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

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Nusrat Zar

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“Public Authorities” for the purposes of the EIR

The Information Commissioner recently published two decision notices in short succession which found that gas and electricity supplier, E.ON UK plc (“E.ON”), and Heathrow Airport Ltd (“HAL”) were both “public authorities” for the purposes of the Environmental Information Regulations 2004 (the “EIR”) under regulation 2(2)(c). Public authorities under regulation 2(2)(c) are “any other body or other person, that carries out functions of public administration”. As a result, any companies with licences for the supply and/or generation of gas and/or electricity should consider themselves at significant risk of being subject to the EIR.

Since the Upper Tribunal’s decision in Fish Legal in 2015, a group of water companies have been public authorities under regulation 2(2)(c). The wide-reaching implications of that decision for other privatised, regulated industries was recognised at the time. The last year has also seen the Information Commissioner advocate for extension of the information access regimes to more companies in the private sector (see, for example, her report titled “Outsourcing Oversight? The case for reforming access to information law”, which was laid before Parliament on 28 January 2019).

Last year, we wrote about the First-tier Tribunal’s (“FTT”) decision in Poplar Housing Association and Regeneration Community Association (“Poplar”) v Information Commissioner and Peoples Information Centre (EA/2018/0199), which provided some further clarity on when a private organisation may be considered a “public authority” for the purposes of regulation 2(2)(c) of the EIR. Poplar is a housing association and registered provider of social housing. The Information Commissioner had decided that Poplar was a public authority under regulation 2(2)(c) but the FTT disagreed. The FTT derived a test for determining this issue from Cross v Information Commissioner [2016] UKUT 153 (AAC) (“Cross“) in which the Upper Tribunal (“UT”) provided guidance on Fish Legal v Information Commissioner (C-279/12) [2014] QB 521 (“Fish Legal EU”), the Aarhus Convention, Directive 2003/4/EC and the EIR (see [94]). Poplar fell down at the “first hurdle” of the test, namely whether it had been “entrusted with the performance of services under a legal regime”. As explained in our previous note, the FTT found that a body performing public administrative functions must be empowered to do so by virtue of “a legal basis specifically defined in national law” for it to be a “public authority” under regulation 2(2)(c) of the EIR. This requires an “explicit statutory delegation of power”, which it found Poplar did not have: “We do not accept that the regulatory framework, even including the direct statutory regulation and the powers granted to registered providers, can be described as ‘a legal basis specifically defined in national legislation’”.

The FTT felt bound by previous case law, in particular Cross and Fish Legal EU, to reach this conclusion and made clear that it would have preferred to take a broader approach to regulation 2(2)(c). The Information Commissioner is currently appealing the FTT’s decision to the Upper Tribunal.

E.ON and HAL as “public authorities”

Poplar, and more so Cross as a decision of the Upper Tribunal, surprisingly do not feature in the Information Commissioner’s consideration of whether E.ON and HAL satisfied the first hurdle of regulation 2(2)(c), namely whether they were “entrusted by law with the performance of services in the public interest”. In both decision notices, the Information Commissioner interpreted this to mean that the body must be empowered with a relevant function under statute. There was no mention of any requirement for an explicit statutory delegation of power à la Poplar, which was the requirement that the FTT felt bound to follow as a result of Cross and Fish Legal EU.

In respect of E.ON, the Information Commissioner considered whether E.ON had any functions which might bring it within the scope of regulation 2(2)(c). The Information Commissioner noted that the Electricity Act 1989 and Gas Act 1986 made it an offence to carry out certain activities without being authorised by Ofgem under a licence. In light of this, the Information Commissioner considered that Ofgem was, in effect, entrusting licence holders with the performance of a public service when granting licences that related to the supply of either gas or electricity to consumers. As E.ON held an electricity supply licence, electricity generation licence and gas supply licence at the time of the EIR request, the Information Commissioner found that E.ON had been “entrusted with services under statute”. The Information Commissioner went on to find that E.ON satisfied two further limbs of the test, namely that E.ON’s performance of these services was in the public interest and that some of its services related to the environment. The final hurdle was whether E.ON was vested with “special powers” to perform at least one of its services that were in the public interest and it did not have to be those services that related to the environment. In this regard, the Information Commissioner relied on the FTT’s obiter comments in Poplar. For a power to be “special”, it simply had to be a power which is not available under private law. The Information Commissioner was satisfied that E.ON enjoyed a number of powers that met this description by virtue of its various licences.

