Khuu & Lee Pty Limited v Corporation of the City of Adelaide
[2012] HCATrans 108
[2012] HCATrans 108
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Adelaide No A21 of 2011
B e t w e e n -
KHUU & LEE PTY LIMITED
Applicant
and
CORPORATION OF THE CITY OF ADELAIDE
Respondent
Application for special leave to appeal
FRENCH CJ
BELL J
TRANSCRIPT OF PROCEEDINGS
FROM CANBERRA BY VIDEO LINK TO ADELAIDE
ON FRIDAY, 11 MAY 2012, AT 12.12 PM
Copyright in the High Court of Australia
MR W.J.N. WELLS, QC: May it please the Court, I appear with my learned friend, MR S.D. OWER, for the applicant. (instructed by Clelands Lawyers)
MR R.J. WHITINGTON, QC: May it please the Court, I appear with my learned friend, MR P.A. BRITTEN‑JONES, for the respondent. (instructed by Norman Waterhouse Lawyers)
FRENCH CJ: Yes, Mr Wells.
MR WELLS: May it please the Court. Could I ask your Honours to take up the application book and turn to page 40, which is the judgment of Justice Vanstone in the Full Court, she writing the principal judgment, and I identify initially to your Honours, solely for the purpose of then identifying from that the matter for special leave, the error that we contend is revealed in the reasons. They are to be found on page 40 at paragraph 17, in particular, the second part of that paragraph starting with her Honour’s reference to the judgment of Justices Davies and Einfeld in General Newspapers and the quotation that then follows by reference to Kioa and to the Bond Case. Then paragraph 19 at the bottom, the first sentence and the reference again to the Bond Case, which was an AD(JR) case, and going over the page onto the top of page 41, the sentence:
Once that characterisation is accepted then any relevant interest in, or expectation of, a renewal held by the appellant is not to the point.
Then I take your Honours on a page or so further to page 43 and to paragraphs 30 and 31, but, in particular, paragraph 31, last two sentences:
The position with respect to the Central Market is that the contractual relations between the Corporation and licence holders are essentially private. It is comparable to a private shopping centre.
We identify that, your Honours, as the error and it is an error which is sought to be upheld and supported by the respondents in their outline. We refer, in particular, to page70 of the application book which is, in particular, paragraph 17 to 19 where the same submission is developed, namely, this is “an ordinary incident of corporate personality”, these are private law matters, nothing to do with public law. Now, your Honours, the submission we make in that respect is that the Full Court, with great respect to their Honours, asked itself the wrong question. It should not have asked was this an administrative decision (under an enactment) which is an exclusively AD(JR) Act construct? It should not even have asked was there a public law element or public law flavour about the decision.
Our submission is it should have asked, would intervention on public law principles have cut across a private law relationship or do the circumstances otherwise require that the parties be left to their private law rights and liabilities? In other words, your Honours, a point of importance here is that the principle for which we contend and which it is timely that this Court should now grapple with is one of constraint in the exercise of jurisdiction, not one of amenability, as it is put or, perhaps more bluntly, one of jurisdiction. This is the issue which Justice Finn in Hughes Aircraft referred to as the “significant fissures in Australian jurisprudence” and it has not yet been resolved by the highest court.
Can we put the matter to your Honours in this way. In the days of electricity commissioners, the supervisory jurisdiction of the superior courts was largely defined by the scope of the prerogative writs, but since then the focus has shifted It has shifted from the shell of prerogative remedies to grounds of review under the umbrella now of a unified procedure of judicial review allowing remedies responsive to the grounds and appropriate to “the status, composition and purposes of the body”, to echo the words of Justice Dixon in the Vegetable Seeds Case. Thus, in our submission, we find clearly stated as the ground based on procedural fairness the statement of principle which is now approved by all members of the Court in Plaintiff M16 v The Commonwealth in very clear terms:
when a statute confers power to destroy, defeat or prejudice a person’s rights, interests or legitimate expectations, principles of natural justice generally regulate the exercise of that power.
BELL J: Can I just interrupt you there to take up how you say, in the circumstances of this case, that principle has application. Your clients had a licence under the relevant legislation.
MR WELLS: Yes.
