the Migration Act 1958 (Cth).15 According to this
provision, the minister may cancel a visa if the minister reasonably suspects that
an individual does not pass a character test. Lam was the estranged father of two
children who were born in Australia and were Australian citizens. In response to
the Department™s letter, Lam submitted that the children™s best interests dictated
that his visa should not be cancelled and he should not be deported to Vietnam.
A letter from the children™s carer, Ms Tran, was included as part of the support-
ing documentation and her telephone number was listed. One week later, on 7
November 2000, an officer of the Character Assessment Unit of the Department
wrote to Lam asking for the contact details of the children™s mother. Lam replied
that he had no contact with the mother, but instead sent the contact details of
the children™s carer. Further correspondence ensued between the applicant and
the Department, with the minister ultimately deciding to cancel Lam™s visa.16
Lam challenged the decision, arguing that the letter of 7 November had created
a legitimate expectation that Ms Tran would be contacted, and the failure to tell
Lam that further contact would not be made by the Department resulted in a lack
of procedural fairness.17
The High Court dismissed the application. Counsel for Lam did not seek to
rely upon Teoh since there was no doubt that the requirements of Article 3 of the
CRC had been taken into account by the Department. Although counsel for Lam
clearly disclaimed any reliance on Teoh, the High Court commented extensively
on the earlier case. While such comments may be considered strictly obiter, they
are a strong indication of the direction that the High Court will take in the future
when confronted with the relationship between Australian administrative law
and international law, and cases involving an alleged denial of procedural fairness
that is founded on an international instrument.


The interaction between international law and Australian
administrative law

The decision in Teoh
Until the High Court™s decision in Teoh, and the subsequent response to the deci-
sion by the Federal Government, the status of international treaties in Australian
302 AUSTRALIAN ADMINISTRATIVE LAW


domestic law could be stated in a few brief propositions. First, the executive
power to enter into treaties is derived from s61 of the Commonwealth Consti-
tution. The executive has used this power to ratify over 900 treaties, including
all major human rights conventions. Second, ratification by the executive alone
does not result in a treaty being incorporated into domestic law, nor does it
create rights in the hands of private individuals unless the treaty is separately
implemented by legislation.18 Although a number of human rights treaties have
been annexed to the Human Rights and Equal Opportunity Commission Act 1986
(Cth), this process does not result in the incorporation of these conventions into
domestic law.19 Third, the requirement for parliamentary implementation does
not reduce the interaction between Australian law and unincorporated interna-
tional instruments ˜to a state of sterility™.20 In relation to this third proposition,
it is accepted that where a piece of legislation is ambiguous, then it should be
interpreted in accordance with Australia™s international obligations.21 This prin-
ciple applies only where the treaty ratification predates the enactment of a piece
of legislation, unless the legislation was enacted in contemplation of executive
ratification.22 Another way in which international law may influence domestic
law is through the development of the common law.23 For example, in rejecting
the common law doctrine of terra nullius in Mabo v Queensland [No 2],24 Bren-
nan J stated that ˜international law is a legitimate and important influence on
the development of the common law, especially when international law declares
the existence of universal human rights.™25 Mason CJ and Deane J repeated these
propositions in their joint judgment in Teoh, with no dissent from other members
of the Court.26
Where the majority in Teoh departed from previous case law was their will-
ingness to give international treaties a role to play in influencing the exercise of
a statutory discretion residing in an administrative decision maker. In their joint
judgment, Mason CJ and Deane J (with Toohey J agreeing) reasoned that:

Ratification of a convention is a positive statement by the executive government of this
country to the world and to the Australian people that the executive government and
its agencies will act in accordance with the Convention. That positive statement is an
adequate foundation for a legitimate expectation, absent statutory or executive indica-
tions to the contrary, that administrative decision makers will act in conformity with the
Convention and treat the best interests of the children as ˜a primary consideration™ . . .
If a decision maker proposes to make a decision inconsistent with a legitimate expec-
tation, procedural fairness requires that the persons affected should be given notice and
an adequate opportunity of presenting a case against the taking of such a course.27

