8.2 The test for determining the validity of delegated legislation
285 In exercising a statutory discretion or power, ordinarily, in the absence of an express legislative intention to the contrary, a Minister or other officer of the Commonwealth must act in conformity with what Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ said in Graham v Minister for Immigration (2017) 263 CLR 1 at 30 [57] namely:
The concept of the national interest, the Minister's satisfaction as to which is the subject of the second condition of s 501(3), although broad and evaluative, is not unbounded. And the statutory discretion enlivened on fulfilment of those statutory conditions must in each case be exercised by the Minister "according to the rules of reason and justice, not according to private opinion; according to law, and not humour, and within those limits within which an honest man, competent to discharge the duties of his office, ought to confine himself"[ R v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189, citing Sharp v Wakefield [1891] AC 173 at 179. See Minister for Immigration and Border Protection v Stretton (2016) 237 FCR 1; Minister for Immigration and Border Protection v Eden (2016) 240 FCR 158].
(emphasis added)
286 In Murphyores Incorporated Pty Ltd v The Commonwealth (1976) 136 CLR 1 at 17-18 Mason J, with whom Gibbs J agreed, adopted what Kitto J had said (with the agreement of Menzies J) in Reg. v Anderson; Ex parte Ipec-Air Pty Ltd (1965) 113 CLR 177 at 189, which is distilled in the quotation in [285] above that I have taken from Graham 263 CLR at 30 [57]. Stephen J (with whom Barwick CJ and Gibbs J also agreed) said of a broad statutory power, which all of the justices in Murphyores 136 CLR 1 considered was conferred on the Minister by statutory predecessors of s 7(1)-(3) of the Export Control Act, "only something amounting to a lack of bona fides could justify curial intervention in decisions made in exercise of the power" (136 CLR at 14 and see too at 12-13).
287 The classic expression of the test for determining the validity of delegated legislation is contained in the reasons of Dixon J in Williams v Melbourne Corporation (1933) 49 CLR 142 at 155 (Attorney-General (SA) v Adelaide Corporation (2013) 249 CLR 1 at 40 [60] per French CJ; 57-83 [117]-[199] per Crennan and Kiefel JJ; South Australia v Tanner (1989) 166 CLR 161 at 164 per Wilson, Dawson, Toohey and Gaudron JJ, see also 175 per Brennan J). Dixon J said:
To determine whether a by-law is an exercise of a power, it is not always enough to ascertain the subject matter of the power and consider whether the by-law appears on its face to relate to that subject. The true nature and purpose of the power must be determined, and it must often be necessary to examine the operation of the by-law in the local circumstances to which it is intended to apply. Notwithstanding that ex facie there seemed a sufficient connection between the subject of the power and that of the by-law, the true character of the by-law may then appear to be such that it could not reasonably have been adopted as a means of attaining the ends of the power. In such a case the by-law will be invalid, not because it is inexpedient or misguided, but because it is not a real exercise of the power. (Compare Widgee Shire Council v. Bonney [(1907) 4 CLR 977 at 982, 986]).
(emphasis added)
288 Ordinarily, an exercise of power by an officer of the Commonwealth is subject to judicial review in the original jurisdiction of the High Court under s 75(v) of the Constitution and, relevantly, for present purposes, in this Court pursuant to s 39B(1) of the Judiciary Act 1903 (Cth). For, as Gaudron, McHugh, Gummow, Kirby and Hayne JJ said in Plaintiff S157/2002 v The Commonwealth (2003) 211 CLR 476 at 513-514 [104]:
The reservation to this Court by the Constitution of the jurisdiction in all matters in which the named constitutional writs or an injunction are sought against an officer of the Commonwealth is a means of assuring to all people affected that officers of the Commonwealth obey the law and neither exceed nor neglect any jurisdiction which the law confers on them. The centrality, and protective purpose, of the jurisdiction of this Court in that regard places significant barriers in the way of legislative attempts (by privative clauses or otherwise) to impair judicial review of administrative action. Such jurisdiction exists to maintain the federal compact by ensuring that propounded laws are constitutionally valid and ministerial or other official action lawful and within jurisdiction. In any written constitution, where there are disputes over such matters, there must be an authoritative decision-maker. Under the Constitution of the Commonwealth the ultimate decision-maker in all matters where there is a contest, is this Court. The Court must be obedient to its constitutional function. In the end, pursuant to s 75 of the Constitution, this limits the powers of the Parliament or of the Executive to avoid, or confine, judicial review.
