Attorney-General v Unitec Institute of Technology Ca163/05
[2006] NZCA 317
•23 November 2006
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IN THE COURT OF APPEAL OF NEW ZEALAND
CA163/05
BETWEENTHE ATTORNEY-GENERAL
Appellant
ANDUNITEC INSTITUTE OF TECHNOLOGY
First RespondentANDNEW ZEALAND QUALIFICATIONS AUTHORITY
Second Respondent
Hearing:11 and 12 October 2006
Court:William Young P, Chambers and Goddard JJ
Counsel:K L Clark, M S R Palmer and M J Hodge for Appellant
M Chen and L A Seales for First Respondent
P J Radich for Second Respondent
Judgment:23 November 2006 at 2.15pm
JUDGMENT OF THE COURT
A The appeal is allowed and the judgment of the High Court is set aside.
B The cross-appeal is dismissed.
C The first respondent’s claim against the appellant is dismissed and judgment is entered for the appellant.
DThe appellant is entitled to costs against the first respondent in the High Court. In default of agreement, these costs are to be fixed by the High Court. The costs order in the High Court in favour of the second respondent is confirmed.
EWith respect to the costs in this Court, the first respondent is to pay the appellant the sum of $12,000, together with usual disbursements. We certify for second counsel.
REASONS OF THE COURT
(Given by William Young P)
Table of contents Para No
Introduction [1]
The relevant legislative environment [7]
Overview [7]
Section 162 of the Education Act 1989 [8]
Other provisions of the Act [9]
The background facts [11]
The findings of the Judge [23]
Why the Minister suspended the statutory process in May 2000 [28]
The extent of Minister’s administrative law obligations in relation to
the Unitec proposal [36]
Overview [36]
Timing [38]
The role of the Minister under s 162 [39]
Was the Minister entitled to suspend a process which
had already begun? [45]
Did the policy of no more universities pending the development of
tertiary education policy amount to an abdication of
discretionary authority? [47]
Legitimate expectations [54]
Unitec’s arguments based on ss 160-161 of the Act [60]
Given those administrative law obligations, do the actions of
the Minister warrant review? [65]
Disposition [69]Introduction
[1] In August 1999, Unitec Institute of Technology approached the Minister for Tertiary Education in the then National-led government with a view to being re-constituted as a university (in particular, a “university of technology”). In accordance with the relevant legislative framework (and in particular, s 162 of the Education Act 1989), that Minister sought advice from the New Zealand Qualifications Authority (NZQA). A final decision was still many months away when the November 1999 general election resulted in a Labour-led government. Under the new government, the Unitec proposal was largely the responsibility of the Associate Minister of Education, Mr Steven Maharey, although the Minister of Education, Mr Trevor Mallard, was also involved. For ease of reference we will not generally distinguish between the two ministers and will usually refer to them collectively as “the Minister”. The new Government was unenthusiastic about the prospect of new universities and not particularly sympathetic to Unitec’s desire to achieve university status. On 15 May 2000, consideration of the Unitec proposal was put on hold pending government decisions on the fundamental shape, structure, funding and strategic direction of the tertiary education sector. The process of developing this policy became drawn out. Associated with it were amendments to the legislative framework to the disadvantage of Unitec which came into effect on 1 January 2003.
[2] Eventually Unitec sought review of the actions of the Minister (represented in the proceedings by the Attorney-General) and NZQA in relation to the suspension of the statutory processes associated with Unitec’s proposal. These proceedings were heard in June 2005 and the result was a judgment in which Miller J found largely in favour of Unitec as against the Minister but rejected its claims against NZQA. That decision is now reported: Unitec Institute of Technology v Attorney-General [2006] 1 NZLR 65. Miller J adjourned for further consideration claims by Unitec for further relief (in the form of financial compensation).
[3] In his judgment, Miller J concluded that:
(a)On 15 May 2000 Unitec’s application to be established as a university was unlawfully suspended by the Minister as a result of a government policy that no new university should be established until policy for the sector was settled. In this respect he did not accept the primary argument of Unitec that the underlying government policy was that there should be no more universities. The unlawful suspension continued until 1 January 2003 (ie the day on which the amendments to the legislative framework came into effect).
(b)The suspension of the application was properly characterised as a suspension of s 162 of the Education Act 1989 and was accordingly a breach of article 1 of the Bill of Rights 1688.
(c)Unitec had a legitimate expectation that its application would be decided within a reasonable time. On the basis that the Minister should have been in a position to make a recommendation by the end of 2000, the delay between then and 1 January 2003 constituted a breach of natural justice.
