*ADMINISTRATIVE LAW II*
AH. EMANUEL ALOYCE
*The Ultra Vires Principle*
Ultra vires
In the world of business and corporate law, the concept of what is “ultra vires” is
important. It refers to acts that are beyond the legal power of a corporation or
organisation. It is the opposite of under proper authority—intra vires.
When a company engages in an ultra vires act, it can have serious consequences
for both the organisation and its stakeholders. Likewise, the principle has the same
definition in the fields of judicial review and administrative law.
*Meaning of the Ultra Vires Principle*
An ultra vires act is an act that a person or entity performs, that is beyond their
legal authority. There are three fields where the doctrine can be applicable:
Judicial review
Administrative law
Corporation law
Judicial Review
In the context of judicial review, it refers to the principle that delegated legislation
(also known as subordinate legislation) is invalid if it exceeds the powers that have
been delegated to the body that made it.
Delegated legislation is legislation that is made by a public body. This incudes a
government minister or a local authority, under the authority of an Act of
Parliament. It is often used to fill in the details of a statute or to make changes to it
in response to changing circumstances.
The ultra vires doctrine is one of the main grounds on which parties can challenge
delegated legislation in judicial review proceedings. If a court finds that delegated
legislation is ultra vires, it will quash it (declare it invalid).
There are two main types of ultra vires challenges:
*Procedural ultra vires.* This happens when a public body fails to follow the
correct procedures when making delegated legislation. For example, a minister
may fail to consult with the relevant stakeholders before making a regulation.
*Substantive ultra* vires. This occurs when a public body makes delegated
legislation that is outside the scope of the powers that have been delegated to it.
For instance, a local authority may make a by-law that restricts freedom of speech,
even though this is not a power that the Parliament has delegated to it.
The ultra vires doctrine is an important safeguard against the abuse of power by
public bodies. It ensures that they make delegated legislation in accordance with
the law. It also ensures that it does not exceed the powers that have been delegated
to the public body that made it.
Ultra vires
Administrative Law
The ultra vires doctrine is a principle of administrative law that allows the courts to
review the actions of public bodies to ensure that they are acting within the powers
granted to them by law. The doctrine is based on the idea that public bodies are
creatures of statute and that their powers don’t go beyond those that the Parliament
specifically grants to them.
Moreover, if a public body acts beyond its powers, its actions are ultra vires.
Therefore, they become invalid. This means that the courts can set aside the actions
of the public body and order it to take steps to remedy the situation.
The ultra vires doctrine is one of the most important principles of administrative
law. It helps to ensure that public bodies do not abuse their powers and that they
act in accordance with the law. The doctrine also provides a mechanism for
individuals and businesses to challenge the actions of public bodies that they
believe are unlawful.
Corporate Law
In the context of corporations, an ultra vires act is an act that a corporation
performs. This act is beyond the scope of its powers as per its articles of
incorporation or bylaws. There are two main types of ultra vires acts:
Acts that are beyond the express powers of the corporation. These are acts that the
corporation’s articles of incorporation or bylaws do not specifically authorise.
Acts that are within the express powers of the corporation, but that are prohibited
by law. These are acts that the corporation’s articles of incorporation or bylaws
authorise. But are prohibited by statute or case law.
Effect of an Ultra Vires Act
If a corporation engages in an ultra vires act, the act may be void or voidable.
A void act is an act that has no legal effect whatsoever.
A voidable act is an act that is valid until a court of law challenges it, and declares
it void.
If a corporation engages in an ultra vires act, the parties to the act may be able to
recover damages from the corporation. However, the corporation may also be able
to defend itself against liability by arguing that the act was ultra vires and therefore
not binding on the corporation.
This principle protects the interests of creditors and shareholders of corporations.
By preventing corporations from engaging in acts that are beyond their legal
authority, the doctrine helps to ensure that corporations are only able to enter into
contracts and incur liabilities that they are legally capable of fulfilling.
The Legal Services Commission of South Australia states that the existence of an
ultra vires act in the decision making process of the Parliament results in the
interference of the court with an administrative decision or question. This is if it
can be shown that the decision maker went beyond its powers given to one’s
position.
Reasons Why a Administrative or Judicial Decision May Be Ultra Vires
An administrative or judicial decision may be ultra vires (beyond its powers) for a
number of reasons:
Error of law: – In the usual manner of decision-making, tribunals have the
freedom to create legal principles in particular fields of law. However, there are
times when the law has been decided in other decisions and the tribunal is obliged
to follow such established rules.
Beyond or lack of jurisdiction: – If a decision is beyond the jurisdiction of a
particular tribunal, a decision that affects the rights and interests of individuals and
entities may be challenged on that ground.
Bad Faith: – In this ground, it must be shown that corruption, bribery, malicious
intent, or other similar malpractice has affected the decision.
No evidence: – This ground establishes that the evidence presented does not
sufficiently support the decision made.
Irrelevant considerations: – The government body, in reaching its final decision,
included factors that were not relevant to the matter at hand or failed to consider
the more relevant matters that should influence the outcome of the decision. Thus,
the court may intervene.
Ultra vires
Need to Challenge an Ultra Vires Transaction or Decision?
The law constantly evolves and adapts to the changing needs of society. But
sometimes, the law can be rigid and inflexible, leading to decisions that are unfair
or unjust. This is where the concept of ultra vires comes in.
Challenging an ultra vires decision can be a complex and time-consuming process.
But it is an important way to ensure that public bodies are accountable for their
actions. Ultimately, it is a way to protect the rights of individuals and groups and to
ensure the fair and consisted application of law.
*AH EMANUEL*
