Government introduces the Judicial Review and Courts Bill into Parliament

On 21 July, the Government introduced the Judicial Review and Courts Bill into Parliament. The Bill was foreshadowed in the Queen’s Speech on 11 May as part of the Government’s aim to ‘restore the balance of power between the executive, legislature and the courts’. The Government’s press release states that the Bill will ‘equip judges with the tools to give more tailored solutions in judicial review cases’. The Government has published a number of ‘fact sheets’ on aspects of the Bill, accessible here, as well as a detailed explanatory note.

As anticipated, the Bill includes provisions for quashing orders to be made subject to conditions, namely to not take effect until a date specified in the relevant order (i.e. suspension of the order) or removing or limiting any retrospective effect of the quashing of the impugned act. Judges will be “empowered” to use these powers at their discretion.

The Bill also provides for the removal of “Cart” judicial reviews(subject to some limited exceptions). Applications for judicial review against a decision of the Upper Tribunal (the “UTT“) to refuse permission to appeal against a decision of the First-Tier Tribunal (the “FTT“) on the basis that the FTT’s decision was affected by an error of law and therefore the UTT’s decision was also so affected are referred to as applications for a “Cart” judicial review. They derive their name from the decision of the Supreme Court in R (Cart) v The Upper Tribunal [2011] UKSC 28. Described as “inefficient” by the Government, the removal of “Cart” judicial reviews follows a recommendation made in the report by the Independent Review of Administrative Law (“IRAL“). The Bill does, however, provide for some limited circumstances in which a challenge can still be brought to a decision of the UTT on permission to appeal. These are set out in Clause 2(4) and include where the UTT has acted in bad faith or in fundamental breach of the principles of natural justice.

The Bill does not provide for clarification on the effect of statutory ouster clauses more generally or on the principles which lead to a decision being a nullity by operation of law. These were topics on which the Government recently consulted (along with the removal of “Cart” judicial reviews and modifications to quashing orders). The Bill’s explanatory note makes clear that the Government has “decided not to proceed with” these proposals following consideration of the IRAL report and responses to the consultation.

The Bill is awaiting a second reading on a date to be announced. With the House of Commons now in recess, this will not take place before Parliament resumes in early September.

Our previous blog posts on this topic can be found here:

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High Court finds apparent bias in contract award decision

The High Court has found apparent bias on the part of the Government in respect of its award of a contract under the Public Contracts Regulations 2015 (the “PCR“) for the provision of focus group and communication support services without public notice or competition during the early weeks of the Covid-19 pandemic (the “Contract“) (R (The Good Law Project) v Minister for the Cabinet Office [2021] EWHC 1569).  The Court found that whilst there was no suggestion of actual bias, the steps taken by the Government in awarding the Contract fell short of the objective test for apparent bias.

Key Points:

  • The test for apparent bias is whether the circumstances would lead a fair minded and informed observer to conclude that there was a real possibility or a real danger that the decision maker was biased.
  • Evidence of personal or professional relationships between the contracting parties is insufficient to establish apparent bias, but it is a factor to be considered when assessing impartiality and independence in the context of public procurement.
  • A claimant may have standing to challenge an individual procurement decision despite not being an economic operator if it has a sufficient interest in compliance with the public procurement regime in that it is affected in some identifiable way by the challenged decision, or the gravity of a departure from public law obligations justifies the grant of a public law remedy.

Background

The judicial review claim related to the award by the Cabinet Office of the Contract to Public First, a public policy research agency, in June 2020 with a retrospective effective date of 3 March 2020. The Contract arose incrementally when Public First, who had originally been engaged for a discrete unrelated task, were asked to redirect their planned focus group to conduct Covid-19 research and carry out further work in response to demand caused by unforeseen developments in the pandemic.

Regulation 26 of the PCR establishes the general rule that there must be a competition for public contracts. Regulation 32 specifies that in certain circumstances contracting authorities may award public contracts without complying with the procurement procedures in the PCR. These circumstances include where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the procedures in the PCR cannot be complied with.

The claimant, the Good Law Project, sought judicial review on the basis of three grounds of challenge:

  1. There was no basis for making a direct award of the Contract under regulation 32 of the PCR.
  2. Even if the award of the Contract to Public First was lawful, the duration of the Contract (six months) was disproportionate to the immediate need in the given circumstances.
  3. The decision to award the Contract to Public First gave rise to apparent bias, in breach of the principle of procedural fairness. The allegations of apparent bias cited “the longstanding and close personal and professional connections” between Public First’s directors and owners, the Minister of the Cabinet Office, Dominic Cummings (the then Chief Adviser to the Prime Minster) and the Conservative Party, the lack of a competition despite the availability of other contract providers, and the high price of the Contract (£840,000) for six months’ work.

Judgment

In respect of the first ground, the Court concluded that the Defendant was entitled to rely on regulation 32 of the PCR in awarding the Contract to Public First on account of the extreme and unforeseeable urgency caused by the Covid-19 pandemic which justified a departure from the usual procedural requirements and time limits.

The Court also dismissed the second ground that the Contract length was disproportionate. The Court noted that at the time no one could foresee the extent or duration of the pandemic, thereby creating a need for the greater flexibility achieved by a longer contract length.

On the third ground, the Court noted that the test for apparent bias is as set out in the Supreme Court decision of Porter v Magill [2002] 2 A.C. 357, which asks whether the “circumstances would lead a fair minded and informed observer to conclude that there was a real possibility, or a real danger […], that the [decision maker] was biased.”

The Court acknowledged that, having regard to the specialised nature of the public policy and communications research industry, it was unsurprising that those involved might have developed professional and/or personal friendships over the years working within the government departments. It accepted that such acquaintanceships did not preclude Mr Cummings from making a lawful judgment, but stated that it was a factor to be considered in the circumstances surrounding his impartiality and independence in the context of public procurement. The court suggested that it was the fact that these circumstances existed that should have prompted the Government to take careful steps to remove suspicion of favourable treatment, by ensuring that there was a clear record of the objective criteria used to select Public First over other research agencies.