(d)Section 27 of the New Zealand Bill of Rights Act 1990 applied to the Minister’s decision whether to recommend the establishment of the university and the delay between the end of 2000 and 1 January 2003 was a breach of Unitec’s rights to natural justice under s 27(1).
(e)Unitec did not acquiesce in any part of the delay up to 1 January 2003 and acquiescence in any event could not afford a defence to a claim based on the unlawful suspension of s 162.
[4] Since that judgment was delivered, the proposal that Unitec be re-constituted as a university has been finally rejected, a rejection which itself is not the subject of legal challenge.
[5] The Attorney-General appeals against all findings made against the Minister. Unitec’s cross-appeal is addressed to the scope of the findings made by the Judge. The first ground of the cross-appeal relates to the finding referred to in [3](a), with Unitec maintaining that the real reason for the suspension was that there was a government policy that there be no more universities. In its second cross-appeal argument, Unitec contends that the finding of unlawful suspension should not have been confined to the period between 15 May 2000 and 1 January 2003.
[6] The case turns on three issues, the answers to which dispose of both the appeal and cross-appeal:
(a)The reason why the Minister suspended the statutory process in May 2000;
(b)The extent of the Minister’s administrative law obligations in relation to the Unitec proposal; and
(c)Whether the actions of the Minister warrant review in light of those obligations.
Before we address those issues, it is necessary to discuss the relevant legislative environment and the factual background in a little more depth.
The relevant legislative environment
Overview
[7] Prior to 1990, all universities in New Zealand were governed by, and had their establishment recorded in, their own separate statutes. That changed when s 36 of the Education Amendment Act 1990 inserted a new Part 14 into the Education Act 1989. It is this Part of the Act which is primarily relevant to the case. These provisions were amended in the 1990s and then again in 2002 with effect from 1 January 2003. For present purposes, the 2002 amendments are irrelevant (save to the extent to which they form part of the narrative of events which we will shortly be discussing).
Section 162 of the Education Act 1989
[8] The key provision of the Act for the purposes of this case is s 162 which was relevantly in these terms before the 2002 amendments:
162 Establishment of institutions
(1) Upon the commencement of this section, this Act has effect as if—
(a) Each body specified in Part 1 of the Schedule 13 to this Act was established as a university under subsection (2) of this section; and
…
(c) Each body that, immediately before that commencement, was established as a polytechnic, institute of technology, technical institute or community college under the Education Act 1964, was established as a polytechnic under subsection (2) of this section,—
and a reference in any other Act to an institution established under this Act shall be read as including a reference to a body referred to in paragraph (a), paragraph (b), or paragraph (c) of this subsection.
(2) Subject to subsections (3) to (5) of this section, the Governor-General may, by Order in Council made on the written recommendation of the Minister, establish a body as … a polytechnic, … [or] a university …, as the Governor-General considers appropriate.
(3) Before deciding whether or not to recommend to the Governor-General the making of an Order in Council under subsection (2) of this section, the Minister shall—
(a) Give the Qualifications Authority a reasonable period in which to give advice to the Minister on the matter and consider any advice so given; and
(b) Consult with such institutions, organisations representing institutions, and other relevant bodies, as the Minister considers appropriate.
(4) In recommending to the Governor-General under subsection (2) of this section that a body should be established as … a polytechnic, … [or] a university, …, the Minister shall take into account—
(a) That universities have all the following characteristics and other tertiary institutions have one or more of those characteristics:
(i) They are primarily concerned with more advanced learning, the principal aim being to develop intellectual independence:
(ii) Their research and teaching are closely interdependent and most of their teaching is done by people who are active in advancing knowledge:
(iii) They meet international standards of research and teaching:
(iv) They are a repository of knowledge and expertise:
(v) They accept a role as critic and conscience of society; and
(b) That—
…
(ii) A polytechnic is characterised by a wide diversity of continuing education, including vocational training, that contributes to the maintenance, advancement, and dissemination of knowledge and expertise and promotes community learning, and by research, particularly applied and technological research, that aids development:
…
(iii) A university is characterised by a wide diversity of teaching and research, especially at a higher level, that maintains, advances, disseminates, and assists the application of, knowledge, develops intellectual independence, and promotes community learning:
…
Other provisions of the Act
[9] Section 160 is in these terms:
160 Object
The object of the provisions of this Act relating to institutions is to give them as much independence and freedom to make academic, operational, and management decisions as is consistent with the nature of the services they provide, the efficient use of national resources, the national interest, and the demands of accountability.