As regards HAL, the Information Commissioner considered the “history” of the privatisation of Heathrow Airport to determine whether HAL’s operation of Heathrow Airport was entrusted to it by statute. The Commissioner found that there appeared to be a “direct and continuing link” between the original transfer of functions, powers and responsibilities from the British Airport Authority by way of the Airport Act 1986 to the private sector and ultimately to HAL. As it had in E.ON, the Information Commissioner went on to answer the questions of whether HAL performed its services in the public interest, whether any of its services related to the environment and whether it was vested with “special powers”, in the affirmative.

In both decision notices, the Information Commissioner concluded her analysis with carrying out a “cross-check” (a term coined in Cross and applied in Poplar) which entailed “standing back and looking at whether having conducted all the tests above, there is a sufficient connection between the functions of the body under examination and those which entities that organically are part of the administration or executive of the state do”. She was satisfied that the test had been met in both cases.

What happens next?

Each of E.ON and HAL can appeal the respective decisions to the FTT. E.ON had previously challenged an information notice that the Information Commissioner issued upon it (in connection with the EIR request in question) all the way up to the Upper Tribunal so an appeal to the FTT on this further decision may not be out of the question. These new decisions certainly underscore the importance for some clarity from the Upper Tribunal in its determination of the Poplar appeal (which was heard in February 2020).

In the meantime, companies operating in these sectors in similar circumstances should carefully consider the implications for their businesses and consider seeking advice on the EIR where necessary.

Contacts

Andrew Lidbetter

Andrew Lidbetter
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+44 20 7466 2066

Nusrat Zar

Nusrat Zar
Partner
+44 20 7466 2465

Jasveer Randhawa

Jasveer Randhawa
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Christine Iacono

Christine Iacono
Associate (Australia)
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Court of Appeal considers Parliamentary privilege in the context of a non-statutory inquiry

In striking out claims against an independent non-statutory inquiry, the Court of Appeal has provided useful guidance on the breadth of Parliamentary privilege, the scope of the Human Rights Act, and the procedure for challenging inquiry decisions: Foreign and Commonwealth Office and Others v Warsama and Another [2020] EWCA Civ 142.

Key points

  • The reports of non-statutory inquiries can be protected by Parliamentary privilege if they are published by Parliament.
  • Challenges to the decisions of non-statutory inquiries should be brought expeditiously and, in most cases, by way of judicial review.
  • Non-statutory inquiries may be considered ‘public authorities’ for the purposes of Section 6 Human Rights Act 1998 (the “HRA”).

The Inquiry and the claims

In 2014 the Foreign and Commonwealth Office ( the “FCO”) appointed Sasha Wass QC to chair an independent inquiry into allegations of corruption and child sex abuse on St Helena (the “Inquiry”). The Inquiry was “non-statutory” – in other words, it had no statutory footing and was not governed by either the Inquiries Act 2005 or the Inquiry Rules 2006.

The Inquiry conducted an investigation, which involved interviewing witnesses and reviewing documents. It then provided its findings (the “Report”) to the FCO. The Report criticised the two individual claimants in this case on a personal and professional level, describing them as “professionally incompetent and unable to fulfil the terms of their employment”.

The House of Commons subsequently published the Report using the “Motion for an Unopposed Return” Parliamentary procedure. This procedure involves the House of Commons passing a motion requiring the provision and publication of particular information, which in this case was the Report. Once the motion was passed, the Report was laid before the House of Commons (and published) accordingly.

Almost a full year after the publication of the Report, the claimants issued proceedings alleging a breach of their right to a private life as protected by article 8 of the European Convention on Human Rights (the “ECHR”), as incorporated into UK law by the HRA. The substance of their claims, in which they sought damages, was that the Report was factually inaccurate and unnecessarily harsh, and that serious procedural irregularities had arisen during its preparation. In particular they alleged that they were not given notice of the Report’s terms or sufficient opportunity to make representations on the inclusion of the relevant criticisms, which had damaged their reputations and livelihoods.

Parliamentary privilege

The question of Parliamentary privilege at issue in this case was whether the publication of the Report through an “Unopposed Return” procedure constituted a “proceeding in Parliament” for the purposes of Article 9 of the Bill of Rights 1689. That provision states:

That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament.