The Court concluded that the Defendant’s failure to consider any other research agency by reference to experience, expertise, availability or capacity would lead a fair minded and informed observer to conclude that there was a real possibility that the decision maker was biased. The Court accordingly made a declaration that the decision to award the Contract to Public First gave rise to apparent bias and was unlawful.

Comment

The judgment in this case reiterates the objective test in Porter v Magill to consideration of allegations of apparent bias. Whilst extreme urgency (as a result of the pandemic or otherwise) can justify the need to act quickly when taking procurement decisions, there remains an overriding expectation that those decisions will adhere to fundamental public law principles. The High Court also referenced regulation 24 of the PCR, which is concerned with the avoidance of actual conflicts, as a useful indicator of the circumstances that might give rise to apparent bias. That provision refers to any situation where relevant staff members have, directly or indirectly, a financial, economic or other personal interest which might be perceived to compromise their impartiality and independence in the context of a procurement procedure.

The judgment is also of interest in that the Court found that the Good Law Project had standing to bring the judicial review, despite not being directly affected by the decision to award the Contract to Public First. The Court highlighted a number of points in favour of granting standing, including that: the Good Law Project had a genuine interest in promoting good public administration, where there had been no competition there was no unsuccessful bidder who might have challenged the Contract award, and the gravity of the issues raised justified scrutiny by the Court and the grant of a public law remedy. This decision will be seen as a helpful precedent for third parties with an interest in the award of contracts with a significant public interest.

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Referral decision by professional body not amenable to judicial review

Summary

The High Court has held that a decision by a professional body to refer a complaint against a member to a disciplinary board was not amenable to judicial review (R (Hannah) v Chartered Institute of Taxation [2021] EWHC 1069 (Admin)).

Key points

  • The approach taken by the Courts when ascertaining whether an organisation is a public body for the purposes of judicial review is to look at the source and nature of the power being exercised by the body in order to ascertain whether it exercises public law functions, or whether the exercise of the power has public law consequences.
  • If the source of the power is contained in legislation, the body in question generally will be amenable to judicial review. If the source of the power is purely contractual then judicial review will not generally be available.
  • In some cases the Courts have held bodies without any statutory basis to be amenable to judicial review, because it is clear from the context in which they operate that if they did not exist that government would step in.
  • A body is unlikely to be amenable to judicial review where the relationship between the body and its members is purely contractual, and it is a voluntary scheme which members are not required to sign up to.

Background

The Chartered Institute of Taxation (“the CIOT“) is a membership organisation for tax professionals, with over 19,000 members. A tax adviser is not required to be a member of a professional body such as the CIOT, and each member enters into a membership contract under which he or she is obliged to comply with the CIOT’s Bye-laws, Members’ Regulations, Council Regulations and disciplinary rules and is also obliged to accept the jurisdiction of the Taxation Disciplinary Board (the “Board“). It has no general statutory powers.

The CIOT decided in February 2020 to refer a complaint against the claimant, Mr Hannah, to the Board. Mr Hannah sought to challenge the referral by way of judicial review, alleging that the decision was procedurally unfair as he was not able to make representations before the referral was made.

Decision

The Court considered whether the CIOT was amenable to judicial review, and summarised the current approach taken by the Courts with regard to amenability. Judicial review is not restricted to bodies which derive their powers from legislation or the prerogative. If the source of the power is legislation, the body in question generally will be subject to judicial review, but if the source of the power is purely contractual then judicial review will not generally be available. The Court will look at both the source and the nature of the power being exercised to see whether the body exercises public law functions, or whether their exercise had public law consequences (R v Panel on Take-Overs and Mergers ex parte Datafin plc [1987] QB 815). A body will generally be amenable to judicial review if its functions have been interwoven into the fabric of governmental regulation or governmental control, for instance if regulations take account of its decisions.

In some cases the Courts have held bodies to be amenable to judicial review without any statutory basis, because it is clear from the context in which they operate that if they did not exist that government would step in and its functions would be carried out by an existing authority exercising statutory powers (R v Advertising Standards Authority Limited ex parte Insurance Service plc (1990) 2 Admin LR 77).

The Court concluded that the referral function of the CIOT was not amenable to judicial review. It noted that there was no statutory scheme regulating the conduct of tax advisers, that the CIOT scheme was operated voluntarily and its relationship with its members is purely contractual. The CIOT itself is not involved in disciplining its members.

The Court noted that it is in the interests not only of clients and the public, but also of the collective membership of the CIOT, that there is a code of conduct and a disciplinary system to maintain professional standards and reputation i.e. it is advantageous for an agent to be able to promote him or herself as someone with the professional standing and reputation of a Chartered Tax Adviser. The Court found that these features were compatible with the position of a member being the subject of purely private law principles. The Court noted that this conclusion was reinforced by the fact that there is no requirement for any person or body giving tax advice to belong to the CIOT or any other professional body, and the Government had not indicated any inclination to introduce such a requirement. The Court also noted that the Board may receive complaints about members of the CIOT directly from a member of the public, and that there could be no question of such a referral being amenable to judicial review.

Even if the referral to the Board was amenable to judicial review, the Court commented that it would not have been appropriate to quash the decision on the grounds of procedural fairness, not least because the CIOT’s referral was only a preliminary step and did not involve any adverse conclusion that the standards had been breached. It simply started a disciplinary process (the commencement of which would not be publicised) which would include multiple opportunities for Mr Hannah to make representations.

Comment

The judgment in this case reinforces the approach taken by the Court of Appeal in R (Holmcroft Properties Ltd) v KPMG LLP [2018] EWCA Civ 2093 regarding when a body is amenable to judicial review. The Court of Appeal in Holmcroft confirmed that the test is whether the body carries out a public law function, and the circumstances relating to the nature and function of the power are relevant. In Hannah, the fact that the CIOT’s relationship with its members is purely contractual was indicative but not solely determinative of the applicability of public law principles to the CIOT’s decision-making. The Court will focus on whether the body is carrying out a public law function by reviewing the broader regulatory and factual context.

The manner in which the Government interacts with the functions in question will also weigh with the Court, in particular whether the body is woven into the fabric of public regulation or whether, but for the body’s existence, a Government organisation would ‘step into the breach’.  

