Conduct of Members

December 2nd, 2015 by James Goudie KC in Standards

The Welsh Government has issued a Consultation, for response by 10 January 2016, seeking views on the contents of two Statutory Instruments, both to be made under Part III of the Local Government Act 2000, in relation to the conduct of councillors in Wales.  They are the Local Government (Standards Committees, Investigations, Dispensations and Referral) (Wales) Regulations 2016 and the Local Authorities (Model Code of Conduct) (Wales) (Amendment) Order 2016.

The draft Code Amendment Order amends paragraph 15(2) of the Model Code to put it beyond doubt that all personal interests disclosed under paragraph 11 of the Code, not just those financial and other interests falling within a category mentioned in paragraph 10(2)(a), should be entered in the register of members’ interests. The draft Code Amendment Order omits from the Model Code the requirement to report a potential breach to the Ombudsman.  The requirement to report a breach to the Monitoring Officer is retained. This does not prevent a member from quite properly reporting a potentially serious breach of the Code to the Ombudsman.

Paragraph 10(2)(b) of the Model Code provides that a member has a personal interest in a matter if a member of the public might reasonably perceive a conflict between their role in taking a decision on that matter on behalf of the authority as a whole, and their role in representing the interests of constituents in their ward or electoral division, as appropriate. This aspect of the Code has given rise to unintended consequences in its practical application. The equivalent provision in the 2001 Model Code of Conduct was framed so as to apply to an executive member acting alone in taking a decision on behalf of the authority. The wider wording of the provision in the 2008 Code has been read by authorities as applying to members when acting collectively, e.g. on a planning or licensing committee, and has been seen as potentially precluding members from participating in any decisions affecting their ward.  Paragraph 10(2)(b) is also potentially in conflict with Section 25 of the Localism Act 2011, which aims to clarify the law covering predetermination in England and Wales.

The draft Code Amendment Order omits paragraph 10(2)(b) from the Model Code in order to overcome the practical difficulties encountered with respect to constituency interests.  However, a member taking a decision on a matter should keep an open mind until they are in full possession of all relevant facts and act objectively and in the public interest in accordance with paragraph 8 of the Model Code.

 The draft Standards Committee Regulations amend the Standards Committees (Wales) Regulations 2001, SI 2001/2283, the Local Government Investigations (Functions of Monitoring Officers and Standards Committees) (Wales) Regulations 2001, SI 2001/2281, and the Standards Committees (Grant of Dispensations) (Wales) Regulations 2001, SI 2001/2279.  There are amendments to facilitate the establishment and operation of Joint Standards Committees; a change to the term of office of local authority members of Standards Committees; changes in relation to the publication of misconduct reports; provision for the referral of misconduct reports to another authority’s Standards Committee; limitation upon the period of suspension imposed by a Standards Committee so that it does not extend beyond the end of a member’s term of office; a proposed procedure for an application for permission to appeal a Standards Committee determination to the Adjudication Panel for Wales; and provision for the referral of a dispensation application to another authority’s Standards Committee.

 

Partnership Arrangements

December 1st, 2015 by James Goudie KC in Social Care

Part 3 of the consolidating National Health Service Act 2006 (“the 2006 Act”) relates to local authorities and the NHS, Part 4 to medical services, and Part 11 to Property and Finance.  Within Part 3, Section 75 relates to arrangements between NHS bodies and local authorities.  Under its predecessor provisions there were made the NHS Bodies and Local Authorities Partnership Regulations 2000, SI 2000/617 (“the 2000 Regulations”).  The NHS Bodies and Local Authorities Partnership Arrangements (Amendment) Regulations 2015, SI 2015/1940 (“the 2015 Regulations”), laid before Parliament on 30 November 2015, and which are due to come into force on 1 April 2016, amend the 2000 Regulations.

Partnership arrangements under Section 75 of the 2006 Act include the establishment of funds made up of contributions by one or more NHS bodies and one or more local authorities (“pooled funds”). Sections 223B and 223GA within Part 11of the 2006 Act, as amended by Section 121 of the Care Act 2014, make provision for a fund for the integration of care and support with health services known as “the Better Care Fund”. As part of the Better Care Fund arrangements, the National Health Service Commissioning Board must require NHS bodies (in this case Clinical Commissioning Groups) to make payments into a pooled fund as part of arrangements made with local authorities under Section 75 of the 2006 Act.

