As accepted for publication in (2005) 68 Modern Law Review 2005 Terence Daintith contractual discretion and administrative discretion: a unified analysis



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177 “Review of (Non-statutory) Discretions,” above n. 12, at 317. At 317 and 322, Oliver suggests that corporations will not usually be seen as possessing such interests.

178 Above, n. 126. Equitable Life v. Hyman, above n. 122, can be analysed in the same way.

179 Per Woolf M.R. in the Court of Appeal in Equitable Life Assurance Society v. Hyman [2002] 1 A.C. 408, at 416.

180 Overlook v. Foxtel [2002] NSWSC 17, para. 67; Burger King, above, n. 101, at para. 187. For an apparent exception, see Tillmans & Co. v. SS Knutsford Ltd [1908] 2 K.B. 385, at 406 per Farwell L.J., suggesting that a ship’s master, in deciding whether ice made a port inaccessible, had to exercise his discretion “fairly as between both parties, and not merely to do his best for the shipowners, his masters, disregarding the interests of the charterers.” Even here, the notion that the master would need to hear both sides before deciding would surely have seemed ridiculous to the parties.

181 Above, n. 174.

182 [1977] I.C. R. 893, at 902, applied in R. v. British Broadcasting Corporation, ex parte Lavelle, [1983] 1 W.L.R. 23.

183 Gillen v.Laffer (1925) 37 C.L.R. 210, reversed by the Privy Council in Laffer v. Gillen [1927] A.C. 886, offers a clear example of a case where the different views of the judges as to the scope of the substantive discretion enjoyed by a Minister (under a contract whose key terms were fixed by regulation) determined whether they would find its exercise subject to principles of natural justice.

184 As in Burger King, above n. 101.

185 See references at n. 12 above.

186 Oliver, “Review of (Non-statutory) Discretions,” above n. 12, at 317.

187 Above, n. 76.

188 Beatson, above n. 8, at 270-271. Beatson qualifies this restriction by suggesting that some employment contracts may also be so regulated.

189 Per Lord Wilberforce in Black Clawson International Ltd v Papierwerke AG [1975] A.C. 591 at 629.

190 Per Kirby J. in Commonwealth v. Yarmirr (2001) 75 A.L.J.R. 1582, at 1633.

191 Laws, “Law and Democracy,” [1995] Public Law 72, at 79.

192 Woolf, “Droit Public- English Style,” [1995] Public Law 57, at 66.

193 “[W]hat must be ascertained is what is to be taken as the intention which reasonable people would have had if placed in the situation of the parties”: per Lord Wilberforce in Reardon Smith Line Ltd v. Yngvar Hansen-Tangen SS. Co. Ltd [1976] 1 W.L.R. 989 (House of Lords), at 996.

194 See Steyn , above n. 170.

195 Case of Proclamations (1611) 12 Co. Rep. 74.

196 A process begun by Laker Airways Ltd v.Department of Trade [1977] Q.B. 643.

197 Attorney-General v. de Keyser’s Royal Hotel [1920] A.C. 508; R. v. Secretary of State for the Home Department, ex parte Fire Brigades Union [1995] 2 W.L.R. 464 (House of Lords).

198 Hewart, above n. 41.

199 Id.

200 Browne-Wilkinson, “The Infiltration of a Bill of Rights,” [1992] Public Law 397, at 397-398.

201 Laws, above n. 191, at 86.

202 Woolf, “Droit Public – English Style” , above n. 189, at 67-69.

203 Today for example there is reason to think that bipartisan policies seeking to reduce the homogeneity of civil service careers and recruitment, and security of tenure at the highest levels, may have diminished the influence of civil servants over Ministers of which Hewart complained in the 1920s.

204 Collins’ contrary statement that “With the assistance of the legislature, the courts have begun to evolve principles for the review of the exercise of unfettered discretionary powers” (above n. 9, at 231) takes no account of any of the earlier cases.

205 As in Timeload Ltd v. British Telecommunications plc [1995] E.M.L.R. 459 (C.A.).

206 See Daintith, Willoughby and Hill, above, n. 4 (on petroleum production licences whose terms must generally comply with model clauses promulgated under Petroleum Act 1998, s. 4(1)).

