Flanagan, Richard --- "Legitimate Expectation and Applications - An Outdated and Unneeded Distinction" [2011] CanterLawRw 17; (2011) 17 Canterbury Law Review 283

Last Updated: 20 May 2013

LEGITIMATE ExPECTATION AND APPLICATIONS

– AN OUTDATED AND UNNEEDED DISTINCTION

Richard Flanagan^*

I. Introduction

Legitimate expectation is an area of administrative law that can be of uncertain ambit. At times determining the boundaries of the doctrine will rely on fine judgements and slender distinctions. Applications for substantive benefit are a case in point. Those who already hold some ongoing benefit are considered to have rights that those applying for one do not.¹ In the words of Megarry VC in McInnes v Onslow Fane,² applicants have a “mere hope”, and not an “expectation” in the administrative law sense. This paper will argue that this is a false distinction. Borrowed from the private law, it does not transfer easily into a public law context.³ It uses a narrow application of procedural fairness founded on the existence of a contractual relationship between the parties. Persons already party to a contract of membership were viewed as having justiciable rights in contract, in contrast to applicants without such a contract.⁴ Since Schmidt,⁵ judicial review has not been bound by this type of analysis. Legitimate expectation encompasses the notion that the requirements of fairness may arise outside of the constraints of a formal legal relationship. Ongoing use of the distinction as a principle of legitimate expectation is therefore inconsistent with the principles of legitimate expectation in its modern sense. It reflects constraints that no longer apply. Moreover, the distinction is aimed at a problem that is well captured within existing principles. The rule fulfils no useful purpose, and simply adds a further layer of theory upon doctrines where it is submitted “the ingredients of the problem at hand (should) dominate”.⁶

* Solicitor, Bell Gully, Auckland. [e-mail]

1. PA Joseph, Constitutional and Administrative law in New Zealand 3^rd ed, Brookers, Wellington, 2007) at 959.

2 McInnes v Onslow Fane [1978] 3 All ER 211.

3. For general comment on the use of private tools and procedures in the English Administrative Law tradition, see, for example, I Harden and N Lewis The Noble Lie, The British Constitution and the rule of law (Hutchinson, London, 1986).

4 Nagle v Fielden [1966] 1 All ER 689.

5 Schmidt v Secretary of State for Home Affairs [1969] 2 Ch 149 (CA).

6 Rt Hon Sir Robin Cooke in Judicial Review, A New Zealand Perspective, GDS Taylor

(LexisNexis Butterworths, 1991), at V, Foreword.

283

II. Legitimate Expectation in a Gener al Sense

The purpose and principles of legitimate expectation in its wider sense must inform our judgement of the specific issues examined here. We therefore begin with a survey of the evolution and general ambit of legitimate expectation in modern administrative law. In its simplest sense, the concept of legitimate expectation derives from the administrative law principle that governments and public authorities must act fairly and reasonably.⁷

The concept is a dynamic one, unique to public law,⁸ despite having some similarities with private law concepts like estoppel. It was coined by Lord Denning in Schmidt v Secretary of State for Home Affairs, when he stated that: ⁹

The speeches in Ridge v Baldwin¹⁰ show that an administrative body may, in a proper case, be bound to give a person who is affected by their decision an opportunity of making representations. It all depends on whether he has some right or interest, or, I would add, some legitimate expectation, of which it would not be fair to deprive him without hearing what he has to say.

In Breen v Amalgamated Engineering Union, his Lordship expanded upon the notion, stating that: ¹¹

Seeing he had been elected to this office by a democratic process, he had, I think, a legitimate expectation that he would be approved by the district committee, unless there were good reasons against him. If they had something against him, they ought to tell him and to give him the chance of answering it before turning him down.

Legitimate expectation is therefore significant in that it provides that an interest less than a legal right may warrant the protection of the rules of natural justice. Where a legitimate expectation can be shown, a decision- maker may not act to defeat that benefit without the requirements of procedural fairness being met.¹² As McHugh J explains in Haocher, before Lord Denning’s statements in Schmidt and Breen, the common law rules of natural justice only protected a persons existing rights and interests, implying a right to be heard before a statutory power only where a matter arose which might prejudice those rights and interests.¹³ The introduction of the concept of legitimate expectation under public law extended the range of protection given, so that prospective, as well as existing, rights, interests, privileges and benefits could come within the domain of natural justice. But with such an extension came the obvious need to develop principles of application to prevent a snowball of unfounded claims. Thus a complex set of rules has been developed by the courts to govern when such an expectation will arise.

7 New Zealand Association for Migration and Investments Inc v A-G [2006] NZAR 45 at 52.

8. The concept of legitimate expectation is commonly found in countries whose public law systems follow the United Kingdom common law model, and in selected other cases, such as in German Public law.

9 Schmidt v Secretary of State for Home Affairs (1969) 2 Ch 149.

10 Ridge v Baldwin [1963] UKHL 2 (1964) AC 40.

11 Breen v Amalgamated Engineering Union (1971) 2 QB 175 at 191.

12 Haoucher v Minister for Immigration and Ethnic Affairs [1990] HCA 22; (1989) 169 CLR 648 per Dawson J at

659 .

