Judicial Review of Administrative Decisions - Should There be a 21st Century Rethink?

The Hon Justice Steven Rares 15 October 2014

Presented at the "Administrative Law Master-class" seminar for CLE, UNSW

1. I want to examine, a little philosophically, two questions.

(1) What is the purpose of the principles of judicial review of administrative decisions in the context of our present system of government?

(2) Unconstrained by the way in which our domestic administrative law has developed along the labyrinthine search for jurisdictional error, what principles might guide judicial review of administrative decisions?

In particular, I want to explore if tests for reviewing administrative decisions developed in the 19^th Century, when the decision-maker did not give reasons, should be uncritically applied now to decisions for which there is a requirement to give reasons.

2. The foundations of modern administrative law involved the Courts at Westminster Hall restricting encroachments by inferior courts and executive bodies on the Royal prerogative. Those foundations had little to do with the protection of the rights of the citizen. However, if an inferior body failed to observe the rules of natural justice, its decision was invalid. Thus, in the great case of Cooper v The Board of Works for the Wandsworth District^[1], Byles J traced the history of what we now call the natural justice hearing rule to biblical foundations through Fortescue J's judgment in Dr Bentley's case^[2] that was as follows:

"I heard a learned civilian say, that God himself would not condemn Adam for his transgression until he had called him to know what he could say in his defence. Gen. iii. 9. Such proceeding is agreeable to justice."

3. Brennan J said in Attorney-General (NSW) v Quin^[3] that "the scope of judicial review must be defined not in terms of the protection of individual interests but in terms of the extent of power and the legality of its exercise". He went on to limit the jurisdiction to eschew judicial review of the merits of administrative action^[4].

4. In Plaintiff S157/2002 v The Commonwealth^[5], Gaudron, McHugh, Gummow, Kirby and Hayne JJ endorsed what Dixon J had said in Australian Communist Party v The Commonwealth^[6] about the significance of the rule of law in our nation's Constitution, namely that the Constitution:

"is an instrument framed in accordance with many traditional conceptions, to some of which it gives effect, as, for example, in separating the judicial power from other functions of government, others of which are simply assumed. Among these I think that it may fairly be said that the rule of law forms an assumption."

5. The plurality attached that concept to the irremovable original jurisdiction that s 75(v) conferred on the High Court, saying:

"The reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them. The centrality, and protective purpose, of the jurisdiction of this Court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative action. Such jurisdiction exists to maintain the federal compact by ensuring that propounded laws are constitutionally valid and ministerial or other official action lawful and within jurisdiction. In any written constitution, where there are disputes over such matters, there must be an authoritative decision-maker. Under the Constitution of the Commonwealth the ultimate decision-maker in all matters where there is a contest, is this Court. The Court must be obedient to its constitutional function. In the end, pursuant to s 75 of the Constitution, this limits the powers of the Parliament or of the Executive to avoid, or confine, judicial review."

6. We live in a nation whose Constitution assumes, as a fundamental matter, the rule of law, as Dixon J said in the Communist Party case and five justices affirmed in S157^[7]. That raises the question of what content does that assumption have. Often, the Executive invokes, in formulaic terms or as an incantation, what Brennan J said in Quin^[8] about the court not being able to examine the merits of an administrative decision. This led to the somewhat troubling result arrived at by the different reasons of the majority in Minister for Immigration and Citizenship v SZMDS^[9] that I discussed in SZOOR v Minister for Immigration and Citizenship^[10], which Professor Mark Aronson^[11] recently called the "lunatic" standard in Associated Provincial Picture Houses Ltd v Wednesbury Corp^[12].

7. Judicial review is about power; i.e. did the decision-maker have power to make the decision and did he or she act within or outside the power? The Courts place judge made rules on the assessment of whether the power, as exercised, was authorised by law to be exercised in that way. Hence, the criteria about taking or failing to take account of considerations, of bias, of hearing the party affected, of practical fairness, of error of law, of asking the right or wrong question or constructively failing to exercise jurisdiction. But, an error in making a wrong finding of non-jurisdictional fact is, of itself, ordinarily, not an error of law^[13]. It all comes down to examining what the power was and its actual use to see if the law conferring the power authorised the decision complained of to be made as, or in the way, it was made.

