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Sunday, August 29, 2010

Administrative Law - Doctrine of Legitimate Expectency


An important function of the law is to provide certainty by making possible legitimate expectations. The law cannot be based on trust and expectations, however reasonable and fair they may be. On the one hand, the law must offer certainty and constancy so that individuals can direct their actions accordingly. For this purpose laws are established and binding decisions are taken, and since these laws and decisions create legitimate expectations in the minds of individuals they cannot arbitrarily be amended or repealed later on. On the other hand, the law cannot be static because it has to give shape to a concept such as justice in a rapidly changing society. Our society expects government to pursue an ambitious environmental policy, to take far-reaching measures to combat unemployment. These wishes require continuous adjustment of the law.

The question which arises then is which legitimate expectation must be fulfilled: the expectation which individuals can legitimately derive from the policy which is contrary to the law, or the expectation which can legitimately be derived from the law in general? There may be circumstances in which the legitimate expectation derived from the policy is so strong that the law must be overruled. This theme of the so-called contra legem effect of the principle of legitimate expectations will be dealt with at length in the remainder of this article. Here, however, it is sufficient to note that the principle of legitimate expectations is a principle that has fairly ambivalent ambitions. Two other observations can be made in this connection.
• First of all, the validity of the principle of legitimate expectations is not absolute in the sense that the legitimate expectations created by executive action must always be fulfilled come what may. In a concrete case, it will ultimately always be necessary to balance the interests which one or more individuals have in seeing the principle fulfilled against the possibly conflicting public interest at large or the interests of third parties.
• The second observation is connected with this. Since the effect of the principle of legitimate expectations requires interests to be balanced in concrete cases, the principle has been developed mainly by way of case laws. Although some aspects of the principle are embodied in the statute, this does not alter the fact that the principle has for the greatest part remained judge-made law.

Clearly, the extent to which individuals can put their trust in the principle of legitimate expectations under constitutional and administrative law is often fairly uncertain. It ultimately comes down to an assessment of the merits in a concrete case, with the court having the final say. From the point of view of legal certainty this could be regarded as a fairly gloomy picture. Yet this has to be put in perspective. Over the years various criteria
by which the merits can be balanced have been developed in the decisions of the administrative courts.

Nature -

A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The scope of "legitimate expectations" has been observed as:
“A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise cither from a representation or promise made by the authority, including an implied representation, or from consistent past practice.

Object -
Principles of natural justice will apply in cases where there is some right which is likely to be affected by an act of administration. Good administration, however, demands observance of doctrine of reasonable¬ness in other situations also where the citizens may legitimately expect to be treated fairly.

Doctrine explained -
In the leading case of Attorney General of Hong Kong v. Ng Yuen Shiu , Lord Fraser stated: "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 the implementation does not interfere with its statutory duty."
Wade also states:
"In many cases legal rights are affected, as where property is taken by compulsory purchase or someone is dismissed from a public officer. But in other cases, the person affected may have no more than an interest, a liberty or an expectation . . . 'legitimate expectation' which means reasonable expectation, can equally well be invoked in any of many situations where fairness and good administration justify the right to be heard."

Contemporary Importance -
Of late the doctrine of legitimate expectation is being pressed into service in many cases particularly in contractual sphere while canvassing the implications underlying the administrative law. The legitimacy of an expectation can be inferred only if it is founded on the sanction of law or custom or an established procedure followed in regular and natural sequence.
It has to be noticed that the concept of legitimate expectation in administrative law has now, undoubtedly, gained sufficient importance. It is viewed by some that Legitimate expectation is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action and this creation takes its place beside such principles as the rules of natural justice, unreasonableness, the fiduciary duty of local authorities and in future, perhaps, the principle of proportionately


THE RISE OF LEGITIMATE EXPECTATION ________________________________________

Although the doctrine of legitimate expectations is being used and appreciated in many different cases in India, it has developed in Britain over the last thirty years. The description of the leading cases in this part will show that the following situations generate legitimate expectations and lead to the implication of a duty of procedural fairness when a decision is at the discretion of an administrative body.
• First, where the nature of the interest is such that the person has a right to expect that the privilege will continue (as in, for example, the case of a licence), a hearing of some sort is required before the benefit can be withdrawn.
• Second, if the decisionmaker has made a representation that a procedure in accordance with natural justice will be followed, this will be respected. In addition, if there is a regular practice of according a hearing or other procedure, this procedure will be accorded in the future.
• Finally, if a representation is made that a certain decision will be made or certain criteria will be applied, the agency will be bound to accord natural justice to a person before applying different criteria or making a different decision.