(emphasis added)
289 Relevantly, s 75(v) of the Constitution enables the Court to determine whether an administrative decision (including a decision to exercise a power or make an order under an Act, such as the Second Control Order) is affected or vitiated by a jurisdictional error or some other basis for judicial review: Plaintiff S157 211 CLR at 506 [76]-[77]; Kirk v Industrial Relations Commission (NSW) (2010) 239 CLR 511. Of course, it is a jurisdictional error for a Minister (or another officer of the Commonwealth) to make a decision that is unreasonable or irrational: Minister for Immigration v Li (2013) 249 CLR 332. In my opinion, Stephen J's reference to a lack of bona fides in Murphyores 136 CLR at 12-14 includes a decision that is so unreasonable or irrational as to amount to a jurisdictional error. Such a decision falls neatly within Dixon J's explanation of a decision that "could not reasonably have been adopted as a means of attaining the ends of the power…because it is not a real exercise of the power": Williams 49 CLR at 155. And as Dixon J explained in Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360, appositely in the present case:
Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law.
(emphasis added)
290 In more recent years, the Courts have used the test of proportionality in arriving at an assessment of whether delegated legislation is a valid exercise of the power to make it. In Li 249 CLR at 352 [30] French CJ said that "a disproportionate exercise of an administrative discretion, taking a sledgehammer to crack a nut, may be characterised as irrational and also as unreasonable simply on the basis that it exceeds what, on any view, is necessary for the purpose it serves" (footnote omitted, see too at 362 [63], 367 [76], and at 369 [85] where Hayne, Kiefel and Bell JJ said "but the result itself bespeaks error", and at 376-377 [108]-[110] per Gageler J).
291 In Adelaide Corporation 249 CLR 1 the majority of the Court evaluated the validity of delegated legislation, being a municipal by-law, by reference to the common law principle of legality and the requirements of reasonableness and proportionality (see at 30 [41], 34-40 [47] -[60] per French CJ, 53-54 [105]-[106], 56-58 [116]-[123] per Hayne J, 83-84 [198]-[201] per Crennan and Kiefel JJ and 90 [224] per Bell J, see too 66-67 [148]-[150], 76 [158] per Heydon J).
292 One important common law right, to which the principle of legality attaches, is the right to carry on business in one's own way within the law: The Commonwealth v Progress Advertising and Press Agency Co Pty Ltd (1910) 10 CLR 457 at 464 per O'Connor J, as applied in Wentworth v New South Wales Bar Association (1992) 176 CLR 239 at 252 per Deane, Dawson, Toohey and Gaudron JJ. Gleeson CJ elegantly stated the principle in Electrolux Home Products Pty Ltd v Australian Workers Union (2004) 221 CLR 309 at 329 [20]-[21]. In substance, as he identified, the law presumes that it is highly improbable that the legislature "would overthrow fundamental principles, infringe rights, or depart from the general system of law" unless it expresses such an intention with "irresistible clearness": Potter v Minahan (1908) 7 CLR 277 at 304 per O'Connor J. Gleeson CJ elaborated what this entailed as follows (221 CLR at 329 [21]):
In R v Home Secretary; Ex parte Pierson ([1998] AC 539 at 587, 589), Lord Steyn described the presumption as an aspect of the principle of legality which governs the relations between Parliament, the executive and the courts. The presumption is not merely a common sense guide to what a Parliament in a liberal democracy is likely to have intended; it is a working hypothesis, the existence of which is known both to Parliament and the courts, upon which statutory language will be interpreted. The hypothesis is an aspect of the rule of law.