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Public Law Podcast: Government Consultation on Judicial Review

In the latest episode of our Public Law Podcast, Andrew Lidbetter, Nusrat Zar and Vikram Sachdeva QC of 39 Essex consider the Government’s recent consultation on judicial review following the Independent Review of Administrative Law submitted in January.

You can read more about the issues discussed in this episode in the following blog posts:

This podcast can be listened to on SoundCloudApple and Spotify and don’t forget to subscribe to the channel to receive updates on future episodes.

We welcome feedback and if you would like us to cover particular topics in the future please use the contact details below to get in touch.

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HSF responds to Government’s Consultation on Judicial Review Reform

The Queen’s Speech on 11 May announced a Judicial Review Bill. This followed a consultation on judicial review reform launched by the Government on 18 March 2021 (the “Consultation“) and the publication of the report by the Independent Review for Administrative Law (the “IRAL“) on its review into possible reforms to the judicial review process (the “IRAL’s Report“). Further information on the IRAL review and Report can be found in our previous blog post. This blog focuses on the Government consultation and our response in view of the forthcoming Judicial Review Bill.

The Consultation

The purpose of the Consultation as set out in the Consultation Document is to “complement the analysis presented in the [IRAL’s] Report” and to create an opportunity to consult on some of the proposals it suggested “at an early point in their development“. The questions put forward by the Consultation focus in part on the specific recommendations made in the IRAL’s Report (such as the discontinuance of Cart Judicial Review and the introduction of suspended quashing orders) which the Government agrees with and intends to take forwards. Additionally the Consultation Document sets out further reforms which the Government says there is merit in considering as a means of addressing some of the issues identified in IRAL’s Report.

The key areas in relation to judicial review claims in which the Consultation sought responses included:

  • Remedies (including suspended quashing orders and prospective remedies)
  • Ouster clauses
  • Removal of the promptness requirement
  • Consideration of a ‘track’ system
  • Requirement to identify organisations that might assist in litigation
  • Introduction of a Reply by the Claimant
  • Changes to the obligations surrounding Detailed and Summary Grounds of Resistance

Our Response

In the first section of our response we considered the Consultation’s questions on suspended or prospective quashing orders together and indicated our view that such remedies should only be permitted in exceptional circumstances, if at all. We noted that not only could such measures threaten to weaken existing remedies but they could also dampen the frameworks governing public functions by minimising the consequences of improper decision-making and in some instances depriving people of effective relief.

In relation to ouster clauses our response warned against the use of these to exclude judicial review as we believe it would be highly damaging to the accountability of Government and the rule of law.

The Consultation Document posed a series of questions on the possible removal of the promptness requirement for filing judicial review proceedings in conjunction with potential scope for encouraging the Civil Procedure Rules Committee (the “CPRC“) to offer time extensions to allow for pre-action resolution. We were generally supportive of removing the promptness requirement in our response, noting our belief that the benefits of the promptness requirement are outweighed by those resulting from the certainty that would be achieved by a fixed 3 month period in which to start proceedings. However, we consider that the 3 month period provides consistent opportunities for meaningful engagement in pre-action correspondence and allows for considered advice from practitioners, and therefore we are not in favour of extending the time limit beyond 3 months.

We were sceptical in our response about the need to introduce a requirement to identify organisations or wider groups that might assist in litigation, both because CPR 54.7(b) already partly goes to this, and also because it would be difficult in practice for many parties to identify possible interveners.

The Consultation Document was somewhat unclear in its request for responses on Detailed and Summary Grounds of Resistance but set out proposed changes to the obligations and procedure. We put forward our opinion that it is misguided to suggest that pre-action correspondence is a sufficient substitute for Summary Grounds of Resistance. Nevertheless we noted the role of pre-action correspondence generally in ensuring that the current 35 day limit before the deadline for filing Detailed Grounds of Resistance is well used and thus concluded that there was no need to extend this limit to 56 days.

Conclusion

Our overarching view is that the current mechanism for judicial review and wider administrative law functions well and does not need to be subject to any major reform. Whilst we are supportive of the Government seeking out scope for improvements in judicial review procedure, we encourage continued consultation with experienced practitioners for any significant proposed changes given the potentially wide-reaching implications for access to justice and the rule of law.

The Queen’s Speech to both Houses of Parliament on 11 May 2021 included a reference to a Judicial Review Bill in the context of the Government seeking to ‘restore the balance of power between the executive, legislature and the courts’. It remains to be seen what the Government’s next steps will be in respect of the proposed content of the Bill and any process of consulting on it.

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High Court considers use of expert evidence in judicial review

The High Court in R (Transport Action Network Ltd) v Secretary of State for Transport [2021] EWHC 568 (Admin) considered the extent to which a party in judicial review proceedings may adduce expert evidence.

Key points

  • Expert evidence is seldom required in order to resolve judicial review proceedings. That is because it is not the function of the Court in deciding such a claim to assess the merits of the decision of which judicial review is sought.
  • However where an understanding of technical matters is needed to enable the Court to understand the reasons relied on in making a decision in the context of a challenge to its rationality, expert evidence may be required to explain such technical matters.
  • Expert evidence may be needed if it is alleged that the decision under challenge was reached by a process of reasoning which involves a serious technical error.

Background

The claimant, Transport Action Network Ltd (TAN), commenced judicial review proceedings against the Secretary of State for Transport regarding its roads investment strategy for the period 2020 to 2035 (“the RIS”). The grounds of challenge alleged a failure to take into account the impact of the RIS on achieving specific climate change objectives contrary to the Infrastructure Act 2015, which requires the Secretary of State to have regard to the effect of the RIS on the environment.

The Court granted permission for TAN’s claim to proceed to a hearing. TAN applied to rely on witness statements from two academics. It submitted that the further statements should be admitted in evidence in response to certain inaccuracies in the defendant’s evidence, and that they addressed the issues in the claim in that they set out the alleged errors of logic made by the Secretary of State in quantifying emissions arising from road schemes in the RIS and in assessing their impact on achieving the relevant environmental objectives.