207 Compare, for example, Mance L.J.’s painstaking construction of an implied term in Gan, above n. 117 at paras. 32-78, with Sir Christopher Staughton’s robust rejection of it at paras. 88-99.

208 Brownsword, Contract Law. Themes for the 21st Century (London, Butterworths, 2000), 15-22.

209 Forsyth, “Of Fig-Leaves and Fairy-Tales: The Ultra Vires Doctrine, the Sovereignty of Parliament and Judicial Review,” [1996] Cambridge Law Journal 122 at 139-140. For an evaluation of this position and attacks upon it, see Halpin, “The Theoretical Controversy Concerning Judicial Review,” (2001) 64 Modern Law Review 500.

210 As in early cases involving vague promises of payment for work to be done: see Taylor v. Brewer (1813), 1 M. and S. 290; Roberts v. Smith (1859), 4 H. and N. 315; compare Bryant v. Flight (1839), 5 M. and W. 114. In some cases of “core” discretions, such as those that gave rise to the “fundamental breach” doctrine (above, pp. 000-000), it may not be in the interests of either party to argue that there is no contract. For a telling example, see Boland Bank Bpk v. Steele, 1994 (1) S.A. 259 (T) (cited by Cockerell, above n. 8, at 35, 52), where a variable-rate mortgage was sustained by the judge against a claim that it was void for uncertainty, on the ground that the power to vary rates had to be exercised in a reasonable manner. Compare Paragon Finance, above n. 126.

211 The Vodafone case (above n. 101) offers a good illustration.

212 The need for caution is illustrated by the facts in the Tredegar v. Harwood litigation (above n. 152) on its face a dispute between a powerful landlord and a single private leaseholder, in fact an argument between that landlord and local building societies as to which of them was to be entitled to select the insurers of the leased properties.

213 Collins, above n. 9.

214 See generally Winter, “Bartering Rationality in Regulation,” (1985) 19 Law and Society Review 219. Legislative provision for express agreements between government and individuals or corporations raises other kinds of issue.

215 For express judicial references see, e.g. Institute of Patent Agents v. Lockwood [1894] A.C. 347, per Lord Herschell, LC at 357; Johnson (B.) and Co. (Builders) Ltd v.Minister of Health [1947] 2 All E.R. 395. per Lord Greene M.R. at 400.

216 Though this has sometimes caused confusion about how discretions in such contracts were to be dealt with: see Northern Regional Health Authority v. Crouch (Derek) Construction Co [1984] Q.B. 644 (Court of Appeal), overruled by the House of Lords in Beaufort Developments (NI) Ltd v. Gilbert-Ash (NI) Ltd [1999] A.C. 266.

217 Compare Atiyah’s suggestion that the development of the “classical” 19th century law of contract was tempered by continuing judicial hesitations about a full commitment to laissez-faire thinking: The Rise and Fall of Freedom of Contract (Oxford, Oxford University Press 1979), at 404-405.

218 See e.g. Braunstein v. The Accidental Death Insurance Co., above n. 82, at 794, and in particular Paragon Finance plc v. Staunton, above n. 126, at 258-261.

219 On the economics of such contracts see Williamson, “Transaction-cost economics: the governance of contractual relations,” (1979) 22 Journal of Law and Economics 233.

220 Though note the suggestion that greater reliance by government on contract law as an economic and social steering mechanism of the “post-regulatory State” may over time require contract law to absorb new social values – which could suggest new bases for restriction of contractual discretions: Collins, “Regulating contract law,” in Parker, Scott, Lacey and Braithwaite eds., Regulating Law (Oxford, Oxford University Press 2004), ch. 1 at 28-30.

221 For convenience I reproduce these here:

An application for approval to drill a new exploration or development well, or to re-enter an existing exploration or development well shall be made in duplicate not less than one month or such other period as is approved prior to the commencement of the operation, and such an operation shall not be commenced without prior approval.”



“If any other pits should be required other than the two in part sunk, then the [mineral lessee] shall have power to sink another pit, or other pits, as aforesaid, but only in such a situation, or such situations, as shall have been previously approved of in writing by [the landowner].”


