Legal Unreasonableness: Life After Li

LEGAL UNREASONABLENESS: LIFE AFTER LI

Michael Barker and Alice Nagel*

In Dunsmuir v New Brunswick (Board of Management),[1] the plurality of the Supreme Court of Canada observed of ‘reasonableness’ that it is one of the most widely used and yet most complex legal concepts
and how, in any area of the law we turn our attention to, we find ourselves dealing with the reasonable, reasonableness or rationality. The Court then
asked:

But what is a reasonable decision? How are reviewing courts to identify an unreasonable decision in the context of administrative law and, especially,
of judicial review?

In Minister for Immigration and Citizenship v Li[2], the plurality of the High Court partially answered these questions, for an Australian audience at least, by stating that ‘[u]nreasonableness is a conclusion
which may be applied to a decision which lacks an evident and intelligible justification’.[3]

Common law developments in judicial review in Australia, however, have sometimes been described as ‘exceptional’, particularly when compared with other
common law jurisdictions such as Canada, the United Kingdom and New Zealand.^[4] Not only is Australian law wedded to jurisdictional error as a central ‘unifying concept’ in administrative law,^[5] but the Constitutional separation of powers has placed a distinct wedge between legality and merits review, with consequences for the availability
of administrative law remedies and notions of deference to executive decision-making.

Li therefore provides an opportunity to explore the development of legal unreasonableness in Australia and to contrast the different trajectories
of this concept in the United Kingdom, New Zealand and Canada.

Legal unreasonableness shares common origins across these jurisdictions and has been envisaged as a form of judicial ‘safety net’^[6] or an intervening ‘judge over the shoulder’^[7] in the exercise of discretionary authority. In light of the strong legal and academic interest in Li, it is interesting to survey the origins,
rationale and continuing development of this concept across the common law world. To what extent is legal unreasonableness a familiar concept, imputed
as a necessary component of good government according to law? To what extent does its ongoing development betray a level of convergence or perhaps,
exceptional terrain, in Australian administrative law?

Source of legal unreasonableness

Associated Provincial Picture Houses Ltd v Wednesbury Corporation[8]came
to be regarded as an authoritative statement of the standard of legal unreasonableness imposed on decision-makers exercising discretionary powers.
In his oft-cited judgment, Lord Greene MR stated that decision-makers will fall into error where they remain within the ‘four corners of the matters
which they ought to consider, [but] have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it’.
^[9]

It is possible to distil from this judgment several principles governing the ambit of discretionary decision-making. First, the Court recognised in Wednesbury that
a decision might be regarded as unreasonable in a general sense where particular errors are shown in the decision-making process. Yet unreasonableness
also exists as a specific, residual ground of judicial review. A court might invalidate a decision on the ground of unreasonableness where a decision-maker
has otherwise taken into account all relevant considerations, exercised power for a proper purpose and afforded the applicant procedural fairness.

Second, courts have accepted that legal unreasonableness is not an avenue for the court to substitute its own view of the correct or preferable decision
to that of the administrative decision-maker. As Lord Greene MR recognised in Wednesbury, the question ‘is not what the court considers unreasonable,
a different thing altogether’.^[10] The Wednesbury doctrine thereby preserved a certain realm of decision-making autonomy, recognising that decision-makers may reach different
views and this alone will not be sufficient to establish legal unreasonableness.

As such, Wednesbury unreasonableness imposed a high threshold. To assuage concerns that this ground of review might allow courts to delve into
the merits of a decision, or produce undue uncertainty for administrative decision-makers, legal unreasonableness was regarded as an exceptional ground,
not lightly satisfied. Lord Greene MR indeed added in Wednesbury,that proving a case of legal unreasonableness ‘would require something overwhelming’.
^[11]

The decision in Wednesbury has been rigorously analysed, applied in a number of common law jurisdictions and, in Australia, until Li,
had acquired a significance much greater than the concrete factual situation before the court. As the High Court emphasised in Li, however,
Wednesbury was not the first or only decision to import standards of reasonableness.

