Local Government Ombudsman

March 27th, 2014

In R (Nestwood Homes Developments Limited v South Holland District Council [2014] EWHC 863 (Admin) the Council successfully defended a judicial review claim by a developer against the Council’s decision to comply only partly with the Local Government Ombudsman’s (“LGO”) recommendations that it pay compensation for maladministration of over £250,000.  The authority paid £50,000 plus interest.  Applying R (Gallagher) v Basildon DC [2011] PTSR 731, Sales J rejected claims of irrationality, pre-determination and procedural unfairness.  He said that the authority was entitled to take into account the financially straitened circumstances in which it operated in deciding how to respond to the LGO’s recommendations, and had reached a rational conclusion.

Sales J observed as follows, from paragraph 54.  The LGO has power to investigate a complaint of alleged maladministration in connection with a local authority’s administration functions, under sections 24A and 26 of the Local Government Act 1974. A report by the LGO is sent to each person concerned: section 30(1). It can include recommendations to remedy injustice suffered as a result of maladministration: section 30(1A). Where the LGO reports that there has been maladministration, the local authority should inform the LGO of the action it has taken or intends to take: section 31(2). If the LGO is not satisfied with the action proposed by the local authority, then he shall issue a further report and make recommendations: section 31(2A). Where the authority still fails to comply with the recommendations made by the LGO, he can require the authority to publish a statement in two local publications, setting out his recommendations and any other material he requires: section 31(2D), (2E) and (2F). However, the notice need only contain the authority’s reasons for not complying if the authority so decides: section 31(2E)(c). Where the LGO issues a report which makes findings of maladministration, injustice and loss suffered as a result, those findings are binding on the authority unless successfully challenged by way of a judicial review claim.The authority is not obliged to accept and act on the recommendations as to remedy made by the LGO. The authority’s decision how to respond is governed by usual, general public law requirements of good faith, rationality, fairness and so on. The rationality of a proposed response has to be assessed taking account of the binding findings of maladministration, injustice and loss which have been made. The statutory scheme providing for public notice to be given if the LGO is not satisfied with remedial steps taken by an authority indicates that emphasis is placed upon political sanctions and pressure, as opposed to imposition of a simple legal obligation to act upon the LGO’s recommendations. A finding of maladministration does not have the same effect as a finding of breach of some public or private law duty, in relation to which binding legal remedial consequences may be imposed by order of a court. By contrast, “even though a recommendation as to remedy made by the LGO requires to be taken very seriously by an authority to which it is directed, it leaves scope for that authority to have regard to other pressing aspects of the public interest in deciding whether to accept and act upon the recommendation”. There is no statutory duty to give reasons for rejecting a LGO’s recommendation. However, where the authority does provide reasons for rejecting a recommendation, the Court is entitled to examine carefully whether the authority has, first, taken into account relevant considerations and, secondly, has weighed those relevant considerations in a way that a reasonable council should have done. Local authorities decline to accept and act on recommendations regarding remedy made by the LGO in only a tiny proportion of cases. Whilst this serves to emphasise the seriousness with which a local authority should approach a LGO recommendation as to remedy for maladministration, it does not in itself indicate that an authority is required to treat itself as bound to accept and act upon such a recommendation.

Sales J held (paragraphs 61-66) that adequate reasons had been given; (paragraphs 67-72) that excessive weight had not been given to affordability and there had been no failure to consider relevant considerations; (paragraphs 73-80) that there had been no unfairness; (paragraphs 81-86) that there had been no predetermination; and (paragraph 87) that there had been no perversity.

At paragraph 70 he observed: “The financial constraints on the Council … were severe, and the Council was entitled to give them significant weight”; and at paragraph 84: “… some predisposition to wish to conserve the resources of the Council in order to provide services in its area was to be expected …”.

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