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An improper purpose

One of the fascinations of administrative law is the number of different rules you can break with a single flawed decision.

One of the fascinations of administrative law is the number of different rules you can break with a single flawed decision. Did I exceed my powers? Have I taken an irrelevant factor into account? Was I perhaps a little bit biased? Or was my decision so far outside the range of decisions that a reasonable decision-maker might have taken in the circumstances that no one can quite decide what to call it?

Joanna Trafford v Blackpool Borough Council [2014] EWHC 85 (Admin) reads like an exam question. This is what it is all about.

The case

Ms. Trafford is a solicitor in Blackpool. Her firm rents an office unit from the Council within a start-up business centre, on a three year contracted-out lease. The centre was built with ERDF funding and tenants are sometimes assisted in other ways. The eligibility criteria for tenants are set out in a brochure and an application form. The firm’s practice includes claimant litigation, and this includes claims against the Council, mainly tripping claims. In 2012 the number of claims increased to 113, from 18 the previous year and just one the year before that. The Council’s Corporate Asset Management Group (CAMG) decided not to renew the lease. It believed that the firm was “farming” tripping claims, against the Council’s financial interests, and it did not want to continue the relationship. The judge, HHJ Stephen Davies, found that there was nothing at all improper about the firm’s activities (the claimant was supported by the Law Society), and that the Council did not intend to force the firm to move out of Blackpool or to close down. It wished, though, to retaliate to the claims, to punish the firm and to send a message to other local solicitors. This was a one-off decision, and there was no policy basis for it at all.

The judge rejected preliminary arguments that the claim was out of time and that there was no public law issue. On the latter point he was influenced by the nature of the business centre, the claimant’s argument that she had in effect been told that she would never be granted a new tenancy, and by the clear public law grounds of challenge. There was “a sufficient public law element or connection to render the decision amenable to judicial review on the ground of abuse of power.”

The claimant succeeded with her three main grounds of challenge: that the decision was taken for an improper and unauthorised purpose, that it was Wednesbury illegal and that there was procedural unfairness.Two others were rejected. An argument based on the public sector equality duty was a late addition, and was not admitted because the Council had not had time to address it. The argument that the Council was acting in accordance with an unpublished policy was rejected on the facts.

The judge found that the power which the Council had exercised, under section 123 of the Local Government Act 1972, had not been exercised for the purpose for which it had been given. It had been exercised for the sole or dominant purpose of punishing the claimant and her firm. This was improper because the claimant was doing nothing wrong, because it was a purported fetter on the Council’s discretion to offer a new tenancy in the future, and because the CAMG had failed to give any thought to what the allegation of “claims farming” might actually mean or entail.

In addition, the decision had been motivated by an illegitimate consideration - the desire to inflict punishment - and had failed to have regard to all relevant considerations including the usual tenancy criteria. Alternatively it was Wednesbury irrational, if that is the right term. If it was motivated by a desire to protect the Council’s financial interests, it could not possibly have had that effect. The number of claims would not have been reduced. And it was procedurally unfair. If the Council was going to take a decision which fell outside its published criteria, it should have told the claimant and invited representations.

The decision was quashed. What will happen next is a matter of conjecture.

Comment

We understand the reasons for the strength of feeling on both sides but we cannot comment on the details or the findings of fact.

Perhaps one underlying issue deserves some thought. The Council did not actively seek to end the lease. It just decided not to offer a new one. It was not legally obliged to do so, so perhaps it thought it had a free hand? Unfortunately, and counter intuitively, it did not. If a public body provides a facility to individuals or businesses then it has to entertain any application for that facility properly, and an adverse decision can be attacked on all the usual grounds. The answer is to publish justifiable criteria, keep them under review, and follow due process if they are to be changed or set aside or to evaluate applications against them. This, of course, comes out looking like the kind of mindless bureaucracy that gives the public sector a bad name. You just can’t win.

Legally, apart from the “public or private law” issue, the interesting point is the appearance of the principle of using a statutory power for an improper or extrinsic purpose. This is seen less often than you might expect, mainly because (as in this case) it tends to overlap with other grounds. But it is worth exploring.