In Sharp v Wakefield,[12] Lord Halsbury LC observed that a discretionary power conferred by statute is intended to be exercised ‘according to the rules of reason and justice,
not according to private opinion; according to law, and not humour … (and) not arbitrary, vague, and fanciful, but legal and regular’.^[13] In Rooke’s Case, the Court stated that the discretion of the commissioners of sewers ‘ought to be limited and bound with the rule of reason
and law’.[14]

A common thread underlying Li, by reference to earlier decisions, is the recognition that reasonableness is an essential element of administrative
decision-making and is implied as a statutory condition on the exercise of discretionary power. French CJ observed that this ‘framework of rationality’
is premised on an implication that ‘parliament never intended to authorise’ a decision attended by legal unreasonableness.^[15] Likewise Gageler J recognised that legal unreasonableness has its origins in a statutory implication, which is well-understood by the three branches
of government.^[16] So too the plurality emphasised that parliament is taken to intend that a discretionary power will be exercised reasonably.[17]

While, therefore, legal unreasonableness has common law origins and potentially even deeper historical antecedents, its force is now principally derived
as a statutory implication. Analogous with the requirements of procedural fairness and the formation of specific states of mind in administrative decision-making,
principles of statutory interpretation have an important role to play.

The emphasis placed on legal unreasonableness as a statutory implication, however, raises the question as to whether this requirement could be excluded
by express statutory language. Could parliament grant a decision-maker licence to make decisions that are arbitrary or patently unreasonable? Would
the only check on such legislation be democratic processes, or would any Constitutional limitation stand in its way?

In Minister for Immigration and Border Protection v Singh, the Full Court of the Federal Court (Allsop CJ, Robertson and Mortimer JJ) accepted
that reasonableness as a statutory presumption could be modified or abrogated by clear statutory language: [18]

Subject to any impinging Constitutional consideration, the presence of a clear statutory qualification or contrary intention may be capable of modifying
or excluding either implication (natural justice or legal unreasonableness).

The Full Court left open what this ‘impinging Constitutional consideration’ might be. Indeed, following the High Court’s decisions in Plaintiff S157/2002 v Commonwealth
[19]

and Kirk v Industrial Court of New South Wales,[20] there is ongoing discussion as to whether the entrenched minimum provision of judicial review might serve to shield substantive grounds of review,
such as natural justice or legal unreasonableness, as well as a court’s general supervisory jurisdiction.^[21]

While not attempting to grapple with these Constitutional law dimensions here, the judiciary’s approach to attempts to exclude or limit natural justice
requirements is illustrative. Courts have accepted that the legislature may limit the application of natural justice principles by clear statutory
language. The starting point, however, is always an assumption that the legislature intends such principles to apply, unless an express contrary intention
is shown.^[22] From this perspective, reasonableness will always remain the default position in administrative decision-making under statute.

Rationale for legal unreasonableness

The acceptance of legal unreasonableness as a ground of judicial review raises important questions about the relationship between different arms of government
and the intensity of review applicable to discretionary decision-making. In our system of law and government, it is not really controversial that discretionary
powers should be bounded in some way; indeed, the notion of completely unbridled discretionary power is the antithesis of the rule of law. Yet, once
it is accepted that discretionary powers should be subject to some form of legal regulation, the key question is the extent to which the judiciary
should interfere in examining the reasonableness of the process or outcome of decision-making, and the ambit of decisional freedom otherwise left to
a decision-maker.^[23]

Notions of reasonableness in decision-making have long pervaded legal, political and philosophical thought. In Laws, Plato described reason as
a ‘sacred and golden cord … the common law of the State’.^[24]

Standards of legal reasonableness have been imported into a number of areas of decision-making. In the context of planning law, for example, the High Court
has affirmed the test articulated by the House of Lords in Newbury District Council v Secretary of State for the Environment,[25] that a condition attached to a grant of a planning permission will be invalid unless:

the condition is for a planning purpose and not for any ulterior purpose;

the condition reasonably and fairly relates to the development permitted; and

the condition is not so unreasonable that no reasonable planning authority could have imposed it.^[26]

The ground of unreasonableness, or at least the formulation articulated in Wednesbury, also finds clear expression in s 5(2)(g) of the Administrative Decisions (Judicial Review) Act 1977 (Cth).
This section provides that a person aggrieved by an administrative decision may challenge the decision on the ground that the exercise of power ‘is
so unreasonable that no reasonable person could have so exercised the power’.