BELL J: There was a requirement in the event that the council were to consider the grant of a further licence to give preference to your client, but that only applied in circumstances where it was intended to grant a further licence. In fact, here it was said that your clients were in breach and there does not appear to be any controversy. The intention of the council was not to grant a further licence in respect of the area covered by the stand. Now, what is it that you say the council did that destroyed or defeated the rights that you had?
MR WELLS: It did not hear from my client before making the decision. It made no communication at all before the making of the decision. What your Honour has referred to are issues that arose by reference to the Retail and Commercial Leases Act which was a second prong, as it were, to the submissions that were made on behalf of the applicant and which are not pursued in this Court, by reference to which it was contended that separately there was a right of preference under that Act. We do not, for these purposes, refer to that at all or rely on it. What we rely on here is a straight interest or legitimate expectation that the applicant had by reason of long user.
FRENCH CJ: There was a lot of exchange and communication, was there not, between your client and its representative, Mr Pearson, and the council after the council’s announcement?
MR WELLS: It was after, though, your Honour.
FRENCH CJ: Yes, I know, but there was a lot of discussion about your client’s assertion that the council should renew the stand licence and the council remaining obdurate.
MR WELLS: Yes, your Honour.
FRENCH CJ: So I am just wondering what the utility of the relief that you seek is because in the end if you succeed, you just go around the circle again in relation to that sort of exercise of negotiation and discussion, do you not?
MR WELLS: Well, with great respect, your Honour, our submission is that it will not necessarily at all be a matter of just, as it were, going through an empty process. The communications that your Honour is referring to are communications that post‑dated the decision that was made by the council and ‑ ‑ ‑
FRENCH CJ: The council was not precluded from changing its mind, was it?
MR WELLS: No. As a matter of ‑ ‑ ‑
FRENCH CJ: It was the owner of the land, it could have granted a licence at any time, could it not?
MR WELLS: As a matter of ordinary practice, that is so, your Honour, but, nevertheless, the decision which is under challenge is the decision that was made and which preceded the subsequent discussions that were undertaken, but the fact is ‑ ‑ ‑
FRENCH CJ: What I am worried about, Mr Wells, to be blunt about it, is the utility ultimately of granting special leave and the relief you seek given that, in effect, you have engaged, albeit fruitlessly, with the council in this process of negotiation in a situation where it was open to the council to change its mind.
MR WELLS: However, your Honour, the assumption should not be made that the council will remain of that view and the point about the ground of natural justice, that is, as a ground of review, is that it is not determined, as we know from Stead’s Case, it is not determined by whether anything would have been different had procedural fairness been given.
FRENCH CJ: I am looking at the criteria of special leave of course.
MR WELLS: Yes, indeed, your Honour, but, nevertheless, it should not be assumed for the purpose of special leave that this would be an empty remedy. To make that assumption is to assume that the council will continue to hold the same view as it expressed at the time when there was agitation. Your Honour will understand that in a context of and an environment of agitation views may be held or expressed which will not necessarily be the same when there is a more measured approach taken, and may I put it in a neutral way, on both sides with respect to what would be an issue of renewal where, and this is the important point, your Honour, it is not just a licence in isolation.
The true position is that the Khuu family and the present applicant is effectively an incorporation of the current member of the Khuu family. The Khuu family had traded from that shop for many years, that is, from the early nineties. The stand, which is the subject of intention here, was built in the late nineties and a licence provided and when the present applicant took over the business from Mr Khuu’s parents and incorporated and the stand licence was renewed in 2005, in the middle of all this there is a lease of the shop to which the stand is a pertinent and there is a licence in relation to the cool room which is a pertinent to the shop. So these are not matters in isolation. These are matters that relate to the conduct of the business which continues and which the council decided should continue by the renewal of the shop lease and the cool room licence.
BELL J: Mr Wells, I still have some difficulty seeing the legitimate expectation arising out of long user in circumstances in which the parties’ rights are relevantly regulated under the legislation affecting commercial leases.
MR WELLS: That is not the only regulation that applies here, your Honour. There are two matters perhaps that I should make by way of response. The first is, we do not found simply on legitimate expectation which is based on long user and expectation of renewal. We found also upon the consideration of interest, which is also included in the formulation from Plaintiff M16, that is, the applicant’s interest in the shop and the cool room is itself affected by the refusal to renew the licence over the stand which is a pertinent to those too. So there is also an exercise of power which would destroy and defeat or prejudice rights, interests or legitimate expectations. That is the first answer, your Honour.