Regulation 2(2) of the 2015 Regulations amends the 2000 Regulations so that, in the case of partnership arrangements entered into as part of the Better Care Fund, there is no longer a requirement for Clinical Commissioning Groups and local authorities to consult persons who appear to be affected by such arrangements.

Regulation 2(3) of the 2015 Regulations amends the 2000 Regulations to include the function of arranging primary medical services under Section 83, within Part 4, of the 2006 Act (a function of the National Health Service Commissioning Board) as a function in respect of which partnership arrangements can be entered into.

 

Renaming Streets

November 30th, 2015 by James Goudie KC in Environment, Highways and Leisure

Authorities have power to alter street names pursuant to Section 18 of the Public Health Act 1925.  There is an unrestricted right of appeal under Section 8 to the Magistrates’ Court against a decision to rename a street. Basildon BC v James [2015] EWHC 3365 (Admin) was concerned with the approach to be adopted on appeal. 

Other than the giving of notice, Section 18 imposes no preconditions on the exercise of the power. It gives no direction as to factors to which the authority is required to have regard in making such a decision. Garnham J saw no grounds on which a Court could read into the exercise of the statutory power any requirements to be met, or matters to be considered, before the power is exercised, beyond those required by familiar principles of public law, namely to have regard to all that is relevant and to disregard all that is not.

The nature of the power in question is one that demands a subjective judgment by the authority. It cannot be governed by predetermined requirements. Essentially, Parliament has given the authority the right to choose a name.

There can be no doubt that it is the authority who makes the primary decision. The right of appeal given to “those aggrieved” by Section 8 does not change the identity of the primary decision maker.

The entitlement in the Magistrates’ Court on hearing the appeal to “make such order… as they consider reasonable” describes the remedies available to the Court in disposing of the appeal. It does not make the Magistrates’ Court the body charged with the decision whether or not to alter the street name. It follows that before determining what order is required the Magistrates’ Court must first determine whether or not the appeal succeeds; whether or not the authority’s decision was “wrong”.

The statute provides no guidance as to the test which should be applied in determining whether or not the appeal should be allowed or rejected.  In those circumstances, in Garnham J’s view, it was a mistake for the District Judge here to attempt to introduce objectives of his own devising as a means of testing the adequacy of the authority’s reasoning. There is simply no basis for the Magistrates’ Court to create such a list of objectives or to treat is as decisive. The question for the District Judge was whether, according the authority, appropriate respect for its reasoning and conclusions, that decision could properly be said to be wrong.

At paragraph 43 of his Judgment, Garnham J said:-

“… Section 8 provides an unrestricted right of appeal; but a District Judge is obliged to pay great attention to the opinion of the Council as the duly constituted and elected local authority and should not lightly reverse their conclusion; his function is to exercise the Section 8 powers only if he was satisfied that the judgment of the Council could be shown to be wrong, not merely because he was not satisfied that the judgment was right; if, but only if, he was first satisfied the Council was wrong was it for the District Judge to substitute his opinion for that of the Council.”

 

EU funding

November 19th, 2015 by James Goudie KC in Capital Finance and Companies

Case C-460/14, brought by the City of Wroclaw in Poland, concerns the award of a public contract for the construction of a ring road in Wroclaw.  The project benefited from EU financial assistance. The City stipulated in the tender specifications that the successful tenderer was to perform at least 25% of the works covered by the contract using its own resources. The public authority in Poland competent to verify proper use of the EU funding took the view that that stipulation infringed the principle of fair competition and therefore was inconsistent with Directive 2004/18/EC.  As a consequence, that authority imposed on the City a flat rate correction of 5% of the amount of eligible costs borne by public funds. The City challenged the financial correction before a Polish Administrative Court, which made a reference to the ECJ.  On 17 November 2015 Advocate General Sharpston gave her Opinion.

