By: N/A
Howe v Keown[1] has been one of the most controversial cases to pass through the Christchurch Courts this year.  The case concerned an injunction application to prevent the defendant, Christchurch City Councillor Aaron Keown, from participating in the Council process to appoint a new chief exectuive.  The plaintiff, a concerned ratepayer, sought the injunction principally on the grounds that the defendant illegitimately favoured the incumbent Council chief executive and had made public statements to that effect.  Fogarty J refused to award the injunction and in so doing severally curtailed the application of the law of bias to elected members in public office.

The common law has long prevented public powers from being exercised in a way that unfairly favours a particular party.  Various rules have evolved that all start from the same principle, that "justice should not only be done, but should manifestly and undoubtedly be seen to be done."[2]  In the Howe case, the plaintiff relied, among other things, on the rule against apparent bias.

The rule can be simply expressed.  A decision-maker is disqualified from making the decision when a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial mind to the resolution of the question the decision-maker is required to decide.[3]

Despite the apparent simplicity of the rule, its application can often cause considerable difficulty.  That is because the nature public powers and those who exercise them differ enormously.  The rules must, therefore, inevitably be tailored to suit the particular decision in the particular context.  The Howe decision shows the complexities involved.

To fully understand the issues in the Howe case it is necessary to appreciate the public powers in question.  The case concerned the Christchurch City Council process to appoint a CEO.  The process is heavily prescribed by the Local Government Act 2002 (the "LGA"). 

Under s 42, a local authority is charged with the task of appointing the authority's chief executive officer.  After the chief executive officer's first term, the authority has a discretion under cl 34 of Schedule 7, to either reappoint the incumbent for a further two years or to advertise the position as vacant and open up another five year term.
When considering the candidates for chief executive officer, cl 33 of Schedule 7 provides that the authority must have regard to the need to appoint a person who will -
  1. discharge the specific responsibilities placed on the appointee; and
  2. imbue the employees of the local authority with a spirit of service to the community; and
  3. promote efficiency in the local authority; and
  4. be a responsible manager; and
  5. maintain appropriate standards of integrity and conduct among the employees of the local authority; and
  6. ensure that the local authority is a good employer; and
  7. promote equal employment opportunities.
Lastly, the authority has several obligations regarding its employment practice.  Under cl 36(2)(c) of Schedule 7, the authority is required to have a personnel policy requiring the impartial selection of suitably qualified persons.  Furthermore, cl 36(3)(a) requires the authority to give preference to the person who is best suited to the position when making an appointment.

Fogarty J summarised these provisions by saying, "the law requires councillors to impartially select the suitably qualified person best suited for the position of Chief Executive Officer of the Council."[4]

The plaintiff argued principally that Councillor Keown had demonstrated that he had pre-determined the appointment of the chief executive and that he had demonstrated an apparent bias.  The plaintiff relied on various public and private statements Councillor Keown had made which he argued evidenced Councillor Keown’s partiality to the incumbent.

The plaintiff argued that the test to be applied to determine whether Councillor Keown should have been disqualified from the appointment process on the grounds of apparent bias was that articulated in Saxmere Company Ltd v Wool Board Disestablishment Co Ltd[5].  That case reiterated the law that is now settled across the Commonwealth jurisdictions.[6]  The test for apparent bias is whether a fair-minded lay observer might reasonably apprehend that the decision-maker might not bring an impartial mind to the resolution of the question the decision-maker is required to decide.

Fogarty J dismissed the plaintiff’s submission.  His Honour thought that the Saxmere standard of apparent bias that was not applicable to decisions of elected persons.[7]  Rather, his Honour thought that Parliament, in passing the LGA, had bestowed on city councillors the power to appoint a chief executive knowing that the councillors will have formed strong views before the appointment process starts.[8]

To this extent, Fogarty J thought it was permissible for city councillors to develop a policy, additional to the criteria set out in the LGA, by which they could determine the decision at hand.[9]  In this instance, his Honour though it legitimate for Councillor Keown to have published a policy in favour of the incumbent.[10]

With respect, Fogarty J’s appreciation of the relevant public law standard of bias was misguided.  As discussed above, the rationale behind the rule against apparent bias is that justice must manifestly and undoubtedly be seen to be done.  It is true though that the courts do not recognise that the Saxmere standard of apparent bias is to be applied clumsily to all decision-makers.  Saxmere itself concerned the apparent bias of a Court of Appeal judge who was expected to maintain the highest standards of apparent impartiality.  In some circumstances, it is simply a matter of realism to expect elected decision-makers to exercise a degree of bias in order to satisfy the mandate upon which they were elected.[11]  However, what constitutes permissible and impermissible bias must be determined primarily by an enquiry into the nature of the decision to be made and the way in which Parliament has directed the decision is to be made.