13 Ibid, per McHugh J at 679-680.

In general, this will be in four key situations: where assurances or promises are given by a decision maker, whether express or implied,¹⁴ where statements of intent are made by a decision maker, like in policy manifestos,¹⁵ where a regular practice gives rise to the reasonable implication that the practice will continue,¹⁶ and from the creation of machinery for a hearing process.¹⁷ Where a public authority makes an undertaking, they must honour it, provided it does not conflict with any statutory duty¹⁸ and there is no “satisfactory reason” not to do so.¹⁹ However in the same way that statements or conduct may create a legitimate expectation, they may also defeat one. Reliance cannot be made on one statement or action while others that form an equally relevant part of the overall scheme are disregarded.²⁰ Improper conduct by the party claiming the expectation or changes in government policy may also defeat a claim.²¹ In Hughes, the House of Lords explained that:²²

“the more the decision challenged lies in what may be inelegantly described as the macro- political field, the less intrusive will be the courts supervision. Governments must be free to pursue policies in the public interest, even if a change of direction defeats expectations generated by an earlier policy.”

In this regard a fundamental tension exists between the public interest in holding an authority to promises made and the conflicting interest of allowing an authority the freedom to change policy as circumstances dictate.²³ In addition, decision-makers are subject to a general requirement under administrative law that they will not embark upon any course of conduct that will prevent them from exercising the discretion given to them in each individual case.²⁴

The doctrine of legitimate expectation may be incompatible with this requirement, because as Professor Joseph notes, on orthodox principles public bodies must retain the right to extinguish substantive legitimate expectations, whether or not the interested parties should have an opportunity to object.²⁵

On the other hand, public bodies may enter contracts that fetter their discretionary powers, provided the contract promotes the body’s statutory functions or purposes.²⁶ The need to uphold the requirements of fairness

14 Vea v Minister of Immigration [2002] NZAR 171 (HC).

15 Haoucher v Minister for Immigration and Ethnic Affairs, above, n 11, per Mc Hugh J at 681.

16 Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 at 415 per Lord

Roskill (HL).

17 Lawson v Housing New Zealand [1996] NZHC 1528; [1997] 2 NZLR 474 at 488.

18 Thames Valley Electric Power Board v NZ Forest Products Pulp & Paper Ltd [1994] 2 NZLR

641; R v Secretary of State for the Home Department; Ex p Ruddock [1987] 2 All ER 518 (QB).

19 NZ Maori Council v Attorney-General [1994] 1 NZLR 513; [1994] 1 AC 466 (PC); Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374.

20 R v Liverpool Corporation; Ex parte Liverpool Taxi Fleet Operators’ Association; [1972] 2 QB

299; [1972] 2 All ER 589; [1972] 2 WLR 1262.

21 Chen v Minister of Immigration [1991] NZCA 227; [1992] NZAR 261 (CA).

22 Hughes v Dept of Health and Social Security [1985] AC 776, [1985] 2 WLR 866, HL.

23 Attorney General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629; 2 All ER 346 (PC); NZ Maori Council v Attorney-General [1994] 1 NZLR 513; [1994] 1 AC 466 (PC).

24 The Power Co Ltd v Gore District Council [1996] NZCA 483; [1997] 1 NZLR 537 (CA) at 548, citing Birkdale

District Electric Supply Co Ltd v Southport Corporation [1926] AC 355 per Lord Sumner at

372.

25 Joseph, above, n 1, at 965.

26 The Power Co Ltd v Gore District Council, above, n 23, at 548.

also mean that a contract that fetters powers will be upheld if to strike it down would be unfair or contrary to some legitimate expectation, or would amount to an abuse of discretion.²⁷ One key factor that is considered in balancing these considerations is the nature of the expectation and the number of people affected. Where a policy induces an expectation of a substantive outcome affecting a small and specific group of people, this will be more likely to be sufficient to ground some reliance.²⁸ By contrast, where the expectation is vague, and is not made to any person or specific group in particular, this will be less likely to require substantive compliance. In New Zealand Association for Migration and Investments Inc v Attorney-General,²⁹ for example, the fact a policy “applied to a large number of individuals where no specific promises have been made, nor settled practice adopted” meant that while it had the potential for unfairness in some cases, it was not sufficient to ground a binding legitimate expectation.

In a general sense, legitimate means reasonable.³⁰ The question of whether or not an expectation is reasonable depends on the conduct of the decision maker; what it had committed itself to, and what the applicants expected and were entitled to expect.³¹ Thus it cannot be based upon a misinterpretation of an assurance, undertaking or dealing,³² or a mere unsubstantiated belief of the person asserting it.³³ The representation on which the expectation is based must be clear and unambiguous.³⁴ Because legitimate expectation does not constitute a form of public law estoppel, detrimental reliance need not be proven for a legitimate expectation to arise.³⁵ The two concepts do overlap, both being based upon fairness and unconscionability of action, but as Professor Joseph notes: “Estoppel has its roots in private law and is unsuited to public law needs”.³⁶ But while proving detrimental reliance is not necessary to establish a legitimate expectation, it will strengthen an argument one exists and that it would be unfair to thwart it.³⁷ On the other hand, decision-makers should not be constrained to continue a practice they have voluntarily engaged upon to better the quality of the decision making process. To do so would punish them for taking their ‘best practice’ duty to consult seriously. In Te Heu Heu v AG, Robertson J noted that: ³⁸

27 Lemmington Holdings Ltd v Commissioner of Inland Revenue [1983] NZHC 77; [1984] 2 NZLR 214; R v Inland

Revenue Commissioners, ex parte Preston [1984] UKHL 5; [1985] 1 AC 835; [1985] 2 All ER 327.