Directive 2004/18 coordinates at EU level national procedures for the award of public contracts above a certain value.  It aims to ensure the effects of the principles of freedom of movement of goods, freedom of establishment, and freedom to provide services and the principles deriving therefrom, including the principles of equal treatment, non-discrimination and transparency. It also aims to guarantee the opening-up of public procurement to competition. The Directive contains provisions on subcontracting, in order to encourage the involvement of small and medium-sized undertakings in the public contracts procurement market.   Pursuant to the first paragraph of Article 25 (“Subcontracting”), in the contract documents, the contracting authority may ask or may be required by a Member State to ask the tenderer to indicate in his tender any share of the contract he may intend to subcontract to third parties and any proposed subcontractors. Under Article 26 (“Conditions for performance of contracts”), contracting authorities may lay down special conditions relating to the performance of a contract, provided that these are compatible with EU law and are indicated in the contract notice or in the specifications.

Article 1(1) of Council Regulation No. 2988/95 provides: “For the purposes of protecting the European Union’s financial interests, general rules are hereby adopted relating to homogenous checks and to administrative measures and penalties concerning irregularities with regard to EU law.” Article 1(2) defines “irregularity” as “any infringement of a provision of EU law resulting from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the general budget of the European Union or budgets managed by it, either by reducing or losing revenue accruing from own resources collected directly on behalf of the European Union, or by an unjustified item of expenditure”.  Article 2 provides in particular that administrative checks, measures and penalties shall be introduced in so far as they are necessary to ensure the proper application of EU law. They shall be effective, proportionate and dissuasive so that they provide adequate protection for the European Union’s financial interests.

Regulation No. 1083/2006 lays down general rules governing the Funds, i.e. the European Regional Development Fund, the European Social Fund and the Cohesion Fund, including principles and rules on financial management, monitoring and control on the basis of responsibilities shared between the Member States and the European Commission.

Advocate General Sharpston said:-

“30. Directive 2004/18 is designed not only to avoid obstacles to freedom to provide services in the award of public service contracts or public works contracts but also to guarantee the opening-up of public procurement to competition.  Recital 32 in the preamble to that directive states that the possibility of subcontracting is liable to encourage small and medium-sized undertakings to get involved in the public contracts procurement market. Subcontracting enables such undertakings to participate in tendering procedures and to be awarded public contracts regardless of the size of those contracts.  Subcontracting thus contributes to achieving the Directive’s objectives by increasing the number of potential candidates for the award of public contracts.

31.      Accordingly, Article 25 of Directive 2004/18 not only envisages that a tenderer may subcontract part of the contract but also sets no limit in that regard.  Indeed, Directive 2004/18 confirms explicitly that an economic operator may, where appropriate and for a particular contract, rely on the economic, financial, technical and/or professional capacities of other entities, regardless of the legal nature of the links which it has with them.  Consequently, a party may not be eliminated from a procedure for the award of a public service contract solely because it proposes, in order to carry out the contract, to use resources which are not its own but belong to one or more other entities.

32.      That said, contracting authorities do have a legitimate interest in ensuring that the contract will be effectively and properly carried out. Where an economic operator intends to rely on capacities of other economic operators in a tendering procedure, it must therefore establish that it actually will have at its disposal the resources of those operators which it does not itself own and whose participation is necessary to perform the contract.  A tenderer claiming to have at its disposal the technical and economic capacities of third parties on which it intends to rely if it obtains the contract may be excluded by the contracting authority only if it fails to meet that requirement.

33.      The contracting authority may not always be in a position to verify the technical and economic capacities of the subcontractors when examining the tenders and selecting the lowest tenderer. The Court has held that in such cases Directive 2004/18 does not preclude a prohibition or a restriction on subcontracting the performance of essential parts of the contract. Such a prohibition or restriction is justified by the contracting authority’s legitimate interest in ensuring that the public contract will be effectively and properly carried out. Directive 2004/18 does not require a contracting authority to accept performance of essential parts of the public contract by entities whose capacities and qualities it has been unable to assess during the contract award procedure.

34.      In my view, considering the essential role subcontracting plays in promoting the objectives of Directive 2004/18, no other prohibition or restriction is permissible. …

35.      It follows that a stipulation such as that in issue in the main proceedings is clearly not consistent with Directive 2004/18.”

“43. I … conclude that Directive 2004/18 precludes a contracting authority from stipulating in the tender specifications of a public works contract that the successful tenderer is required to perform part of the works covered by that contract, specified in abstract terms as a percentage, using its own resources.”

