It's called "covering your ass" and is practiced widely in this litigation mad society we live in these days !
But ATCs arse is already covered as the AIP clearly spells out the circumstances under which a visual approach at night may be conducted.
ATC are creating a rod for their own backs by including the phrase "when established in the circling area", IMHO - they are assuming some of the pilot's responsibilities.
In the case of the Dash 8, the controllers instruction should just have been "make visual approach".