The second answer which I should come to and do so now is to be found in the booklet which has been provided by the applicant entitled “Applicant’s authorities”. Your Honour will see by consideration of the sections I am now about to take the Court to that the decision to grant licences and leases in the central market are not matters of private relationship and private dealings. They are driven by a public interest, that is, by the exercise of powers conferred on the city council to be exercised in the public interest, not – and this is the critical point – in purely self‑interest. Indeed, it is doubtful if it would be available for it to exercise these powers in any form of self‑interest.
I indicate these provisions, your Honours. Your Honours will see that section 6 deals with the principal role of a council and in that respect I invite your Honours’ attention in particular to paragraphs (a) and (b) of section 6. If I take the Court over the page, under the heading “Objectives of a council”, section 8:
A council must, in the performance of its roles and functions –
and then take your Honours down to paragraphs (h) and (i) –
(h)seek to ensure that council resources are used fairly, effectively and efficiently;
(i) . . . seek to ensure equitable access to its services, facilities and programs –
I do not overlook section 36, which is relied on by our learned friend, granting legal capacity to contract, but I take your Honours on to section 49(1) where again the statute imposes an obligation on the:
A council must prepare and adopt policies on contracts and tenders, including on the following:
. . .
(d)the sale or disposal of land or other assets.
BELL J: What is the relevance of subparagraph (d) to this argument? The council has decided not to renew a licence relating to the stand.
MR WELLS: Yes.
BELL J: It seems to me there is some difficulty in taking us to the broad powers of the council and its power respecting contracts relating to the sale or disposal of land or other assets to assist you in this argument, Mr Wells.
MR WELLS: Could I take your Honour then to section 200 because that is where it does bite. Your Honour will see section 200 which refers to the business use of community land for a business purpose. Community land is land which is either owned by the council or under the care, control and management of the council. There is a prohibition on the use of “community land for a business purpose unless the use is approved by the council”. Now, the rhetorical question I ask, your Honour, in the context of the sections I have just taken the Court to is, by reference to what considerations does the council consider the question of approval?
The answer that I provide to the rhetorical question is that it must be taking into account those considerations which it is required under its charter to pursue. Therefore – and this is the critical point – it is not pursuing its self‑interest. It is pursuing the public interest as it has had it defined to it by the Parliament in the provisions just referred to. Now, that is the first step; it has to give an approval and then and only then grant a lease, licence, authorisation or permit under the Act. Your Honour will see in that respect section 201 which deals with sale or disposal of local government land extending to the notion of lease or licence, as can be seen from subsection (2)(c).
So your Honours will in that respect see that before even we get to section 202 there has to have been the exercise of public power that is in the public interest. This is not a case on its facts, which is really what I am presently addressing, which, in our respectful submission, identifies the council as acting as if it were a private owner of property, which is what is contended against us. It does own property, it is community land, it is required to administer it in accordance with the public interests that have been defined to it in its own statute and because that is the position as a matter of fact, we are talking here about the exercise of statutory power in the public interest, not in self‑interest.
Now, that, in my submission, is the factual matter, but the matter of principle, your Honours, is simply this – and I would I think need to conclude on this point – that the proposition or the principle that I have contended for is a principle that says the supervisory jurisdiction is available, it is not a question of there being no jurisdiction. The only question is, in what circumstances will that supervisory jurisdiction be exercised and, in our respectful submission, that requires a consideration of whether there are private law relationships which in some way require the
court to hold its hand and to leave the parties to a private law relationship with its rights and liabilities.
That is a matter, if you like, of discretion and, in our respectful submission, there is nothing here on the facts of this case that involve in any way a cutting across of any private law relationship. The fact of the matter is that the decision that is under challenge is a refusal to renew a licence and in those circumstances no relevant relationship is otherwise in view. In our submission, there is in those circumstances no obstacle to the exercise of the supervisory jurisdiction in this case on the grounds of a failure to provide procedural fairness. May it please the Court.
FRENCH CJ: Thank you, Mr Wells. Yes, Mr Whitington.