Decision   

The Court (Lang J) concluded that the two witness statements should be treated as expert evidence. The academics had no first-hand knowledge of the Secretary of State’s decision, but they possessed qualifications and expertise in the field and they were giving their opinions on the issues.

The Court agreed with the Secretary of State that in a “failure to have regard” challenge the focus should be on the material which the decision maker either did or did not take into account when making his or her decision. This was not an irrationality challenge in which the substance or the merits of the decision are reviewed by the Court. However in this case, the parties disagreed on whether the matters identified by TAN were mandatory material considerations. The defendant relied on the de minimis effect of RIS schemes on carbon emissions as a reason why these matters were not “obviously material” to RIS and, therefore, not mandatory material considerations. The Supreme Court in R (Friends of the Earth Ltd) v Heathrow Airport Ltd [2020] UKSC 52 confirmed that the test to decide whether a consideration is so “obviously material” that it must be taken into account is the irrationality test. Therefore, irrationality was in issue, albeit to a limited extent.

The Court also considered the decision of the Divisional Court in R (The Law Society) v The Lord Chancellor [2018] EWHC 2094 (Admin) where it was found that expert evidence may be needed if it is alleged that the decision under challenge was reached by a process of reasoning which involved a serious technical error. In this case, the Court concluded that the evidence from TAN’s experts was on how and why the Secretary of State had allegedly seriously underestimated the emissions that would be caused by the RIS. The Court concluded that this was a technical field which a layperson, including the judge, could not fully understand without the benefit of expert evidence.

Comment

Given the nature of judicial review claims, expert evidence is rarely required in order to assist the Court to resolve the issues. This is because it is not the Court’s role to determine the merits of the decision under review, but rather it is concerned with the lawfulness of the exercise of the relevant public function. To answer that question, it is seldom necessary or appropriate for the Court to consider any evidence which goes beyond the material which was before the decision-maker and evidence of the process by which the decision was taken – let alone any expert evidence. However, as this judgment demonstrates, in limited circumstances the Court may require the assistance of an expert in order to make a determination.

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Publication of the Independent Review of Administrative Law’s Report and a Government Consultation into Judicial Review

On 18 March 2021, the Independent Review of Administrative Law (the “IRAL”) published its report on reform to the judicial review process (the “IRAL’s Report”) in which it made two substantive recommendations and a number of procedural recommendations. The Lord Chancellor and Secretary of State for Justice agreed with those recommendations and was “also interested in exploring proposals beyond these”. This was the basis upon which on the same day the Ministry of Justice published a consultation on judicial review reform (the “Consultation”).

Background

On 31 July 2020 the Government announced that it had appointed a panel of experts to examine if there is a need to reform the judicial review process and other aspects of public law decision making. The intention of the IRAL was to be wide-ranging in its scope. The Terms of Reference of the IRAL stated that it would “examine trends in judicial review of executive action, in particular in relation to the policies and decision making of the Government”. As part of its review the IRAL’s call for evidence invited submissions on how well or effectively judicial review currently balances, on the one hand, the legitimate interest in citizens being able to challenge the lawfulness of executive action with, on the other, the role of the executive in carrying on the business of Government.

While much can be said in respect of the IRAL’s Report and the Consultation, we have focussed on the key issues.

The IRAL’s Report

In summary, the IRAL made the following recommendations for changes to the substantive law:

  • Abolishing Cart JRs: Applications for judicial review against a decision of the Upper Tribunal (the “UTT”) to refuse permission to appeal against a decision of the First-tier Tribunal (the “FTT”) on the basis that the FTT’s decision was affected by an error of law and therefore the UTT’s decision was also so affected are referred to as applications for a “Cart JR”. The IRAL received a request from judges to examine Cart JRs, which some of those who gave evidence thought adds an additional layer of appeal that is unnecessary and unintended. After conducting investigations, the IRAL concluded that in only 0.22% of all applications for a Cart JR since 2012 has granting permission to pursue an application for a Cart JR resulted in an error of law on the part of a FTT being identified and corrected. On that basis the IRAL concluded that the continued expenditure of judicial resources on considering applications for a Cart JR could not be defended, and recommended that the practice of making and considering such applications should be discontinued.
  • Allowing courts to suspend quashing orders: The remedies that are potentially available when an application for judicial review is successful are set out in section 31 of the Senior Courts Act 1981: a mandatory, prohibiting or quashing order; a declaration or injunction; damages, restitution or the recovery of a sum due. The IRAL’s recommendation in this area was that section 31 should be amended to give the courts the option of making a suspended quashing order, i.e. a quashing order which will automatically take effect after a certain period of time if certain specified conditions are not met. It is the view of the IRAL that by issuing such an order the Court would be able to acknowledge the supremacy of Parliament in resolving conflicts between the courts and the executive as to how public power should be employed.

The IRAL also made some further recommendations and suggestions, including for non-legislative changes, which are more procedural in nature. For example, it stated that there is a need to clarify the scope of the duty of candour (i.e. the requirement that a public authority, when presenting its evidence in response to an application for judicial review, to set out fully and fairly all matters that are relevant to the decision that is under challenge). The IRAL suggested that this clarification be achieved by revisiting the Treasury Solicitor’s Guidance. It also stated that some amendments be made to the Civil Procedure Rules, such as a formal provision for a Reply to be filed by a Claimant within 7 days of receipt of the Acknowledgement of Service. With regard to the time limit within which a claim for judicial review must be brought by filing a claim form at court, CPR 54.5 states that it must be “no later than three months after the grounds to make the claim first arose” but the first requirement is that this must be done “promptly”. The IRAL states that there may be a case for abolishing the requirement of promptitude and it would “certainly not favour” any tightening of the current time limits for bringing a judicial review. Also, the IRAL recommends that the criteria for permitting intervention should be developed and published, “perhaps in the Guidance for the Administrative Court”.

The IRAL explicitly ruled out some possible reforms. For instance, it rejected the concept of statutory codification because “the grounds for review are well established and accessibly stated in the leading textbooks”. However, it acknowledged that codification could make judicial review more accessible to non-lawyers. The IRAL also recommended that Parliament does not pass any comprehensive or far-reaching legislation regarding non-justiciability, but instead legislate in response to particular decisions. The IRAL warned that broader legislation in this area that purported to roll back certain developments in the law on non-justiciability would be regarded as amounting to an ouster clause and that while the use of such a clause would be justified, it is likely to face a hostile response from the courts and robust scrutiny by Parliament.