A. Schmidt’ case -
The first appearance of legitimate expectations was in the judgment of Lord Denning M.R. in Schmidt v. Secretary of State for Home Affairs. The Home Office, which administered the Aliens Order, 1953, had a policy of according aliens studying at a “recognized educational establishment” a permit to live in Britain. The plaintiffs had been admitted to study at the Hubbard College of Scientology and were given permits to stay in the country for a certain period of time. The home secretary, because of concerns about Scientology, announced that the college would no longer be considered a “recognized educational establishment.” When the plaintiffs applied for renewal of their permits, they were refused. They alleged that this constituted a denial of natural justice, since they were not given a hearing before this decision was made.

Lord Denning emphasized that, since the plaintiffs were aliens, they were only entitled to remain in the country “by licence of the Crown.” He held that the duty to allow representations to be made “depends on whether [the plaintiff] 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 this case there was no legitimate expectation because the permits were for a limited time, which had expired. However, Lord Denning stated that the plaintiffs would have been entitled to a hearing if their permits had been revoked before they expired. Were this the case, they would have had a legitimate expectation of being allowed to remain in the country for the time specified, which would have entitled them to a hearing.

B. Liverpool Taxi case -
The doctrine was further developed in R. v. Liverpool Corporation, ex parte Liverpool Taxi Fleet Operators’ Association. Although this decision was also written by Lord Denning, the words “legitimate expectation” themselves never appear in the judgment. The number of taxi licences in Liverpool had been limited by the county council to 300 for some time. When the taxicab owners’ association heard that the council was considering increasing the number of taxi licences, it expressed concern, and received letters from the town clerk assuring it that there would be opportunities for the taxicab owners to make representations and that “interested parties would be fully consulted.” The city council subcommittee did recommend an increase in the number of licences. After the city council meeting which approved these minutes, the subcommittee chair announced that the number of licences would not be increased until national legislation, then pending, to restrict “private hire cabs” was in force. This undertaking was confirmed in a letter to the association. Nevertheless, several months later, without informing the association, the committee and the city council decided to begin increasing the number of licences almost immediately. Although the owners asked for a hearing when they indirectly heard about the pending resolution, this was denied to them.

Lord Denning held that this promise gave the plaintiffs a right to another hearing if a decision was to be made contrary to it. He wrote:
“….So long as the performance of the undertaking is compatible with their public duty, they must honour it. And I should have thought that this undertaking was so compatible. At any rate they ought not to depart from it except after the most serious consideration and hearing what the other party has to say: and then only if they are satisfied that the overriding public interest requires it…..”

This passage establishes that if an undertaking has been given by a public body, it cannot be changed without at least giving the affected person a chance to be heard. This substantive promise could not be broken without giving the owners special procedural rights.

C : McInnes’ case -
In McInnes v. Onslow Fane, the plaintiff had applied to the British Boxing Board of Control for a boxing manager’s licence but had been refused without reasons or an oral hearing. Megarry V.C. distinguished three types of cases involving licences or other cases where “rights” were not involved. If there were a forfeiture or revocation of a licence or membership, the plaintiff was generally entitled, it was held, to the full range of procedures of natural justice. At the other extreme, if what was at issue were merely an application for a benefit, there was no right to be heard. Megarry V.C. suggested that legitimate expectations constituted an “intermediate category.” These arose, he suggested, where someone’s licence or membership was up for renewal, or where it had been granted informally but was waiting for confirmation. Thus, following this decision, either the nature of the interest presently held (McInnes), or a representation or statement (Schmidt, Liverpool Taxi) could give rise to an expectation

D : Ng Yuen Shiu case –

The Privy Council addressed the issue of legitimate expectations in Attorney-General of Hong Kong v. Ng Yuen Shiu. The government of Hong Kong had instituted what was known as a “reached base” policy for illegal immigrants. If an immigrant from China reached the urban areas of Hong Kong without being arrested the person was not deported. However, because of an influx of illegal immigrants, the policy was changed and it was announced that illegal immigrants from China would begin to be deported. In response to a petition, an immigration official read a statement that illegal immigrants from that country would “be treated in accordance with procedures for illegal immigrants from anywhere other than China. They will be interviewed in due course. No guarantee can be given that you may not subsequently be removed. Each case will be treated on its merits.” The plaintiff, an illegal immigrant who had entered from Macau, reported to an immigration office to register. However, at his interview the next day, he was only allowed to answer questions that were put to him, and was not allowed to express what he felt were the humanitarian reasons he should stay.