[10] As well, we should record that:
(a)Section 161 provides for the preservation and enhancement of academic freedom.
(b)The reconstitution of Unitec as a university required its disestablishment as a polytechnic under s 164 and its reestablishment as a university under s 162. Section 164 is set out later in the judgment (see [41] below).
The background facts
[11] The proposal by Unitec that it be re-established as a university was along similar lines to a proposal which had been successfully promoted by the Auckland Institute of Technology which eventually achieved university status with effect from 1 January 2000.
[12] The Labour Party’s policy on tertiary education for the 1999 election was announced in September 1999. The policy included the establishment of a Tertiary Education Advisory Commission:
to develop and advise government on appropriate long term strategic directions for the sector and the immediate priority areas for additional funding.
There was nothing in the policy to exclude the possibility of the creation of further universities. On the other hand the drift of the policy as announced would not have been welcomed by Unitec. For instance the policy provided:
Labour does not support moves to blur the distinctions between categories of institutions and providers. Each has an important role to play in a comprehensive education system.
Labour will maintain the current definitions, and will expect institutions and providers to develop their own specialisations within those formal categories.
For example, UNITEC has been seeking to become a “university of technology”. Auckland University has been setting out the terms of reference for a “research university”. Labour will explore these and other possibilities with the institutions.
[13] Between November 1999 (ie after the general election) and May 2000, NZQA continued the process of reviewing the Unitec case for university status but there was distinct lack of government enthusiasm for the proposal. It is clear, however, that there was concern within the government as to whether it could simply suspend the Unitec process without attracting legal action.
[14] The establishment of the Tertiary Education Advisory Commission (TEAC) was announced on 17 February 2000. Its role was described in these terms:
The role of the Commission will be to make recommendations on how the purpose, shape, structure, size and funding of tertiary education, including scholarship and research, should develop to meet New Zealand’s needs in the twenty-first century. These recommendations will be made within the context of a broad strategic direction prepared by the Commission initially and agreed to by Government.
[15] On 15 May 2000 the government introduced the Education (Limiting Number of Universities) Amendment Bill into Parliament. If enacted, this Bill would have prevented the establishment of any more universities. It did not have a sunset clause. On the other hand, the explanatory note was in these terms:
This is a Bill to amend the Education Act 1989. It proposes to insert a provision to restrict the number of public universities to 8. There are presently 8 such universities in New Zealand, and the Government does not wish there to be any more until it has considered advice from the recently established Tertiary Education Advisory Commission.
[16] On 16 May 2000, the Minister wrote to Unitec advising that he would not be making the final decision on its request for university status in the meantime and that it was therefore unnecessary, and would be wasteful of public resources, for NZQA to continue its assessment. On the same day, he wrote in similar terms to NZQA. That letter and a subsequent letter from the Minister to NZQA of 22 May 2000 could fairly be regarded as amounting to a direction to NZQA to stop the assessment process.
[17] Unitec was understandably troubled by the suspension of the process and sought to achieve progress on a number of fronts, through direct meetings with Mr Maharey and lobbying Members of Parliament. In the end, something of a compromise was reached. Unitec agreed to await advice from TEAC on the concept of a university of technology and there was a deferral of further parliamentary steps in relation to the Bill. This is recorded in a letter from Unitec to the Minister written on 20 July 2000:
Thank you for your action in permitting the Education and Science Select Committee to defer the report back date on this Bill. We were advised by the Committee earlier today that they will request the Business Committee to extend the date to March 2001.
We appreciate that this represents a very significant gesture of good will on your part, and wish to assure you that, as previously indicated, UNITEC will await the outcome of advice to you from the Tertiary Education Advisory Commission on the concept of a university of technology before requiring our current application to be considered by the New Zealand Qualifications Authority.
[18] In 2001 TEAC provided four reports, the most significant of which, for present purposes, was Shaping the Future which was issued in March 2001. It suggested that a Tertiary Education Committee (TEC) be set up with responsibility for the whole sector. The Minister was not prepared in the meantime to re-activate reconsideration of the Unitec proposal, a point which emerged in correspondence between him and Unitec between April and July 2001. The Education (Limiting Number of Universities) Amendment Bill was still before Parliament. Unitec would appear to have taken the view that if it pressed its case too hard (and in particular went to the courts), the Bill was likely to be passed.
[19] As a result of Cabinet decisions made in October 2001, the Education (Tertiary Reform) Bill was introduced in Parliament in December 2001 and was enacted in December 2002. It came into effect in January 2003. This legislation amended Part 14 of the Education Act in a way which did not favour Unitec. The Education (Limiting Number of Universities) Amendment Bill lapsed in May 2003.
