Libraries

July 25th, 2014 by James Goudie KC in Land, Goods and Services

Many rounds of cuts include library closures.  In Draper v Lincolnshire County Council [2014] EWHC 2388 (Admin) a judicial review challenge to a decision to reduce library provision from 44 to 15 libraries succeeded.  It did so on two grounds.  One ground was that the authority had not properly considered an expression of interest from a charitable organisation to provide the services. The other ground was that consultation had not taken place at a formative stage.

Chapter 2 of Part 5 (Sections 81-85) of the Localism Act 2011 (“LA 2011”) introduced a mechanism by which civil society organisations can require local authorities to consider conducting a procurement exercise in relation to one or more of the services that they provide.  The basic structure is that a local authority is under a duty to consider an “expression of interest” that has been submitted to it by a “relevant body”.  An “expression of interest” is an expression of interest in providing or assisting in providing a service on behalf of the local authority.  A “relevant body” is a voluntary or community body, a charitable body, a parish council or two or more employees of the local authority at issue.  A voluntary body is one whose activities are not carried on for profit.   A community body is a body carrying on activities primarily for the benefit of the community.  There is no requirement that a “relevant body” have local connections.

Upon consideration of an expression of interest, one of three things can happen: it can be accepted, rejected or modified, but an expression of interest can be modified only in circumstances where the authority thinks that the expression of interest would not otherwise be capable of acceptance and the relevant body agrees to the modification.  In deciding whether to accept an expression of interest, the local authority must consider “whether acceptance of the expression of interest would promote or improve the social, economic or environmental well-being of the authority’s area”; and if a local authority accepts an expression of interest it must then carry out a procurement exercise: the exercise “must be such as is appropriate having regard to the value and nature of the contract that may be awarded as a result of the exercise”.

There have been made the Community Right to Challenge (Expressions of Interest and Excluded Services) (England) Regulations 2012, SI 2012/1313, Schedule 1 to which specifies requirements for expressions of interest.  Also, the Secretary of State has issued statutory Guidance.

In the Lincolnshire Libraries case, Greenwich Libraries Ltd (“GLL”), which manages libraries in the London Boroughs of Greenwich and Wandsworth, and which is a “relevant body”, submitted what Collins J found to be an Expression of Interest within Section 81 of LA 2011 made in time.  It proposed taking over the provision of the County’s library services and stated that it could do so retaining what existed and achieve savings.  Collins J found that the Expression of Interest was not “properly considered”: paras 46/47.

Further, consultation must of course be when proposals are at a “formative stage”.  At para 17 Collins J said:

“It is clear that it is proper for an authority to have a preferred option and to consult on the basis that that is what is proposed by the authority.  But for consultation to be meaningful the authority must be prepared to think again if those consulted are unhappy with the proposal and suggest a different solution.”

Collins J found, at para 27, that the consultation exercise was flawed.  This was because a central element in relation to the statutory service, namely to reduce it to 15 libraries with the targeting for those outside the 30 minutes travel area, could not be changed.

However, the inevitable PSED challenge failed, as did an irrationality challenge. The authority had identified the possible areas of discrimination and identified measures which it believed would ensure that there was no unlawful discrimination (para 50).  The “overwhelming objection” to the decision did not in itself mean that it was unlawful (para 53).  The decision to make the cuts was “a political one … which cannot be challenged in the Courts”:  “The need for cuts will inevitably produce hard decisions for many, but that does not make them unlawful”.

 

Rates

July 15th, 2014 by James Goudie KC in Council Tax and Rates

The Liquidator of a tenant company has disclaimed the lease.  The property is unoccupied.  Who then is the “owner” of the property for the purposes of non-domestic rates? Answer: the landlord.  So ruled Hickinbottom J in Schroder v Birmingham City Council [2014] EWHC 2207 (Admin).  The disclaimer determined the lease.  It gave the landlord the right to immediate possession.  It was irrelevant that the Insolvency Act 1986 preserved the contractual liabilities of the guarantor.  Those did not mean that the guarantor had a right to immediate possession.

 

Local Government Ombudsman

July 8th, 2014 by James Goudie KC in Non Judicial Control

Who can complain to the Local Government Ombudsman?  Basically, “a member of the public”: Section 26A of the Local Government Act 1974.  Who for this purpose is “a member of the public”?  An individual or “a body of persons”, whether incorporated or not, that does not come within either of the exclusions in Section 27.  The first exclusion is of a local authority or other authority or body constituted for purposes of the public service or of local government, or for the purposes of carrying on under national ownership any industry or undertaking or part of an industry or undertaking.  The second exclusion is of any other authority or body whose members are appointed by Her Majesty or any Minister of the Crown or government department or by the Welsh Ministers, or “whose revenues consist wholly or mainly of moneys provided by Parliament or the Welsh Ministers”.  The purpose no doubt of both exclusions is to avoid one public body invoking the Ombudsman to pursue a complaint of injustice which it attributes to another public body.