Lord Fraser of Tullybelton held that the statement that each case would be treated on its merits gave rise to a legitimate expectation on the part of the plaintiff, who therefore had a right to bring forward the reasons he should be allowed to stay. Though he did not give a complete definition of the concept, he held that a representation by the responsible authority was one way of generating such an expectation. Finally, he said, if the representation “conflicted with its duty” the body would not be held to it. If the representation made was ultra vires, the body would not be required to grant a hearing when departing from it. this case was also the first leading case in which the terminology used was of fairness, rather than natural justice.

E : Khan’s case –

Ng Yuen Shiu was applied and developed in the Court of Appeal in R. v. Secretary of State for the Home Department, ex parte Khan. In this case, the Home Office had circulated a pamphlet outlining the criteria which it would use when exercising its discretion to allow a child to come into Britain for adoption. The circular also set out a procedure for gaining approval. The plaintiff wished to adopt his relative’s child, who lived in Pakistan. He followed the steps set out in the circular. However, the criteria set out in the circular were not applied, since those which the Home Office normally used were quite different.

Parker L.J. held that the circular created a legitimate expectation on the part of Khan that the criteria contained in it would be the ones applied. He was entitled to a hearing at which he could argue why the stated criteria should be applied to him. There is also a suggestion that the ministry could not apply different criteria unless there was an overriding public interest that justified changing them. Like Liverpool Taxi, Khan shows that a representation by the decision-making body that decisions will be made based on a certain policy can give rise to special procedural protections. The expectation here was not of a procedure, but of the application of a certain set of criteria, a “substantive” expectation.

F. GCHQ case –

Perhaps the most extensive application of the doctrine came in what is now generally considered the leading case on legitimate expectations, in the House of Lords in Council of Civil Service Unions v. Minister for the Civil Service. The case involved employees of Government Communications Headquarters (GCHQ), which was responsible for communications and intelligence functions for the government. The several thousand people employed in this branch of the government were represented by various national trade unions. As part of the national unions’ action against the Thatcher government, several one-day strikes, work-to-rule campaigns, and overtime bans were carried out by the unions working at GCHQ. As a result of concerns about these job actions and their effect on national security, Thatcher, who was also the minister for the civil service, announced that the workers at GCHQ would no longer be entitled to belong to the national unions, and could only belong to an approved staff association. This was done without any consultation with the unions, despite the fact that in the past, changes in the civil servants’ conditions of employment had been the subject of consultation. The unions argued that they were entitled to a hearing before the decision was made.

Lord Diplock emphasized that a legitimate expectation was not simply one which a reasonable person would entertain, but required something more to be “legitimate.” This analysis, though, suggested that the only types of promises that could trigger the doctrine were those of hearings (as in Ng and GCHQ), and minimized the possibility of promises of substantive benefits giving rise to procedural rights (as, for example, in Khan). Lord Fraser’s view in the same case, however, was broader and did seem to encompass the Khan situation.


LEGITIMATE EXPECTATION: LEADING CASES ________________________________________
The emerged concept of legitimate expectations in administrative law has now gained sufficient importance. Legitimate expectation is the latest recruit to the long list of concepts fashioned by the Courts for the review of administrative actions. The Legitimate action would arise when there is an express promise given by a public authority that there is a regular practice of certain thing which the claimant can reasonably expect to continue. It therefore follows that the concept of legitimate expectations consists of inculcating an expectation in the citizen that under certain rules and scheme he would continue to enjoy certain benefits of which he would not be deprived unless there is some overriding public interest to deprive him of such an expectation.

The basic principles in the branch were enunciated by Lord Diplock in Council of Civil Service Union v. Minister for the Civil Service, It was observed in that case that for legitimate expectation to arise, the decisions of the administrative authority must affect the person by depriving him of some benefit or advantage which either
• he had in the past been permitted by the decision make to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it and which he has been given an opportunity to comment or
• he has received assurance from the decision maker that they will not be withdrawn without giving him first an opportunity of advancing reason for contending that they should not be withdrawn.