[20] During 2003, the TEC asked Unitec to wait until 2004 before requesting a resumption of the assessment of its request for university status. Unitec did not formally request resumption of the assessment until 31 May 2004. At that time (or shortly afterwards) NZQA resumed its assessment.
[21] The present proceedings were commenced in January 2005.
[22] As already noted, since Miller J’s decision was released, the proposal that Unitec be reconstituted as a university has been finally determined and indeed rejected. The merits of that decision are not before us.
The findings of the Judge
[23] The approach the Judge took involved a reasonably literal approach to s 162(3). For ease of reference we set out again the key words:
(3) Before deciding whether or not to recommend to the Governor-General the making of an Order in Council under subsection (2) of this section, the Minister shall—
(a) Give the Qualifications Authority a reasonable period in which to give advice to the Minister on the matter and consider any advice so given; and
(b) Consult with such institutions, organisations representing institutions, and other relevant bodies, as the Minister considers appropriate.
[24] The Judge found that once the Minister was seriously considering the question whether or not to make a recommendation to the Governor-General under s 162(3), and had invited NZQA to provide advice, there was no scope in the legislative scheme for putting that process on hold.
[25] This reasoning, in part, appears in the following passage of his judgment:
[50] The criteria that a body must satisfy are those set out in s 162(4)(a). They relate to what may be described broadly as the academic characteristics of a university. There is no reference to any limit on the number of universities. Rather, the legislation envisages that any body may be established as a university if the Governor–General so decides by Order in Council following a recommendation by the minister, who must take into account the criteria in s 164(4)(a) [sic – s 162(4)(a)] when recommending establishment. Nothing in the section suggests a limit on the number of universities. The legislation contemplates that a body may change status; in that case, it must first be disestablished under s 164, which contemplates that the Governor–General may, by Order in Council made on the written recommendation of the minister, incorporate a disestablished institution as a new institution of a different class. Section 164(4)(b) specifically contemplates that a disestablished polytechnic may be incorporated in a university.
[51] Asked to identify which part of the Act contemplated that the minister might decline to recommend establishment of a university on the ground that government policy was not to create additional universities, Ms Clark referred to s 160. That section refers to the efficient use of national resources and the national interest. However, it does so only by way of qualification to the object of the relevant provisions of the Act, which is to give institutions as much independence and freedom to make academic, operational, and management decisions as is consistent with the nature of the services they provide, the efficient use of national resources, the national interest, and the demands of accountability.
[52] The Act’s emphasis on academic and management freedom is consistent with a legislative policy that there is to be no fixed limit on the number of universities, but rather that they will be established on their individual merits. That is apparent on reading the legislation, and it is confirmed when the Act is considered in its historical context: R v Z [2005] 3 All ER 95 at para [17]. Introducing the legislation on 29 March 1990, the then Minister of Education, Mr Goff, emphasised that it extended to polytechnics and similar institutions some of the privileges of universities. Previously polytechnics had been strictly controlled. Under the Bill, they would gain freedom to make operational and management decisions, and were to be encouraged to become more entrepreneurial: (1990) 506 NZPD 1166, 29 March.
[53] I conclude that a decision that a body is to be denied university status, regardless of its academic qualities, on the ground that the minister is opposed to any increase in the number of universities would be contrary to the text and purpose of the Act.
This language is a little awkward (because the Judge actually held that there was no government policy that there be no more universities but merely a policy that there be no more universities pending a policy review). But the Judge would appear to have been of the view that a decision not to make a recommendation could only be made after compliance with s 162(3), and, as he later made clear, he concluded that the Minister was not entitled to defer the process pending the establishment of a new policy:
[61] … By suspending the application, the associate minister plainly refused to exercise a statutory power to make a recommendation to the Governor–General. Indeed, that was the whole point of the 2000 Bill. This is not a case in which the minister’s decision was of a purely administrative kind, a point which I elaborate upon at paras [159] – [162] below.
[62] I conclude that the associate minister was not lawfully entitled to halt Unitec’s application on the ground that it was government policy that there ought to be no additional universities until the TEAC review had been completed.
[26] The Judge’s approach to the legitimate expectations of Unitec (which underpinned his conclusions as referred to above in [3](c)) was very much a downstream consequence of this approach:
[138] I accept that an expectation may be revoked. De Smith, Woolf and Jowell, Judicial Review of Administrative Action at 8–063 states:
“An expectation need not endure eternally. It may come to an end naturally or it may be cancelled. There are sound reasons why officials ought to be able to change their policies and practices, for otherwise their discretion would be fettered.”