28 R v North and East Devon Health Authority; Ex p Coughlan [2001] QB 213.

29 New Zealand Association for Migration and Investments Inc v Attorney-General [2006] NZAR

45 at 62.

30 Attorney General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629; 2 All ER 346 (PC).

31 University of Auckland v Tertiary Education Commission [2004] NZHC 1065; [2004] 2 NZLR 668 (HC).

32 Lawson v Housing New Zealand [1996] NZHC 1528; [1997] 2 NZLR 474.

33 Te Heu Heu v A-G [1999] 1 NZLR 98.

34 Ng Siu Tung v Director of Immigration (2002) 1 HKLRD 561.

35 Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273; R v Secretary of State for Education and Employment; Ex Parte Begbie [1999] EWCA Civ 2100; [2000] 1 WLR 1115; R (Bibi) v Newham London Borough Council [2001] EWCA Civ 607; [2002] 1 WLR 237.

36 Joseph, above, n 1, at 965.

37 R v Secretary of State for Education and Employment; Ex P Begbie [1999] EWCA Civ 2100; [2000] 1 WLR 1115; R (Bibi) v Newham London Borough Council [2001] EWCA Civ 607; [2002] 1 WLR 237.

38 Te Heu Heu v AG [1999] 1 NZLR 98.

... it is important that the courts do not quickly find a willingness to talk has given rise to a Legitimate expectation when all it has done is demonstrated an openness of process and a willingness to be receptive to ideas.

This principle was affirmed in NZ Assn for Migration and Investments v A-G,³⁹ where a prior practice of information sharing and co-operation was considered to simply reflect a degree of good faith existing between the parties, and did not establish a binding expectation of prior consultation about policy changes and their implementation. A balancing between the competing public interest factors involved will again be required.⁴⁰

III. Specific Issues Relating to Applications

In addition to the general considerations applying to all arguments of legitimate expectation, applications for benefit raise a number of specific policy considerations. The operation of these factors is illustrated by the distinction drawn by the courts between so-called ‘license’ or ‘forfeiture’ cases and ‘application’ or ‘membership’ cases’. In McInnes,⁴¹ Megarry VC explained that license or forfeiture cases involve a decision which takes away some existing right or position, as where a member of an organization is expelled or a license revoked, and as such the right to an unbiased tribunal, to take notice of the charges and to be heard in answer to these charges will apply.⁴² By contrast, in application or membership cases, the decision involves a refusal to grant the applicant the right or position that they seek, such as membership of the organization, or a license to do certain acts. Nothing is being taken away, and in all normal circumstances there are no charges, and so no requirement of an opportunity to be heard in response to the charges. Instead there is the far wider and less defined question of the general suitability of the applicant for membership or a license. The distinction is well recognized, for in general it is clear that the courts will require natural justice to be observed for expulsion from a social club, but not on an application for membership to it. As a result, the question of whether a particular case is a license or a membership case often becomes a key element in arguments as to the existence of a legitimate expectation.⁴³ According to De Smith, the distinction hinges on the existence of a vested interest to defend, because as opposed to the holder of an existing benefit, an “applicant will be adversely affected by a refusal of something which he does not yet have only to the extent that he is disappointed and may have suffered some “transaction costs” in the process of the application.”⁴⁴

This approach can also be justified on the traditional principles of when an expectation can be reasonably expected to arise, for an ongoing pattern of substantive action provides a stronger basis from which to infer a legitimate expectation than representations in relation to action that is only

39 NZ Assn for Migration and Investments v A-G [2006] NZAR 45 at 61-64 (HC).

40 Hughes v Dept of Health and Social Security [1985] AC 776 at 788 (HL).

41 McInnes v Onslow Fane, above, n 2, at 218.

42 Ridge v Baldwin [1963] UKHL 2; [1963] 2 All ER 66 at 114.

43 White v New Zealand Stock Exchange & Anor [2000] NZAR 297.

44 De Smith, Woolf & Jowell, Judicial Review of Administrative Action, (5^th ed, Sweet & Maxwell, London, 1995) [8-027].

a possibility in the future. In broad terms, legitimate means reasonable,⁴⁵ and therefore imports a requirement that the expectation is one that is sufficiently strongly grounded so as to sustain a requirement that it would at least be closely considered before action is taken which overrides it. Generally it will be difficult to establish that a decision maker has a sufficiently proximate relationship with an applicant, particularly as proving a legitimate expectation requires showing not only that the applicants expected some benefit, but that they were reasonably entitled to do so.⁴⁶ Flowing out of this distinction is the implicit principle that an application, compared to a licence, generally provides a mere hope of achieving the substantive outcome desired, and “a hope is not an expectation in public law terms”.⁴⁷ While this classification will often be an accurate one in terms of the ability of the party to successfully sustain an argument of a legitimate expectation the issue of causation must be examined further. In a great number of cases where the distinction is said to preclude the existence of an enforceable expectation, the failure is simply attributable to the threshold requirements imposed by the normal principles, and is entirely unrelated to the particular nature of the action.