MR WHITINGTON: May it please the Court. The present application, in our submission, raises no question of principle suitable for resolution by this Court. The case below essentially turned on special facts and, in any event, no basis has been shown in the submissions put to challenge the correctness of the unanimous decisions of both the trial judge and the Full Court below. Can I touch on an aspect of the facts of the matter which demonstrate why this is not a suitable vehicle.
Today for the first time the applicant has raised two new considerations. It said that public law remedies are attracted for the applicant’s circumstances because of a so‑called right of long user, but no basis was ever disclosed in the argument or, indeed, in the case below for any assertion of a long user and the precise nature of that long user is entirely obscure and would remain so, in our submission, on any hearing in the court.
The other novel matter put forward as a matter of fact to justify the application was that there was said to be an effect on the interests of the applicant in losing the stand licence by virtue of its adjunct nature of the shop lease and the cool room licence. That, with great respect, is an untenable submission because the trial judge made a finding at paragraph 37, application book 9, that it was simply impossible to have any understanding of the connection between the stand licence and the effect on trade on the shop because of the applicant’s refusal to make any disclosure of interaction and so the two new matters raised today take the matter nowhere.
Can I come back to the thrust of our submissions. It is important to bear in mind that the applicant was content to enter into the stand licence under the general law regime of property and contractual rights and obligations governing leases and licences in South Australia. Indeed, the applicant’s alternative case below was that it was entitled to private rights afforded to a lessee under the State’s legislation regulating shop tenancies.
FRENCH CJ: But that does not detract from the character of the city’s function in the grant of a licence as a statutory function. It only gets to grant the licence by virtue of section 202 and so forth, does it?
MR WHITINGTON: That is the ultimate statutory source of power along with section 36, but the immediate source of its power, for instance, not to renew the licence or in certain circumstances to terminate the licence for breach, arises under the contract itself.
FRENCH CJ: Yes, but the city owns the land, it is a vesting, I presume, of some kind, and by that ownership it would have the incidence of ownership which would ordinarily include the right to grant licences or leases. In this case that right is subsumed in a statutory framework so that when it grants a licence it is exercising a statutory function, is that correct?
MR WHITINGTON: But, with respect, that can be said about any public body who owes its life and constitution to a statute and generally that such public bodies are afforded the powers and capacities of a natural person, as was recognised by this Court in Griffith University v Tang, and the Court then said, in effect, a wedge was to be driven between the statutory basis of the existence of the public body and the nature of the powers it was exercising.
FRENCH CJ: But that was a power to contract.
MR WHITINGTON: Exactly. But here there is – it is a power to contract or, indeed, a power not to contract. Here it is a power which is incident to the ownership, the property rights of the council over the market. This is simply a case where the council owns land, it is land which operates, for all intents and purposes, as a retail shopping centre. As an incident of that ownership, the council must on a daily basis make decisions about how its land is to be used or not used. It must contract, it must monitor breaches, it must terminate leases and licences for breach, it must grant renewed leases and so on. Now, that is intrinsically a commercial or a private element of its capacities.
In our submission, our learned friends make the mistake of conflating the existence of a public body with the exercise of public powers. Plainly, a public body will exercise public powers or powers which ought to be regulated through judicial review by virtue of their public nature, but at the same time many public bodies are given the rights, as it was put in the Master Builders’ Association Case, the rights akin to those of a citizen. If the exercise of the rights is on that side of the line, then there is no basis, we say, with respect, to attract public law remedies.
BELL J: The distinction that Mr Wells draws is that here the council is dealing with community land.
MR WHITINGTON: It is, but only in the sense that the council is a local government authority and any land it owns is obviously owned for the benefit of the community at large. That is all those provisions mean. There is an express exemption under this regime in section 15A of the relevant regulations to the Local Government Act of the requirement that the council, in entering into a lease or licence over a section of the Adelaide market, attend to its public consultation policy, otherwise, the only relevant requirement is that there be a management plan in respect of community land. The very broad parameters of the management plan are set out in section 200. There was never any evidence before the court of the nature of the particular management plan in this case, but nor was there any suggestion that the management plan had not been attended to.