[139] However, in this case, Unitec’s expectation arose primarily from the legislation itself. I have held that it did not contemplate a policy that there would be no additional universities. Coupled with the acceptance of Unitec’s application and its initial processing by the NZQA, I find that Unitec had a legitimate expectation that its application would be considered and a decision whether or not to make a recommendation to the Governor–General would be reached within a reasonable time. I do not accept that it was open to the associate minister to revoke that expectation on the ground that it was government policy that there would be no additional universities pending the TEAC review. It is not necessary to decide whether he might have revoked it on other grounds.
[27] It follows that if the Judge’s approach to the scheme of s 162(3) is wrong and that it was open to the Minister to suspend the NZQA process as he did, the findings made by the Judge against the Minister as recorded in [3](a) and (b) are wrong and the primary basis for the Judge’s findings against the Minister as recorded in [3](c) and (d) above is likewise wrong. So the key issue in the case is the extent of the administrative law obligations on the Minister. But before we discuss those obligations it is appropriate to revert briefly to the facts to make a finding on one of the disputed issues in the case, the reason why the Minister suspended the process.
Why the Minister suspended the statutory process in May 2000
[28] Miller J concluded that a blanket policy by the Minister (or Government) against the establishment of new universities would not have been consistent with the legislative scheme: see the passage of his judgment which we have cited at [25] above.
[29] This conclusion was based on the cases which hold that a public body vested with discretionary authority must not abdicate that authority, see for instance the discussion in Joseph Constitutional and Administrative Law in New Zealand (2ed 2001) at 801 et seq. But whether this approach should be adopted in relation to a particular statutory discretion and a particular policy depends on the true interpretation of the empowering legislation. If s 162 is seen as primarily empowering the Minister (ie as conferring a discretion on the Minister) to initiate the process, it is not self-evident that the abdication of discretion approach is applicable, cf the remarks of Richmond J in Hamilton City v Electricity Distribution Commission [1972] NZLR 605 at 634.
[30] The interpretation issue cannot sensibly be approached in an abstract way. The issue whether there has been an improper abdication of discretion requires analysis not only of the key statutory provisions but also a finding as to the nature of the policy.
[31] The case for Unitec, both at trial and before us, was that consideration of the Unitec proposal was suspended because of a blanket government policy against the establishment of new universities. Certainly some of the documents which were produced in evidence suggested that there was such a policy. For instance, in a letter of 17 February 2000 to the Prime Minister, the Minister said:
It is government policy to limit the number of universities in New Zealand to eight, which is the current number.
A cabinet minute of 8 May 2000 records that:
Cabinet noted that it is the government’s policy not to have an increase in the number of universities in New Zealand.
A cabinet minute of 15 May 2000 is in similar terms. As well, there was evidence of remarks apparently made much later by other ministers to the effect that Unitec did not correspond to the concept of a university held by a number of senior government ministers.
[32] The case for the Minister was that the reason for the suspension of the statutory processes associated with the Unitec proposal was a policy decision that there be no more universities pending the establishment of a policy following the review by TEAC. Mr Maharey’s affidavit was to this effect.
[33] One of the difficulties with this aspect of the case is temporal. On the evidence of Mr Maharey, the government policy was that there be no more universities pending the TEAC review of the development of a policy. Documents addressing the situation as it was in early 2000, ie before the TEAC review was available and the associated policy had been developed, could understandably (if elliptically) describe the policy, as at that time, as being that there were to be no more universities.
[34] In his judgment, the Judge said:
[39] I … find that the cause of the suspension was the government’s policy with respect to the number of universities. There was a dispute as to precisely what that policy entailed. Ms Chen argued that the policy was that there would be no new universities. She referred to a number of documents that baldly state it was government policy not to have an increase in the number of universities, the decision not to include a sunset clause in the 2000 Bill, and hearsay evidence to the effect that senior government figures have a fixed view of what a university should look like.
[40] However, the evidence does not satisfy me that the government had closed its mind to the possibility of further universities pending the TEAC review, which it had commissioned. The associate minister’s evidence to the contrary is borne out by subsequent experience; the legislation has been amended in a way that does not limit the number of universities, although there are now additional criteria to be met. Accordingly, I find that the policy was, as stated by the associate minister, a governmental moratorium on establishing new universities before government policy for the tertiary sector had been settled.
[35] What the Judge obviously meant by the first sentence of [40] was that the Government had not ruled out the possibility of future universities being established after TEAC had reported. On this point, we agree with the conclusion of the Judge, which, in any event, was open to him on the evidence. So the first of the two cross-appeal arguments must fail.
