Reasons and the Record – Reconsidering Osmond and Constitutional Perspectives

REASONS AND THE RECORD – RECONSIDERING OSMOND AND CONSTITUTIONAL PERSPECTIVES

Christopher Ellis*

[The author of this article is the joint winner of the 2015 AIAL National Essay Prize. The article by Lucy Jackson, the other winner, was published in Issue 81 of the AIAL Forum.]

The common law provides that a person subject to a decision by an administrator acting under a statutory power is entitled to fairness in decision-making.
The doctrine of procedural fairness has generally been split into two elements: the hearing and bias rules.[1] The case of Public Service Board of New South Wales v Osmond held that fairness does not extend to the provision of reasons for an administrative
decision.[2] In the decades after the decision there has been extensive growth in the number of statutes granting decision-making power. Some jurisdictions have
enacted a statutory right to reasons.[3] However, the common law has retained the Osmond position.

The lack of an administrative right to reasons may leave a person subject to a decision without justification. This may potentially lead to a lack of confidence
in administrators who appear to be exercising their power arbitrarily. In contrast, the judiciary is generally required to provide reasons.[4]

This article examines whether the principle of a right to reasons at common law should be revisited in light of subsequent legal developments. It is argued
that the analysis given by the High Court reflects superseded reasoning and does not withstand a critical analysis. The analogy between the judicial
and administrative processes, contained in the reasoning of Kirby P in the New South Wales Court of Appeal,[5] is appropriate. However, the analogy must acknowledge that a threshold distinction exists between the judiciary, which is subject to constitutional
considerations, and administrative decision-makers, who are not.

Osmond also enunciated the principle that the reasons for a decision are not considered part of the record for the purposes of certiorari unless
expressly incorporated.[6] The failure to consider reasons as part of the record limits the capacity of the courts to issue certiorari for a decision tainted by an otherwise
reviewable error. I argue that the record should be expanded to include the reasons for a decision. This argument is based on later developments in
the judiciary’s protection of its supervisory review jurisdiction, entrenched in Ch III of the Constitution.[7]

The right to reasons at Common Law 

Osmond was a member of the New South Wales public service who unsuccessfully applied for promotion to the position of Chairman of the Local Lands Board.
The adverse decision was appealed to the Public Service Board of New South Wales under the Public Service Act 1979 (NSW). The decision to
dismiss the appeal was communicated orally to Osmond. Subsequently, reasons were requested and refused. Osmond sought judicial review beforethe Supreme
Court of New South Wales, arguing that his prospects for promotion were important rights giving rise to a legitimate expectation that he would receive
the promotion for which he applied.[8] The refusal to provide reasons was arguably a denial of natural justice.[9] Hunt J considered himself bound by precedent in holding that, in the absence of a statutory requirement to do so, the Board was not obliged to provide
reasons.[10] This decision was reversed by the Court of Appeal.[11]

The Court of Appeal 

It is often stated that it would be advantageous for administrators to be required to provide reasons.[12] The policy arguments in favour of a right to reasons include: the assurance of a reasoned opinion, the promotion of public confidence, a check on the
exercise of discretion through increased transparency, the facilitation of appeal or judicial review and the promotion of consistency in administrative
decision-making.[13] The giving of reasons also serves a ‘dignitarian’ function.[14]

The arguments against a right to reasons include the cost and burden on administrators, the nature of some decisions as unreviewable, the imposition of
an obligation on an undefined class of decision-makers and the risk of ‘standard statements in stereotype form that express little of the decision
maker’s true reasoning’.[15] Elliot argued that the burden argument is, ‘properly understood, an argument in favour of a suitably flexible duty to give reasons – not against
the existence of a general duty in the first place’.[16] It was also argued in Osmond CA that this developing area of law should be addressed by parliament, not the courts.[17]

Kirby P’s formulation of the right to reasons suggests that his Honour favoured the pragmatic argument of facilitating either appeal or judicial review:

That obligation will exist where, to do otherwise, would render nugatory a facility, however limited, to appeal against the decision. It will also exist
where the absence of stated reasons would diminish a facility to have the decision otherwise tested by judicial review.[18]

This formulation of the administrative obligation is analogous to the general judicial requirement to give reasons.[19]

Kirby P answered the argument that parliament should address this area by emphasising that this enunciation of the right to reasons was merely an elaboration
of the principles of procedural fairness. The extent of the obligation is ‘what is fair in the particular case’.[20] The breadth of the phrase, ‘what is fair in the particular case’, allows exceptions to the general rule. Kirby P noted two general exceptions: where
the obligation ‘would be otiose’ or where it would require the disclosure of confidential information.[21] Groves argued that, ‘[s]uch exceptions implicitly concede the force of contrary arguments but provide no guiding principle’.[22] However, Groves continued by stating that, ‘[s]uch concerns can easily be overstated. After all, courts have long moderated general rules with criteria
of policy or exceptional circumstances’.[23]

The High Court 

The High Court overturned the decision of the Court of Appeal. Gibbs CJ stated that a right to reasons was, ‘a change which the courts ought not to make,
because it involves a departure from a settled rule on grounds of policy, which should be decided by the legislature’.[24] His Honour referred to decisions of the House of Lords and Privy Council as establishing that the rule against reasons was ‘so clear as hardly to warrant
discussion’.[25] Further reference was made to ‘carefully reasoned’ decisions of the English Court of Appeal.[26] With respect, none of these cases justifies the proposition that there is no right to reasons at common law.

In Sharp v Wakefield,[27] the renewal of a liquor licence was refused on the grounds of remoteness from police supervision and the character of the neighbourhood. The statute
provided that relevant considerations in the grant of a licence included the fitness of the person and the premises to be kept. The appellant argued
that these considerations were relevant only to the grant of a licence and not to its renewal. The House of Lords held that these considerations were
relevant to both the grant and renewal of a licence. Relevantly, Lord Bramwell stated in the course of his analysis: ‘The magistrates have a discretion
to refuse; they are not bound to state their reason, and therefore their decision cannot be questioned’.[28] However, a failure to state reasons no longer insulates the decision-maker from review.[29]

Wrights concerned a Canadian taxation statute which empowered the Minister of National Revenue to disallow expenses which he could determine to
be ‘in excess of what is reasonable or normal for the business’.[30] The Minister disallowed a certain sum of the respondent after receiving a report from the local Inspector of Income Tax. The content of the report
was not communicated to the company or, later, to the reviewing courts. The Privy Council reasoned that there was ‘nothing in the language of the Act
or in the general law which would compel the Minister to state his reasons’.[31] However, the refusal of reasons would not defeat an appeal as holding otherwise would render the statutory right of appeal ‘completely nugatory’.
[32]
Further, it was held that the court was entitled to examine the facts which were before the Minister.[33] If the facts were insufficient in law to support the decision, the inference is that the exercise of discretion was arbitrary.

In Padfield, a statutory scheme created a Board to oversee the marketing and pricing of milk in multiple regions. Complaints concerning the scheme
were referred to the Minister who had discretion to establish an investigative committee. The Minister refused to refer a particular complaint to committee
on the basis that he would be expected to make a statutory order to give effect to the committee’s recommendations, that the complaint ‘raises wide
issues’ and that the matter should be resolved through the scheme.[34] Lords Reid, Hodson and Pearce reasoned that the Minister was obliged under the Act to refer relevant complaints concerning the Board, when it was acting
outside of the public interest, to committee.[35] Their Lordships reasoned that the Minister had accounted for irrelevant considerations in the exercise of his discretion.[36] Further, their Lordships reasoned that the absence of evidence justifying the Minister’s decision gave rise to an inference that the decision was arbitrary.
[37]

