Cases involving NHS bodies continue to be instructive for local authorities. See R(QSRC Ltd) v NHS Commissioning Board [2015] EWHC 3752 (Admin) on the ability to enter into an interim contract pending the completion of a procurement exercise, even if (paragraph 107) the procurement exercise has been considerably delayed,  provided (paragraph 103) that there is preference of an existing provider over other potential providers; and Keep Wythenshawe Special Ltd v NHS Central Manchester CCG [2016] EWHC 17 (Admin), at paragraphs 62-79 inclusive, on how a consultation exercise should be structured, the manner in which it should be carried out, when there should be a re-consultation, and influences on the requirements of fairness.

In BT Cornwall Ltd v Cornwall Council [2015] EWHC 3755 (Comm), a services provider brought a claim against the local authority and other public sector bodies for an injunction to prevent the termination of a potentially long duration £160 million agreement between them.  The claim failed. The agreement covered services such as health, transport, communications and public safety.  It also provided for the creation of new jobs for local residents.

The agreement contained a clause entitling the local authority to waive key performance indicator scores resulting from service failures if it was satisfied that a remedial plan was in place. There were substantial problems with performance.  A number of key performance indicators fell consistently below target level.  A backlog of work accrued.

The parties established an executive forum aimed at resolving the issues. Later, however, the local al authority stated its intention to terminate the agreement for material breach.  It also claimed that the service provider’s failure to meet its annual jobs guarantee gave rise to an obligation to provide a remediation plan, which it had failed to do.  The service provider claimed that a large number of faults had been caused by the local authority.  It also claimed that a separate agreement had been entered into for the backlog to be cleared, with the implication that the key performance indicator results which fell below breach level would not be used to justify termination, and that the local authority was in any event estopped from relying on breaches in terminating for material breach.

Knowles J held that the failure to create new jobs resulted at least in part from the local authority’s failure to secure a health contract, which would have accounted for 70 new jobs. There was no contractual requirement for a remediation plan.  Accordingly, the service provider was not in breach of the agreement in that respect.  Moreover, there was no evidence that the waiver clause in the agreement had been exercised nor was there any reason to imply a waiver.  The service provider was contractually obliged to resolve the backlog and was not entitled to protection from the consequences of its failure to do so.

Knowles J further held that there was no basis for a case on estoppel or affirmation. The fact that the local authority was prepared to engage with the executive forum and to work collaboratively with the service provider was not to be held against it and did not signal that it would refrain from taking action under the agreement.   There had been no material delay on the local authority’s part, and neither its actions nor the passage of time were to be taken as an election not to terminate for material breach.

In conclusion, the service provider had failed to provide the service it had promised to the required standard. There was no capriciousness or bad faith on the local authority’s part in expecting it to clear the backlog or take the contractual consequences if doing so resulted in further breaches of the key performance indicators.  Accordingly, the service provider was in breach of the agreement such as to justify termination.

James Goudie QC

H M Treasury has issued a Consultation Paper, for response by 25 January 2016, on the final draft Regulations pursuant to the Small Business, Enterprise and Employment Act 2015 allowing for the recovery of public sector exit payments when a high earner returns to the public sector shortly after leaving. There are changes including as follows to the previous proposal. 

The Government proposes to replace the stipulation that exit payments are recovered when an individual returns to the same part of the public sector with the proposal that public sector exit payments are recovered when an individual returns to any part of the public sector. The amount paid back will be net of tax paid.

The previous starting point was that recovery would apply only to individuals earning at or over £100,000. The Government now proposes to set the minimum salary at which the recovery provisions apply at £80,000 per annum.

The Government proposes to remove the full recovery period during which exit payments should be repaid in full on returning to a public sector body. As such, the taper begins from the first day after a public sector employee has exited.

 In Lightways (Contractors) Limited v Inverclyde Council [2015] CSOH 169 the Outer House of the Court of Session made a declaration of ineffectiveness in respect of the award of a street lighting call-off contract to an economic operator which was not a party to the relevant framework agreement, albeit it was a company in the same group as a party to that agreement.

Section 22C(5) of the Children Act 1989 requires a local authority to place a child in the placement which, in the authority’s opinion, is “the most appropriate placement available”. Must the authority consider all placements available at the relevant time and search for a placement with every potential provider?  No, ruled William Davis J in R (Nationwide Association of Fostering Providers v Bristol City Council and Others [2015] EWHC 3615 (Admin).  He held (paragraph 44) that: “No duty is imposed to ensure that there are independent providers as well as in-house providers”, and (paragraph 45) that: “No specific requirements are made of a local authority in relation to the “most appropriate placement”.”

The Judge concluded (paragraph 59) that the statutory duty did not require a local authority to contact all providers of potentially appropriate placements at the same time for every “looked after” child, for reasons including that:-

– The duty is not a procedural duty. It is an outcome duty. How a local authority goes about fulfilling that duty is a matter of policy within the discretion of the local authority subject to any express regulatory provisions.