The extent of the Minister’s administrative law obligations in relation to the Unitec proposal
Overview
[36] As is apparent from the passages we have already cited from his judgment, the Judge treated the statutory process as if it were an application by Unitec with the Minister having an adjudicative (or perhaps semi-adjudicative) role. Indeed throughout the judgment, the Judge referred to the proposal that Unitec be constituted as a university as “an application” by Unitec to the Minister. If this is the way the section was intended to work, the Judge’s overall approach is understandable. However, if the process is properly to be treated as being, in substance, that of (ie driven by) the Minister, the logic underpinning the judgment is open to question.
[37] One contextual issue of significance is that Part 14 of the Act is addressed to public tertiary institutions. Private training establishments, as tertiary institutions which are not public tertiary institutions are called, are dealt with under a separate part of the Act, namely Part 18. In this case, the key debates have all occurred within the public sector (at least construed broadly). We accept that institutions governed by Part 14 have institutional autonomy and that their public sector status does not prevent them from having legal rights vis-à-vis other institutions or individuals operating within the public sector. And plainly they have the right to go to the courts to vindicate their rights. So if their administrative law rights have been infringed by the actions of the Minister, they are entitled to redress. But their public sector status is material in terms of deciding just what administrative law rights they have. In this case, a public sector organisation set up for one purpose has claimed the right to require the Minister to reconsider that purpose (and thus its status) and, associated with this, to have the reconsideration take place within a particular statutory process and within reasonable timeframes and to be entitled to relief, including damages, associated with what it claims are deficiencies in the process. It is not self-evident that this was contemplated by the legislature when Part 14 was enacted.
Timing
[38] The section requires the s 162(3) process to be completed before a decision on a possible recommendation is made. But there is no explicit obligation on the Minister as to when that decision must be made and thus nothing in the wording of the section to prevent the Minister deferring the making of that decision. Given our views as to the role of the Minister (which we discuss shortly) we see nothing implicit in the section or the scheme of the Act which requires the Minister to act on a timetable initiated or proposed by a public body set up for one purpose (here, to be a polytechnic) which wants to become a different type of public body (here, to be a university). Instead, we see s 162 as empowering the Minister to recommend the establishment of new universities and as providing a process which he or she must go through before a final decision can be made. Accordingly the Minister is entitled to defer the making of a decision one way or the other until he or she is ready make the decision.
The role of the Minister under s 162
[39] Associated with the conclusion just expressed are some other problems with the approach of the Judge.
[40] We start by noting that s 162 cannot be given an absolutely literal interpretation. For instance, it could not have been the case that a Minister who idly contemplated the possibility of a new university was not permitted to get that idea out of his or her head (and thus decide not to recommend the making of an Order in Council) without going through the s 162(3) process. Likewise, we simply do not accept that a Minister to whom the establishment of a new university has been proposed is inexorably compelled to go through an elaborate and expensive statutory process before deciding to go no further.
[41] That the Minister has a significant role to play is emphasised by processes which must be gone through where the reconstitution of a polytechnic as a university is involved. For Unitec to be reconstituted, it had first to be disestablished under s 164. Prior to the 2002 amendments, that section relevantly read:
164 Disestablishment of institutions
(1) Subject to this section, the Governor-General may, by Order in Council made on the written recommendation of the Minister, disestablish an institution.
…
(3) The Minister shall not recommend the disestablishment of an institution unless the Minister—
(a) Is satisfied on reasonable grounds that there are good reasons to do so; and
(b) Specifies the reasons in the recommendation.
(4) When an institution is, or 2 or more institutions are, disestablished, the Governor-General may, by Order in Council made on the written recommendation of the Minister, incorporate the disestablished institution or any one or more of the disestablished institutions in another institution, whether the other institution is—
(a) An existing institution or a new institution established for the purpose:
(b) An institution of the same class as the disestablished institution or institutions or an institution of a different class from it or them (for example, a disestablished polytechnic may be incorporated in a university).
(5) Before deciding whether or not to recommend the making of an Order in Council under subsection (1) or subsection (4), or both subsections (1) and (4), the Minister shall—
(a) Give to the Council of the institution or the Councils of the institutions concerned, and to every other body that the Minister considers is likely to be directly affected, written notice—
(i) Setting out the action that the Minister is considering whether to take and the reasons for that action; and
(ii) Inviting each Council or other body to make a written submission to the Minister in relation to the matter; and
(b) Publish such notices as the Minister considers appropriate inviting members of the public to make written submissions in relation to the matter; and
(c) Consider any submissions made within a reasonable period in response to the notices referred to in paragraphs (a) and (b) of this subsection.