Within that management plan one can fairly assume that the council is quite entitled to operate this market, as it has for years, as a commercial venture attending to its private commercial rights. In one of the cases in this Court, or it might have been in the Federal Court, I cannot bring it to mind now, but Justice Gummow made the point that where a public body is entitled to attend to its private rights and interests it would be completely incompatible with that right and power for that body at the same time to have to afford natural justice. The two concepts are simply incompatible. So how would this council in exercising its commercial decisions about tenancies go about affording natural justice? Is it required before it entertains any application for a tenancy to cast the net widely through the entire public demain?
FRENCH CJ: But it has always been the case, has it not, that renewals of established licences attract a particular consideration when you look at procedural fairness as distinct from initial grants?
MR WHITINGTON: That may be so, but that is in a particular circumstance. That is the kind of FAI v Winneke licence. That is the case where the licensee has an inherent right to conduct business. So in the case of FAI v Winneke, they have an inherent right to conduct insurance business in the market. That right is then taken away by a blanket prohibition which is then modified by a regime for the grant of licences and so the licence then qualifies as in the nature of property, such as the licence I have mentioned or a fishing licence, in the face of the blanket prohibition and in those circumstances the government is exercising State power when it chooses not to renew that licence because, as I say, it has cleared the field by the prohibition.
This is a very different case. This is simply a case of a shopping centre deciding that – or the owner of a shopping centre deciding it will not renew a lease or licence. That is pre‑eminently a matter in the private domain and to impose upon any owner of a shopping centre, be they a local government authority or otherwise, an obligation of natural justice would make the commercial activities of that public body virtually impossible.
So this is not, we would say, with respect, the kind of case one sees at FAI v Winneke or the kind of case one sees in a fishing or other licence where the courts have held that given the regime, the licences are imbued with the nature of a proprietary right. This is simply the case of a landlord deciding, for good reason, in the face of all the breaches, that it wanted the roadway back as a roadway, that it did not wish to relet the area and that in those circumstances it had no obligation to offer or afford preference to the tenant under the Commercial Tenancies Act. And I repeat, it is a curious feature of this case that when it suits the applicant he says that the local government authority is exercising public powers, but with the same breath when it suits the applicant it says that it is entitled to the private rights afforded to tenants by the modification of leases affected by the Retail and Commercial Leases Act. We say that is a demonstration that really we are in the area of landlord and tenant or private rights.
The other plank of the applicant’s application, apart from a reliance on the exercise of statutory power, appears to be a reliance on a more amorphous concept of the exercise of public power by reference to two cases it refers to, Victoria v Master Builders’ Association and the MBA Land Holdings Case, which are both referred to in the applicant’s principal written submission, but neither of those cases assist. The Master Builders’ Association Case turned on the fact that the construction of a blacklist by the Building Industry Taskforce and the publication of that list which had an affect on the reputations of those persons appearing on the list involved the exercise of the coercive power of the State and not the exercise of any power akin to that of a private citizen. That is a radically different case from this one. The other case, MBA Land Holdings following and applied Master Builders’ Association Case.
In both of those cases the courts were at pains to emphasise that it could not be doubted that a government body had the right, untrammelled by judicial review, to make decisions about whom it would contract with in its own commercial interest. That is exactly what we have here and there is no relevant overlay in the Local Government Act by reference to section 200 or section 202 which we say would gainsay that essential proposition.
FRENCH CJ: Well, if the overlay comes from anything, it would come from a renewal, the fact that this is a renewal question would it not? You say it is really in the same character as an initial grant because it is all private or it has to be characterised as a private dealing?
MR WHITINGTON: There are two separate questions. There are really, with great respect, two entirely separate questions here at the beginning and the end of the argument. The first is, is there any relevant exercise of a public power or a statutory power which would mark this out from a conventional exercise of private powers? We say plainly not. But at the other end of the argument, even allowing that that is wrong, is the question, is there any right or legitimate expectation of the applicant being affected by a decision to do nothing? We say there plainly is no right. This matter sounded in contract. There was no contractual right of renewal. There was no contractual right by the addendum of section 20D of the Retail and Commercial Leases Act to a further or extended lease.
So my learned friend is then driven at the tail end of the argument to a submission that there is some kind of legitimate expectation which has never been satisfactorily explained in the case but which today was put on the basis of either a long user, which really we say is an empty expression unless some factual content is given to it and none has ever been, or an interest by reference to ‑ ‑ ‑
FRENCH CJ: But all that that means though, does it not, in the context of a renewal you would be given an opportunity, if it applies, that procedural fairness would require that he would be given an opportunity to be heard before a decision not to renew is made.