The further question therefore arose, given that the City’s project benefited from EU financial assistance, whether the infringement of the EU procurement rules constituted an “irregularity” within the meaning of Article 2(7) of Regulation No. 1083/2006, giving rise to an obligation on the part of the Member State concerned to impose a financial correction.  The Advocate General’s view (paragraphs 46-56) was that it did, even if the infringement did not result in any actual quantifiable financial loss to the Funds; and (paragraphs 57-61) that the competent national authorities may apply flat-rate corrections when they identify an infringement of EU public procurement rules, provided that the corrections reflect appropriately the nature and gravity of the various irregularities to which they apply and do not result in disproportionate corrections.

 

Minimum wage

November 18th, 2015 by James Goudie KC in Land, Goods and Services

EU law allows the exclusion of a tenderer who refuses to pay the minimum wage from the procedure for the award of a public services contract.  So ruled the ECJ on 17 November 2015 in Case C-115/14, Regis Post GmbH v Stadt Landau, a case concerned with postal services in the German municipality of Landau.  The public sector procurement Directive, 2004/18, does not prevent legislation that requires tenderers and their subcontractors to undertake, by means of a written declaration enclosed with their tender, to pay staff called upon to perform the services a predetermined minimum wage.  That obligation constitutes a special condition in principle acceptable under Article 26 of the Directive, since it relates to the performance of the contract and concerns social considerations.  That special condition was set out in the contract notice and in the specifications, so that the procedural condition as to transparency was satisfied.  Moreover, the special condition was neither directly, nor indirectly, discriminatory.  The minimum wage in question was part of the level of protection that must be guaranteed by undertakings established in other Member States to workers “posted” for the purposes of performing the public contract.  The Court distinguishes the case in Rüffert (C-346/06).

 

Judicial Control

November 13th, 2015 by James Goudie KC in Judicial Control, Liability and Litigation

A compensation claim against a local authority for child abuse in foster care in the period 1985-1988 failed in the Court of Appeal in NA v Nottinghamshire County Council [2015] EWCA Civ 1139 in the light of the then legislative framework within which the authority exercised its powers.  The authority had not been negligent in placing the child with foster carers.  Nor had it been negligent in supervising the placement.  It retained its overarching powers.  It was not vicariously liable for the abuse perpetrated by the foster parents.  Nor was it responsible for their actions on the basis of a non-delegable duty of care.  It had taken reasonable steps to protect the child from harm.  Fostering is a function which the authority must, if it thinks it the appropriate choice, entrust to others. By arranging the foster placement the authority discharged rather than delegated its duty to provide accommodation and maintenance for the child.  It was inherent in the permitted choice of foster care that it must be provided by third parties rather than by the authority itself.  Moreover, there is no non-delegable duty not deliberately to assault or inflict harm.

 

Consultation

November 6th, 2015 by James Goudie KC in Decision making and Contracts

In Tilley v Vale of Glamorgan Council [2015] EWHC 3194 (Admin), a library case, Elizabeth Laing J said:-

“64. … Whether there is an obligation to consult on alternatives will depend on the facts of the case in hand, and, in particular, on whether there are any realistic alternatives … Moseley gives limited help on the question when there will be an obligation to consult on alternatives. It is clear from paragraphs 40 and 41 of Lord Reed’s judgment that in some cases there will be no obligation to consult on alternatives; and even when such an obligation does arise, it may not require an authority to discuss alternatives in detail, or the reasons why they have been rejected.

65. I accept … that it was for the Council to decide, in the circumstances, how much it wanted to save from the library service budget. In my judgment the   Council was also entitled to consult on what it described in the consultation document as its ‘preferred option’, that is community-led libraries, in the places served by the existing village libraries, …”

The Judgment also contains interesting observations (paragraphs 69-71 inclusive) on when a consultation challenge will be out of time.

 

Land Transfer

November 6th, 2015 by James Goudie KC in Land, Goods and Services

In Dudley Muslim Association v Dudley Metropolitan Borough Council (2015) EWCA Civ 1123 the Court of Appeal held that a Chancery Master had not erred in striking out the Community Association’s defence of legitimate expectation in relation to a claim by the Council for the specific performance by the Association of a contractual obligation on the part of the Association to transfer land back to the Council.  This was for three reasons: first, the legitimate expectation could not avail against the contract; second, Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 was applicable; and third, the defence failed on the facts.