…
[42] It will be noted that s 164(5) has some resemblance to s 162(3), in that it sets out a statutory process to be followed by the Minister, “[b]efore deciding whether or not to” make a recommendation. Commonsense dictates that the Minister need not go through this process unless actually considering the possibility of making such a recommendation, a point which is confirmed by s 164(5)(a)(i). Under the s 164 process, the Minister is the key player. While this may be because s 164 is likely to be invoked when educational institutions are in difficulty, the section was also applicable in the current situation. And if the Minister was not prepared to recommend disestablishment of Unitec as a polytechnic, there would not be much point in going through the s 162(3) process.
[43] There is another point which emerges from s 164. In s 164(5) the words “or not” are there to ensure that, prior to completion of the statutory process, the Minister has not made a final decision to recommend disestablishment, ie to avoid predetermination. But if the Minister decides, before taking the steps required by s 164(5), not to make a recommendation (and is therefore not “considering” whether to do so), there is obviously no requirement for the Minister to go through the process. For instance if a disaffected student irritated by poor marks seeks an institution’s disestablishment, the Minister is entitled to reject that suggestion without giving the Council of the institution notice under s 164(5).
[44] We think that similar considerations apply under s 162(3). The Minister is only required to embark on the s 162(3) process if the making of a positive recommendation is seriously under consideration. In this context, the words “or not” are there simply to preclude predetermination of a decision to make a recommendation.
Was the Minister entitled to suspend a process which had already begun?
[45] In his judgment, the Judge did not directly answer the question whether the Minister could be required to embark on the s 162(3) process at the request of an institution seeking to become a university. His approach was that once the process was underway, it was not open to the Minister to cancel or postpone it. But if the Minister cannot be required to embark on a s 162(3) process, it would be odd if the Minister could not cancel (or suspend) such a process once it was underway.
[46] Once it is accepted that the words “or not” have only a limited purpose in s 162(3) (being the purpose discussed in [44]) and that the subsection cannot be construed completely literally, there is no warrant in the language of the section itself for the approach of the Judge. In our view, there was no requirement for the Minister to commence or continue with the s 162(3) process unless he had in mind the possibility of making a positive recommendation in the near future.
Did the policy of no more universities pending the development of tertiary education policy amount to an abdication of discretionary authority?
[47] As already indicated, we are satisfied that the key policy which led to the suspension of the s 162(3) process was that there be no more universities pending the establishment of tertiary education policy.
[48] Did that policy amount to an illegitimate abdication of discretionary authority?
[49] We think not.
[50] As is apparent from what we have already said, we see s 162 as empowering the Minister to put in place the processes to disestablish a polytechnic and to establish a new university.
[51] There are high policy components in decisions to establish a university and disestablish a polytechnic. That this is so strikes us as being sufficiently obvious to require little elaboration. It is sufficient to note that the 1990 amendments to the Education Act were enacted in response to the report of the institutional framework working group chaired by Sir Kenneth Keith, dated 24 May 1989, Learning for Life. In [50] of this Report, the working group concluded that:
The process of establishment and recognition should take at least the form of an order in council amending the statutory list. We do not think that Ministerial decision alone is adequate. First, there does not appear to be sufficient reason in this context to distinguish between the categories of institutions. Secondly, the existing institutions have been recognised or created in a formal way – in the case of each university by their own individual statute. Thirdly, the actions usually are of national significance or importance; they commonly involve major political and financial responsibility involving interests beyond those of the Department of Education; and considerations of international parity and status suggest such a process. Finally, such decisions are rare.
[52] We are satisfied that the Government (given that the Executive Council is its alter ego) and the Minister were entitled to develop a tertiary education strategy and, when making decisions under s 162, to apply the then current policy, see Re Findlay [1985] 1 AC 318 at 338 (HL) per Lord Scarman. In this context we think it unrealistic to expect that decisions as to the establishment of universities would depend on a mechanical application of the s 162(4) criteria.
[53] It follows that the Minister was entitled to defer a determination on the Unitec proposal pending the development of policy.
Legitimate expectations
[54] Legitimate expectations principles provided an alternative basis upon which it was argued that the Minister could not terminate the process once he had started on it.
[55] Unitec knew that the successful proposal that Auckland Institute of Technology be re-established as a university had gone through the s 162 process. It had, between August 1999 and May 2000 engaged with NZQA in relation to the assessment exercise which was proposed. Up until 15 May 2000, there was no formal indication from the Government to the effect that the process would not be permitted to continue. So we accept that Unitec had expectations as to the continuance of the NZQA process.