In The Matter of an Application by Armagh City and District Council for Judicial Review, [2014] NICA 44, the Northern Ireland Court of Appeal held that a GP partnership is a “body” for the purpose of similar exclusions in Northern Ireland legislation, but that, although the partnership was mainly publicly funded under the NHS, it did not come within the “… revenues … provided by Parliament …” exclusion of complainants from the Ombudsman’s jurisdiction.

 

Local Auditors

July 7th, 2014 by James Goudie KC in Non Judicial Control

The Local Audit (Auditor Resignation and Removal) Regulations 2014, SI 2014/1710 (“the Regulations”) made pursuant to the Local Audit and Accountability Act 2014 (“the Act”) make provision about the resignation and removal of a local auditor appointed under Part 3 of the Act. Local auditors audit the accounts of relevant authorities (as to which, see Section 2 of, and Schedule 2 to, the Act). Most relevant authorities are required to have an auditor panel to advise on the selection and appointment of its local auditor (see Section 9 of, and Schedule 4 to, the Act in relation to auditor panels).

Regulation 2 makes provision about the application of the Regulations in relation to relevant authorities that are policing bodies (by virtue of Section 9(2) of the Act those authorities are not required to have an auditor panel). Regulation 3 sets out requirements on an auditor when resigning from office as a relevant authority’s local auditor and steps that must be taken by the authority in question. Regulation 4 requires the auditor panel of the authority to investigate following the resignation of a local auditor.  The panel’s statement is required to be published.

Regulations 5 to 7 make provision about the removal of a local auditor from office, including the way in which such a decision must be taken, the process the relevant authority must follow prior to removal of the auditor and the steps it must take after that removal. Regulation 8 requires a relevant authority to notify certain bodies that the local auditor has ceased to hold office. Regulation 9 requires a relevant authority to appoint a new local auditor within three months and contains provision enabling the Secretary of State to appoint, or direct the authority to appoint, a replacement auditor where the authority has failed to do so.

 

Local Auditors

June 30th, 2014 by James Goudie KC in Non Judicial Control

Regulations have been made under the Local Audit and Accountability Act 2014 (“the Act”).  The Local Audit (Professional Qualifications and Major Local Audit) Regulations 2014, SI 2014/1627 make provision about professional audit qualifications under the Act, which requires “relevant authorities” to appoint their own “local auditors”.  Schedule 5 to the Act applies, with modifications, provisions of the Companies Act 2006 in relation to the eligibility and monitoring of local auditors.  The Local Audit (Liability Limitation Agreements) Regulations 2014, SI 2014/1628, make provision about agreements (liability limitation agreements) to limit the liability of a local auditor appointed under the Act Pt 3 in respect of any negligence, default, breach of duty or trust in relation to a “relevant authority”.  Regulation 2 sets out a restriction on the duration of an agreement: it cannot cover more than the financial year or years to which the appointment of the local auditor relates.  Regulation 3 prevents the agreement from limiting the local auditor’s liability to less than such amount as is fair and reasonable in all the circumstances of the case.  The Public Interest Reports and Recommendations (Modification of Consideration Procedure) Regulations 2014, SI 2014/1629, provide for paragraph 5 of Schedule 7 to the Act to apply with modifications in respect of certain relevant authorities listed in Schedule 2 to the Act.  Paragraph 5 of Schedule 7 to the Act sets out the procedure for the consideration by relevant authorities of public interest reports or recommendations.  Relevant authorities must consider the report or recommendation at a meeting within one month of receiving it under paragraph 5(5).  The Regulation modify the application of this sub-paragraph so that certain relevant authorities may consider a report or recommendation as soon as is practicable, rather than within one month of receipt.