The procedural part of it relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made. The substantive part of the principle is that if a representation is made that a benefit a substantive nature will be granted or if the person is already in receipt of the benefit that it will be continued and not be substantially varied, then the same could be enforced.
Leading cases -

It is clear that promises that a certain procedure will be followed give rise to legitimate expectations in India, as they do in Britain, and this is the most accepted manner in which expectations arise. One of the fundamental principles behind the doctrine is that fairness requires public agencies to keep their word and follow their stated policies about procedure.

In Attorney General of Hong Kong v. Ng Yuen Shiu the government announced that illegal immigrants would not be deported till their cases would be considered individually on merits. A deportation order was passed against the applicant without affording opportunity. Quashing the order, the Court observed:
"When a public authority has promised to follow a certain pro¬cedure, 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."

In Navjyoti Coop. Group Housing Society v. Union of India as per the policy of the government, allotment of land to housing society was to be given on the basis of "First come first served". It was held that the societies who had applied earlier could invoke the doctrine of 'legit¬imate expectation'.
In R v Commissioners for Inland Revenue ex parte Unilever Plc, the Inland Revenue's practice was to allow applicants' claims for loss relief even if the claim was not made in accordance with statutory requirements. Then after many years, a £17m claim was rejected. This was held to be an unfair abuse of power and gave rise to a legitimate expectation requiring substantive protection.
In the case of Navjyoti Co-Op. Group Housing Society V. Union of India, it has been held that person enjoying certain benefits/advantage under the old policy of the Government derive a legitimate expectation even though they may not have any legal right under the private law in the context of its continuance. The doctrine of 'legitimate expectation imposes in essence a duty on the public authority of act fairly by taking into consideration all the relevant factors relating to such legitimate expectation that may have a number of different consequences and one of such consequences is that the authority ought not to act to defeat the legitimate expectation without some over-riding reasons of public policy to justify its doing so.
In R v SoS for the Home Department ex parte Ruddock, the applicants sought a declaration that the Secretary of State had acted unlawfully in authorising warrants for telephone tapping. They maintained they did not come within the stated criteria. Taylor J found that they did, but if not, then they could have legitimately expected that their telephones would not be tapped. This right could have been protected by substantive relief. Prior consultation before criteria were established or changed was obviously inappropriate in such cases.
Furthermore, if the authority proposes of defeat a person's legitimate expectation it should afford him an opportunity to make a representation in the matter. In the case of Food Corporation of India V/s M/s Kamadhenu Cattle Feed Industries, it has been held that non-arbitratrariness, fairness in action and due consideration of legitimate expectation of the affected party are the essential requisities for a valid state action. It has also been held that whether expectation is legitimate is a question of fact which has to be determined in the larger public interest.

The Supreme Court in the case of Union of India v/s. Hindustan Development Corporation, elaborately considered this principle. In this case, it has been held that the principle of legitimate expectation gave the applicant sufficient locus standi to seek judicial review and that the doctrine was confined mostly to a right to fair hearing before a decision which resulted in negativing a promise or withdrawing an undertaking was taken. It did not involve any crystallized right. The protection of such legitimate expectation did not require the fulfillment of expectation where the overriding public interest required otherwise. However, the burden lay on the decision maker to show such an overriding public interest. In this case several English and Australian cases were referred to and conclusions were then reached.

In the case of Madras City Wine Merchant Association V/s State of Tamil Nadu, , the matter related to the renewal of liquor licences rule which were statutorily altered. It was therefore held that the repeal being a result of a change in the policy by legislation, the principle of non-arbitrariness was not invokable. Then again in M.P. Oil Extraction V/s State of M.P. (1997) 7 SCC 592, it was held that the State's Policy to extend renewal of an agreement to selected industries which came to be located in Madhya Pradesh on the invitation of the State, as against the local industries was not arbitrary and the said selected industry had a legitimate expectation of renewal under the renewal claims.

In this way, I have referred many leading case laws which are important to be discussed. Hence finally concluding in my opinion, with the passage of time we are getting enlightened to the various fundamental rights as guaranteed by the Constitution under Article 14 of the constitution. We have a right to equality but the executive and administrative excesses many a time deprive us of this. There is therefore a constant demand that the administrative action must be fair, reasonable and non-arbitrary. The doctrine of legitimate expectation has its genesis in the field of administrative law. Precisely speaking the Government and its departments, in administering the affairs of the country are expected to honour their statements of policy or intention and treat the citizen equally without any iota of abuse of discretion. The policy statement can not be disregarded unfairly or applied selectively.


