Boycotts

June 7th, 2018 by James Goudie QC in Local Authority Powers

In R (Palestine Solidarity Campaign Ltd) v SoS for CLG (2018) EWCA Civ 1284 the Court of Appeal allowed the SoS’s appeal against a declaration at (2017) EWHC 1502 (Admin) that part of his statutory Guidance relating to the Investment Strategy of local authorities administering local government pension schemes was unlawful.  The Court of Appeal ruled that the SoS was within the broad discretion afforded to him by the Public Service Pensions Act 2013 in issuing Guidance on non-financial considerations, including those of wider public interest, such as foreign and defence policy.  Nor was the relevant passage in the Guidance contrary to Article 18 of Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision (“the IORP Directive”), which it was common ground applies in relation to the LGPS.  The Guidance included a summary requirement that administering authorities “should not pursue policies that are contrary to UK foreign policy or UK defence policy”, with a fuller statement in the accompanying text that “using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are [sic] inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government”.

As regards the broad discretion/authorised purpose point, Sir Stephen Richards, with whom Davis and Hickinbottom LJJ agreed, said:-

“19.    In considering this issue there is, in my judgment, a risk of over-elaborating what is in truth a simple point. The 2013 Act confers a broad discretion upon the responsible authority, in this case the Secretary of State. It provides a framework for the establishment of public service pension schemes by means of regulations which, subject to the Act, may make such provision in relation to a scheme as the responsible authority considers appropriate. That may include provision as to the administration and management of the scheme, including in turn the giving of guidance to the scheme manager. The power to make regulations and to give guidance must of course be exercised so as to promote the policy and objects of the legislation but the discretion conferred is nonetheless a wide one, and the range of considerations that may in principle be taken into account in its exercise is likewise wide.

  1. It is plainly within the scope of the legislation for an authority’s investment strategy to make provision for non-financial considerations to be taken into account in making investment decisions. Thus, nobody suggests that regulation 7(2)(e) falls outside the powers of the statute in requiring that an authority’s investment strategy must include the authority’s policy on how social, environmental and corporate government considerations are taken into account in the selection, non-selection, retention and realisation of investments. Since the Secretary of State is empowered to give guidance as to an authority’s investment strategy, it seems to me to be equally plainly within the scope of the legislation for the guidance to cover the extent to which such non-financial considerations may be taken into account by an authority. The detailed content of that guidance is a matter for the Secretary of State, subject to Wednesbury reasonableness. In particular, I can see nothing objectionable in his having regard to considerations of wider public interest, including foreign policy and defence policy, in formulating such guidance. In no way does that run counter to the policy and objects of the legislation. The public service pension schemes to be established under the 2013 Act include central as well as local government schemes. It must be possible to have regard to the wider public interest when formulating the investment strategy for central government schemes; and it would be very surprising if it could not also be taken into account in the giving of guidance to local government authorities, themselves part of the machinery of the state, in relation to the formulation of the investment strategy for schemes administered by them.”

“22.    … I do not accept that the relevant part of the Guidance was issued for an unauthorised purpose, and I am satisfied that it fell within the powers conferred by the legislation.”

As regards the IORP Directive, Sir Stephen said:-

“35.    I do not accept that a prohibition on interference by Member States with the freedom of institutions to take into account non-financial considerations can be spelled out of any part of Article 18. First, the article places obligations on Member States to require institutions to invest in accordance with the prudent person rule as more particularly set out in Article 18(1), and to prohibit institutions from borrowing or acting as a guarantor for third parties (Article 18(2)). It then prohibits Member States from requiring institutions to invest in particular categories of assets (Article 18(3)). None of those matters carries with it an implication that Member States are prohibited from limiting the non-financial considerations that may be taken into account. … The discretion granted to Member States in relation to prudential rules does not warrant the inference that they are prohibited from limiting the non-financial considerations that may be taken into account.”