8. Thus, it is a curiosity that, although most federal decision-makers must now give a written statement of their material findings of fact, the evidence on which those were based and their reasons for the decision, until recently it seemed that those reasons could be those of a lunatic, as long as someone, other than the person who exercised the entrusted power, could have reasoned to that conclusion. Crennan and Bell JJ in SZMDS^[14] explained their reasoning as follows:

"The complaint of illogicality or irrationality was said to lie in the process of reasoning. But, the test for illogicality or irrationality must be to ask whether logical or rational or reasonable minds might adopt different reasoning or might differ in any decision or finding to be made on evidence upon which the decision is based. If probative evidence can give rise to different processes of reasoning and if logical or rational or reasonable minds might differ in respect of the conclusions to be drawn from that evidence, a decision cannot be said by a reviewing court to be illogical or irrational or unreasonable, simply because one conclusion has been preferred to another possible conclusion." (emphasis added)

9. Their Honours went on to say that the correct approach was to ask whether it was open to the decision-maker "to engage in the process of reasoning in which it did engage and to make the findings it did make on the material before it"^[15]. Heydon J found that the decision had been based on a major premise that the decision-maker had not stated, but nevertheless upheld it^[16]. He said that it was an issue on which minds could differ.

10. One might ask what is the point of asking the lunatic to give his or her reasons if they are not reviewable on their merits as reasons to see whether they disclose that the entrusted power was, as would ordinarily be implicit, actually exercised reasonably? That still allows a very wide scope for discretionary decision-making, as Parliament ordinarily intends when it confers a power. But, it is very difficult to think that, in a Parliamentary constitutional democracy in which the rule of law is a fundamental assumption, Parliament has power, and if it does, routinely exercises it, to authorise the Executive to act as lunatics in the administration of the nation. If the reasons that a decision-maker gives for exercising an entrusted power are not reasonable, how is the rule of law served by upholding that person's exercise of power simply because someone else, but not him or her, could have come to the same conclusion?

11. Where a statute requires a decision-maker to give written reasons for a decision, now, under s 25D of the Acts Interpretation Act 1901 (Cth) and its analogues, the instrument giving those reasons must also set out the findings on material questions of fact and refer to the evidence or other material on which those findings were based. In Minister for Immigration and Multicultural Affairs v Yusuf^[17], McHugh, Gummow and Hayne JJ said that such a requirement enabled a person dissatisfied with the resultant decision to identify with certainty what reasons the decision-maker had for reaching its conclusion and what facts it considered material to the conclusion.

12. A statutory requirement that an administrative decision-maker state its reasons for decision makes transparent what was previously hidden by the High Court's refusal in Public Service Board (NSW) v Osmond^[18] to recognise any obligation to do so at common law. Importantly, the grounds for judicial review were largely developed at a time when the administrative decision-maker's reasoning process was unknown. All one had was the "record", oftentimes too, the material that was before the decision-maker, and the result. That left the Court to speculate about how the decision-maker arrived at its decision. Critically, this is the context in which cases like Wednesbury^[19] were decided. Thus, in Avon Downs Pty Ltd v Federal Commissioner of Taxation^[20], Dixon J explained how the oyster of a decision given without reasons might be opened, saying:

"Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law."

13. Today, when the reasons are there in front of the Court, and they are not reasonable or logical, one could be forgiven for thinking that that is the actual evidence that the power has not been exercised as the law intended. In days past, when the Court had to speculate, without the reasons, about the basis for an administrative decision, there was a good juridicial foundation for a rule that allowed it to stand if a decision-maker could reasonably have come to that decision. However, if the actual reasons deny that the decision-maker did that, why should the Court now condone the decision that the reasons, such as they were, show was arrived at unreasonably?

14. Just as courts must give reasons to justify their exercise of their publicly conferred jurisdiction and powers, the reasons of administrative decision-makers, while meant to inform, are also the decision-maker's justification for acting as he or she did. Those reasons will be either good or bad. But, they should not be shielded from judicial review because someone else may have been able to reason differently and in a way that was reasonable to justify the exercise of an Executive power where the reasons actually given show that the repository exercised that power unreasonably.