We should go back to the dark days of the war between the loony left and the Thatcher government. The leading case on improper purpose involved Leicester City Council [1], who discovered that they could not ban the Leicester rugby club second team from using its recreation ground because the club refused to condemn the England rugby tour to apartheid South Africa. Only one of the speeches in the House of Lords was based on the idea of improper purpose, but it struck a chord. So the London Borough of Lewisham [2] could not refuse to buy Shell’s products to pressurise it to disengage from the same regime. And the London Borough of Ealing [3] and Derbyshire County Council [4] discovered that, however much they disliked the News International’s approach to industrial relations (they had sacked 6,000 employees for striking against the move to Wapping), they could not refuse to buy and display their newspapers, or decline to advertise vacancies in them. This line of case law petered out when Part II of the Local Government Act 1988 outlawed certain “non-commercial considerations” in decisions about local authority contracts. A couple of years later, however the (Conservative) London Borough of Barnet decided that the East Finchley Community Festival could only use Cherry Tree Wood for its summer event if it agreed to prevent the stallholders distributing party political literature, but failed to persuade the Court of Appeal [5] that its decision was a valid exercise of its power to permit a social event in a public park or a reflection of the ban [6] on local authorities assisting others to publish party political material.

More recently, the principle surfaced in the unlikely context of planning conservation. Worcester City Council [7] and the London Borough of Barnet [8] declared conservation areas in order to prevent the demolition of a cricket pavilion and a monastery, respectively, which the Secretary of State had decided should not be protected by inclusion on the statutory list of buildings of special interest.   Both decisions were quashed.  The purpose of declaring a conservation area is to preserve and enhance the character and appearance of the area, not to protect a single building.

Of course, real life is sometimes more complicated. It is not always easy to decide what is and is not improper. In 1988 the Governing Body of Haberdashers Aske’s schools had to decide what kind of schools they should become under new legislation.  The Inner London Education Authority, which was itself due to be abolished, appointed the majority of the governors, traditionally on a politically balanced basis. After consultation, the schools’ foundation body favoured becoming a City Technology College.  ILEA favoured voluntary controlled status and more consultation.  The two conservative governors declined to commit to this approach.  ILEA replaced them, and they challenged the decision[9].  They argued that the power of removal could not be used so as to usurp their independent role as governors. The House of Lords agreed, and quashed the decision.  At about the same time, a few miles away in the London Borough of Greenwich, two Labour Councillors had a disagreement with their party about the performance of the social services department, and the party withdrew the whip from them.  Because of government cuts and a process called “ratecapping” the Council had to find £19 million savings, and there was a proposal to increase housing rents.  The two councillors voted against it in the Housing Committee.  The Council then reduced the size of the committee, and failed to reappoint the recalcitrant councillors. The new Housing Committee approved the rent increase.   The councillors challenged the decision [10]. One of the challenges reached the Court of Appeal, which rejected it.  Neil LJ said “In my judgment the crucial questions in this case can be stated quite simply. (1) What was the reason for the decision on 10 February? (2) Was that reason a legitimate reason? … In my judgment the reason for the decision was a legitimate reason. A councillor is always under some pressures from outside. The risk of not being re-elected at the next election is one obvious constraint. It seems to me however that at the present day, when local government is organised on party lines, some additional constraints resulting from the existence of a party line or strategy on particular issues are inevitable. … In this sense “group discipline” does not connote punishment but any attempt to keep the party group together.”  The ILEA case was distinguished because, according to Staughton LJ, “The council and its committees are not distinct and independent entities. The council is entitled to expect its committees to promote the council's policy. If one or more members of a committee are likely to obstruct that aim, the council is entitled to remove her or them.”