Language deferential to Parliament’s role as a legislature was incorporated throughout the IRAL’s Report, as illustrated at paragraph 2.78:

We should emphasise that our reasons for not favouring making large changes to this area of law do not include any argument that it might be inappropriate for Parliament to legislate in this area. On the contrary: we are of the firm view that it is entirely legitimate for Parliament to pass legislation making it clear what sorts of exercises of public power (or issues relating to such exercises) should be regarded as non-justiciable. We strongly agree with the view advanced by Baroness Hale in her submission to us that: ‘If Parliament does not like what a court has decided, it can change the law.’ This is the case in every other area of law, and it is hard to see why it should not be in relation to the law on judicial review.

Nonetheless, it is interesting that the IRAL chose to incorporate its observations that while R (Miller) v Secretary of State for Exiting the European Union [2018] AC 61 and R (Miller) v Prime Minister [2020] AC 373 represented “substantial setbacks for the [Government] and were of considerable constitutional importance, [the IRAL is] not convinced that the decisions (novel as they were) in those cases are likely to have wider ramifications given the unique political circumstances” at the time. Indeed the IRAL goes so far as to state that for “every controversial decision, there are many others (less publicised and less commended-upon) where judges have shown ‘restraint’”.

The Consultation

The Government agrees with the IRAL’s recommendations regarding Cart JRs and adding a remedy for suspended quashing orders, as well as removing the requirement for a claim to be issued “promptly”; providing further guidance for interveners; and providing for an extra step in the process for a Reply to be filed within 7 days of receipt of the Acknowledgement of Service. The Consultation seeks further views on these issues.

The Lord Chancellor and Secretary of State for Justice is “also interested in exploring proposals beyond these [recommendations]”. The Consultation makes clear that now is not the right time to propose far-reaching, radical structural changes to the system of judicial review, but that there is a case for targeted, incremental change. To that end the Government is now consulting on the following topics:

  • legislating to clarify the effect of statutory ouster clauses;
  • legislating to introduce remedies which are of prospective effect only, to be used by the courts on a discretionary basis;
  • legislating that, for challenges of Statutory Instruments, there is a presumption or a mandatory requirement for any remedy to be prospective only;
  • legislating for suspended quashing orders to be presumed or required;
  • legislating on the principles which lead to a decision being a nullity by operation of law; and
  • making further procedural reforms (which would need to be considered by the CPR Committee).

The Consultation closes on 29 April 2021.

Conclusion

Despite the wide remit conferred upon it at the outset of its review, the IRAL’s relatively modest recommendations may be underpinned by its view that while it “understands the [Government’s] concern about recent court defeats, [the IRAL] considers that disappointment with the outcome of a case (or cases) is rarely sufficient reason to legislate more generally.” However, it is clear that the Government continues to feel strongly that the courts should remain deferential to Parliament:

[It] cannot be emphasised enough that Parliament is the primary decision-maker here and the courts should ensure they remain, as Lady Hale put it, ‘the servant of Parliament’.

We note that that the Lord Chancellor and Secretary of State explains that he wants to “focus attention first on the most pressing issues, namely ouster clauses and remedies, before considering whether any broader reforms are necessary”. This suggests that upon concluding the Consultation, the Government may propose further reforms to judicial review and public law matters.

Previous related blog posts

https://hsfnotes.com/publiclaw/2020/08/03/government-launches-panel-to-consider-the-judicial-review-process/

https://hsfnotes.com/publiclaw/2020/09/08/governments-terms-of-reference-for-review-of-the-judicial-review-process/

https://hsfnotes.com/publiclaw/2020/10/27/hsf-responds-to-the-call-for-evidence-for-the-governments-independent-review-of-administrative-law/

 

Andrew Lidbetter
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Shameem Ahmad
Shameem Ahmad
Associate
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The importance of correctly approaching regulations and guidance in regulatory decisions

The High Court held in Havant Biogas Ltd & Ors v Gas & Electricity Markets Authority [2021] EWHC 84 (Admin) that Ofgem’s refusal to register the claimants as producers for a subsidy scheme contained public law errors in relation to the registration requirements and so remitted the applications to Ofgem for reconsideration. The case demonstrates the importance of properly interpreting and applying key provisions in regulations and any applicable guidance.

Background

The Claimants were four (of thirty seven) special purpose vehicle companies owned by Qila Holdings Limited (“Qila”) who each made applications to Ofgem to be registered as a producer of biomethane for injection in the national gas work under the Renewable Heat Incentive subsidy scheme (the “Subsidy Scheme”).

The Subsidy Scheme was governed by the Scheme Regulations made under section 100 of the Energy Act 2008. Two sets of Regulations were relevant to the case:

  • the Renewable Heat Incentive Scheme Regulations 2011 (SI 2011 No.2860) (the “2011 Regulations”) which were in force on 9 May 2018 at the time the Claimants made their applications; and
  • the Renewable Heat Incentive Scheme Regulations 2018 (SI 2018 No.611) (the “2018 Regulations”) which took effect from June and October 2018.

The Claimants’ applications were rejected by Ofgem, following which the Claimants requested a Statutory Review which was refused by the Statutory Review Officer (“SRO”).

Qila had earlier successfully registered other special purpose vehicles in 2016 which Ofgem had granted in 2017 (the “2017 Decisions”).

Both the 2017 Decisions and the Claimants’ applications were based on the ‘Two-Phase Model’ which was a form of staggered commissioning by which the applicant would carry out initial short-term steps for biomethane production in Phase 1 with registration preceding Phase 2. Phase 2 then involved funding being secured and the substantive assets being built. The Two-Phase Model was permissible under the 2011 Regulations but not under the 2018 Regulations.

The Claimants sought judicial review of the SRO’s decision to reject their applications for registration (the “Operative Decision”).

Judgment

The Court was faced with five grounds for judicial review.