– The word “appropriate” of itself implies an exercise of judgment by a local authority. Moreover, the judgment is one subject to the “opinion” of the local authority.

– The statutory provisions require a local authority to make decisions in relation to “looked after” children in its care in such a way as to safeguard and promote their welfare. They do not set out precisely how a local authority should make such decisions.

The procedural question, whether the reasons given for a decision, when reasons are required, are adequate, and the substantive question, whether the reasoning in support of the decision is adequate, to make for demonstration of a reasonable decision, continue to arise with considerable frequency, including in two cases decided on 2 December 2015, one in our Court of Appeal and the other in the EU General Court.

The Court of Appeal case is Jedwell v Denbighshire County Council [2015] EWCA Civ 1232, concerned with Environmental Impact Assessments (“EIAs”) and Screening Opinions (“SOs”) The Council’s planning officer had issued a negative SO, stating that no EIA was required.  A resident argued that an EIA should have been obtained and that the SO was inadequately reasoned, making the grant of planning permission in February 2013, for wind turbines, unlawful.

In May 2013 the resident wrote to the Council asking for contemporaneous reasons for the SO.  The Council sent him the covering letter that had accompanied the SO and indicated that it had nothing further to add. 

There were three main issues: (1) whether the SO itself was adequately reasoned; (2) whether the Council’s response to the May letter discharged its duty to give reasons; and (3) if not, whether the planning officer’s witness statement saved the Council.  The Court of Appeal decided all three issues against the Council.  In order to discharge its duty, the Council had to supply reasons before the issue of proceedings against it.

The Town & Country Planning (Environmental Impact Assessment) (England and Wales) Regulations 1999, which remained in force in Wales, obliged the local authority to give reasons only where the SO concluded that an EIA was required. They did not require reasons to be given for a negative screening opinion.  However, EU law did, either in the decision itself or in a subsequent communication following a request from an interested party.  The reasons had to demonstrate that the author had understood and considered the issues, and that proper consideration had been given to the possible environmental effects of the development.  They also had to be sufficient to enable the interested party to understand why the decision had been made and to decide whether to challenge it.  The instant SO stated its conclusion but contained no reasoning at all.  It did not indicate why the planning officer thought that no EIA was needed, and it did not demonstrate that she had applied her mind to the relevant questions.  The Council had not provided any proper reasons in response to the May letter.  When the claim form was issued, it was in breach of its duty to give adequate reasons.  The planning officer’s witness statement could not cure that deficiency.  One of the purposes of requiring the local authority to give reasons for a negative SO was to enable the interested party to decide whether to challenge it in legal proceedings.  Reasons had to be given within a reasonable time of the request.  However, if a reasonable time had elapsed but proceedings had not been commenced, the local authority might still cure any deficiency by supplying further reasons before the commencement of proceedings.  However, in the instant case, the contents of the planning officer’s witness statement had not been disclosed before the resident issued his claim form and could not rescue the local authority from its breach of duty.

The General Court case is Case T-553/13, European Dynamics v European Joint Undertaking for ITER and the Development of Fusion Energy, in which the claimant’s challenge to the defendant’s tendering procedures with respect to IT services failed.  The principle of non-discrimination had not been infringed, and the obligation to give reasons had not been breached.  The reasoning of the award decision was adequate.  It allowed the claimant to understand why other tenders were selected as being superior to their tender.

The Court said that, according to well-established case-law, the obligation to state reasons in respect of public contracts is fulfilled when the contracting authority informs unsuccessful tenderers immediately of the reasons for the rejection of their respective tenders and then, subsequently, if expressly requested to do so, provides to all tenderers who have made an admissible tender the characteristics and relative advantages of the tender selected as well as the name of the successful tenderer. In addition, the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure, the nature of the reasons given and the interest which the addressees of the measure, or other parties to whom the measure is of direct and individual concern, may have in obtaining explanations  However, it is apparent from the case-law that a contracting authority cannot be required to communicate to an unsuccessful tenderer, in addition to the reasons for rejecting its tender, a detailed summary of how each detail of its tender was taken into account when the tender was evaluated and, in the context of notification of the characteristics and relative advantages of the successful tender, a detailed comparative analysis of the successful tender and of the unsuccessful tender. Furthermore, the contracting authority is not bound to supply the unsuccessful tenderer with full copies of the evaluation report and the successful tender.

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.