IV. The True Principle of Mcinnes v Onslow-Fane

In McInnes v Onslow-Fane,⁴⁸ where the notion of a “mere hope” was first used, Megarry VC noted the “substantial distinction between the forfeiture cases and the application cases”.⁴⁹ In application cases nothing is being taken away, and in normal circumstances no charges are involved, so there is also no requirement that an opportunity is given to answer those charges. However, his honour also considered that clear and exhaustive classification of these cases would not be possible, and as a result argued for at least the existence of a further class that he called the expectation cases. Such cases would differ from the application cases only in that the applicant has some legitimate expectation from what has already happened that their application would be granted, like where an existing licence-holder must apply for renewal or a person already elected seeks some confirmation from a higher authority.⁵⁰

The addition of the category implies the need for a substance over form approach. Without this the requirements of natural justice could be defeated by simply transferring the claim into one involving an application, like by considering matters of discipline only upon reapplication after expiry, and not at the time they arise. So while classification as either an application or a cancellation may provide a useful starting point for the courts, ultimately it must subordinate the particular facts of each case.

45 Attorney General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629; 2 All ER 346 (PC).

46 University of Auckland v Tertiary Education Commission [2004] NZHC 1065; [2004] 2 NZLR 668 (HC).

47 Ibid; White v New Zealand Stock Exchange [2000] NZAR 297 (HC); Haoucher v Minister for

Immigration and Ethnic Affairs [1990] HCA 22; (1989) 169 CLR 648.

48 McInness, above, n 2.

49 Ibid at 218.

50 Weinberger v Inglis (No 2) [1919] AC 606; Breen v Amalgamated Engineering Union (1971)

2 QB 175; Schmidt v Secretary of State for Home Affairs (1969) 2 Ch 149; R v Barnsley

Metropolitan Borough Council; Ex parte Hook [1976] 1 WLR 1052.

“Expectation cases”, for example, although in form involving not forfeiture but a mere application that fails, nonetheless involved a legitimate expectation of confirmation or renewal of the applied for item which raised the question of “what had happened to make the applicant unsuitable for the membership or licence for which he was previously thought suitable.”⁵¹ As a result, the fact an applicant may have a “mere hope”, and not an expectation may simply denote that that person has fallen short of meeting the legal rigours required to meet that threshold, and not that there is a blanket classification which prohibits a particular form of action from ever sustaining a finding of legitimate expectation. The case on the facts was an example, involving an applicant who had made five consecutive prior applications for the license in question and had all of them declined. As a result there was no factual basis on which such an expectation could be considered reasonable, a finding that is clearly consistent with the orthodox principles applying to all cases of legitimate expectation.

An equivalent case considered by the New Zealand Court of Appeal that same year reached a similar conclusion. Stininato v Auckland Boxing Association⁵² also involved an applicant for a boxing licence, and one who had held such a licence in the past. During the period the applicant held the licence, a number of complaints were received about him that the

Association considered well founded. Because the appellants licence was due to expire within a few months, and it was clear no association in New Zealand would employ him in the intervening period, the council decided to take no action and simply allow his licence to lapse, with the intention of avoiding the difficulties associated with terminating an existing benefit. A letter was sent telling him that the complaints had been received, but that the council had decided to take no action. Upon expiry of the initial licence, the appellant applied for a new licence but was rejected on the basis of those previous incidents. He then made a number of subsequent applications, all of which were unsuccessful. The appellant then sought judicial review of the decisions on the basis that when the council refused to grant him a licence they acted unfairly by failing to indicate to him, before reaching a decision as to the granting of the licence, that they intended to take into account the views which had been arrived at when the initial complaints were received.

While on the facts the members of the Court concluded that no breach of proper procedure had taken place, all agreed that the fact the Association had handled the situation so as to deal with his case as an application and not a termination did not allow them to evade the general requirements of procedural fairness in considering that application. Cooke J (as he then was), concluded that:⁵³

Taking all those points together, I think that a refusal by the council of a professional boxer’s licence application, for misconduct but without giving him any opportunity of answering the charge, is well capable of being regarded as an unreasonable restraint

51 McInnes v Onslow-Fane [1978] 3 All ER 211 (CA).

52 Stininato v Auckland Boxing Association [1978] 1 NZLR 1.

53 Ibid per Cooke J (as he then was) at 24.

of trade and a breach of natural justice. In substance that is what the appellant alleges happened here. In my opinion, proof of such allegations would give the court jurisdiction to grant a declaration; and in some cases an injunction would be appropriate.

Many years down the track, the difficulty of applying the simple classification of the licence/application approach remains. In the recent High Court case of White, Gendall J noted that:⁵⁴

Whilst categorization may assist in some circumstances, and lawyers delight in the precision said to arise from such an exercise- the obligation to afford procedural fairness, in the sense of a right to be heard, is a general one. It depends upon the nature of the power exercised, the interests of the person affected and any perceived or actual detriment, whether a person has been led to believe that a hearing will occur, and there may be other general aspects of “fair play in action”.

One simple alternative would be for the distinction to create a starting presumption which was ultimately subject to the same evidential burdens applied to all other cases of legitimate expectation. For while the licence/ application distinction is founded on reason, the utility that it provides is largely subsumed within the larger question of whether on all the facts of a particular case the relevant factors in establishing a legitimate expectation have been met. The fact an argument of expectation involves an application would simply become another factor in the decision, and not the decision itself, or as some have put it, it would be a starting point but not the finish line.⁵⁵ To do so would in some respects recognize the criticisms made of the doctrine of legitimate expectation as a whole- that it is overly complex and adds little to established existing principle.⁵⁶ Megarry’s “expectation” classification, for example, which recognizes the existence of applications that “in form”⁵⁷ raise the same sort of expectations of a license case, provides an example of how a more flexible approach to classification could be applied.