There are three parts to this statement. The first element is that the ratification
of an international treaty constitutes a statement to the national community. In
expounding upon this point, Toohey J quoted with approval from Tavita v Minis-
ter of Immigration,28 decided in the New Zealand Court of Appeal, where it was
stated that an argument that would result in treaty ratification being reduced
to ˜window-dressing™ was ˜unattractive™ to the Court.29 The second element of
303
THE IMPACT AND SIGNIFICANCE OF TEOH AND LAM


Mason CJ and Deane J™s statement is that ratification is an adequate founda-
tion for a legitimate expectation. The third aspect relates to the consequences “
if the expectation is to be disappointed then certain procedural requirements
will follow. Gaudron J agreed with Mason CJ and Deane J as to the status of
the CRC in Australian law, but believed that a more important rationale for pre-
serving the best interests of the children was their status as Australian citizens.30
McHugh J dissented on a number of grounds, emphasising that in his view the act
of treaty ratification by the executive government was a statement to the inter-
national community, and, in particular, an undertaking to other state parties,
rather than to the national community.31 McHugh J firmly believed that Article
3 of the CRC could not give rise to a legitimate expectation that an application
for resident status will be decided in accordance with its terms. In particular,
McHugh J was concerned that the approach advocated by the majority would
result in the amendment of the law by the executive government and ˜enormous™
consequences for administrative decision makers.32
Allars has suggested that Teoh constituted a dramatic beginning to ˜the inter-
nationalisation of Australian administrative law™ given the High Court™s earlier
rejection of the relevance of international treaties to the exercise of an adminis-
trative discretion.33 In arriving at this conclusion, Allars examines two previous
High Court cases: Lim v Minister for Immigration, Local Government and Ethnic
Affairs34 (Lim) and Kioa v West35 (Kioa). In Lim, counsel argued that Division 4B
of the Migration Act 1958 (Cth) should be ˜read down to the extent necessary™
to avoid inconsistency with the Human Rights and Equal Opportunity Act 1986
(Cth), the International Covenant on Civil and Political Rights (ICCPR) annexed
to the Act, and the Convention and Protocol relating to the Status of Refugees.36
Although Brennan, Deane and Dawson JJ agreed with the general proposition
that where legislation is ambiguous the courts should favour a construction which
accords with Australia™s international obligations, they found that Division 4B,
which required that ˜boat people™ be held in custody, was quite unambiguous.37
In the seminal High Court decision on procedural fairness, Kioa v West, counsel
went one step further and argued that the Declaration on the Rights of the Child
and the ICCPR were relevant considerations in making a decision concerning the
deportation of the parents of a child who was an Australian citizen.38 Although
the Preamble to the Human Rights and Equal Opportunity Commission Act 1986
(Cth) stated that ˜it is desirable that the laws of the Commonwealth and the con-
duct of persons administering those laws should conform with™ the conventions
scheduled to the Act, Brennan J held that this only indicated that decision mak-
ers were entitled to take the conventions into account, not that they were bound
to do so.39 Gibbs CJ also rejected the argument based on the two international
instruments stating that ˜there was no legal obligation on the Minister™s delegate
to ensure that his decision conformed with the Covenant or the Declaration™.40
In Teoh, Mason CJ and Deane J accepted that there was no failure to taken into
account a relevant consideration.41 In this respect, Teoh was a ˜small step™42 as
it only elevated the role of international conventions in relation to the doctrine
304 AUSTRALIAN ADMINISTRATIVE LAW


of procedural fairness, rather than their status with respect to other grounds for
the review of administrative action.