In Kelton v Wiltshire Council [2015] EWHC 2853 (Admin) three challenges were made to a grant of planning permission on the ground of bias/disqualification.  Two challenges failed.  The third succeeded.  The planning permission was for a scheme of up to 35 custom built residential dwellings, including 9 affordable homes.  At issue was the participation of one of the councillors on the Council ‘s planning committee, Councillor Magnus Macdonald, whose vote carried the decision in favour of granting the outline planning permission. It is alleged that he was disqualified from participating in the planning committee on this matter, because he is a director of Selwood Housing Association (“Selwood”), a not for profit association, which has had an interest in the affordable housing part of the development. Cllr. Macdonald receives, as director, some £3000 per annum.

The first challenge was based on the rule of automatic disqualification for financial interest.  The argument was that Cllr. Macdonald was automatically disqualified as a result of his directorship of Selwood.  Selwood was involved in the application and had an interest in its fate given that the applicants for planning permission had identified it as, effectively, their affordable housing partner.

Cranston J held that Cllr. Macdonald had no direct pecuniary or proprietary interest in the planning application so as to be automatically disqualified from participating in the decision. The decision of the committee in the present case did not lead to Cllr. Macdonald obtaining any benefit. There are too many contingencies between the committee’s decision and any benefit to him as a director of Selwood for the rule to have any purchase.  Here Selwood was not a party to the decision. Cllr. Macdonald could not be regarded as promoting the cause of affordable housing through his voting on planning permission on this application.

The second challenge was statutory disqualification as a result of a disclosable pecuniary interest, contrary to  Section 31 of the Localism Act 2011 and the Schedule to the Relevant Authorities (Disclosable Pecuniary Interests) Regulations 2012.

The argument was that, under Section 31, Cllr. Macdonald had a disclosable pecuniary interest in the matter before the planning committee. He was aware that Selwood stood to benefit directly from the grant of permission and accordingly was statutorily disqualified from participation in the meeting and should have withdrawn.

In the Judge’s view, however, Cllr.Macdonald had no disclosable pecuniary interest in the matter to be considered. Selwood was not the applicant for planning permission and at the point of the decision had no contract with the developers. It may have built up goodwill with its advice to them over a period, but at the time of the grant of planning permission the affordable housing part of the development was yet to be tendered. In the result, Cllr. Macdonald was not disqualified under Section 31.

Apparent bias was the third challenge.  Cranston J’s view was that Cllr. Macdonald’s participation in the decision to grant planning permission gave rise to an appearance of potential bias. It was plainly in Selwood’s interests and Cllr. Macdonald’s, as director, for the application to be approved. The reasonable and fair-minded observer, having the background facts, would have been aware that Selwood had committed time, resources and expertise to working with the developers over the design of the affordable housing part of the scheme. It was highly unlikely that Selwood would have gone to all the trouble it did unless it was seriously interested in delivering the affordable housing part of the scheme and had reason to believe that it stood a good chance of winning the tender once planning permission was granted. It had built up goodwill with the developers. The evident reality of the position then was that although it was not a done deal, Selwood was the front runner to deliver the affordable housing part of the scheme and would, barring something unforeseen, be appointed to do so in due course.

One element of the attack on Cllr. Macdonald’s participation was that he participated in a decision which furthered the cause of affordable housing, which as a member of Selwood he obviously supported, but that was only part of it.  The important distinction is that as a director of Selwood he also had a private interest.  In Cranston J’s view, Cllr. Macdonald’s directorship of Selwood will not be an issue in the great majority of housing applications likely to come before the committee, even those with an affordable housing element.  The position in this case was quite different.  Selwood, with Cllr. Macdonald as a director was not simply an affordable housing provider.  Here it was the only provider which had been willing to give assistance on the scheme, had expressed a clear interest in delivering it, had been named by the applicants as their potential partner, and had written in support and attended the planning committee meeting when it was considered.  In other words, its position was superior to that of any other interested providers of affordable housing because of its previous involvement and its prospects of winning the contract when the affordable housing part was tendered.  Because of that, Cllr. Macdonald’s private interests were engaged, as a director of Selwood, not just his interests in the cause of affordable housing. In all these circumstances it was wrong for Cllr. Macdonald to have participated in the meeting.

In R (Nicholson) v Allerdale BC [2015] EWHC 2510 (Admin) Holgate J emphasized relevant principles upon which the High Court will approach a challenge to a decision taken by a local planning authority involving criticism of the officer’s report:-

(i) In the absence of contrary evidence, it is a reasonable inference that members of the planning committee follow the reasoning of the officer’s report, particularly where a recommendation is accepted;

(ii) The officer’s report must be read as a whole and fairly, without being subjected to the kind of examination which may be applied to the interpretation of a statute or a contract;

(iii) Whereas the issue of whether a consideration is relevant is a matter of law, the weight to be given to a material consideration is a matter of planning judgment, which is a matter for the planning committee, not the court;

(iv) An application for judicial review based on criticisms of the planning officer’s report will not normally begin to merit consideration unless the overall effect of the report significantly misleads the committee about material matters which thereafter are left uncorrected at the meeting of the planning committee before the relevant decision is taken;