This level of emphasis also seems appropriate when we consider the original purpose for which the distinction was used. In each of the cases discussed above, the need to consider the licence/application distinction arose from the fact that they involved non-statutory bodies for which it was necessary for the courts to establish the jurisdictional question of whether they were open to review. Traditionally, the right to review was said to arise from the fact that members of such a club had a contractual relationship with it that gave rise to obvious obligations absent of a mere applicant. As Salmon LJ explained in the foundational case of Nagle v Fielden:⁵⁸

There can be no doubt that it is permissible to exclude anyone for any reason or no reason from membership of a social club just as anyone (unless he has a statutory right of entry) may be excluded from one’s home. Once however, a man is elected to a club, he acquires contractual rights and cannot be expelled save in accordance with its rules and processes which do not offend against natural justice.

54 White v NZ Stock Exchange [2000] NZAR 297 at 309.

55 Halsbury’s Laws Of England, Administrative Law- Volume 1(1) (2001 Reissue, Judicial Control, Procedural Fairness, Natural Justice in General: 96. Application and Scope Of The Duty To Act Fairly.

56 R v North and East Devon Health Authority; Ex p Coughlan [2001] QB 213 at 645-646 (CA);

Daganyasi v Minister of Immigration [1980] 2 NZLR 130 at 141 per Cooke J (CA).

57 McInnes, above, n 2 at 218.

58 Nagle v Fielden [1966] 1 All ER 689 per Salmon LJ at 698-699.

However even in that situation, the existence of an existing relationship was not necessarily determinative, with exceptions being made where a private body held a monopolistic or ‘closed shop’ style control over an area of significant importance to the lives of citizens.⁵⁹ So not only is the distinction not an absolute, it is also a specific private law concept, with no general application to government bodies whose amenability to review does not rest upon a purported contractual basis.

V. Treatment by the New Zealand Courts

Examination of the decided New Zealand cases reflects this limited application, with no mention of the distinction made in any of the cases that involve a direct statutory body.⁶⁰ As a result, treating the application/licence distinction as simply a rebuttable presumption, or even doing away with it entirely, would not result in any real change to the ambit of judicial review. Focusing solely on applying the orthodox criteria to applications retains the greatest hurdle to establishing legitimate expectation on an application - establishing that there was a sufficiently clear and unambiguous course of conduct to give rise to a reasonable expectation. The law would therefore continue to recognise that while a legitimate expectation may arise to protect an interest less than a recognised legal right, it will not do so lightly. This is an important consideration, for as Cooke J noted in Stininato v Auckland Boxing Association Inc,⁶¹ while legitimate expectation is undoubtedly an area of ongoing development, that does not give a basis for allowing the doctrine to creep further into new areas of application unless there is a principled basis to do so. Indeed: ⁶²

... concern for the development of administrative law as an effective and realistic branch of justice must imply that the discretionary remedies should not be granted lightly. After all, progress is not synonymous with giving judgement for the plaintiffs.

The need to proceed with caution has been reflected in the approach taken by the New Zealand courts in dealing with arguments of legitimate expectation made with regards to an application for benefit, and show that even if an application were able to sustain a legitimate expectation, proving that on the facts would be very difficult.

One of the most recent of these cases, Attorney-General v E,⁶³ is a case in point, and involved an application for a temporary New Zealand visa by immigrants seeking refugee status. From the outset, it is worth noting that while the area of immigration policy is one in which legitimate expectation is often argued,⁶⁴ it is a particularly difficult area in which to obtain a favourable

59 Ibid, affirmed in White v NZ Stock Exchange & Anor [2000] NZAR 297.

60 See the detailed examination of the New Zealand cases later in this paper.

61 Stininato v Auckland Boxing Association Inc [1979] 1 NZLR 1 (CA) at 29.

62 Ibid.

63 Attorney-General v E [2000] 3 NZLR 257.

64 See, for example, Haoucher v Minister for Immigration and Ethnic Affairs (1990) 169 CLR

648; NZ Assn for Migration and Investments v A-G [2006] NZAR 45 (HC); Lalli v Attorney- General (Minister of Immigration) [2009] NZAR 720; Ng Siu Tung v Director of Immigration [2002] HKCFA 6; (2002) 5 HKCFAR 1 and Vea v Minister of Immigration: [2002] NZAR 171 (HC).

outcome. As the Court of Appeal noted in Ashby v Minister of Immigration: “It has long been established that immigration policy is a sensitive and often controversial political issue.” ⁶⁵ As a result: ⁶⁶

Subject to compliance with the statute and other legal obligations, substantial weight will normally be accorded by the Courts to government perceptions of the national interest inherent in the setting of immigration policy and its necessary review from time to time.