(emphasis added)
293 The applicability of the principle of legality to the exercise of a delegated legislative power is no less confined. One way in which the Parliament sought to ensure that those to whom it had delegated a power in legislation actually turned their minds to the significance and potential impact of an exercise of that delegated power was its prescription in the Legislative Instruments Act. That provided that before a rule-maker, such as the Minister (see s 4(3)), exercised a delegated legislative power first, he or she had to be satisfied that any consultation that he or she considered appropriate and to be reasonably practicable had occurred, particularly if the proposed legislative instrument (such as the Second Control Order) was likely to have a direct, or substantial indirect, effect on business (s 17(1)) and, secondly, he or she had to lodge an explanatory statement of the measure to explain, (a) its purpose and operation and (b), if no consultation had occurred under s 17 before it was made, why not (s 26(1); and see the definition of explanatory statement in s 4(1) of the version of that Act in force in 2011, now found in ss 26(1A)(a), (b) and (c)). However, a failure to consult or prepare an explanatory statement did not affect the validity or enforceability of the legislative instrument (ss 19, 26(2)). And, s 18 provided that the nature of the instrument might be such as made consultation unnecessary or inappropriate, including because it was required as a matter of urgency.
294 In Adelaide Corporation 249 CLR at 83-84 [200]-[201] Crennan and Kiefel JJ, with whom Bell J substantially agreed (although, as I explain in [306] below, not on the application of the test in the circumstances), said that Dixon J's statement of the test of reasonableness in Williams 49 CLR at 155 "bears an obvious affinity with a test of proportionality." Crennan and Kiefel JJ said that in Tanner 166 CLR at 165, Wilson, Dawson, Toohey and Gaudron JJ had equated that test with that of reasonable proportionality, referring to what Deane J said in The Commonwealth v Tasmania (1983) 158 CLR 1 at 260. They also stated that the test of validity for delegated legislation was whether the impugned provisions "are a reasonable means of obtaining the ends of the rule-making power" citing Coulter v The Queen (1988) 164 CLR 350 at 357 per Mason CJ, Wilson and Brennan JJ.
295 In McCloy v New South Wales (2015) 257 CLR 178 at 213 [68] French CJ, Kiefel, Bell and Keane JJ said that proportionality testing is a tool of analysis for ascertaining the rationality and reasonableness of a legislative restriction. They discussed proportionality as follows (at 215-216 [74]:
Proportionality provides a uniform analytical framework for evaluating legislation which effects a restriction on a right or freedom. It is not suggested that it is the only criterion by which legislation that restricts a freedom can be tested. It has the advantage of transparency. Its structured nature assists members of the legislature, those advising the legislature, and those drafting legislative materials, to understand how the sufficiency of the justification for a legislative restriction on a freedom will be tested.
296 Their Honours said that there were at least three stages for assessing the proportionality of a statute, namely whether it was, first, suitable, secondly, necessary, and, thirdly, adequate in its balance (McCloy 257 CLR at 217 [79]). They said that suitability was also referred to as "appropriateness" or "fit", but the measure was to be tested by ascertaining whether it would contribute to the realisation of the statute's legitimate purpose. Unless that could be done, its use could not be said to be reasonable. The test at the first stage required there be a rational connection between the provision in question and the statute's legitimate purpose, so that its purpose could be furthered (257 CLR at 217 [80]).
297 Their Honours said that the second stage of the test looked to whether there were other, equally effective, means of achieving the legislative object which had a less restrictive effect on the freedom and were obvious and compelling. In cases where such alternative measures were available, the use of a more restrictive one was not reasonable and could not be justified (257 CLR at 217 [81]). In Betfair Pty Ltd v Western Australia (2008) 234 CLR 418 at 477 [102] Gleeson CJ, Gummow, Kirby, Hayne, Crennan and Kiefel JJ described this as a "criterion of 'reasonable necessity'".
298 French CJ, Kiefel, Bell and Keane JJ identified the third stage, adequacy, as involving a question of whether the burden on the freedom was undue or impermissibly burdensome, again having regard to the statutory purpose (McCloy 257 CLR at 218 [86]).
299 The first two of those stages involves the relationship between the legitimate legislative purpose (or "ends") and the means to achieve it. A legislative purpose may be the most important factor in justifying the effect that the measure has on the relevant right or freedom (257 CLR at 218 [83]-[84]).
300 I am of opinion that the explanation in McCloy 257 CLR 178 of how proportionality operates as a tool of analysis in the constitutional context is apposite to the analysis of proportionality in determining the validity of delegated legislation: see too Adelaide Corporation 249 CLR at 84 [201]; Minister for Primary Industries and Energy v Austral Fisheries Pty Ltd (1993) 40 FCR 381 at 399-400 per Beaumont and Hill JJ; Betfair Pty Ltd 234 CLR at 477 [102]-[103].