The effect of this provision is that “proceedings in Parliament” cannot be the foundation of any civil or criminal proceedings. This rule applies regardless of whether the statement was untrue to the knowledge of the person making it, and “however injurious they might be to the interest of a third party” (per Lord Chief Justice Cockburn in Ex parte Watson (1869) QB 573 at 576). Both domestic courts and the European Court of Human Rights have emphasised the important public interest in Parliamentary privilege.

There is no comprehensive definition of “proceedings in Parliament” but the authorities are clear (and it was accepted by all parties in this case) that it is for the courts to determine the scope of Parliamentary privilege: R v Chaytor [2010] UKSC 52. The important question for courts is whether a finding that a particular action is not covered by Parliamentary privilege would impact adversely on the core or essential business of Parliament (being the freedom of speech and debate in the Houses of Parliament and their committees).

In this case, both the judge at first instance and the Court of Appeal found that the Unopposed Return procedure did constitute a proceeding in Parliament for the purposes of article 9 of the Bill of Rights. This had the effect that the protection of Parliamentary privilege was conferred on the content of the Report and no party in the proceedings could rely on the Report to support or rebut the claims for damages.

In making this finding, the Court of Appeal emphasised that the subject matter of the Report was “of great public concern” and that it formed an “essential part” of one of Parliament’s “primary functions” (namely ensuring the public accountability of the executive). More broadly, the Court of Appeal considered that the “ability of Parliament to publish information it has called for and which is of interest to its members, and hence also the public, without the risk of exposing the authors of that information to litigation is an important freedom”.

On the question of interference with the claimants’ ECHR rights, the Court found that protecting the Report with Parliamentary privilege was a proportionate response to a legitimate aim of allowing the production of a report on an investigation which “provides a frank and detailed assessment of the actual or alleged failings of institutions or people acting in the public sphere”.

The Court of Appeal similarly accepted the first instance finding that claims based on the procedure of the Inquiry would not necessarily fail because of Parliamentary privilege (as that privilege only attached to the Report). However, on the facts (and on an analysis of the pleaded cases), the Court found that there was no arguable alternative claim. It therefore struck out the claims in full.

Was the Inquiry a “public authority”?

Ms Wass QC appealed the first instance finding that the Inquiry constituted a “public authority” within the meaning of section 6 HRA and sought to contrast the position of the Inquiry with that of a statutory inquiry set up under the Inquiries Act 2005 (which she accepted would have been a public authority).  Applying the leading cases of YL v Birmingham City Council [2007] UKHL 27 and Aston Cantlow v Wallbank [2003] UKHL 37, however, the Court concluded that the factors set out in these cases as being relevant to this issue pointed “inexorably” to the conclusion that the Inquiry was performing a public function. It was funded by the FCO, its establishment was announced in Parliament, its terms of reference were published in the House of Commons Library, and in effect the Inquiry was “performing a function on behalf of the Government in the public interest”.

Comment

It is striking that the claims at issue in this case were brought within days of the expiry of the one year limitation period for bringing proceedings under the HRA. The limitation period for bringing judicial review proceedings, which the Court described as the “right course” for addressing procedural concerns arising from the conduct of an inquiry, had long since expired. This had the effect that, by the time that the claims were brought (at which stage the Report was protected by Parliamentary privilege), it was “too late to mount an effective challenge”. This illustrates the importance of bringing claims against inquiries promptly and, where procedural complaints arise, often before the publication of the inquiry’s report. Promptness is even more important in a statutory inquiry context as section 38 of the Inquiries Act 2005 imposes a 14 day time limit for bringing judicial review claims in many circumstances.

More helpfully from the perspective of potential claimants, this case does indicate that the courts are likely to consider that claims under the HRA can be pursued against non-statutory inquiries.