Notwithstanding this contextual difficulty, the applicants in the case argued that an Immigration Service Operations Manual created a presumption that temporary Immigration permits would be issued to refugee claimants. In the High Court, Fisher J considered the breadth of discretion expressed in the governing Immigration Act 1987, the provisions of the Manual, a United Nations convention referred to by the Act, evidence from an Immigration service official that temporary permits are normally granted to refugee status claimants, and s 22 of the New Zealand Bill of Rights Act 1990. He concluded that the combination of these factors meant that there was intended to be a strong, although rebuttable, presumption in favour of granting temporary permits which he saw as providing a basis for a legitimate expectation. While the judge himself stated that the decision was prepared “under some urgency”,⁶⁷ it is relevant to note that at no point did he consider the fact this was an application for a desired benefit as impacting upon the legitimacy of the argued expectation.

On appeal to the Court of Appeal, however, the decision was overturned by 4-1 majority, the Court concluding that relevant conduct fell well short of meeting the requisite standard of a legitimate expectation in the binding legal sense. The Court considered that: ⁶⁸

... we are unable to read into (the section of the manual) or the practice adopted anything more than a recognition that in the general run of cases claimants are likely to be granted temporary permits and that if a permit is granted it will normally be a visitor permit. That is a considerable distance from imposing a fetter on the clear statutory discretion, particularly one of the seriously inhibiting kind propounded.

Unfortunately, the Court made few statements as to the nature of doctrine in general, simply stating that: “with respect, we do not see this as a case of legitimate expectation’.⁶⁹ No comment at all was made about the impact of the expectation arising from a new application for benefit as opposed to some change to an established course of affairs. As a result, Attorney-General v E appears to provide only a reminder of the clear and unambiguous representation necessary for a successful argument of legitimate expectation,⁷⁰ and cannot be treated as an authoritative determination of the fact that people applying for a substantive benefit cannot hold a legitimate expectation that benefit will be received.

65 Ashby v Minister of Immigration [1981] 1 NZLR 222, 230-231 per Richardson J.

66 Ibid.

67 Attorney-General v E [2000] NZAR 354 at 363.

68 Attorney-General v E & Ors [2000] 3 NZLR 257, per Richardson P, Gault, Henry and Keith

JJ at 270.

69 Ibid at 269.

70 Ng Siu Tung v Director of Immigration (2002) 1 HKLRD 561.

The failure of the Court of Appeal to make a determinative finding on the relevance of legitimate expectation to applications for benefit is particularly unfortunate considering the existence of a number of High Court decisions that make differing comments upon the issue. One of the first of these was the decision of Williams J in Vea v Minister of Immigration,⁷¹ which involved an application for residency by a Tongan over stayer during a declared amnesty by the Immigration Service. Although the applicant did not expressly plead legitimate expectation, the judge considered that it was implicit in the factual matrix, in which the Immigration Service failed to consider his application within a reasonable time, and then declined that application on the basis of an incident which had occurred some time after it had first been made. His honour noted the comments of the Privy Council in Attorney-General of Hong Kong v Ng Yuen Shiu that:⁷²

When a public authority has promised to follow a certain procedure, it is in the interest of good administration that it should act fairly and should implement its promise so long as implementation does not interfere with its statutory duty

and concluded that the existence of both express and implied representations by the Immigration Service were sufficient to ground a claim of legitimate expectation. Unlike in Attorney General v E, there was: ⁷³

... little doubt that the Immigration Service Circular, and statements made both orally and in written form to the applicant on the basis of the circular, could be characterised as representations that the Immigration Service would act in a certain way or take a certain view of Mr Vea’s application.

Although the issue was not expressly considered, it was implicit in the finding that there is nothing inherent in an application for benefit that means only a “hope” and not an “expectation” would exist. Thus where an applicant can prove on ordinary principles that a reasonable expectation existed in the legal sense, the Court would act to protect that expectation, in this case by declaring that the Immigration Service was not entitled to refuse Mr Vea’s application on the basis that s 7 of the Immigration Act precluded him from the grant of residence.⁷⁴

In NZ Association for Migration and Investments Inc v Attorney General,⁷⁵

Randerson J also considered an immigration case in which an argument of legitimate expectation was made, this time involving visa applicants who expected that their applications, which were filed but not processed before a date for policy changeover, would be determined in accordance with the old policy. Compared to the relatively simple application of legitimate expectation undertaken in Vea, the Judge noted the complex matrix of factors which will impact on the decision as to whether a disappointed assumption was sufficient to ground a legitimate expectation in the legal sense, stating that:⁷⁶

71 Vea v Minister of Immigration [2002] NZAR 171 (HC).

72 Attorney-General of Hong Kong v Ng Yuen Shiu [1983] UKPC 2; [1983] 2 All ER 346 at 351.

73 Vea v Minister of Immigration [2002] NZAR 171 at 180.

74 Ibid

75 NZ Association for Migration and Investments Inc v Attorney General [2006] NZAR 45 (HC).

76 Ibid at 55-56.

It is clear that the approach adopted by the Court in legitimate expectation cases involving policy changes will be very much fact dependent. The response will depend on a range of factors including the degree of specificity of the promise; the significance of the consequences to the individual or class concerned if the promise is not kept or the prior practice not followed; whether the decision maker has given proper consideration to the position of the affected parties; what provision, if any, has been made to accommodate those affected by way of transitional provisions, whether by the creation of exceptions from the application of the new policy or by compensation or otherwise; and the nature and strength of any countervailing public interest factors justifying the course proposed.