(v) In construing reports, it has to be borne in mind that they are addressed to a knowledgeable readership, including council members who, by virtue of that membership, may be expected to have a substantial local and background knowledge;

(vi) The purpose of an officer’s report is not to decide the issue, but to inform the members of the relevant considerations relating to the application. It is not addressed to the world at large, but to council members who, by virtue of that membership, may be expected to have substantial local and background knowledge. There would be no point in a planning officer’s report setting out in great detail background material, for example, in respect of local topography development plan policies or matters of planning history if the members were only too familiar with that material. Part of a planning officer’s expert function in reporting to the committee must be to make an assessment of how much information needs to be included in his or her report in order to avoid burdening a busy committee with excessive and unnecessary detail;

(vii) Democratically elected bodies go about their decision-making in a different way from courts. They have professional advisers who investigate and report to them. Those reports obviously have to be clear and full enough to enable them to understand the issues and make up their minds within the limits that the law allows them. But the courts should not impose too demanding a standard upon such reports, for otherwise their whole purpose would be defeated.

There was also an irrationality challenge.  Holgate J reiterated that an application for judicial review is not an opportunity for a review of the planning merits of the Council’s decision. Although an allegation that such a decision was perverse, or irrational, lies within the scope of proceedings under CPR Part 54, the Court must be astute to ensure that such challenges are not used as a cloak for a rerun of the arguments on the planning merits.  In any case where an expert tribunal is the fact finding body, as in the case of a planning committee, the threshold for Wednesbury unreasonableness is a difficult obstacle for a Claimant to surmount, which is greatly increased in most planning cases by the need for the decision-maker to determine not simply questions of fact, but a series of planning judgments. Since a significant element of judgment is involved, there will usually be scope for a fairly broad range of possible views, none of which could be categorised as unreasonable. Moreover, the decision may also be based upon a site inspection, which may be of critical importance. Against this background, a Claimant alleging that a decision-maker has reached a Wednesbury unreasonable conclusion on matters of planning judgment faces a particularly daunting task.  On the other hand, irrationality challenges are not confined to the relatively rare example of a “decision which simply defies comprehension”, but also include a decision which proceeds from flawed logic.

On policies, Holgate J reiterated that the correct interpretation of planning policy is a question of law to be determined by the Courts.  But, notwithstanding its legal status and effects, a development plan is not analogous to a statute or a contract and therefore its policies must not be construed as if they were statutory or contractual provisions. That is because development plans often contain broad statements of policy, and policies of that nature may be difficult to reconcile if construed strictly. In addition, the language used to express planning policy may depend upon the exercise of judgment by the decision-maker when applied to a given set of facts. The exercise of judgment by a planning authority when applying a policy is legally distinct from the construction of that policy. Such matters of judgment fall within the jurisdiction of the planning authority and may only be challenged in the courts if irrational or perverse.   When determining the extent to which a proposal conforms with a local plan, the correct focus is on the plan’s detailed policies. The supporting text consists of descriptive and explanatory material and/or reasoned justification in respect of the policies. That text is relevant to the interpretation of the policy with which it is concerned, but it does not itself constitute policy or form part of policy. Because the supporting text does not have the force of policy it cannot trump or override the policy to which it relates. So, for example, a criterion which is to be found in supporting text but not in a policy of the plan, could not affect the decision as to whether a proposal accords with the development plan.

The Cities and Local Government Devolution Bill, which is having its Second Reading in the House of Lords on 8 June 2015, in relation to combined authorities in England under Part 6 of the Local Democracy, Economic Development and Construction Act 2009, will enable secondary legislation to provide for an elected mayor for a combined authority’s area who would exercise specified functions individually and chair the authority; provide for the possibility for the mayor additionally to undertake the functions of Police and Crime Commissioner for the combined authority area (in place of the Police and Crime Commissioner); where a mayor is to have Police and Crime Commissioner functions, cancel Police and Crime Commissioner elections that would otherwise have taken place and allow the current Police and Crime Commissioner’s term of office to be extended until the mayor is in place; remove the current statutory limitation on functions that can be conferred on a combined authority (currently economic development, regeneration, and transport); require combined authorities to establish overview and scrutiny committees; and provide for GPOC under the Localism Act 2011 to be extended to combined authorities.  The Bill also provides for the Secretary of State to make regulations making provisions about local authorities’ governance arrangements, their constitution and membership and structural and boundary arrangements.  For these purposes a local authority is a county council in England, a district council or a London Borough.  Governance arrangements mean the arrangements an authority operates for taking decisions – executive arrangements, the committee system, or prescribed arrangements as provided for under Part 1A of the Local Government Act 2000.  Such regulations are to be made only with the consent of the local authorities to which the regulations apply.