[56] The more difficult question (from the point of view of Unitec) is whether those expectations justify the relief which the Judge granted.
[57] In circumstances where the Government is not, for the time being, prepared to commit to the establishment of new universities for policy reasons which go beyond the issues likely to be addressed by NZQA under s 162(3), it would be strange if an expensive but pointless s 162(3) exercise was required to be carried out.
[58] As already noted, the Judge’s views on this were primarily driven by his interpretation of the Act.
[59] On the interpretation of the Act which we prefer, Unitec should have proceeded on the assumption that the Minister and Government were entitled to defer making a decision until policy had been developed. Once the Minister and Government had chosen to defer making a decision pending the development of policy, Unitec could not reasonably have expected NZQA to continue with the s 162(3) process.
Unitec’s arguments based on ss 160-161 of the Act
[60] Section 160 is set out above in [9]. Section 161 provides that the intention of Parliament was that:
academic freedom and the autonomy of institutions are to be preserved and enhanced.
What, if any, assistance these sections provide in the present context is open to dispute.
[61] Part of the argument for Unitec was that the emphasis in these sections on institutional autonomy and academic freedom supported its contentions as to the obligations on the Minister. Unitec also maintained that the reference in s 160 to “the efficient use of national resources” and “the national interest” applied only to the extent to which institutions should be given autonomy (in relation to “academic, operational and management decisions”) and should not be taken to authorise the Minister to make decisions based on “the efficient use of national resources” or “the national interest”.
[62] We disagree with the contention as to ss 160 and 161.
[63] We see ss 160 and 161 as fulfilling two primary roles. First, they are a Parliamentary admonition to ministers and others on the importance of academic freedom and the need for public tertiary institutions to have autonomy. See in that regard s 161(4). Secondly they tell institutions how they are to act: see s 161(3). In that regard, the sections stand with ss 180 and 181 (which address the functions and duties of Councils of institutions). We also accept that ss 160 and 161 may be important when the disestablishment of an institution is contemplated.
[64] On the other hand, these sections do not have a significant role to play in relation to the establishment of institutions. That this is so emerges clearly from the passage from Learning for Life which we have already cited. The reference in s 160 to “independence and freedom” involving “academic, operational, and management decisions” associated with “services” provided by institutions does not imply any need for the Minister to defer to the desire of an institution to change its status. Unitec has a large measure of autonomy as a polytechnic. But the Act contemplates that decisions associated with a change in its status to a university are to be made by the Minister and the Executive Council. Further, while we agree that the references to “efficient use of national resources” and “the national interest” in s 160 are not directly applicable to the role of the Minister under s 162, we think it reasonably obvious that the Minister was nonetheless entitled to have regard to national interest and efficiency considerations given the policy issues necessarily involved in the s 162 process.
Given those administrative law obligations, do the actions of the Minister warrant review?
[65] We are satisfied that the Minister was under no express or implied time constraint as to when to make a final decision whether or not to recommend university status.
[66] Likewise we are satisfied that the Minister had no obligation to continue with the s 162(3) process. This is because the timing of the process was under the Minister’s control and in any event the Minister was entitled to discontinue or suspend the process if the possibility of making a positive recommendation was not under immediate consideration.
[67] Furthermore, we are satisfied that there was no legal error in the decision made by the Minister to suspend the process in that it was open to him to defer making an eventual decision pending the outcome of the government’s policy review.
[68] We are satisfied that legitimate expectation principles did not preclude the Minister from suspending the process.
Disposition
[69] The conclusions we have reached dispose of the findings made by the Judge against the Minister. For reasons earlier given, the first of the cross-appeal arguments fails. As we have concluded that there was no unlawful suspension of the s 162(3) process, the second cross-appeal argument necessarily fails as well.
[70] Accordingly, the appeal is allowed and the judgment given in favour of Unitec in the High Court is set aside. The cross-appeal is dismissed. The first respondent’s claim against the appellant is dismissed and judgment is entered for the appellant. The appellant is entitled to costs against the first respondent in the High Court. In default of agreement, these costs are to be fixed by the High Court. The costs order in the High Court in favour of the second respondent is confirmed. With respect to the costs in this Court, the first respondent is to pay the appellant the sum of $12,000, together with usual disbursements. We certify for second counsel.
Solicitors:
Crown Law Office, Wellington for Appellant
Chen & Palmer, Wellington for First Respondent
Izard Weston, Wellington for Second Respondent
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