 

Public Health

November 11th, 2016 by James Goudie QC in Local Authority Powers

The appeal has been dismissed in National Aids Trust v NHS Commissioning Board and the Local Government Association [2016] EWCA Civ 1100.  NHS England does have the power to commission an anti-retroviral drug for use on a preventative basis for those at high risk of contracting HIV.  The question at the root of the appeal was out of whose budget the cost of medication is to be paid: the budget of NHS England; or that of local authorities.  The answer is NHS England.  This is because it is not a public health function for the purposes of the Health and Social Care Act 2012.  However, it is not possible to draw the dividing line between public health and non-public functions neatly along the lines between the prevention of ill-health and its treatment. There is no simple criterion for defining the boundaries of public health functions in a borderline case.  However, in circumstances where public health functions are not defined and the boundary line between local authority public health functions and NHS non-public-health functions is not clearly drawn in the primary legislation, it is legitimate to refer to where it is drawn in the related secondary legislation.

 

Public health functions

August 2nd, 2016 by James Goudie QC in Local Authority Powers

National AIDS Trust v NHS England (2016) EWHC 2005 (Admin) is a challenge to a decision of NHS England to refuse to consider in its commissioning process an anti-retroviral drug to be used on a preventative basis for those at high risk of contracting AIDS. NHS England argued that it had no power to do so under the governing legislation, the National Health Service Act 2006.

It argued that it did not have power to perform “public health functions” that are carried out by local authorities or the SOS pursuant to their respective statutory powers and duties. NHS England further argued that, pursuant to 2013 Regulations promulgated by the SOS there is now a division of labour between NHS England and local authorities, with the latter assuming responsibility for preventative medicine in relation to sexually transmitted diseases.

The local authorities disagreed. They were represented in the litigation by the LG A. At its core the judicial review was about the allocation of budgetary responsibility in the health field.

Green J concluded that NHS England had erred in law in deciding that it had no power or duty to commission the preventative drugs in issue. It has a broad preventative role and commensurate powers and duties. In any event preventative treatments facilitate and/or are conducive and/or are incidental to the discharge of its broader statutory functions. 

 

Charges for water and sewage services

March 8th, 2016 by James Goudie QC in Local Authority Powers

Newey J described the point in Jones v Southwark LBC [2016] EWHC 457 (Ch) as being one of “considerable importance”.  This was both because Southwark itself had numerous tenants who could be affected, and because it could have implications for other landlords.

The point arose in this way. For decades, Southwark had collected from many of its tenants, including the claimant, charges for water and sewerage services.  These services were supplied to the properties by Thames Water.

The questions raised by the case were, first, whether the Water Resale Order 2006 (“the 2006 Order”) applied to these arrangements, and, second, if it did, whether Southwark had charged its tenants more than was permissible under the 2006 Order. The answers turned, in part, on whether Southwark had been acting as an agent or had been buying and re-selling the services.

The Judge concluded that the relationship between Thames Water and Southwark was not one of principal and agent, but involved Southwark buying water and sewerage services from Thames Water and re-selling them to its tenants; as a result ,the 2006 Order did apply and served to limit what tenants could be charged; and the amounts that Southwark charged Miss Jones exceeded the “maximum charge” allowed under the 2006 Order.

 

Benefit fraud

February 19th, 2016 by James Goudie QC in Local Authority Powers

A DWP Consultation, for response by 31 March 2016, seeks views on a revised “Social Security Fraud Act 2001 Code of Practice on Obtaining Information”. The current Code is from 2002.  The Welfare Reform Act 2007 (Sections 46 to 48) extended local authority investigation powers to enable local authorities to investigate and prosecute fraud against certain DWP benefits alongside offences committed against Housing and Council Tax Benefit. These sections commenced in April 2008 and empower local authorities to investigate and prosecute certain DWP benefits providing there is a linked Housing/Council Tax Benefit claim. The required changes have been incorporated into Appendix 3 of the Code.

The Welfare Reform Act 2012 (Sections 122 and 123) extended the definition of social security benefits to include tax credits and child tax credits, for the purposes of Sections 109A (Authorisations for investigators) and Section 109B (Power to require information) of the Administration Act, when investigating benefit offences. These Sections commenced in April 2013, therefore tax credits and child tax credits are treated as social security benefits and are subject to those provisions and the revised Code.