301 In Austral Fisheries 40 FCR at 399 Beaumont and Hill JJ held that a power, that appeared to be unlimited, to make a provision in an instrument of delegated legislation was nonetheless constrained by three principles of statutory interpretation. Those were that, first, in the absence of an explicit contrary provision, the power should be interpreted so as not to result in an operation that is, in the court's opinion, "capricious and irrational" (applying Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (Cth) (1981) 147 CLR 297 at 321 per Mason and Wilson JJ), secondly, an exercise of the power will be invalid if it "could not be justified on any reasonable ground", being one reasonably open to the decision-maker (applying Parramatta City Council v Pestell (1972) 128 CLR 305 at 323 per Menzies J), and thirdly, "a reasonable proportionality must exist between the designated object or purpose and the means selected by the [delegated legislation] for achieving that object or purpose" (applying Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 29 per Mason CJ): see too 40 FCR at 382-384 per Lockhart J.
302 In 1993, Hill J observed when agreeing with Gummow J, in Minister of State for Resources v Dover Fisheries Pty Ltd (1993) 43 FCR 565 at 582, that the application of the "reasonably proportionate" test in administrative law was then "still fluid in Australian jurisprudence". Gummow J, with whom Cooper J also agreed (43 FCR at 582), suggested that when the question is the validity of delegated legislation made pursuant to a valid enactment, "the proportionality principle is differently focused" to when the issue is the constitutional validity of a law: Dover 43 FCR at 577. There, Gummow J identified the fundamental question by reference to what Lockhart J had said in Austral Fisheries 40 FCR at 383-384 as being whether the delegated legislation is within the scope of what the Parliament intended when it enacted the legislation conferring the power to make the delegated legislation. Cooper J distilled the test as follows (Dover 43 FCR at 585):
The test of proportionality reflects an underlying assumption that the legislature did not intend that the power to enact delegated legislation would be exercised beyond what was reasonably proportionate to achieve the relevant statutory object or purpose; the test of reasonableness assumes that the legislature did not intend to confer a power to enact delegated legislation which enactment no reasonable mind could justify as appropriate and adapted to the purpose in issue and the subject matter of the grant. Whether one describes the test as one of "reasonable proportionality" or "unreasonableness", the object is to find the limit set by the legislature for the proper exercise of the regulation or rule making power and then to measure the substantive operation of the delegated legislation by reference to that limit. In my view there is no substantive difference between the tests as stated.
(emphasis added)
303 In McCloy 257 CLR at 210-211 [57]-[58] French CJ, Kiefel, Bell and Keane JJ said that in applying the criterion of proportionality, as a tool of analysis in assessing the validity of legislation, the court can have regard to whether there is an obvious and compelling, alternative reasonably practical, but less drastic, means of achieving the same purpose or end as in the impugned statutory provision. But, they warned, "courts must not exceed their constitutional competence by substituting their own legislative judgments for those of parliaments." The same caution must apply to a court's examination of the validity of the exercise of a power to make delegated legislation.
304 French CJ described as a suggestion (in a footnote in Adelaide Corporation 249 CLR at 40 [61]) Gummow J's statement (in Dover Fisheries 43 FCR at 577) that, in the case of the validity of delegated legislation, "the proportionality principle is differently focused" to that where constitutional validity is in issue. However, the Chief Justice proceeded to analyse the validity of the by-law, as an exercise of the statutory power, using proportionality analysis as a tool. He said that Dixon J's test in Williams 49 CLR at 155 was "[a] high threshold test, which falls into the class of proportionality criteria … to determine the validity of delegated legislation" (249 CLR at 37 [55]-[56]). He explained that "the high threshold test for reasonable proportionality" was applicable to the assessment of the validity of delegated legislation made in the exercise of a purposive power. He said, in respect of Dixon J's test, that the criterion of reasonable proportionality could be seen as "an appreciation of the unreasonableness criterion adapted to a purposive law-making power" (249 CLR at 40 [59]-[60]). In my opinion, French CJ was not propounding a new criterion or test; rather he was emphasising that the court could only hold that an exercise of delegated legislative power was invalid, if the measure adopted was not reasonably proportionate to achieve the legislative purpose of its conferral, and that issue was to be tested using proportionality analysis.
