Officers’ Reports

June 30th, 2014 by James Goudie KC

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”.

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