The case of Wrights focused specifically on the frustration of a right of appeal.[38] In contrast, Padfield was concerned with the no evidence ground of review. No authority or argument was provided in any of the three cases
for the proposition that the common law does not provide a right to reasons. The principle of no right to reasons appears to offend the need for legitimacy
in the exercise of power by an empowered State representative in a democratic society. It should be justified on a stronger principle than that of
it is ‘clear’.[39] Gibbs CJ attempted to find this justification in ‘carefully reasoned’ decisions of the English Court of Appeal.[40]

The first of these cases was Payne.[41] This case concerned a model prisoner whose application for release on licence was refused. Payne sought review on the ground that he was entitled to
the reasons for refusal. The Court of Appeal reasoned that the relevant statute formed a comprehensive code of procedural fairness. In particular,
the statutory requirement for reasons when the prisoner is recalled from licence demonstrated that the legislation did not intend for reasons to be
provided in the initial grant.[42]

In the Australian context, the High Court has considered the statutory codification of procedural fairness in the case of Re Minister for Immigration and Multicultural Affairs; Ex Parte Miah.
[43]

The court reasoned that the common law protects procedural fairness through the principle of legality.[44] The principle of legality is a presumption which provides that express words or necessary intendment are required in a statute in order to displace
fundamental common law rights.[45]

In Miah,the statute had failed to displace procedural fairness as it was silent on whether it displaced an applicant’s rights and did not declare
that the ‘code’ was exhaustive.[46] Further, the statute had expressly excluded natural justice in relation to other provisions, demonstrating an intention to include natural justice
in sections where it was not expressly excluded.[47] The statute in Payne was similarly silent on displacing common law rights and did not declare the statute an exhaustive code. If Payne were
reconsidered from this perspective, the words of the statute would be insufficient to codify procedural fairness. Further, Payne has later
been distinguished, in part because of ‘the continuing momentum in administrative law towards openness of decision-making’.[48] This demonstrates a greater willingness on the part of the English courts to impose an obligation to give reasons in fairness, despite the steadfast
denial that a general obligation exists.[49]

The second relevant case, Benaim,[50]concerned
two French nationals who sought a certificate of consent which would entitle them to apply for a gaming licence. The applicants were summoned to an
interview. It was clear from the nature of the questions that the Board had acquired information from a confidential external source. The application
was later refused. By letter, the Board noted that it was clear from their questioning that they had concerns regarding the applicants’ character and
activities.[51] The solicitors for the applicants inquired further but were informed that the Board was ‘not obliged to give their reasons’.[52]

Lord Denning MR, with whom Lord Wilberforce and Phillimore LJ agreed, reasoned that the Board had acted in fairness by providing the applicant with the
necessary information through the interview process while keeping their sources secret.[53] The ‘careful reasoning’ against a right to reasons was merely the statement that, ‘Magistrates are not bound to give reasons for their decisions. Nor
should the Gaming Board be bound’.[54] There are two paradoxes in the reliance on this reasoning. First, Australian law binds magistrates and judges to provide reasons in most cases.[55] Gibbs CJ stated in Osmond: ‘there have been many cases in which it has been held that it is the duty of a judge or magistrate to
state his reasons’.[56]

Second, Lord Denning MR relied on an analysis of judicial, not administrative, functions. Gibbs CJ drew a distinction between these functions:

That does not mean that the requirement is an incident of a process which is not judicial but administrative; there is no justification for regarding rules
which govern the exercise of judicial functions as necessarily applicable to administrative functions, which are different in kind.[57]

The distinction requires, in his Honour’s view, a rejection of the judicial analogy as there is ‘no justification’ for it.[58] However, in the same reasoning, Gibbs CJ is relying on Lord Denning MR’s analogy with a judicial function. This paradox cannot be reconciled within
the reasoning of Gibbs CJ.

