Judicial review is a critical topic for many business projects and understanding the issues, procedural and substantive, remains essential – whether you are an aggrieved party bereft of any other avenue, or a project sponsor facing the threat of unwelcome challenge.
The law of legitimate expectation has been one of the more fruitful areas of development of the law of judicial review in recent years, as it moves away from more traditional areas of challenge such as breaches of procedural rules and misdirection on the law.
A recent decision by five UK Supreme Court judges, sitting in the guise of the Judicial Committee of the Privy Council, is the latest to provide a valuable source of material on this issue – and, perhaps, a reminder of the wide reach of such an important argument. The circumstances of the case, in which the judges were required to rule on whether a promise of support by the Trinidadian government to policyholders of a major insurance company in the immediate aftermath of the global financial crisis were to be upheld, were in a sense secondary.
In the words of Lord Neuberger, in his leading judgment in the case, legitimate expectation is "based on the proposition that, where a public body states that it will do (or not do) something, a person who has reasonably relied on the statement should, in the absence of good reasons, be entitled to rely on the statement and enforce it through the courts".
Some restrictions of this general principle were plain, according to the judge. The statement had to be "clear, unambiguous and devoid of relevant qualification". It could not be invoked if, or to the extent that, it would interfere with the public body's statutory duty. And even a real legitimate expectation might face a time when it was simply inappropriate to insist that the public body complied, perhaps because of a change of circumstances.
While it was reasonably clear that legitimate expectation could be invoked in relation to most, if not all, procedural statements, the boundaries of its application to statements as to substantive matters were less clear, Lord Neuberger said. That was even more so in relation to "macro-political" or "macro-economic" discussions, as were at issue in the present case, he said.
The court ruled that a point had been reached where, in the circumstances and having regard to the particular financial background, the decision of the government of Trinidad and Tobago to depart from previous promises for reasons connected with its perception of the national economic interest was not a decision which could be successfully challenged – notwithstanding the legitimate expectation of the policyholders.
In a supporting judgment, Lord Carnwath set out a much fuller exposition of the development of the doctrine, which he described as one of "continuing controversy". Recent cases and academic authorities favoured a "narrow interpretation" of the principle; requiring a "clear, unambiguous" promise, "devoid of relevant qualification", to be given to an "identifiable defined person or group" which had acted to its detriment on that basis, he said.
The courts would, he said, require such a promise to be honoured "unless the authority is able to show good reasons, judged by the court to be proportionate, to resile from it", he said. In judging proportionality, as in this case, the court must take into account "any conflict with wider policy issues, particularly those of a 'macro-economic' or 'macro-political' kind", he said.
While time does not permit a detailed examination of the Commonwealth material, it will undoubtedly be of enormous interest as the law in this area continues to develop.
Craig Connal QC is a commercial litigation expert at Pinsent Masons, the law firm behind Out-Law.com.