On the facts of the particular case, the judge concluded that while there may have been members of the plaintiff ’s association who held some assumption that the previous policy would be applied to their case, and even expended substantial time and effort on the basis of that assumption, it was not sufficiently specific or certain so as to give rise to a legitimate expectation in law.⁷⁷ Nor would any assumption lead to such a finding unless it could be shown that there was a promise or settled practise to that effect.⁷⁸

The unfairness of the case was regrettable, but applied to a large number of individuals to whom no specific promise had been made or settled practise established, and as such was not enough to make the change invalid. Again it is important to note that the fact this was an application for benefit, as opposed to an expectation arising in a different manner, was not considered relevant. Instead the case was simply determined according to the ordinary principles of when an expectation would arise in the traditional sense, and fell short upon that standard.

In White v New Zealand Stock Exchange & Anor,⁷⁹ legitimate expectation arising under an application was considered outside the often difficult area of immigration. The case involved a stockbroker who partway through his career came to require membership of the New Zealand Stock Exchange. He was denied this membership because of a past proven case of dishonesty, and appealed to the membership appeals board, arguing that he had a legitimate expectation to a substantive hearing in order to explain the past dishonesty, and that in simply denying his application the requirements of natural justice had been breached. Because the case involved an application to a non-statutory organization, the licence/application distinction became a major factor in the case, Gendall J going back to the fundamental principle laid out in Nagle v Feilden⁸⁰ that the requirements of natural justice would only apply to an application to a non-statutory body where it constituted a “monopolistic association”, that “controlled certain trades or spheres of human activity in which no man can earn his living unless he is admitted to membership of the association”.⁸¹ Yet even in such a strictly delineated area of application, the judge questioned the utility of the distinction, stating that strict classification was of less value than the factual determination of whether there was a valid expectation in the particular case.⁸² Because the

77 Ibid at 61.

78 Ibid at 60.

79 White v New Zealand Stock Exchange & Anor [2000] NZAR 297.

80 Nagle v Feilden [1966] 1 All ER 689 at 698-699.

81 Ibid at 698-699.

82 White v New Zealand Stock Exchange [2000] NZAR 297 at 309.

obligation of fairness was a general one, a blanket rule that one particular form of claim, like an application, would not succeed could not be made. Thus while the facts of this particular case were not considered to sustain such an expectation, the judge considered that there would certainly be cases in which it would, the obvious example being the established exception of applications which pertained to a person’s ability to work.⁸³ Again this approach is consistent with the suggestion that where the distinction arises, it should be treated as a relevant but not determinative factor.

One example given by the judge was where a candidate sought admission as a barrister and solicitor. His honour noted that: ⁸⁴

A certificate of character is required from the Council of a District Law Society. Lists of candidates for admission are notified to the profession. If an objection alleging some wrongdoing on the part of the candidate was forthcoming, fairness would require that he be told of this, so that at least it could be answered. A formal oral “hearing” may not be required, but an opportunity to respond is.

In that case, the seriousness of the application would make it reasonable to expect that the principles of procedural fairness would be applied, and thus the presumptions arising from the fact the case involved a “mere application” for an unattained benefit would be overcome by the ability to nonetheless prove the expectation was a reasonable one in accordance with orthodox principles.

So even in the limited circumstances where the distinction arises, it is already being treated as a starting point and not the finishing line. This is not surprising in light of the general reluctance to establish fixed rules of application in administrative law. As Cooke J noted in Stininato:⁸⁵

The requirements of fairness or natural justice vary with the facts. If authority still be needed for that truism, it is enough to cite the latest House of Lords case on the subject: Fairmount Investments Ltd v Secretary of State for the Environment.[Fairmount Investments Ltd v Secretary of State for the Environment [1976] 1 WLR 1255, 1265; [1976] 2 All ER

865, 874, per Lord Russell of Killowen].

Taking the New Zealand cases on the matter as whole then, perhaps it is unsurprising that there has not been any definitive statement as to the relevance of an argument of legitimate expectation arising in the context of an application, for in the majority of cases which involve statutory bodies it is not a relevant issue, and in those few cases where it is relevant, exceptions tend to be made where the gravity of the situation warrants it.⁸⁶

83 De Smith, Woolf & Jowell, Judicial Review of Administrative Action, 5^th Edition (Sweet & Maxwell, London, 1995) [8-022] to [8-026].

84 Ibid.

85 Stininato v Auckland Boxing Association (Inc) [1978] 1 NZLR 1

86 See for example the discussion of Stininato (above, n 52) and White (above, n 54), where the

Courts were willing to make an exception had the particular facts imported the need.

VI. Erosion of the Distinction in Other Jurisdictions

Overseas authority also reflects that while the licence/application distinction provides one means of assessing what fairness requires in a particular situation, it should always be regarded as a starting point for analysis and not a definitive conclusion. In the United Kingdom, applications for a number of different types of benefit have been held to warrant a hearing, particularly where the failure to grant the application will cast some aspersion upon the applicant’s character. The need for a hearing will be particularly important where the application is considered according to broad and potentially ambiguous grounds, which in the absence of an opportunity to be heard would make it difficult for the applicant to contemplate where the focus of their submissions should lie. In R v Secretary of State for the Home Department, ex p Fayed,⁸⁷ for example, an application for citizenship by a prominent Egyptian family was held to sustain the legitimate expectation of a fair hearing because of both the obvious substantive benefit they would be deprived of and the likely damage to their reputation it would cause. Lord Woolf MR explained that the legitimacy of this expectation was accentuated by the “rather nebulous” criteria used in judging such applications, which reinforced the need for court supervision in order to ensure that procedural fairness was adhered to.⁸⁸