222 This is a most unusual arrangement: private companies normally operate under some form of contract with the state: for the common forms of concessions, production sharing agreements and service contracts see, as a convenient recent source, Smith, Dzeinkowski, Anderson, Conine and Lowe, Materials on International Petroleum Transactions (Denver, Rocky Mountain Mineral Law Foundation 1993), Part II. On why Australia adopted a purely administrative regime, see Daintith, “Administering the Petroleum (Submerged Lands) Act: too much discretion or too little?” [2004] AMPLA Yearbook 1-43, at 6-7.

223 Above, n. 3.

224 At 1392-1393 (judgment of the Lord Ordinary).

225 Most offshore production is not subject to royalty, but to the payment of a special tax (Resource Rent Tax). An area rental, not dependent on production, is also payable on acreage subject to a production licence.

226 A direction such as this may be given wherever a regulation could have been made (Petroleum (Submerged Lands) Act 1967, s. 101(1)), and regulations may prescribe “all matters that by this Act are required or permitted to be prescribed or are necessary or convenient to be prescribed for carrying out or giving effect to this Act” (s. 157(1)), and “may make provision for securing, regulating, controlling or restricting”, among other things, the exploration and recovery of petroleum (s. 157(2)(a) and (b)).

227 See for example the remarks of Mason J. in FAI Insurances Ltd v. Winneke (1982) 151 C.L.R. 342 at 368.

228 s. 52.

229 Even judicial acquiescence in this position cannot be entirely ruled out. The authority is expressed to be “subject to this Act and the regulations and in accordance with the conditions to which the licence is subject,” and a Schedule of Requirements containing directions like the one under discussion is incorporated as a licence condition. In the rather different United States context, where rights to explore and produce offshore are based on a lease but subject to extensive control by regulations, the Supreme Court has held that the lease is no more than a exclusive authorisation to apply for the various regulatory permissions required (including permission to drill): Secretary of the Interior v. California, 464 U.S. 312 (1984). Systematic refusal of such permissions, however, will constitute repudiation by government of the lease contract: Mobil Oil Exploration and Producing Southeast, Inc. v. United States, 530 U.S. 604; 120 S.Ct. 2423; 147 L.Ed. 2d 528 (2000).

230 A formal problem with this argument is that the Schedule is a purely administrative device, collecting a large number of directions each of which is, notionally, separately made under powers conferred by s. 102 of the Act.

231 Above, pp. 000-000. It should however be recalled that Australian courts, unlike their United Kingdom counterparts, have long possessed a constitutional jurisdiction, so that these relationships are objectively different.

232 Cf. the remarks of Justice Kirby, of the Australian High Court:

“A written contract is typically an agreement between a small number of identified parties (commonly only two), to be bound to certain legal consequences in terms that they mutually agree upon. A statute, or law made under statute, ordinarily has a much wider application. It is addressed to he entire community affected. Further, a statute typically has not only a wider ambit and application. It also generally enjoys a longer duration and typically, more coercive consequences in the case of a breach.”



Kirby, “Towards a Grand Theory of Interpretation: the Case of Statutes and Contracts,” a paper given to the joint conference of Clarity and the Statute Law Society, Cambridge, 13 July 2002, pp. 8-10.

233 Above, n. 208.

234 Above, n. 9.

235 See Daintith, “Regulation”, in International Encyclopedia of Comparative Law, vol. XVII, ch. 10 (1997); Baldwin and Cave, Understanding Regulation: Theory, Strategy and Practice (Oxford University Press 1999), ch. 4; Breyer, “Analyzing Regulatory Failure – Mismatches, Less Restrictive Alternatives, and Reform” (1978-79) 92 Harv. L.Rev. 547; Howse, Prichard and Trebilcock, “Smaller or Smarter Government?” (1990) 40 U. Toronto L.J. 498; Better Regulation Task Force, Imaginative Thinking for Better Regulation (London 2003).

236 Bercusson, “Economic Policy: State and Private Ordering,” in Daintith, ed., Law as an Instrument of Economic Policy: Comparative and Critical Approaches (Berlin, W. de Gruyter 1988), 359-420.

* Institute of Advanced Legal Studies, London, and School of Law, University of Western Australia.




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