 

Officers’ Reports

June 30th, 2014 by James Goudie KC in Decision making and Contracts

In R (Sky Blue Sports & Leisure Ltd) v Coventry City Council [2014] EWHC 2089 (Admin), in which the Claimants unsuccessfully sought judicial review of the City Council’s Decision to lend £14.4 million to the company, ACL, that manages the stadium, the Ricoh Arena, at which Coventry City Football Club played, the Claimants’ assertions included that Council Members had failed to take into account relevant considerations in making the Decision because their Officers’ Report that recommended the Decision had allegedly been deficient and misleading.  Hickinbottom J rejected these allegations as not being arguable.  As regards the legal principles to be applied when considering a challenge of this kind, the Judge said, at paragraph 139 (emphasis added):-

            “i) A local authority acts unlawfully if, in making a decision, it fails to take into account a material consideration …  For these purposes, a consideration is material if the decision-maker might have decided the matter differently had he taken it into account …

ii) Decision-makers … (usually councillors, in full Council or in a committee to which decision-making is delegated) often act on the basis of information provided by its officers in the form of a report. Such a report usually also includes a recommendation as to how the application should be dealt with. In the absence of contrary evidence, it is a reasonable inference that, where a recommendation is adopted, the decision-making councillors follow the reasoning of the report.

iii) The councillors are not deemed to know something that the officers know, but which is not transmitted to them …

iv) The officers’ report is therefore often a crucial document. It has to be sufficiently clear and full to enable councillors to understand the important issues and the material considerations that bear upon them; and decide those issues within the limits of judgment that the law allows them. However, the courts have stressed the need for reports also to be concise and focused, and the dangers of reports being too long, elaborate or defensive. The councillors do not have to be provided with every detail of every relevant matter, but only those matters which are so relevant that they must be taken into account, i.e. the salient facts which give shape and substance to the matter such that, if they are not considered, it can be said that the matter itself has not been properly considered …

The assessment of how much and what information should go into a report to enable it to perform its function is itself a matter for the officers, exercising their own judgment …

v) Of course, if the material included is insufficient to enable the decision-making councillors to perform their function, or if it is misleading, a decision taken on the basis of a report may be challengeable. However, when challenged, officers’ reports are not to be subjected to the same exegesis that might be appropriate for the interpretation of a statute: what is required is a fair reading of the report as a whole …

vi) In construing reports, it also has to be borne in mind that they are addressed to a “knowledgeable readership”, including councillors “who, by virtue of that membership, may be expected to have a substantial local and background knowledge” … As in this case, they may have been given briefings prior to the meeting at which the decision is taken. Furthermore, in deciding whether they have got sufficient information to make a properly informed decision or request further information or analysis, again that involves the exercise of judgment on their part. They are entitled to ask for more. Given the experience and expertise of councillors, coupled with the fact that they are democratically elected, the judicial approach to challenges to their decisions should be marked by particular prudence and caution …”

At paragraph 160 the Judge said (emphasis added):-

“…   As I have indicated, officers’ reports are to be read broadly and as a whole. Reading the Hastie Report thus, I consider the belated criticism of it unfounded. In my view, it set out, properly and succinctly, the important relevant matters that the councillors were required to take into account, including the relevant risks of the proposal as well as the potential benefits. The courts have been rightly cautious about requiring officers’ reports to be too full (see paragraph 139(iv) above): the dangers of such a requirement are obvious. A focused and succinct report, such as Mr Hastie’s Report in this case, is in my judgment positively to be commended.”

The main issue in the case, however, was whether or not the loan amounted to State Aid.  The Judge, applying the objective test of the Market Economy Investor Principle, ruled, at paragraphs 86-132 inclusive, that it did not.  A private investor in the Council’s position, as an investor in the stadium company seeking to protect its existing investment, may have made the same investment on the same terms.

Moreover, in rejecting an allegation that the Council’s conduct had been underhand and reprehensible, the Judge observed, at paragraph 35: “The Council was here engaged in the commercial field, and (subject to its public duties) it was entitled to act in the way that it considered was best in protecting its own commercial interests, namely its share in ACL”.

 

Delegation

June 24th, 2014 by James Goudie KC in Decision making and Contracts

In order to comply with the provisions in Section 101 of the Local Government Act 1972 with respect to delegation of functions to officers, it is not essential for the scheme of delegation actually to identify the officers.  Lewis J in R (Pemberton International Ltd) v Lambeth LBC [2014] EWHC 1998 (Admin) holds, at paragraph 53, that it suffices that the scheme “sets out the process by which the officers authorised to exercise certain functions can be identified”.  This may be “a certain group of officers”.