15. In Yusuf^[21], McHugh, Gummow and Hayne JJ said that the grounds for judicial review that fastened on the use made of relevant and irrelevant considerations are concerned essentially with whether the decision-maker has properly applied the law. They also said, delphically, that those grounds were not "centrally concerned with the process of making the particular findings of fact upon which the decision-maker acts". They said that the expression "jurisdictional error" embraced a number of different kinds of error that the Court had stated non-exhaustively in Craig v South Australia^[22], namely, a decision that is affected by the decision-maker having identified a wrong question, ignored relevant material, relied on irrelevant material, and in some circumstances, made an erroneous finding or reached a mistaken conclusion^[23].

16. Many of the common law categories now invoked as jurisdictional error were developed when decision-makers did not give reasons for their decision, as Dixon J showed in Avon Downs^[24].

17. However, the question in today's world is whether what was legally unreasonable when there were no reasons is the same when there are. If the reasons are stated, but do not expose a reasonable thought process to justify the exercise of power that the Parliament entrusted to the decision-maker, can the Court overturn the decision?

18. Thus, Professor Aronson identified^[25] a debate about the effect of the High Court's jurisprudence on judicial review between:

(1) whether the result was irrational on the materials before the decision-maker, as in Crennan and Bell JJ's reasoning in SZMDS^[26]; or

(2) the decision-maker's reasoning was irrational, as found in the dissent in that case, of Gummow A-CJ and Kiefel J^[27].

19. In Minister for Immigration and Citizenship v SZJSS^[28], French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ said that a decision-maker's reasons for its factual finding that it gave no weight to particular evidence could not be reviewed. They said that a court reviewing the factual findings as to the weight the decision-maker placed on an aspect of the evidence was not a review of the process by which the decision-maker arrived at its conclusions. And they held that, even if the weighting had been in error, that did not enable the Court to conclude that, on the whole of the evidence, the result "was manifestly irrational or unreasonable".

20. In the last year or so, a change may have begun, for in Minister for Immigration and Citizenship v Li^[29], Hayne, Kiefel and Bell JJ said that the legal standard of unreasonableness should not be limited to what is in effect an irrational, if not bizarre, decision or one so unreasonable that no reasonable person could have arrived at it. They said^[30]:

"Further, in Minister for Aboriginal Affairs v Peko-Wallsend Ltd^[31], Mason J considered that the preferred ground for setting aside an administrative decision which has failed to give adequate weight to a relevant factor of great importance, or has given excessive weight to an irrelevant factor of no importance, is that the decision is "manifestly unreasonable". Whether a decision-maker be regarded, by reference to the scope and purpose of the statute, as having committed a particular error in reasoning, given disproportionate weight to some factor or reasoned illogically or irrationally, the final conclusion will in each case be that the decision-maker has been unreasonable in a legal sense."

21. Their Honours concluded that a decision that lacks an evident and intelligible justification is unreasonable^[32]. They overturned a tribunal's decision not to allow more time to qualify to a person who had failed a skills assessment and was appealing against the decision to deny her a visa, holding that the decision was unreasonable.

22. And, in FTZK v Minister for Immigration and Border Protection^[33], French CJ and Gageler J found a jurisdictional error because a decision-maker had made findings of fact that its reasons did not demonstrate had responded to the question that it had to address. They discerned a logical framework that the relevant statutorily imported criterion imposed, and found that the decision-maker had not complied with that framework. Hayne J found that some of the factors relied on by the decision-maker were not logically probative of the ultimate finding^[34]. Crennan and Bell JJ found a jurisdictional error in the decision-maker failing to consider whether the matters that it had relied on were probative of its conclusion^[35].

23. The Court applies similar principles to those for judicial review of administrative decision in reviewing the exercise of a judicial discretion, as Hayne, Kiefel and Bell JJ noted in Li^[36] by reference to House v The King^[37]. The Court reviews the judge's reasons to see if he or she made an error.

24. Quite where this discussion leaves us in terms of understanding what principles Australian judicial review applies is perhaps not pellucid.

25. As Gleeson CJ said in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam^[38]:

"Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice."

26. Practical injustice can be occasioned by unreasonable or illogical official decision-making. In the end, ordinary people are offended by a decision that seems unfair. Reasons can explain why what seems, without proper explanation, to be unfair, is, in fact, fair or just. But the discipline of giving reasons often exposes to their author that what initially appeared to him or her to be reasonable was, in fact, incapable of justification.