Fordham J found that there was no breach of the provisions which prevented prior involvement in the decision making process by the SRO; there was no legitimate expectation based on prior decisions allegedly constituting a practice tantamount to a clear and unambiguous representation; there was an error in the Operative Decision considering whether to apply the test of “properly made” in the 2018 Regulations but the error was not material; and the Operative decision was not tainted by legal irrelevancies. Four grounds for judicial review were therefore rejected.

However, the Claimants succeeded on the ground that the SRO had misappreciated and overlooked the objectively correct meaning and effect of certain key provisions of the Regulations and the applicable guidance as to the requirements of a properly made application, and this had led to the SRO failing to ask the right questions and making public law errors.

Fordham J emphasised the Court’s limited supervisory function relating to interpreting the law (i.e. identifying its objective, legally correct meaning and determining whether Ofgem had acted compatibly with its relevant public law duties) as distinct from questions of application of the legislation and Ofgem’s applicable guidance, and matters of evaluative judgment which were squarely for Ofgem to decide, provided it acted consistently with its public law duties (para 23).

Ofgem argued that there had been no public law error in the Operative Decision and that it had involved matters of appreciation which Ofgem was entitled to regard as highly material as an exercise of reasonable judgment within the ambit of the SRO’s evaluative judgment.

However, Fordham J held that there were ‘core and recurrent themes in the SRO’s reasoning’ (para 79) from which it was possible to ‘trace certain problems lying at the heart of the public law errors in the SRO’s approach’ (para 90).

These recurrent themes related to the requirements of a properly made application. The Operative Decision emphasised the absence of certain elements of the application, such as the absence of identifying a site for producing biomethane and the absence of firm arrangements with any third party for the production of biomethane as reasons for the rejection of the Claimants’ applications.

Fordham J considered each strand of Ofgem’s decision in turn and held that the Operative Decision erroneously treated certain elements as pre-conditions required for registration when they did not appear as such in either the Scheme Regulations nor in any of Ofgem’s guidance, and therefore were not preconditions in law. He emphasised in particular Ofgem’s public law duty of adherence to guidance (absent good reason to depart from it), and highlighted that in making the Operative Decision, the significance of the relevant guidance (which clearly articulated the standard of sufficiency and requirements for applications) was not appreciated.

He noted that certain elements were pre-conditions required for applications made on or after 20 June 2018 (i.e. after the Claimants’ applications) and that these preconditions were not compatible with the Two-Phase Model, but that there was no express or implied previous requirement of that kind under the 2011 Regulations and applicable guidance.

Fordham J concluded that as a result of recurring themes that permeated the Operative Decision as a whole, he could not be convinced that Ofgem’s reasons for rejecting the applications in the Operative Decision would have independently justified a refusal of the applications, and therefore was not satisfied that a lawful decision would be ‘highly likely’ to be ‘not significantly different’. He therefore declined to refuse relief under section 31(2A) Senior Courts Act 1981.

Conclusion

This case serves as a reminder of the Administrative Court’s well-established approach of considering what is required by the legal provisions and also the correct approach to guidance. Fordham J emphasised Ofgem’s public law duty to adhere to its applicable guidance (unless it has good reason to depart from it). In this case, the Court considered that Ofgem had failed to ask the right questions or give due regard to its own guidance, and so when the Operative Decision was looked at as a whole, it contained public law errors in respect of the relevant requirements against which the applications should have been judged.

 

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
Catherine Bagge
Catherine Bagge
Associate
+44 20 7466 7499

Court of Appeal and High Court consider property rights under the Human Rights Act

Two recent judgments have demonstrated the utility of the right to property under Article 1 of the First Protocol of the European Convention on Human Rights (“A1P1”) for companies and the scope for challenges where public decisions have interfered with private contracts. A1P1 is incorporated into English law by way of the Human Rights Act 1998, and provides for a right to peaceful enjoyment of possessions.

In R (Aviva Insurance Limited) v Secretary of State for Work and Pensions [2020] EWHC 3118 (Admin), the High Court found that the Secretary of State’s scheme for the recovery of state benefits from insurers in asbestos-related claims was incompatible with the insurers’ A1P1 rights.

In Solaria Energy UK Limited v Department for Business, Energy and Industrial Strategy [2020] EWCA Civ 1625, the Court of Appeal held that Solaria’s sub-contract with another company was a possession for the purposes of A1P1, despite contractual limits on its assignability.

Key Points

  • When considering whether a contract is a possession for the purposes of A1P1, the starting point is that a concluded and part-performed commercial contract is presumed to be a possession.
  • While assignability is a factor in considering whether a contractual right is a possession, it is not a conclusive factor.
  • Although legislation may not have been unlawful when it was first introduced, incompatibilities with ECHR rights may arise due to subsequent legal developments.

R (Aviva Insurance Limited) v Secretary of State for Work and Pensions

Background

Aviva holds a large book of long-tail employers’ liability insurance (for which Swiss Re provides reinsurance), whereby claims regarding asbestos-related diseases arising in the course of employment are covered by insurance in place at the time exposure occurred, even if the disease does not manifest itself until much later on. Such insurance is compulsory in the UK.

In personal injury litigation against a negligent employer, the claimant’s damages are reduced by the amount of specified state benefits received. The Social Security (Recovery of Benefits) Act 1997 (the “1997 Act”) requires the employer (and by extension its insurer) to then reimburse the Compensation Recovery Unit (“CRU”, part of the Department for Work and Pensions) in respect of those benefits. The 1997 Act retroactively applies to diseases that arise due to exposure prior to 1997, and the insurance policies that were in place at the time of exposure.