Legal unreasonableness also shares parallels with the grounds for appellate review of discretionary judicial decisions. In House v The King, Starke
J recognised that judicial discretion is ‘very wide, but it must be exercised judicially, according to the rules of reason and justice, and not arbitrarily
or capriciously or according to private opinion’.[27] The plurality (Dixon, Evatt and McTiernan JJ) similarly observed that appellate error might be demonstrated where the exercise of judicial discretion
produces a result which is ‘unreasonable or plainly unjust’. [28]

As an abstract value, reasonableness has strong appeal in administrative

decision-making. The Hon Dame Sian Elias, Chief Justice of New Zealand, writing

extra-judicially, has observed that ‘[g]ood government according to law is the end sought by administrative justice. It must entail reasonableness,
fairness, legality, consistency, and equal treatment …’^[29] Likewise, Chief Justice French, also writing extra‑judicially, has described reasonableness in the exercise of governmental power as ‘an aspect of
the rule of law’.^[30]

The doctrine of unreasonableness serves to shore up a level of credibility, transparency and accountability in governmental decisions, helping to legitimate
and justify the conferral of power on administrative decision-makers. In the modern administrative state, a plethora of functions and discretionary
powers has been conferred on private and public decision-makers and lines of accountability have become increasingly complex. It is a core component
of the rule of law that administrative decisions are made in accordance with the subject matter, scope and purpose of enacting legislation, which includes
the requirement of reasonableness. This framework of rationality ultimately provides a level of indirect accountability for decision-makers exercising
discretionary powers. As Galligan has suggested, ‘discretion is a legitimate and central part of modern government, and legal regulation is concerned
in its main emphasis to enhance that legitimacy’.[31]

To this end, legal unreasonableness provides an important final check on administrative decision-making. While unreasonableness has been regarded hitherto
as an exceptional ground of review in Australia, its existence confirms the importance our system of law and government places on logical and rational
decision-making.^[32] When it is viewed as a component of good decision‑making and an aspect of accountability which the legislature and executive are taken to have endorsed,
legal unreasonableness promotes a level of certainty and stability in administrative law decision-making over time.^[33]

Nonetheless, the invocation of unreasonableness as a ground of judicial review has often been controversial, due to concerns that it presents an assault
on the traditional distinction between merits and legality review.^[34] There is a fine line between an unreasonable decision and a reasonable decision with which one disagrees.^[35] The High Court has repeatedly emphasised that legal unreasonableness is not a covert method for the judiciary to express its disapproval of an administrative
decision.^[36] The tension in every legal system is how to introduce a check on discretionary authority and ensure that judges are not blinkered when it comes to
the reasonableness of an administrative decision; yet simultaneously, manage to preserve the flexibility at the heart of discretionary power and accommodate
the expertise, democratic accountability and Constitutional limitations placed on different decision-makers.

A survey of recent developments in the United Kingdom, New Zealand, Canada and Australia provides a useful framework for examining how each common law
country has responded to these tensions in reasonableness review.

United Kingdom

Wednesbury unreasonableness continues to be applied in the United Kingdom, although the precise formulation and level of scrutiny applied to discretionary
powers has evolved considerably. Several attempts have been made to reformulate the test. For example, Lord Diplock described legal irrationality as
‘a decision which is so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the
question to be decided could have arrived at it’.^[37]

In its various guises, the notion of legal unreasonableness has survived and continued to prosper in the United Kingdom. The trend has been towards adopting
a variegated standard of Wednesbury review, which requires courts to give ‘anxious scrutiny’ to decisions impacting on fundamental rights,
^[38]


rather than to anxiously scrutinise the distinction between merits and legality review. Under this approach, the intensity of judicial review of
a decision will vary according to the subject-matter and the gravity of the impact on individuals affected by the decision.^[39]

Laws LJ explained this approach in R v Department of Education and Employment; Ex parte Begbie:[40]

Fairness and reasonableness (and their contraries) are objective concepts; otherwise there would be no public law, or if there were it would be palm tree
justice. But each is a spectrum, not a single point, and they shade into one another. It is now well established that the Wednesbury principle itself
constitutes a sliding scale of review, more or less intrusive according to the nature and gravity of what is at stake.

According to Laws LJ, the principle of variegated unreasonableness review is closely intertwined with other developments in the United Kingdom, such as
the doctrine of substantive legitimate expectation. At their roots, each of these concepts is directed towards limiting ‘abuse of power’.^[41]

On occasion, judges in the United Kingdom have expressed concerns about the vagueness or circularity of Wednesbury unreasonableness, and some
commentators have gone so far as to call for a ‘Wednesburial’.^[42] For example, Lord Cooke of Thorndon stated in R (on the application of Daly) v Secretary of State for the Home Department that ‘the day will
come when it will be more widely recognised that [Wednesbury] was an unfortunately retrogressive decision in English administrative law, in
so far as it suggested that there are degrees of unreasonableness and that only a very extreme degree can bring an administrative decision within the
legitimate scope of judicial invalidation’.[43]