The response to Teoh
Not all were convinced that Teoh represented a modest step in developing the
relationship between administrative law and international law, or that it was
a positive development. Following the High Court™s decision, the Minister for
Foreign Affairs and Trade and the Attorney-General were quick to take up the
concern articulated by McHugh J as to the potential impact of the case on admin-
istrative decision makers by issuing a joint ministerial statement. Seizing upon
the words in Mason CJ and Deane J™s judgment ˜absent statutory or executive indi-
cations to the contrary™ (emphasis added) the 1995 joint statement emphatically
stated that merely entering into a treaty, without further parliamentary action,
would not raise a legitimate expectation that administrative decision makers will
act in accordance with its provisions.43 The 1995 joint statement illustrates that
Australia exhibits a certain amount of ambivalence towards its international
human rights obligations.44 The ministers assert that it is not legitimate to expect
that a non-incorporated treaty will be applied by decision makers, while at the
same time emphasising ˜that the Government remains fully committed to observ-
ing its treaty obligations™.45 However, international conventions enumerating
human rights principles require states™ parties to guarantee the rights of individ-
ual citizens and must have effect within a nation if they are to have any impact.46
Thus, the 1995 joint statement sent divergent messages to the international and
national communities concerning the way in which Australia would implement
its treaty obligations.47
In 1997, the new Attorney-General and Minister for Foreign Affairs for the
Coalition Government issued a second joint statement in similar terms to the
first.48 But rather than underline Australia™s full commitment to its treaty obliga-
tions at the international level, the 1997 joint statement is more concerned with
the proper roles of the Executive and Parliament in ratifying and implement-
ing treaties in Australia. Consequently, the 1997 joint statement emphasises that
˜under the Australian Constitution, the Executive Government has the power to
make Australia a party to a treaty. It is for Australian parliaments, however, to
change Australian law to implement treaty obligations™.49 It will be seen that these
expressions of concern regarding the proper role of the executive and parliaments
with respect to treaties were taken up by some judges in Lam.50
The response to Teoh did not end with the executive government as both
joint statements were followed by the introduction of legislation into the Federal
Parliament. The 1995 and 1997 versions of the Administrative Decisions (Effect
of International Instruments) Bill contained a clause to the effect that Australia™s
ratification of a treaty does not give rise to a legitimate expectation that adminis-
trative decision makers will act in compliance with the treaty, and if not, that the
person will be entitled to a hearing.51 Despite the flurry of activity at the time, nei-
ther piece of legislation has been enacted, leaving the 1997 joint statement as the
305
THE IMPACT AND SIGNIFICANCE OF TEOH AND LAM


only existing executive or legislative indication at the Commonwealth level that
the High Court™s decision has no legal effect. The South Australian Parliament in
1995 passed its own Administrative Decisions (Effect of International Instruments)
Act 1995 (SA), attempting to negate the impact of Teoh in that state.52 Following
the enactment of this legislation, a plaintiff in South Australia argued that a per-
son in a correctional facility had a legitimate expectation that the minister and
officers of the Department of Correctional Services would act in conformity with
Standard Minimum Rules for the Treatment of Prisoners and other rules to which
Australia is a signatory.53 The argument failed on the basis that the Minimum
Rules are not a treaty and are not part of domestic law.54 Additionally, the plaintiff
argued that the practice of ˜doubling up™ (whereby untried prisoners share the
same cells as convicted criminals in South Australian prisons) breached Article 10
of the ICCPR.55 Millhouse J found that the Covenant was not binding on the state
of South Australia and stated (with regret) that the effect of the Administrative
Decisions (Effect of International Instruments) Act 1995 (SA) in South Australia
˜is to make Australia™s involvement in international conventions “merely plat-
itudinous and ineffectual”™.56 The decision demonstrates that a heavy-handed
legislative response may produce an impact beyond the fairly limited principle
in Teoh and affect other areas where international law has been found to have a
role to play in domestic law.
Doubts remain about the legal effect of the joint statements at the Common-
wealth level.57 In 1995, the Administrative Appeals Tribunal (AAT) in Re PW
Adams Pty Ltd and Australian Fisheries Management Authority (No. 2)58 held that
the 1995 joint statement counteracted a party™s submissions based on legitimate
expectations in the context of the Universal Declaration of Human Rights. But a
number of Federal Court and AAT decisions appear to have applied Teoh with no
regard to the intentions indicated in the joint statements by members of the exec-

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