The English Courts have on several instances considered the question of whether the Saxmere standard should apply to local authority decisions.  In Southwark London Borough Council v Jiminez[12] the English Court of Appeal held that the Saxmere standard for apparent bias, which had been expressed in the House of Lords’ decision Porter v Magill[13], should not be applied in a way that would make local authority decision-making unduly difficult.  However, the Court expressed that it did not conclude that circumstances of local authority decision-making are such as to exclude the broader application of the test altogether.

This point was expanded English case R v Redcar and Cleveland Borough Council[14] concerned a planning permission decision of a local authority.  The claimant sought to apply the Porter test for apparent bias to council members sitting as a planning committee.  Pill LJ held that the Porter case should not automatically be excluded in this context.[15]  Rather, the application of the test turned on an understanding of the constitutional position of the council members in question.[16]

From these decisions, it is clear that the English Court of Appeal favours a test that focuses on the nature of the decision the local authority is required to make.  Although the practicalities of local government decision-making must be taken into account, the Saxmere/Porter test will be applied when the decision calls for a high degree of impartiality. 

It is submitted that the appoint of a local authority chief executive is a decision which calls for a high degree of impartiality.  Arguably the statutory requirement that the chief executive position be re-advertised at the end of the incumbent’s term signals Parliament’s intention that administrative power is not to held at length by one individual beyond public scrutiny.[17]  Consequently, the councillors’ power to appoint the chief executive is a constitutional function.

Fogarty J’s approach fails to recognise the constitutional significance of the decision.  His Honour approached the question by enquiring into the decision-makers rather than the decision.  He judged that local authority councillors will usually have preconceived views and policies.  Consequently, his Honour excluded the Saxmere test and held that Councillor Keown could publicly adopt a policy in favour of the incumbent so long as it was clear he had not “closed his mind.” 

This approach clearly does not align with administrative law’s primary function: to ensure that public powers are not abused.  Fogarty J’s approach lowers the standard rather than requiring decision-makers to meet the standard to which Parliament calls them.  Furthermore, it may be said that Fogarty J’s reasoning is actually inconsistent with the provision of the LGA.  It has been argued that that the LGA’s requirement that the chief executive position be re-advertised is to prevent the illegitimate retention of power by administrative officials.  If the appointment process is carried out pursuant to a policy which favours the incumbent, arguably the LGA’s purpose is frustrated.

The rule against apparent bias must be applied to the exercise of public powers when warranted by the context.  Fogarty J’s decision in Howe v Keown disregards the principle.  Rather, his Honour favoured an inquiry into the nature of local authority decision-makers and not the public importance of the decision at hand.  Were this approach to be accepted the Courts would in effect be sanctioning a lesser standard of administrative decision-making.

[1] HC Christchurch, CIV 2011-409-001493 [2 September 2011].
[2] R v Sussex Justices; Ex p McCarthy [1924] 1 KB 256 at 259, per Lord Hewart CJ.
[3] Saxmere Company Ltd v Wool Board Disestablishment Company Ltd [2010] 1 NZLR 35 (SC) at [3], [38] and [92].
[4] at para [25].
[5] [2010] 1 NZLR 35 (SC).
[6] See Porter v Magill [2002] 2 AC 357; Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 33.
[7] Howe, at paragraph [41].
[8] Ibid, at [35].
[9] Ibid, at [27] & [28].
[10] Ibid, at [37].
[11] For discussion of this principle, see CreedNZ v Governor-General [1981] 1 NZLR 172 (CA) at 194, per Richardson J; and see R (Island Farm Development Ltd) v Bridgend County Borough Council [2007] LGR 60, per Ward J at para [121].
[12] [2003] ICR 1176, at para [25]; [2003] EWCA Civ 502.
[13] [2002] 2 AC 357.
[14] [2009] 1 WLR 83.
[15] Redcar, at paragraph [66].
[16] Ibid.
[17] See LGA, s 3 which provides that one of the purposes of the LGA is to promote the accountability of local authorities to their communities.
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