As Wednesbury has evolved and courts have become more familiar with principles flowing from the Human Rights Act 1998 (UK), the debate
has shifted to whether proportionality should replace unreasonableness as a more apt instrument of legal regulation. Proportionality, a concept emerging
from civil legal systems and adopted in the text of treaties and jurisprudence of the European Court of Human Rights, has come to be regarded by some
as ‘at least a rival to, if not a complete substitute for, Wednesbury unreasonableness’.^[44] However, courts have not yet made the leap to embrace proportionality review and, instead, legal unreasonableness continues to be applied as the appropriate
legal test.^[45]

New Zealand

The development of legal unreasonableness in New Zealand has largely paralleled trends in the United Kingdom. Initially, New Zealand courts accepted the
primacy of Lord Greene MR’s judgment in Wednesbury. In Wellington City Council v Woolworths New Zealand Ltd (No 2), the Court of
Appeal held that a decision may be vitiated on the ground of unreasonableness, ‘if the outcome of the exercise of discretion is irrational or such
that no reasonable body of persons could have arrived at the decision’.[46] In this respect, legal unreasonableness was similar to the position in Australia at the time.^[47]

However, in the 1990s, New Zealand courts followed the United Kingdom and recognised a variegated standard of legal unreasonableness.^[48] Courts have accepted that the intensity of review will adapt to the context of the discretionary power, and will require heightened scrutiny when a
decision affects fundamental rights.

This approach is exemplified by the decision in Discount Brands Ltd v Northcote Mainstreet Inc.[49] Hammond J explained that New Zealand courts have moved to adopt a ‘hard-look doctrine’ or ‘super-Wednesbury’ doctrine, whereby the depth of
review is ‘altered to (at least) a less deferential “reasonableness” inquiry’ where important interests are involved.[50]

In Wolf v Minister of Immigration, Wild J stated that the context in which a decision is made is important, having regard to the identity of the
decision-maker, the process of decision-making, the subject matter, policy content and the importance of the decision to those affected by it.[51] His Honour explained the basis for the variegated standard of unreasonableness as follows:[52]

a)The decision in Wednesbury was made more than fifty years ago, a time at which administrative law scarcely existed as a discrete area of law
and neither New Zealand nor the United Kingdom had enacted a Human Rights Act.

b)Courts have recognised a variable standard of legal unreasonableness for at least twenty years.

c)Many leading administrative law texts and commentators have accepted this shift.

d)Similar developments have occurred in the United Kingdom and Canada.

Canada

Legal unreasonableness in Canada has been characterised by attempts to create a more ‘finely calibrated system of judicial review’, which adequately balances
respect for parliamentary supremacy with the rule of law.^[53] In Canada (Director of Investigation and Research) v Southam Inc, Iacobucci J held that an unreasonable decision is one that ‘in the main,
is not supported by any reasons that can stand up to a somewhat probing examination’.[54]

The Supreme Court endorsed a ‘pragmatic and functional’ approach to legal unreasonableness in Baker v Canada (Minister of Citizenship & Immigration).
[55]

It recognised that there is a spectrum of standards of review, ranging from patent unreasonableness, which is the most deferential; through to
correctness, where no deference is shown; with reasonableness simpliciter lying somewhere in the middle.

However, these three standards produced complexity and uncertainty, which cut against the usefulness of having multiple standards of review. The plurality
remarked in Dunsmuir that ‘[t]he recent history of judicial review in Canada has been marked by ebbs and flows of deference, confounding tests
and new words for old problems, but no solutions that provide real guidance for litigants, counsel, administrative decision makers or judicial review
judges’.[56]

The plurality acknowledged that it may be difficult to distinguish between the patent unreasonableness standard and the reasonableness simpliciter standard,
and that the strictness of the patent unreasonableness standard contemplates that there will be times when parties must simply accept an unreasonable
or irrational decision, if the unreasonableness of the decision is not sufficiently immediate or obvious.

The plurality decided in Dunsmuir that only two standards of review should be used: correctness and reasonableness. Questions of fact, discretion
and policy will generally attract a reasonableness standard, whereas constitutional questions, legal questions important to the legal system as a whole
and matters of jurisdiction will involve a correctness standard.[57] A court reviewing the reasonableness of a decision should consider the ‘justification, transparency and intelligibility’ of the decision-making process
and whether the decision ‘falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law’.^[58]