As to the first reason, Levison LJ observed, at paragraph 22:-

“It is true that in a technical sense the Council is operating under statutory powers; but that is only because the Council can do nothing unless it is authorised by statute. The authorising statute in the present case is section 120 of the Local Government Act 1972, which empowers the Council to acquire land in its area. However, this case is not about the unilateral exercise by the Council of a statutory power; it is about the implementation of a commercial bargain. In substance, what we are dealing with is the enforcement of a contract willingly made by both parties with the aid of legal advice. The DMA’s defence is that the Council is not entitled to enforce the contract according to its terms. This important feature of the case gives rise to the question whether a public law defence based on legitimate expectation is, in principle, an available defence to a claim to enforce a contract. …”

The case will be governed by private law, absent bad faith or improper motive. At paragraph 30, Levison LJ concluded:-

“In my judgment, in the circumstances of this case, there is no public law defence available to the DMA based on legitimate expectation or a general appeal to abuse of power. If the DMA cannot assert a variation of the contract or a promissory estoppel, which they do not attempt to do, the contract is enforceable according to its terms.”

As to the 1989 Act, the Association’s obligation to transfer the land to the Council was in principle within the ambit of Section 2. Any variation that falls within the ambit of Section 2 must itself comply with the required formalities of that Section.  They cannot be outflanked by promissory estoppel.

As to the facts, the Court of Appeal acknowledged (paragraph 46) that a decision of a local authority can be impugned even if there has been no clear representation which created a legitimate expectation, if there is an abuse of power. However:-

“47.      … fairness and reasonableness are objective concepts, otherwise there would be no more than palm tree justice: … Abuse of power is not a freestanding ground on which a court can act in the absence of unlawful action on the part of the public authority in question: …the proper sphere of the court is illegality.”

“49       Where it is alleged that a public authority is abusing its powers it is necessary to inquire: what is the power that is being abused? In many cases what is in question is the exercise of a statutory power, and the question will be whether the power is being exercised for the purposes contemplated by the statute and proportionately on the facts of the individual case. A power of this nature is one conferred upon a public body and is capable of exercise without the consent of the citizens who are affected by its exercise. It is for that reason that the law will intervene to protect the citizen against the abuse of that unilateral power. But in this case we are dealing with contractual rights and obligations. I do not think that it can usually be an abuse of power to exercise contractual rights freely conferred, even if the result may appear to be a harsh one. By the same token what is “unfair” or “conspicuously unfair” will depend on the context. …”

“50.      Once again the context here is a commercial contract entered into by two parties with the benefit of legal advice. It is not usually unfair to hold parties to the terms of the contract that they have agreed. As I have said the law of contract has developed mechanisms, such as the principle of promissory estoppel, which preclude a person from relying on his strict legal rights where certain conditions are fulfilled. These mechanisms exist in private law; but they are not relied on in this case, and play no part in the pleaded defence. One of the hallmarks of a bilateral contract is its mutuality. Whatever rights the Council has, they are rights that the DMA have granted to it. In my judgment the defence of abuse of power, even if available, would also fail on the facts.”

 

Discrimination

November 6th, 2015 by James Goudie KC in Human Rights and Public Sector Equality Duty

In R (Logan) v Havering LBC [2015] EWHC 3193 (Admin) Blake J considered a complaint by Mr Logan, a severely disabled resident in Havering, about the Council’s Council Tax Reduction Scheme for 2015/2016.  Mr Logan alleged that the Council’s Scheme was discriminatory on grounds of disability and age.