Other amendments due to operational changes in the DWP have been incorporated into the Code, mainly the creation of DWP’s Fraud and Error Service, which will enable a single fraud investigation to be undertaken to investigate all social security benefits, including those currently administered by local authorities and HMRC. The reference to local authority powers in the Code is relevant whilst individual local authorities still have Authorised Officers or investigation staff undertaking social security benefit fraud investigations. Once a local authority benefit investigation team transfers into DWP that local authority will no longer be bound by the Code.

There are changes to the layout of the Code, with the aim of making it clearer and simpler to use. This includes the introduction of five new appendices providing the more detailed information on who can be required to provide information, examples of the type of information that may be requested, when and about whom may Authorised Officers require information, details to be included in requests for information, and contact details

The Code outlines the important safeguards that exist and penalties against misuse of the powers, including confidentiality, security and data retention arrangements, and legal professional privilege.

 

Consequences of Ultra Vires

October 6th, 2015 by James Goudie QC in Local Authority Powers

In Central Tenders Board v White [2015] UKPC 39 the Privy Council said (at paragraph 26):-

“Ultra vires is not, of course, the only ground on which a court may quash an administrative decision, but it would be wrong for a court to do so in such a way as to nullify a contract made between a public body pursuant to a legal power and a person acting in good faith, except possibly on terms which adequately protect that person’s interest.”

 

Local Authority Powers

September 18th, 2015 by James Goudie QC in Local Authority Powers

Part 8 (Clause 26 and Schedule 4) of the Enterprise Bill, introduced in the House of Lords on 17 September 2015, contains elaborate provisions giving the Treasury power to impose restrictions on public sector exit payments, as broadly defined. They will be capped.

 

Fees for Licence

April 29th, 2015 by James Goudie QC in Local Authority Powers

The Supreme Court, in R (Hemming) v Westminster City Council [2015] UKSC 25, has allowed in part an appeal by Westminster City Council (“Westminster”) from [2013] EWCA Civ 591, but on a critical question has made a reference to the CJEU.

The Supreme Court had the benefit of interventions by HM Treasury and a considerable number of regulatory or professional bodies, concerned about their ability to recover fees for enforcing other regulatory schemes, which might be regarded as similar to that presently under consideration

In order to trade, sex shops in Westminster’s area need a licence from Westminster under Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982, paragraph 19 of which provides that an applicant for the “grant, renewal or transfer of a licence … shall pay a reasonable fee determined by the appropriate authority”.
 
EU law has placed limits upon the licence fees which can be charged.  Article 13(2) of Directive 2006/123/EC,  given domestic effect by Regulation 18(4) of the Provision of Services Regulation 2009 SI No 2999, provides that the “authorisation procedures and formalities” for applicants “shall not be dissuasive … and any charges which the applicants may incur from their application shall be reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures”.

Mr Hemming runs sex shops in the Westminster area under the name Simply Pleasure Ltd. Westminster has over past years required applicants for sex shop licences to pay with their applications a substantial sum (£29,435 in 2011/12), broken down into a smaller amount (£2,667 in 2011/12) relating to the processing of the application and a larger amount (£26,435 in 2011/2012) relating to the cost of administering and enforcing the licensing regime as a whole. The larger amount was refundable whenever an application failed.

Mr Hemming claims that this system is illegitimate under both domestic and EU law. His primary case is that there is no basis for requiring successful or unsuccessful applicants to meet the costs of administering and enforcing the regime. He has also developed a secondary case, that there is no basis for requiring such costs to be paid with the applications, even on a refundable basis. The Courts below agreed with Mr Hemming’s primary case, holding that such costs had to be funded by an authority such as Westminster out of its general funds.

The Supreme Court has now concluded that:-

(1) Paragraph 19 of schedule 3 to the 1982 Act enables a licencing authority to impose on an applicant a fee for the grant or renewal of a licence which covers the running and enforcement costs of the licensing scheme, to be payable either (a) at the time when the licence is granting; or (b) on a refundable basis, at the time when the application is lodged;

(2) Article 13(2) of the Directive deals only with authorisation procedures and fees relating to applications for permission to access or exercise a service activity, such as operating a sex shop:  it does not prevent the imposition on those who receive licences of proportionate charges to fund the cost of administering and enforcing the licensing regime;