LIMITATIONS ________________________________________
The “doctrine of legitimate expectation”, has its own limitations. The concept of legitimate expectation is only procedural and has no substantive impact. In Attorney General for New South Wales v. Quin, one Q was a stipendiary Magistrate in charge of Court of Petty Sessions. By an Act of Legislature that court was replaced by Local Court. Though applied, Q was not appointed under the new system. That action was challenged. The Court dismissed the claim observing that if substantive protection is to be accorded to legitimate expectations, it would result in interference with administrative decisions on merits which is not per¬missible.

Moreover, the doctrine does not apply to legislative activities. Thus, in R. v. Ministry of Agriculture , conditions were imposed on fishing licenses. The said action was challenged contending that the new policy was against 'legitimate expectations'. Rejecting the argument, the court held that the doctrine of 'legitimate expec¬tations' cannot preclude legislation.

Likewise, in Sri Srinivasa Theatre v. Govt. of T.N by amending the provisions of the Tamil Nadu Entertainments Tax Act, 1939, the method of taxation was changed. The validity of the amendment was challenged inter alia on the ground that it was against legitimate expec¬tation of the law in force prior to amendment. Rejecting the argument and following Council of Civil Service Unions, the Supreme Court held that legislation cannot be invalidated on the basis that it offends the legitimate expectations of the persons affected thereby.

Again, doctrine of 'legitimate expectations' does not apply if it is contrary to public policy or against the security of State. Thus, in Council of Civil Service Unions v. Minister for Civil Ser¬vice , a question arose whether the decision of the Minister withdrawing the right to Trade Union membership without consulting the staff which according to the appellant was his legitimate expectation arising from the existence of a regular practice of consultation, was valid. It was contended that the Minister had a duty to consult the staff as per the existing practice and that though the employee did not have a legal right, he had a legitimate expectation that the existing practice would be followed. On behalf of the Minister on the basis of the evidence produced, it was contended that the decision not to consul! was taken for reasons of national security. The Court held as under:
"An aggrieved person was entitled to invoke judicial review if he showed that a decision of a public authority affected him by depriving him of some benefit or advantage which in the past he had been permitted to enjoy and which he could legitimately expect to be permitted to continue lo enjoy cither until he was given reasons for its withdrawal and the opportunity to comment on those reasons or because he had received an" assurance that it would not be withdrawn before he had been given the opportunity of making representations against the withdrawal.”

Similarly,in State of M.P. v. Kailash Chand , an Act was amended by providing age of superannuation. It was contended that when an ap¬pointment was made by fixing tenure, there was right to continue and the doctrine of legitimate expectation would apply. The claim was, how¬ever, negatived observing that "legitimate expectation cannot preclude legislation."

In Union of India v. Hindustan Development Corpn., in government contract, dual pricing policy was fixed by the State Authorities (lower price for big suppliers and higher price for small suppliers). That action was taken in larger public interest and with a view to break "cartel", it was held that adoption of dual pricing policy by government did not amount to denial of legitimate expectation.

CONCLUSION ________________________________________

From the above discussion, it is clear that the doctrine of legitimate expectations in essence imposes a duty to act fairly. Legitimate expec¬tations may come in various forms and owe their existence to different kinds of circumstances. It is not possible to give an exhaustive list in the context of vast and fast expansion of government activities. They shift and change so fast that the start of our list would be absolute before we reached the middle.
One thing, however, is clear. A court cannot assume jurisdiction to review administrative act or decision, which is unfair in the opinion of the court. If that be allowed, the court would be exercising jurisdiction to do the very thing which is to be done by the repository of an admin¬istrative power, i.e. choosing among the courses of action upon which reasonable minds might differ.
On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation is lo be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfilment of the expectation where an overriding public interest requires otherwise. In other words where a person's legitimate expectation is not fulfilled by taking a particular decision then decision-maker should justify the denial of such expectation by showing some overriding public interest.
Therefore even if substantive protection of such expectation is contemplated that does not grant an absolute right to a particular person. It simply ensures the circumstances in which that expectation may be denied or restricted. A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a quest ion of fact. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has resulted in failure of justice and whether on that ground the decision should be quashed.

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