The Judge rejected Mr. Logan’s arguments that the Scheme was discriminatory, contrary to the Equality Act 2010, and in contravention of Article 14 of the European Convention on Human Rights read with Article 1 Protocol 1. The Court distinguished the case of Burnip v Birmingham City Council [2012] LGR 954 (bedroom tax case in the private sector), holding that that case did not mean that it was “always discriminatory to expect the disabled poor to meet ordinary living expenses out of benefits that are provided because they are disabled. Council tax liability is a general charge on living expenses in the same way as any other item of expenditure that the abled bodied and disabled poor both have to make out of their subsistence budgets”. It was not, in the Judge’s view, “a difference in treatment or an unlawful failure to treat people who are situated differently, to expect that a modest percentage of council tax support be absorbed in the subsistence budgets of the poor generally, even if the benefits forming that budget are provided because of eligibility through the disability gateway.” The Judge also found that the availability of a discretionary scheme to address exceptional hardship provided justification for any indirect difference in treatment. Mr. Logan had himself been a beneficiary of that discretionary scheme.

Blake J did find, however, that not all Members of the Council had paid proper regard to the PSED under Section 149 of the 2010 Act. The Equality Impact Assessment (EIA) which had been produced by Council officers, and which had been seen by the Council’s Cabinet, had not been provided directly to the full Council as part of their papers for the decision on the Scheme. The Judge held that the EIA “was adequate to enable members who read it to have due regard to the PSED, but there was insufficient evidence to indicate either that the decision makers had accessed the EIA … or had understood the importance of reading it in order to discharge their statutory obligation.” The Judge observed that it was not sufficient to assume that because Members could have accessed the EIA that they would have done so. “It might have been different if there was clear evidence that every decision taker had been told that they must access the [report to Cabinet] and the EIA to discharge their statutory responsibilities.”

 

Redesigning The Library Service

October 26th, 2015 by James Goudie KC in Best Value

The decision of McGowan J in Draper v Lincolnshire County Council [2015] EWHC 2964 (Admin) was with respect to the second challenge Mr Draper brought to the Council’s proposed library changes and the process by which those changes were to be brought into effect.  The first challenge had succeeded, in part, before Collins J, and a second consultation process was commenced.  The second challenge failed.

The Judge followed the definition of a “comprehensive and efficient library service” within the meaning of Section 7 of the Public Libraries and Museums Act 1964 given by Ouseley J in the Brent Libraries case. She observed that before Collins J the fundamental decision to re-design services in an attempt to make savings of £2 million was not challenged. The challenge to the substance of the Council’s proposals did not succeed on grounds of irrationality, for breach of the statutory duty under the 1964 Act or for breach of the public sector equality duty. It was the consultation exercise and the method of considering alternative proposals for the provision of services that was under scrutiny. The Council failed in not being seen to be open to proposals which sought to make the required savings without reducing the number of static libraries provided. One such set of proposals came from Greenwich Leisure Ltd and the Council failed in not treating those proposals as a statutory expression of interest under the Localism Act 2011.

The second consultation period closed without challenge. The Council accepted one expression of interest as a qualifying one satisfying the statutory requirements, but rejected two others, because they did not meet those requirements.  The Council then duly commenced a procurement exercise.

There were 3 grounds for the second challenge. First, it was alleged that the second consultation process was flawed. This was on the basis that it failed adequately to deal with alternative proposals.  Second, it was alleged that the procurement exercise was flawed.  Third, it was alleged that the Council had failed to comply with its “best value” duty, under Section 3 of the Local Government Act 1999.

McGowan J rejected the first challenge upon analysis of the consultation document. It made clear that, although the Council had a preferred option, it was looking at and for alternatives, provided that they were within the budgetary limits. It was not challenged, or even complained about, when it was published.  She said (paragraph 26) that a consultation document “has to achieve an acceptable minimum standard” but “it is not a counsel of perfection”.

On procurement, the Judge accepted that the Council was bound only to conduct a procurement exercise for those services it was seeking to procure.

Finally, the Judge (paragraph 32) described the “best value” duty as a duty to seek improvement, that is a duty to seek to achieve a target. It is an obligation to try.  It is not an absolute duty to succeed in that attempt.

The Judge observed (paragraph 35) that it is not for the Court to place itself in the position of decision maker and to say that a particular issue, if decided in a different way might have brought about greater savings and/or an enhanced service. How the Council goes about seeking to try to achieve the “improvement” is a matter for the expert judgment of the Council. The report to the Executive was lengthy and detailed. It set out the issues, canvassed options and by reference to the financial information and the details of the various proposals made a recommendation. It drew on the expertise of the officers of the Council. The Executive then considered the matter and reached a decision. It was not for the Court to audit that process.

 

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