305 Like French CJ, Crennan and Kiefel JJ analysed the validity of the challenged by-law using the proportionality tool of analysis in the same way as it is used in assessing the validity of a statute. Indeed, Crennan and Kiefel JJ said that an analysis, based on Dixon J's test in Williams 49 CLR at 155, "necessarily raises questions similar to those considered in the context of the implied constitutional freedom of communication" (249 CLR at 84 [201]; see too at [202] and 85 [206]).
306 However, Hayne J, with whom Bell J agreed on this issue, took a different view and said that the question of statutory validity of the by-law is tested by asking whether the measure was so unreasonable that it could not fall within the statutory power, whereas the question of its constitutional validity was "whether the by-law is reasonably appropriate and adapted to serve a legitimate object or end in a manner compatible with the constitutionally prescribed system of government and the freedom of political communication which is its indispensable incident" (249 CLR at 63 [137], 90 [224]).
307 The exercise of a power to make delegated legislation will be unreasonable if it involves oppressive or gratuitous interference with the rights of persons who are subject to the measure to such a degree "as could find no justification in the minds of reasonable men", so that the court could conclude that the legislature did not intend to give authority to make it: Jones v Metropolitan Meat Industry Board (1925) 37 CLR 252 at 261 per Isaacs J with whom Knox CJ at 257 and Rich J at 270 agreed (see too Brunswick Corporation v Stewart (1941) 65 CLR 88 at 99 per Williams J).
308 The presence of political considerations as a, or even the, motivation for a political decision-maker, such as Cabinet, a Minister or a local government council, exercising a legislative power to make delegated legislation that is within the literal meaning of the power, cannot, of itself, lead to the measure being invalid. After all, the nature of our democratic system of government is to entrust executive power to Ministers who are answerable to Parliament which, in turn, is answerable to the electorate, (and local councillors who are answerable to their electorates) for the political choices and decisions that they make. Often contentious issues require governmental decision-makers to exercise powers under legislation that can address and regulate the subject matter of the debate. Such exercises of power can be characterised pejoratively, from time to time, as "political decisions", but such a characterisation does not bespeak any necessary impropriety, unreasonableness or inappropriateness in the decision that would lead to it being found to be invalid on the basis that it was not within the, usually very broad, range of choice that the legislature conferred on its delegate. The essence of government is the making of choices between alternative courses on which reasonable minds not only might, but frequently do, differ.
309 And, often governmental decision-making can result in an outcome in which, to draw on a well-known, perhaps apposite aphorism: one man's meat is another man's poison: cf South Australian River Fishery Association Inc and Warwick v South Australia (2003) 85 SASR 373 at 392-393 [115]-[116] per Doyle CJ, at 416 [213] per Gray J, and at 421 [241]-[242] per Besanko J. There Besanko J said (at [241]) that "it is difficult to envisage a situation in which political considerations of themselves could constitute an improper purpose in circumstances where the exercise of power is otherwise valid" (emphasis added). Doyle CJ held (at 392-393 [116]) that "if two quite different but acceptable courses of action are open in a given case involving the exercise of a statutory power for a specified purpose, the government of the day is entitled to adopt the course which will secure a political advantage". In the same vein, Spigelman CJ, with whom Beazley and Tobias JJA agreed, noted in Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources (2005) 138 LGERA 11 at 48 [144], that, inevitably if significant changes are made to an established regulatory regime "there will be winners and losers. Considerations of equity are quintessentially matters for political decision-making".
310 The court will not find delegated legislation invalid merely because it may think that it could have been framed more fairly or in a way that could have resulted in less hardship, or that it is inexpedient or misguided: Williams 49 CLR at 155; Ferrier v Wilson (1906) 4 CLR 785 at 801-802 per Isaacs J; Murrumbidgee Groundwater 138 LGERA at 48 [144]. Rather, invalidity is a consequence of the court concluding, as Dixon J explained in Williams 49 CLR at 155, that the measure "is not a real exercise of the power" because "it could not reasonably have been adopted as a means of attaining the ends of the power". That question can be evaluated (see [296] above) using proportionality analysis as a tool, as I will do below.