There have been a number of developments in the law of tort since 1997 that have greatly increased the number of asbestos-related claims and the amounts recouped by the CRU from insurers. Aviva and Swiss Re (together, the “Claimants”) sought judicial review of the Secretary of State for Work and Pensions (the “SSWP”) on the grounds that, following these legal developments, the CRU’s interpretation and application of the 1997 Act was incompatible with their A1P1 rights. The Claimants alleged that the Defendant breached their A1P1 rights in five respects:

  1. The requirement to repay 100% of the recoverable benefit to the CRU even where the employee’s contributory negligence has reduced the amount of damages payable to them;
  2. The requirement to repay 100% of the recoverable benefit to the CRU even where the employee sustains a divisible disease like asbestosis and the employer is only liable in tort for a small portion of that disease;
  3. The requirement to repay 100% of the recoverable benefit to the CRU even where there would be other defendants that would be liable but they or their insurers can not be traced;
  4. The requirement to repay recoverable benefits even where those benefits do not correspond to any recognised head of loss in tort, for example the repayment of Universal Credit which can include a housing element, whereas housing benefit was previously unrecoverable;
  5. The requirement to repay 100% of the recoverable benefit to the CRU in relation to settled claims, which generally involve an element of compromise and may be settled without admission of liability.

Judgment

Henshaw J considered the context in which the 1997 Act was introduced and the preceding systems for reimbursement of state benefits in tortious claims. Henshaw J found that “what Parliament did not have in contemplation was that, as a result of future developments in the law as between compensators and victims, compensators or their insurers would become liable for the cost of state benefits having no real relationship to the degree of injury or risk that those compensators had inflicted on the injured person”. Henshaw J considered that this amounted to an ongoing interference with the Claimants’ A1P1 rights each time the Claimants incurred a liability under the 1997 Act in respect of a specific claim arising out of a pre-1997 insurance policy.

Under A1P1, any interference with property must be justified. In particular the interference must serve a legitimate interest and be proportionate. Henshaw J considered the proportionality of the five features of the scheme that the Claimants argued were incompatible with their A1P1 rights, using a four stage test:

  1. On the question of whether the scheme had a legitimate aim, it was common ground that the objective of recovering costs attributable to tortious wrongdoing was legitimate.
  2. On whether the interferences were rationally connected to the aim of recovering costs attributable to tortious wrongdoing, Henshaw J considered that the decision to leave contributory negligence out of the 1997 Act was driven by practical concerns and fairness to injured persons. However, the second and third features were not rationally connected to the aim of recovering costs attributable to tortious wrongdoing, as the recovery of 100% of benefits despite only partial responsibility went over and above that aim. On the other hand, Henshaw J found that the fourth and fifth features were rationally connected to the legitimate aim.
  3. On whether the features went no further than necessary to achieve the legitimate aim, Henshaw J looked at similar schemes that had been proposed in Scotland and Wales and found that the first three interferences did go further than was necessary, as schemes could have been constructed so as to reduce the amount of benefits to be repaid in line with the tortious liability in those instances. Henshaw J considered that the fourth and fifth interferences went no further than was necessary to achieve the aim.
  4. On whether the features strike a fair balance between the interests of the community and the rights of the Claimants, Henshaw J concluded that while a fair balance may have been struck at the time the 1997 Act was passed, it did not necessarily follow that there was still a fair balance following subsequent legal developments. He concluded that the first three features did not strike a fair balance, in particular when bearing in mind their retrospective effect.

Henshaw J therefore concluded that the first three features of the operation of the 1997 Act raised in the claim were incompatible with the Claimants’ A1P1 rights. Permission to appeal to the Court of Appeal has been granted to both parties.

Solaria Energy UK Limited v Department for Business, Energy and Industrial Strategy

Background

In October 2011, the Department of Energy and Climate Change (which in 2016 was disbanded and its functions merged to form the Department for Business, Energy and Industrial Strategy, the defendant in this case) published a consultation which included a proposal to reduce certain subsidies in respect of electricity generated by solar panel installations and to bring forward the date for this reduction (the “Proposal”). The Proposal had a substantial impact on the solar energy industry.

In order to establish a successful A1P1 claim, claimants must first prove an unlawful interference by a public body. A significant number of A1P1 claims were brought by manufacturers and suppliers of solar panels which were considered by the Court of Appeal in Breyer Group Plc v Department of Energy and Climate Change [2015] EWCA Civ 408 (“Breyer”). The Court held that in principle the unlawful proposal could amount to a wrongful interference with or deprivation of the claimants’ possessions, namely existing contracts, contrary to A1P1.

Although Solaria had entered into a sub-contract for the supply of solar panels to another company in July 2011, it had not been a claimant in Breyer. Instead, Solaria continued to supply solar panels well into 2012. Eventually, Solaria issued proceedings against BEIS in December 2018, alleging interference with its July 2011 sub-contract contrary to its A1P1 rights. Solaria claimed that as a result of the Proposal, it was forced to renegotiate its sub-contract at a lower rate. However, Solaria’s claim was struck out by the Technology and Construction Court for two reasons. First, the Court found that Solaria’s sub-contract was not a possession for the purposes of A1P1. Although Solaria’s contractual rights under the sub-contract had a value to Solaria, that value was not a readily realisable or marketable value because the sub-contract could not be assigned. Secondly, the judge found Solaria’s claim to be out of time under the one year limitation period for HRA damages claims. Solaria appealed to the Court of Appeal on both grounds.

Judgment

Coulson LJ, who gave the leading judgment, noted that in Breyer a distinction was drawn between existing enforceable contracts and draft contracts which had yet to be concluded. While the former were found to be part of the goodwill of a business and therefore possessions under A1P1, the latter amounted to a loss of future income and were not actionable. Coulson LJ considered that “whilst not all contracts are possessions within the meaning of A1P1, the starting point must be that a signed and part-performed commercial contract is, prima facie, a possession”.

Coulson LJ considered that the judge at first instance was wrong to conclude that Solaria’s sub-contract was not a possession simply because it was not assignable. The sub-contract was in fact assignable, provided that the other party consented to that assignment. While that might affect the value of the sub-contract, it did not prevent the sub-contract from being a possession. Furthermore, even if the contract had contained an absolute bar on assignment, the Court considered that the sub-contract would still be a possession. While assignability was a factor in considering whether a contractual right was a possession, it was not a conclusive factor.

The Court of Appeal unanimously concluded that Solaria’s sub-contract was a possession for the purposes of A1P1. However, the Court upheld the first instance ruling that the claim was out of time and Solaria’s appeal was dismissed.

Conclusion

Property rights which are protected under the Human Rights Act can take many forms. They may involve requirements that property be used in particular ways, as was the case with the requirement on insurers to reimburse state benefits in the event of certain successful claims, or proposed changes to subsidy regimes that affect contracts between two private parties.