All of the cases relied upon by Gibbs CJ to reject a right to reasons fail to justify the proposition. They are either without their own authority or reflect
superseded reasoning. The net result of this flawed formal reasoning is that the ‘basis for the High Court decision was essentially one of policy’
[59]


Specifically, whether the imposition of an obligation to give reasons is a decision best left to the legislature.[60] Kirby P and Lacey both reasoned that this reasoning carries less weight given the increased number of statutory schemes providing an obligation
to give reasons.[61] However, there is more than policy in favour of an obligation for administrators to give reasons. There remains an analogy with the judicial requirement
to give reasons. The dissonance in reasoning arising from the reliance on Benaim by Gibbs CJ can be reconciled through an acceptance of
this analogy. The analogy, contrary to Benaim and Osmond, does not defeat a right to reasons at common law.

The judicial analogy – a constitutional perspective 

As noted above, Gibbs CJ rejected the analogy with the judicial requirement of reasons.[62] The justifications for the judicial requirement of reasons include the facilitation of appeal and as an incident of the judicial process.[63] This appears peculiar. Both the judiciary and administrators may be subject to appeal, review and the principles of procedural fairness.[64] This raises the question as to what distinguishes the judiciary and administrators in the context of providing reasons. The answer lies within the
constitutional framework of Ch III. However, the distinction does not defeat the analogy. The distinction merely requires an acknowledgement of the
differing thresholds of according procedural fairness and reasons.

Judiciary

The importance of the judiciary according procedural fairness and reasons cannot be overstated. It is essential to the exercise of judicial power.[65] Ch III protects procedural fairness as a characteristic of the judiciary at both the State and Commonwealth levels in slightly different ways. This
protection is a functional requirement of Ch III.[66]

At the State level, the incompatibility doctrine provides that a State legislature may not confer a function on a State court that is incompatible with
its role as a repository of federal jurisdiction under Ch III of the Constitution.[67] Functions are incompatible if they infringe the institutional integrity, independence, fairness, openness and impartiality of the court.[68] These characteristics remain essential elements of the courts despite the relevant legislature’s capacity to alter their constitution.[69] The application of procedural fairness is one of these defining characteristics.[70] It was not considered in Wainohu whether reasons were included as an aspect of procedural fairness, but their provision was nevertheless protected
as a characteristic of the State courts.[71]

At the Commonwealth level, Ch III provides the framework for a separation of judicial power from non-judicial powers.[72] The general rule is that a non-judicial power may not be granted to a Ch III court unless it is ancillary to the exercise of judicial power or is directed
to some judicial purpose.[73] Judicial power is not limited to the functions of the court. It may extend to ‘law[s] of general application’ which ‘apply in the exercise of its function’.
[74]
A law which abrogates procedural fairness would likely be imposing a non-judicial power on a Ch III court inconsistent with its exercise of judicial
power.[75]

This brief summary demonstrates that procedural fairness and the provision of reasons are defining characteristics of a court under Ch III. The threshold
of reasons required by the constitutional implication is high, but it is not an ‘inflexible rule of universal application’.[76] The content of the threshold was succinctly stated by Gibbs CJ as the ‘express[ion of] the reasons for their conclusions by finding the facts and expounding
the law’,[77] but this may vary with context.[78] For example, some interlocutory decisions may be exempt from the obligation.[79]

Quasi-judicial decision-makers

In contrast to the judiciary, quasi-judicial decision-makers such as tribunals and administrators are not constitutionally required to obey the principles
of procedural fairness. However, this has not prevented the implication of these principles in the decision-making process.[80]

The content of fairness in any given case is determined by the context in which the decision is made. Similarly, the content of a quasi-judicial obligation
to give reasons would also be determined by the context of the decision.[81] Elliot convincingly argues that,

[t]he default position … is that reasons must be ‘intelligible’ and ‘adequate’, enabling the reader to understand how the agency reached its conclusions
on the principal issues of controversy. From this starting point, particular features of the case may call for a heavier or lighter duty to give reasons.
[82]

This bears similarity to the approach later taken by the High Court in Wingfoot Australia Partners Ltd v Kocak.[83] In that case, a statutory scheme governed claim