(3) As to the legitimacy of Westminster’s system, it is helpful to distinguish between two types of scheme: under Type A, applications for licences are made on terms that the applicant must, upon their application being granted, pay a fee to cover the cost of administering and enforcing the licensing regime; under Type B, which represents the scheme actually adopted by Westminster, applications for licences are made on terms that the applicant must, at the time of making the application, pay a fee, refundable in the event that the application fails, to cover the cost of administering and enforcing the licensing regime;
 
(4) Type A schemes are permissible under Regulation 18(4) of the Regulations and  Article 13(2) of the Directive, because they permit a licensing authority to charge a successful applicant with a proportionate part of the cost of administering and enforcing the licensing regime as a whole;

(5) Whether Article 13(2) also permits Type B schemes is more problematic, because payment is required to be made by every applicant, albeit on a potentially refundable basis, at the time when the application is made: there was no evidence that a Type B scheme could or would have a potentially dissuasive effect upon applicants, but it remains unclear whether it involves in law a “charge” incurred from the application, contrary to Article 13(2);  and

(6) A reference to the OJEU is therefore required on whether and when a Type B scheme is consistent with Article 13(2).

As the Supreme Court observed, at paragraph 20:-

“Under a scheme of Type B, every applicant is required to pay up front – even though on a refundable basis – a sum which is referable not to the costs of handling the application, but to costs which will be incurred for the benefit only of successful applicants. This is a requirement which attaches to the application, not to its success. The question is whether it infringes Article 13(2).”

The Supreme Court further observed, at paragraph 23:-

“The question is … whether the requirement to make a payment refundable on failure of an application is a “charge”. When the application succeeds, the payment becomes due unconditionally. When the application fails, the payment is refundable and refunded. But is it a charge to have to advance the payment, in order to await one or other of these occurrences?”

The questions arising were whether:-

(1)  The requirement to pay a fee including the second refundable part means, as a matter of law and without more, that the Respondents incurred a charge from their applications which was contrary to Article 13(2) in so far as it exceeded any cost to Westminster of processing the application; or

(2)  A conclusion that such a requirement should be regarded as involving a charge – or, if it is so to be regarded, a charge exceeding the cost to Westminster of processing the application – depends on the effect of further (and if so what) circumstances, for example: (a) any evidence establishing that the payment of the second refundable part involved or would be likely to involve an applicant in some cost or loss, (b) any saving in the costs to Westminster of processing applications (and so in their non-refundable cost) that would result from requiring an up-front fee consisting of both parts to be paid by all applicants.

No authority addressing these questions was cited to the Supreme Court.  The answers to them are unclear. Accordingly, it was necessary for the Supreme Court to make a reference to the CJEU.

 

Bringing Proceedings

June 19th, 2014 by James Goudie QC 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).”

 

Local Authority Powers

November 21st, 2013 by James Goudie QC in Local Authority Powers

The General Power of Competence (GPOC) under Section 1 of the Localism Act 2011 was held inapplicable in R (MK) v Barking & Dagenham LBC [2013] EWHC 3486 (Admin).  The Court held that the local authority did not have power either under Section 17 of the Children Act 1989 or pursuant to GPOC to accommodate and provide basic subsistence to an “overstayer”.  The safety net power to accommodate a person who was temporarily admitted to the UK was for central government, under Section 4 of the Immigration and Asylum Act 1999, rather than for local government.  Neither GPOC nor the Children Act could be used in order to circumvent the prohibitions on other statutory means of relief which might otherwise be available to the claimant were it not for her immigration status.  There was a comprehensive statutory scheme reflecting Parliament’s intention to exclude those unlawfully in the UK from a whole range of benefits, including the ones relevant to this case.  Section 2 Localism Act restrictions applied to the Section 1 power.  The scope of “pre-commencement limitation” in Section 2(1) of the Localism Act was held (para 76) to be the same as under Section 3 of the Local Government Act 2000 as interpreted by the Court of Appeal in R (Khan) v Oxfordshire County Council [2004] EWCA Civ 309 from para 30.  At para 84 the Judge said that Section 1 of the Localism Act “was not intended by Parliament as a means of overriding a clear statutory scheme prohibiting the provision of benefits of all kinds to those unlawfully in the UK”.