The judgment in Aviva demonstrates that the law provides protection for those who find their rights interfered with on the basis that they are disproportionate or do not serve a legitimate purpose. The judgment also indicates that although legislation may not have been unlawful when it was first introduced, incompatibilities with ECHR rights may arise due to subsequent legal developments.

The judgment in Solaria serves as a reminder that the concept of possessions under A1P1 is wider than the concept of property in English law, and that a concluded and part-performed commercial contract can be a possession for the purposes of A1P1.

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998
Shameem Ahmad
Shameem Ahmad
Associate
+44 20 7466 2621
Benjamin Coney Critchley
Benjamin Coney Critchley
Associate
+44 20 7466 7472

Court of Appeal considers duty of consultation on public bodies

In R. (on the application of MP) v Secretary of State for Health and Social Care [2020] EWCA Civ 1634, the Court of Appeal clarified the common law duty of consultation upon public bodies based on fairness, and the test for when a legitimate expectation will be established.

Key points

  • The common law duty of fairness upon public bodies is not in itself enough to found a duty to consult.
  • When a public body undertakes a consultation, it has a duty to carry out that consultation properly, but that duty is confined to the proposals included in the consultation and does not necessarily extend to consultation on other proposals.
  • The legal test for establishing a procedural or substantive legitimate expectation requires:
    1. an express promise, representation or assurance which is “clear, unambiguous and devoid of relevant qualification” ; or
    2. a practice tantamount to such a promise.

Background

In 2015, the Appellant (an individual referred to as “MP”) was diagnosed with a form of blood cancer and began receiving NHS chemotherapy treatment. In the same year, MP was refused indefinite leave to remain in the UK. MP’s immigration status was unclear due to a pending appeal to the Upper Tribunal.

As a result of MP’s pending immigration status, MP was classed as an “overseas visitor” for the purposes of his next stage of treatment and under the National Health Service (Charges to Overseas Visitors) (Amendment) Regulations 2017 he was required to pay for his treatment upfront.

The 2017 Regulations introduced three changes to the rules governing NHS charges for certain treatment for those not ordinarily resident in the UK:

  • 1: Charges to be paid in advance for non-urgent treatment;
  • 2: NHS trusts to be required to record the fact that a person was an overseas visitor liable to be charged; and
  • 3: Liability to pay charges to be extended to cover certain NHS-funded services provided in the community.

Prior to making the 2017 Regulations, the Government had in 2015 undertaken a public consultation into proposal 3 above but did not include proposals 1 and 2 above in the consultation.

MP commenced judicial review proceedings, alleging that the advance payment and recording of information provisions in the 2017 Regulations (1 and 2 above) should be quashed because the Secretary of State had failed to undertake due consultation before promulgating them. He was unsuccessful in the High Court. On appeal the Court of Appeal considered two grounds:

  1. Did the fact that the Secretary of State elected to undertake the 2015 consultation mean that he had a duty to consult on proposals 1 and 2 even if he would not otherwise have been obliged to do so?
  2. Whether the Secretary of State was under a duty to consult on the advance payment and recording of information requirements because there was a legitimate expectation of consultation.

Judgment

The Court of Appeal dismissed the appeal on both grounds.

Duty to consult

The Court held that, having chosen to undertake a consultation on a set of proposals in the 2015 Consultation created a duty upon the Secretary of State to consult on all proposals contained within it “properly” (R. v North and East Devon HA Ex p. Coughlan [2001] QB 213 applied). However that duty to consult did not extend to the disclosure or consultation of all other proposals it might have considered in the same field. Proposals 1 and 2 were held to be “discrete, self-contained issues” which were not linked to the proposals consulted upon within the 2015 consultation.

Legitimate expectation

The doctrine of legitimate expectation has two aspects: procedural as well as substantive. Procedural legitimate expectation refers to the expectation of an individual that they have a right to a certain procedure, such as the right to a hearing or a consultation, in advance of a decision being taken by a public body. Substantive legitimate expectation refers to a scenario where an individual or entity seeks a substantive benefit from a public body.

The Court of Appeal held that cases concerned with substantive legitimate expectation were relevant when considering procedural legitimate expectation and that the “fundamental ingredients” of procedural and substantive legitimate expectation were the same, applying R. (on the application of Heathrow Hub Ltd) v Secretary of State for Transport [2020] EWCA Civ 213. The Court clarified these fundamental ingredients by setting out the legal test for when a legitimate expectation (substantive or procedural) would be established in relation to a practice undertaken by a public body, namely that there must be:

  1. an express promise, representation or assurance which is “clear, unambiguous and devoid of relevant qualification“; or
  2. a practice tantamount to such a promise.

The Court concluded that in this case no legitimate expectation of consultation had been established, in circumstances where the Secretary of State had not previously consulted on all amendments to the regime governing NHS charges for those not ordinarily resident in the UK, and that when there was consultation not all the changes made had been consulted upon.

Commentary

The common law duty of fairness on public bodies is not enough to found a duty to consult on its own. Careful consideration is needed of all of the circumstances in a case to determine whether such a duty arises. The Court of Appeal noted with approval the identification by the Divisional Court in R. (on the application of Plantagenet Alliance Ltd) v Secretary of State for Justice [2014] EWHC 1662 of the four main circumstances in which a duty to consult may arise. First, where there is a statutory duty to consult. Secondly, where there has been a promise to consult. Thirdly, where there has been an established practice of consultation. And fourthly where, in exceptional cases, a failure to consult would lead to conspicuous unfairness.

The judgment makes clear that a procedural legitimate expectation cannot be established merely by showing a “sufficiently settled and uniform practice” which is not unequivocal. The test for such an expectation is a high bar as it is for a substantive legitimate expectation, namely that of a clear and unambiguous promise or representation.

Andrew Lidbetter
Andrew Lidbetter
Partner
+44 20 7466 2066
Nusrat Zar
Nusrat Zar
Partner
+44 20 7466 2465
Jasveer Randhawa
Jasveer Randhawa
Of Counsel
+44 20 7466 2998