Andrew Lidbetter

Andrew Lidbetter
Partner
+44 20 7466 2066

Nusrat Zar

Nusrat Zar
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+44 20 7466 2465

Jasveer Randhawa

Jasveer Randhawa
Of Counsel
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James Wood

James Wood
Senior Associate
+44 20 7466 2306

Supreme Court considers exercise of discretionary powers by public bodies

JP Whitter (Water Well Engineers) Limited (Appellant) v Commissioners for Her Majesty’s Revenue and Customs (Respondent) [2018] UKSC 31

Key Points

  • The courts are unlikely to impose additional conditions on public bodies exercising a discretionary power under a prescriptive statutory regime.
  • Arguments alleging lack of proportionality by public bodies based on the right to property under Article 1 of the First Protocol of the European Convention on Human Rights (“A1P1“) in the context of taxation will only exceptionally fall outside of the state’s margin of appreciation.
Background

The appellant was a family-run water well engineering company (“Whitter“). It was registered to enable it to receive gross payments from contractors under the Construction Industry Scheme (“CIS“). The CIS was introduced to counter widespread tax evasion by subcontractors in the construction industry. Only subcontractors with a good tax compliance record can obtain a gross payment registration, which gives subcontractors various advantages.

Under section 66(1)(a) of the Finance Act 2004 (“FA 2004“), HMRC has a discretion to cancel a registration for gross payment if the company does not meet the statutory conditions. The current appeal considered the scope of that discretion.

Whitter failed to make PAYE payments on time for three consecutive years, which led to the cancellation of the company’s gross payment status each time. Whitter appealed these decisions and the company’s CIS registration was reinstated on the first two occasions. However, HMRC refused to reinstate gross payment status on the third occasion because Whitter had failed to show a ‘reasonable excuse’ for failing to meet its PAYE obligations on time.

Whitter argued that this decision was disproportionate to the nature of the breach of conditions. Without gross payment status the company could not tender for certain contracts and would lose around 60% of its turnover, which was likely to result in the dismissal of about 80% of its employees. Whitter were successful at the First Tier Tribunal (Tax Chamber), but the Upper Tribunal and the Court of Appeal subsequently decided in favour of HMRC. Whitter then appealed to the Supreme Court on two grounds:

  1. When exercising its discretion under section 66 of FA 2004 the impact on Whitter should have been a relevant consideration for HMRC to take into account; and
  2. The decision to cancel the registration for gross payment under the CIS was a disproportionate interference with Whitter’s right to peaceful enjoyment of its possessions under A1P1.
Supreme Court Judgment

Whitter’s appeal was dismissed unanimously on both grounds.

Statutory construction / irrationality

Whitter argued that the section 66 discretion, absent specific restriction, must be an unfettered discretion. Contrary to the appellant’s argument, it is doubtful that any of HMRC’s discretions, however drafted, are truly ‘unfettered’ because every such discretion must be exercised lawfully and in accordance with the principles of administrative law, including procedural fairness, and in a manner that is not ‘irrational’ in the administrative law sense. The appellant suggested that HMRC’s behaviour in this instance was irrational, in that the impact of HMRC’s actions on the engineering company’s business was a relevant consideration which, if properly taken into account by HMRC, would have led them not to cancel the registration and it was therefore irrational for HMRC to ignore a relevant consideration. The Supreme Court rejected this argument, with Lord Carnwath (who gave the only judgment) saying he felt this approach “overlooks the basic principle that any statutory discretion must be exercised consistently with the objects and scope of the statutory scheme“. He cited with approval the Court of Appeal’s analysis of the statutory scheme as highly prescriptive, with narrowly defined conditions allowing no element of discretion in the conditions themselves.

Lord Carnwath agreed with the Court of Appeal that the limited discretion in section 66 itself did not extend to matters “which do not relate, directly or indirectly, to the requirements for registration for gross payment, and to the objective of securing compliance with those requirements”. There was therefore no requirement to give consideration to the impact on the taxpayer’s business when exercising the Section 66 discretion.

Proportionality

Whitter had also argued that the cancellation of the registration amounted to an interference with the possessions represented by either (a) the entitlement to the full contract price or (b) the bundle of rights inherent in registration, and is therefore caught by A1P1. It had been common ground before the Court of Appeal that both constituted possessions for the purposes of A1P1. However, A1P1 allows member states a wide margin of appreciation for the enforcement of tax, and the exercise of the section 66 power within the scope of the statutory framework was seen to be well within that margin. Registration was a privilege subject to stringent conditions and the cancellation was not therefore disproportionate.

Comment
The Supreme Court judgment confirms the approach taken in the Court of Appeal, which suggests that where public bodies are administering a narrowly defined statutory regime the courts will be reluctant to ‘read in’ further obligations on the decision-maker, especially where the additional considerations are not closely related to the objects and scope of the statutory scheme.

 

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