And organisations, especially political organisations, sometimes have more than one motive.  In the landmark “gerrymandering” case, Porter v Magill [11] the Leader and Deputy Leader of Westminster City Council challenged the external auditor’s finding of wilful misconduct in adopting a policy of first keeping vacant, and then gentrifying and selling, council dwellings in marginal wards in order to increase the conservative vote in key areas.  The finding lay behind a certificate that they should be surcharged and made to pay some £26 million pounds to cover the income lost to the council and the unnecessary expenditure incurred. The court struggled with the question of purpose.  The auditor himself, and the three judges in the Divisional Court, decided that the decision to adopt the policy was unlawful because its purpose was to secure party political advantage.  Two of the three judges in the Court of Appeal thought otherwise: this was the kind of decision that could be made in exercise of statutory housing powers and, in the real world, the political motivation was inevitable.  But all five members of the House of Lords reversed the decision.  Lord Bingham gave the leading judgement on this point.

He said “Councillors do not act improperly or unlawfully if, exercising public powers for a public purpose for which such powers were conferred, they hope that such exercise will earn the gratitude and support of the electorate and thus strengthen their electoral position. The law would indeed part company with the realities of party politics if it were to hold otherwise. But a public power is not exercised lawfully if it is exercised not for a public purpose for which the power was conferred but in order to promote the electoral advantage of a political party.”  Then he deferred to the decision which the Divisional Court had reached on the facts.  All of which restated the question instead of giving an answer.

In the Divisional Court [12], Rose LJ had offered the following useful, if bewildering, analysis. A local authority must exercise its statutory powers in the public interest and for the purpose for which those powers have been conferred.  On the one hand, politics may “influence” a decision, as to the weight to be given to legitimate factors, and as to the public interest in those factors, and it is acceptable to anticipate political advantage from a decision made for a legitimate purpose.  On the other hand, a decision is unlawful if it is “tainted” by a “political purpose extraneous to the statutory purpose”.   In the middle, if a decision is made for more than one purpose, it will be lawful if the permitted purpose is the “true and dominant purpose” even though a secondary advantage may be gained for some purpose outside the authority's powers, unless the ultra vires purpose is one of the “major purpose[s] of the decision”.  And an apparently lawful purpose may “merely a colourable device” to conceal an illegitimate purpose.  It must be possible to devise a flow chart if you are so minded.

We have strayed quite a long way from Blackpool, so let us return there for a final thought.  The decision not to offer a new tenancy involved the discharge of an executive function.  It was taken by an officer (or group of officers).  Regulation 13(4) of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 [13] requires a record to be kept, and made public, of such “executive decisions”.  There has been a debate about how deep this cuts, but a decision to award or refuse a tenancy would meet both the “exercise of delegated powers” test suggested by DCLG and the “close connection with the function” test proposed in the opinion obtained by ACSeS.  The record should state the reason for the decision.  If Blackpool had followed this formula, as perhaps it might, it would have had to apply its mind much earlier to the justification, and its provenance.  We all complained about the Regulations at the time, but they have their uses.

[1] Wheeler v Leicester CC [1985] AC 1054
[2] R v Lewisham LBC ex p Shell UK Ltd – [1988] 1 All ER 938
[3] R v Ealing LBC ex p Times Newspapers Ltd (1986) LGR 316
[4] R v Derbyshire ex p Times Supplements Ltd (1991) COD 129
[5] R v Barnet LBC ex p Johnson (1991) 3 Admin LR 149
[6] Section 2 of the Local Government Act 1986 “A local authority shall not publish any material which, in whole or in part, appears to be designed to affect public support for a political party … A local authority shall not give financial or other assistance to a person for the publication of material which the authority are prohibited by this section from publishing themselves.”
[7]  R (Arndale Properties Limited) v Worcester City Council  [2008] EWHC 678 (Admin)
[8]  R (Metro Construction Limited) v Barnet London Borough Council [2009] EWHC 2956 (Admin)
[9]  Brunyate v ILEA [1989] 2 All ER 417
[10]  R. v Greenwich LBC Ex p. Lovelace [1991] 1 W.L.R. 506
[11]  [2001] UKHL 67 [12] (1998) 30 H.L.R. 997 [13] SI 2012/2089