27. Our public law now requires reasons for administrative decisions, at least as an ordinary exercise of powers conferred on the Executive by the Parliament of the Commonwealth. Of course, administrative decision-makers do not have to be, or to reason like, trained lawyers. And they can, and often should, have regard to policy and a wider range of considerations than a judge. The reasons of administrative decision-makers are, as Brennan CJ, Toohey, McHugh and Gummow JJ said in Minister for Immigration and Ethnic Affairs v Wu Shan Liang^[39], meant to inform, and they should not be scrutinised on judicial review overzealously by seeking to discern some inadequacy in the way those reasons are expressed.

28. Nonetheless, I think that, if the slate were clean, it would be preferable for the Courts to set a standard that those reasons must be reasonable in the sense that they explain in a reasonable and intelligible way the decision-maker's justification for its exercise of the power. The lunatics cannot run the asylum. Just because someone else might have arrived at the decision is not sufficient if the actual reasons given by the person who exercised the power do not, on examination, give a reasonable justification for doing so.

29. The well-known criteria of asking the wrong question, taking into account irrelevant considerations, failing to take into account relevant considerations, making an error of law, denying a hearing or bias are still apposite. But, if the reasons given do not explain how the decision-maker arrived at the decision, or they appear to be unreasonable so that the Court cannot see why the result was arrived at, the power has not been exercised according to law.

30. Reasons for administrative decisions should be examinable on their merits, not as to the result reached, but as to their adequacy in justifying the result that was reached. That is not merits review. Rather, it is a principled way of ensuring that the Executive acts within the law by giving explanations that are objectively reasonable in order to justify the exercise of the power of the State in each case. Why else should the law require reasons if, on examination, however illogical, unreasoned, or unreasonable they are, makes no difference, provided that some other decision-maker might have been able to reason to that conclusion? Where so much of our daily life is now entrusted to administrative decision-makers, our standards for judicial review need to be updated to the 21^st Century from those of the 19^th Century, when life was very different.

31. The rule of law assumes that public power will be exercised reasonably. That is because the arbitrary, capricious, unjustified or inadequately justified use of the power of the State is a hallmark of tyranny and the antithesis of the rule of law.

A judge of the Federal Court of Australia, an additional judge of the Supreme Court of the Australian Capital Territory and President of the Judicial Conference of Australia. The author acknowledges the assistance of his associate, Jessica Ji, in the preparation of this paper. The errors are the author's alone.

^[1] [1863] EngR 424; (1863) 14 CB (NS) 180 at 194-195 [143 ER 414 at 420]

^[2] The King v The University of Cambridge (1724) 8 Mod 148 at 164 [88 ER 111 at 120]

^[3] (1990) 170 CLR 1 at 36

^[4] 170 CLR 1 at 37

^[5] [2003] HCA 2; (2003) 211 CLR 476 at 513-514 [103]- [104]

^[6] [1951] HCA 5; (1951) 83 CLR 1 at 193

^[7] [2003] HCA 2; 211 CLR 476

^[8] (1990) 170 CLR 1 at 35-36

^[9] (2010) 240 CLR 611

^[10] (2012) 202 FCR 1 at 3-8 [2]-[19]

^[11] Mark Aronson, The Growth of Substantive Review: the Changes, their Causes, and their Consequences. A paper delivered at Cambridge University's Public Law Conference in September 2014, available online and without charge at SSRN.com

^[12] [1947] EWCA Civ 1; [1948] 1 KB 223

^[13] Enfield City Corp v Development Assessment Commission [2000] HCA 5; (2000) 199 CLR 135 at 154 [44] per Gleeson CJ, Gummow, Kirby and Hayne JJ

^[14] 240 CLR at 648 [131]

^[15] 240 CLR at 648 [133]

^[16] 240 CLR at 632 [77]-[79]

^[17] (2001) 206 CLR 323 at 346 [69]

^[18] (1986) 159 CLR 656

^[19] [1947] EWCA Civ 1; [1948] 1 KB 223

^[20] [1949] HCA 26; (1949) 78 CLR 353 at 360

^[21] 206 CLR at 348 [74]

^[22] [1995] HCA 58; (1995) 184 CLR 163 at 179

^[23] 206 CLR at 351 [82]