MR WHITINGTON: But, with great respect, we say that is really circular. Unless some basis is to be found – you see, that is really answering ‑ ‑ ‑
FRENCH CJ: I am saying that the legitimate expectation argument is that, is it not? The legitimate expectation argument must ultimately be an argument that a decision not to renew is conditioned by the requirements of procedural fairness to the extent that it requires you to give the licence holder an opportunity to be heard before you say, “We are not renewing you”?
MR WHITINGTON: In a sense, we say, with respect, that is a circular or bootstraps argument because an ordinary tenant does not have a right to natural justice based upon some such expectation after their lease has expired and so we say, where does one find the source in this case of such a legitimate expectation that sounds in public law remedies? That then drives
one back to the beginning of the case and presumably the argument is that because this is a local government authority Act and he is a commercial landlord, therefore the position is somehow different and public law remedies intrude and somehow a right to natural justice arises which feeds a legitimate expectation.
We say the premise of that argument is fundamentally flawed. It is an argument which will lead to quite surprising results because, as I say, the overlay in the Local Government Act takes it nowhere, so in the end, at bottom, it comes down to a proposition that simply because one is dealing with a public body in exercising commercial powers, judicial review remedies must intrude. So we say for those reasons this not a fit matter for special leaves. If the Court pleases.
FRENCH CJ: Thank you, Mr Whitington. Yes, Mr Wells.
MR WELLS: May it please the Court, five matters in reply. There was evidence of long user, with respect, and there are some findings of the learned trial judge in that respect which are summarised on application book page 4, paragraphs 12 and 13. Secondly, the reference by my learned friend to application book 9, paragraph 37, on the question of whether an interest is affected reveals, in our submission, that the learned trial judge was satisfied that the interests in the shop and the cool room were affected. His difficulty was being able to determine to what degree they were affected.
Thirdly, Tang’s Case was a decision under the AD(JR) Act and, in particular, a consideration of the test that is required as a precondition for a review, namely, whether it is an administrative decision under an enactment. Fourthly, my learned friend sought to put the submission that there was a failure on the part of the applicant to draw a distinction between a public body and public powers. Our respectful submission is that that is a distinction in the end without a difference but, in any event, as we have contended, in this case it is quite evident that the powers that are being exercised are being exercised for public purposes, not for self‑interest purposes. That must be necessarily so and therefore, even if the distinction applies, which we deny, it does not produce the result contended for by my learned friend.
Finally, my learned friend referred to FAI v Winneke and suggested that that stood differently from this case and, in particular, referred to the notion in FAI v Winneke that there was a blanket prohibition followed by permission granted. We would simply invite your Honours to again look at section 200 of the Act where exactly that applies here for business purpose. There is a blanket prohibition on the use of land for business purposes unless the use is approved by the council and the approval, as is provided for in that same section at subsection (2)(c), the approval may be followed
by grant of a lease, licence, authorisation or permit, and we know other sections then deal with that. Those are the submissions in reply. May it please the Court.
FRENCH CJ: Thank you, Mr Wells.
The applicant sought judicial review of a decision of the City of Adelaide that upon its expiry an existing licence for a fruit and vegetable stand operated by the applicant on community land owned by the City would not be renewed. The applicant complained that it was not notified prior to the City’s decision that the City was considering whether or not to offer a renewal of the stand licence and was not afforded an opportunity to be heard or to make submissions on why a renewal should be offered.
An action for a judicial review having been dismissed at first instance, an appeal against that decision was dismissed by the Full Court of the Supreme Court.
The applicant seeks special leave to appeal on the basis that the judgment of the Full Court raises a question whether the City was exercising public power attracting the requirements of procedural fairness or simply acting as a landowner in making its decision not to renew the licence. We are not satisfied, having regard to the generality of the statutory power to grant a licence over community land under the Local Government Act, that the applicant’s prospects of success are sufficient to warrant the grant of special leave. Special leave will be refused with costs.
AT 12.55 PM THE MATTER WAS CONCLUDED
Key Legal Topics
Areas of Law
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Administrative Law
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Civil Procedure
Legal Concepts
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Judicial Review
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Standing
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Procedural Fairness
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Jurisdiction
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Costs
2
0
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