 

Consultation

June 19th, 2014 by James Goudie KC in Judicial Control, Liability and Litigation

R (Stirling) v Haringey LBC [2013] EWCA Civ 116, (2013) LGR 251, is now entitled R (Moseley) v Haringey LBC. The authority consulted upon a Council Tax Reduction Scheme (CTRS). Following the consultation, the Government announced a Transitional Grant Scheme (TGS). The authority adopted a CTRS without re-consultation, claiming that the TGS did not affect the draft scheme. The consultation process was alleged to be unfair and unlawful because (1) consultees had not been provided with sufficient information to understand that there were alternatives to the draft scheme; and (2) the Respondent should have re-consulted when the TGS was announced.

On 19 June 2014 the Supreme Court heard an appeal from the decisions of the High Court and the Court of Appeal rejecting that argument.  The issues before the Supreme Court are:  (i) the extent of the duty to consult set out in paragraph 3(1)(c) of Schedule 1A to the Local Government Finance Act 1992 in respect of Council Tax Reduction Schemes; (ii) whether the authority was required to provide information to consultees on alternative options to its preferred proposal in circumstances where those alternatives were reasonably obvious; and (iii) whether the authority was required to draw consultees’ attention to a new factor which emerged during the course of the consultation process.  This is remarkably the first occasion on which the Supreme Court has considered the public law principles which govern the content of the duty to consult.

 

Bringing Proceedings

June 19th, 2014 by James Goudie KC in Local Authority Powers

As is well known, Section 222(1) of the Local Government Act 1972 authorises a local authority to prosecute (or defend or appear in) “any” legal proceedings, where they consider it “expedient for the promotion or protection of the inhabitants of their area”.  In Oldham MBC v Worldwide Marketing Solutions Ltd [2014] EWHC 1910 (QB) the High Court held that the authority had been fully entitled to conclude that proceedings, against a trader who had given but then breached an undertaking not to use misleading advertising in selling to other traders, was expedient in the interests of the inhabitants of their area, notwithstanding that the trader had subsequently left that area.  Phillips J said:-

“24.       … There were both broad policy reasons and specific aspects of this case which, individually, and certainly if considered cumulatively, justified such a conclusion.

25.        First, the inhabitants of an area have a clear and obvious interest in the local authority taking reasonable steps to procure that undertakings it has extracted from traders (such as that given by the defendants in this case) are enforced through proceedings where breached. If such steps are not taken, and undertakings are seen to be breached with impunity, the force and utility of such undertakings will be undermined, lessening their effect and usefulness and consequently leading to greater expense in taking proceedings instead of or in addition to accepting undertakings. It follows that a local authority can properly take the view that it is in the interests of the inhabitants of its area to bring (and to be seen to be bringing) proceedings against a trader who has given but then breached an undertaking, even if the trader has subsequently left the authority’s area.

26.        Second, given the timing of WMSL’s re-location (shortly after the search warrant was executed at its Oldham premises), the short distance the business moved and Mr Kay’s continued connections with the Oldham area, the Council was entitled to perceive a real risk that WMSL would return to its Oldham area in the foreseeable future.

27.        Third, the Council was entitled to take into account the likelihood (if not inevitability) that WMSL’s future sale business, whilst conducted nationally, would include sales calls to businesses based in Oldham. Whatever the content and merits of the four complaints which had been received from Oldham based businesses, their existence demonstrate that businesses in Oldham are by no means excluded from the scope of WMSL’s sales calls. If the Council were considering the matter afresh and in isolation, there might be a question as to whether the risk to local businesses justified taking proceedings. But where the Council had already investigated sales practices in question, obtained undertakings and executed a search warrant to establish ongoing breaches, it could readily conclude that the final step of obtaining an injunction was justified to protect the interests of its inhabitants.

28.        As has been emphasised in the authorities referred to above, s.222(1) is widely worded, imposing no express restriction on what a local authority may properly consider to be expedient to promote or protect the interests of its inhabitants. … there is no basis for limiting the matters the local authority may consider to activities taking place within the relevant area or directly affecting its inhabitants. … The fact that future legislation may permit a local authority to act outside its area without express restriction does not mean that such an authority cannot currently do so where it considers it expedient to do so in the interests of its inhabitants, as permitted by s.222(1).”

 

Council Tax

June 9th, 2014 by James Goudie KC in Council Tax and Rates

SC v East Riding of Yorkshire Council and CW v East Riding of Yorkshire Council, Valuation Tribunal, 27 May 2014, were the first relating to council tax discretionary relief under the Local Government Finance Act 1992 heard since the Local Government Finance Act 1992 had replaced council tax benefit with the requirement for each local billing authority to have a council tax reduction scheme.  They provided the opportunity to consider and define the nature and scope of such appeals.  At paragraph 5 of the decision the President of the Tribunal, Professor Graham Zellick QC, noted that (i) discretionary relief is applicable both to those who have been awarded a reduction under a council tax reduction scheme and those who have not, (ii) as schemes must stipulate a procedure for applying for a reduction, authorities must consider every such application on its merits, and (iii) whereas there must be a formal published scheme for council tax reduction, there is no requirement for a scheme governing discretionary relief, unless there has been a determination that a class of case is to be reduced in accordance with that determination.

