Q12: What has been promised already?

Decision-making may be impacted by expectations that have arisen about the process that will be followed.

These expectations can often be reset through a process of engagement with the individuals concerned.

A legitimate expectation can arise where:

  • a promise has been made to the particular person (expressly or impliedly);
  • an process is outlined by a policy document or guideline; or
  • a department has consistently acted in a particular way in the past.

Usually, a legitimate expectation is relevant only to the process by which the decision was reached, not the outcome.  The courts have been somewhat reluctant to enforce legitimate expectations as to outcome but it is not unprecedented. 

In other jurisdictions, there have been rare cases where decisions have been successfully challenged for breach of an assurance about an outcome.  (See for example R. v. North and East Devon Health Authority, ex parte Coughlan [2001] 1 QB 213).  In that case, that Court was persuaded that a public authority should not be allowed to renege on previous specific assurances to the individual (that she could live in a particular facility).

New Zealand has been very slow to follow this overseas trend. Here it is more likely that, in the case of statutory decision-making, a decision-maker will be able to depart from expectations created as long as the departure is in the public interest and is proportionate, and a fair process is followed. Making decisions contrary to specific assurances that have been provided is high risk, however, and specific advice should be obtained.

Air New Zealand challenged Wellington International Airport Ltd’s increases to landing fees.  The airline claimed a legitimate expectation that the airport company would not seek more than a ‘normal’ return, and would act consistently with precedent.  The Court accepted that the argument was about the outcome – where the parties simply disagreed about what was ‘normal’ for airport fee setting.
The High Court stated that New Zealand courts will give effect to a legitimate expectation of a fair, or a particular, process or procedure, but will not enforce any particular substantive outcome or result.
Air New Zealand Ltd v Wellington International Airport Ltd [2009] NZAR 138

Think about whether there have been any:

  • previously expressed assurances, promises or statements of intent made by the decision-maker;
  • a regular practice that the claimant could reasonably expect to continue;
  • the wording of legislation (for example, if it refers to the principles of equity).
A Ministry official dealing with an application for a transfer of a petroleum exploration permit emailed a third party with a commercial interest in the transfer to advise that the Minister was aware that the third party’s consent was required for the transfer.  The application was subsequently processed without any further contact with the third party.
The Court of Appeal held that the email (a) could not create a legitimate expectation in a substantive outcome (i.e. that the transfer would not be approved); but (b) did create a legitimate expectation that the third party would be notified of the proposed departure from the emailed assurances.  However, the Court refused to quash the transfer decision as it was obvious the Minister would make the same decision again.
GXL Royalties Ltd v Minister of Energy [2010] NZCA 185

If there has been any such promise or practice, and the decision-maker has a good reason for not wanting to follow through, it may be possible to adopt a different course despite the legitimate expectation.  This will require the decision-maker to expressly tell the person that the particular practice or promise will not be followed and the reasons why.  The decision-maker may need to give the affected person an opportunity to comment on that decision, and to take account of the person’s views, before deciding not to follow through with the particular course of action.

It is also possible for an expectation to be overridden by policy change, but the effect of such as a change will depend on a range of factors such the specificity of a promise, the significance of the consequences if the promise is not kept or the prior practice not followed, and whether there has been proper consideration of the position of the affected parties.  Policy change should be carried out with proper notice to those affected and, if appropriate, implemented through a transitional period.  Affected individuals may also need to be given the opportunity to take steps to comply with the new policy – e.g. by having the chance to submit a new application, or to amend an application that has already been made.

Where a claim of legitimate expectation is raised, the inquiry will generally examine:

  • the nature of the commitment made by the public authority, whether by a promise or settled practice or policy;
  • whether it was reasonable to rely on the promise or practice; and
  • what remedy should be provided, if any, if a legitimate expectation is established.
Terminals (NZ) Limited failed in a case seeking to avoid paying excise duty, where it had relied on advice from a telephone conversation with a departmental official to calculate excise duty.  The Court of Appeal said that where a legitimate expectation is established, the court may require the decision maker to follow a process that the decision-maker has expressly or impliedly undertaken to follow. (Examples given were an obligation to give notice to an affected party or to consult before making a decision.)
In other cases, the court may direct the decision-maker to reconsider the decision in the light of the expectation. The judgment reinforced that relief in the form of a substantive outcome is rarely, if ever, granted in New Zealand. To do so would be to usurp the function of the person or body carrying out the relevant public function.
Comptroller of Customs v Terminals (NZ) Ltd [2012] NZCA 598
In New Zealand Association for Migration and Investments Limited v Attorney-General (2006) NZAR 45, the Court was dealing with a challenge to immigration policy. The applicants sought to have their immigration applications processed under a previous (more favourable) policy, on the basis that their applications for different (but arguably related) visas had been being processed at the time of the policy change and that created an expectation that a subsequent application would be processed under the same policy. In the judgment, the Court described the evolution of legitimate expectation, concluding that:
“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 creation of exceptions to the policy or by compensation or otherwise; and the nature and strength of any countervailing public interest factors justifying the course proposed.”
The Court rejected the claim in this case, finding an insufficient connection between the prior applications and the current ones in question. The Court also found that, even if the expectation had been made out, intervention by the Court would not have been appropriate, because the Minister had turned her mind to the impact on these applicants, and the transitional provisions she had been put in place were not irrational. The Minister was entitled to act in the way she had and her decisions were, “quite clearly, in the political category“.