In R v Secretary of State for Foreign and Commonwealth Affairs, ex parte Everett, the English Court of Appeal came to a similar conclusion with regards to an application for a passport by an English citizen living in Spain. Despite there being outstanding warrants for the arrest of the man in the United Kingdom, this being the reason his application was denied, the Court held that the requirements of fairness still imported the need for him to be given reasons for being declined so as to allow him the opportunity to respond, should exceptional circumstances that justified an exception from the standard policy exist. The potential for a legitimate expectation to arise in application cases is not limited to those which involve personal reputation. In R v Huntingdon District Council, ex p Cowan,⁸⁹ a commercial applicant for an entertainers licence was held to be entitled to be told of all information on which the decision was to be founded and given an opportunity to make representations orally or in writing by virtue of the overall scheme of the statute. Again “that truism”⁹⁰ of administrative law, that the requirements of fairness will hinge upon the particular circumstances of the case, will again prevail over any definitive classification.

87 R v Secretary of State for the Home Department, ex p Fayed [1996] EWCA Civ 946; [1997] 1 All ER 228.

88 Ibid per Lord Woolf MR at 237-238.

89 R v Huntingdon District Council, ex p Cowan [1984] 1 All ER 58, [1984] 1 WLR 501.

90 Stininato v Auckland Boxing Association (Inc) and Others [1978] 1 NZLR 1 per Cooke J at 29.

In Australia, the licence/application distinction has generally been considered of little significance in cases of legitimate expectation, being used in only the traditional sense of determining the amenability of clubs and domestic organizations to review. In Haocher, the High Court of Australia recognized the distinction between a mere hope and a bona fide expectation, but at least in the context of the review of a statutory body, treated the concept as simply a reflection of the high onus involved in establishing a legitimate expectation in the administrative law sense.⁹¹ On the facts, they concluded that a resident who applied for review of a deportation order did have a legitimate expectation that the findings of the appeal authority would not be overturned without a hearing being given. A series of other cases have reflected the principle that the primary problem with sustaining an argument of legitimate expectation on an application for benefit is simply the need to meet the threshold required, and not the existence of a principled base that precludes such a finding as a general rule.

In McDade v State Rail Authority,⁹² for example, guidelines for determining promotions in a fair and unbiased hearing were held to generate a legitimate expectation of a person applying for promotion that the procedure will be followed, although that case could be explained at least in part on the traditional ‘right to work’ exemption. This exemption may also stretch to pensions or other government benefits: in Courtney v Peters, ⁹³ an applicant seeking to establish eligibility for the grant of a pension was held to have an interest affected so as to imply procedural fairness. In Consolidated Press Holdings Ltd v FCT,⁹⁴ taxpayers making an application to the Commissioner of Taxation were held to have a legitimate expectation that the material they provided in support of that application would not be communicated to anyone outside that office without them first being consulted, and thus being given the opportunity to consider the impact that action may have upon their applications. That same year the Queensland courts in Re Murphy and Minister for Minerals and Energy⁹⁵ considered it at least arguable that applicants for assignments of mining leases held a legitimate expectation that further material would be sought from the applicant if it was necessary in order to grant that application.

91 Haocher [1990] HCA 22; (1990) 169 CLR 648 (HCA) per McHugh J at 682.

92 McDade v State Rail Authority (1985) 4 NSWLR 383 at 391-5.

93 Courtney v Peters [1990] FCA 526; (1990) 27 FCR 404; 22 ALD 557; 98 ALR 645 at 652.

94 Consolidated Press Holdings Ltd v FCT [1994] FCA 1367; (1995) 57 FCR 348; 129 ALR 443 at 452, 453 per

Lockhart J.

95 Re Murphy and Minister for Minerals and Energy (1995) 2 QAR 94 at 98.

VII. Conclusion

In light of both New Zealand and overseas authority it is clear there is no binding rule of policy that applications for benefit cannot sustain a legitimate expectation. Such applications may face greater obstacles to meeting the general threshold involved, but they are not predestined to fail. Nor should they be, for the application/licence distinction is a private law concept that has limited or no application in a public law context. The pseudo-contractual analysis it is founded on is not relevant to public bodies, as their amenability to review is based upon different grounds. In practice, the courts may often find that there is no legitimate expectation in application cases due to the remoteness of the relationship between the parties. Such a finding only affirms the adequacy of the general principles to application cases. In particular, the requirement that an expectation be reasonably held ensures that findings of legitimate expectation are not made too readily, while maintaining the discretion necessary for ongoing fairness. According to Lord Cooke, it is a truism that the requirements of procedural fairness depend on the particular facts of a situation. On this basis alone, prescriptive rules of policy like the licence/application distinction should be avoided wherever possible. The case for removal strengthens where the rule also lacks a principled foundation. The quest for simplification may be a defining test of the doctrines utility, with some judges already raising questions about its ongoing viability.⁹⁶

96 The argument that legitimate expectation is overly complex and does not materially add to the abuse of power and substantive unfairness grounds of review is noted by Joseph, (above, n 1) for example, at 966, and led the English Court of Appeal in R v North and East Devon Health Authority; Ex p Coughlan [2001] QB 213 at 645-646 to couch a simpler test of whether reneging on a promise was ‘so unfair [as to] amount to an abuse of power’.