At paragraph 16 the President stated that his own Practice Statement, Council Tax Reduction Appeals, was incorrect.  It is to be amended and reissued.

At paragraph 23, the President stated that the Tribunal’s approach is the same as in every other appeal.  He stated as follows (emphasis added):-

“24.    Thus, it is for the appellant to raise doubt as to the correctness of the authority’s decision and to argue what the correct decision should have been. The authority may then defend its decision and the panel will decide the appeal on the balance of probabilities. There is no inhibition on the Tribunal’s substituting its view for that of the authority, but any such substitution must be soundly and solidly based.

25.     The following points … are designed to assist billing authorities, council tax payers and Tribunal members and clerks in dealing with these appeals:

(1)        The focus of an appeal as opposed to a review is fundamentally different: full appeal reaches further and assesses the actual merits of the decision reached.

(2)        Some deference should, however, be paid to the view of the original decision-maker and an effort made to understand how that decision was arrived at, but that cannot prevent the Tribunal from substituting its view for that of the authority provided that the Tribunal can articulate cogently why it is doing so and how it has arrived at its conclusion.

(3)        The authority’s decision does not have to be unreasonable in the Wednesburysense before it can be set aside, but the Tribunal should intervene only where there are strong grounds for doing so.

(4)        It may not be an exact parallel, but the Court of Appeal will allow an appeal against sentence only where the sentence is wrong in principle. This suggests that some restraint should be exhibited by the Tribunal before disturbing a billing authority’s decision.

(5)        Procedural defects may recede in importance, or be completely effaced, since the Tribunal will be chiefly concerned with the actual merits of the decision. Earlier defects in process may therefore be cured or superseded by the appeal, and a decision may be adjudged correct despite defects in process.

(6)        Although a scheme or policy is not required by statute, it is difficult to see how such an open-ended discretion can be satisfactorily exercised in the absence of one.

(7)        Any such policy should be scrutinised by the authority’s lawyers before promulgation.

(8)        Compliance with a formal published policy or scheme, if there is one, cannot preclude the Tribunal from allowing an appeal.

(9)        Any such scheme is not immune from challenge in the Tribunal as, for example, is a council tax reduction scheme… . It is not the Tribunal’s business to impugn any scheme as such but rather that its own powers cannot be inhibited or circumscribed by a scheme.

(10)      Failure to comply with a substantive element of a scheme to the detriment of the applicant is likely to lead to the overturning of the decision unless there are good reasons for having departed from it.

(11)      However, compliance with a scheme or policy may help in persuading the Tribunal that the original decision was correct.

(12)      The Tribunal should be slow to interfere with a decision that properly flows from a determination made under section 13A(7).

(13)      An authority cannot as a matter of law fetter its discretion and must therefore consider every application on its merits whatever the policy or scheme says.

(14)      Suppose, for example, there is a provision that non-essential expenditure should be disregarded when calculating legitimate outgoings and determining disposable income. The Tribunal could conclude that the item was wrongly so characterised and should be included. Or that on its specific facts it should be included. Thus, mobile phones might normally be treated as a luxury but might become a necessity if the appellant is a carer who might need to be contacted urgently when not at home. Or a subscription to a satellite television service might have to be accepted if the appellant is locked into a contract that pre-dates his financial difficulties.

(15)      A factor which cannot have any relevance for the Tribunal is an overall budget created by the authority for the totality of discretionary applications in a given year so that any application will be considered in relation to the available budget and once that sum is exhausted no further applications can be granted. I do not see how in law this can be a cash-limited exercise. The merits of an appeal cannot be affected by the existence of any such budget. A “budget” is in any event a somewhat artificial concept in view of the fact that the authority is forgoing income and not spending existing funds.

(16)      Where the Tribunal is minded to allow the appeal and order a recalculation but is unsure of the actual amount to substitute, the appeal may either be adjourned for the parties to supply whatever further information is needed to reach a decision or it may conclude the appeal by quashing the calculation and ordering the authority to recalculate properly. The former is likely to be the better course in most cases.”

 

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