In this e-bulletin we consider the issue of when, absent a promise or past practice of consultation, public bodies may be required to consult as part of their general duty to act fairly. The point arose in two recent judicial review cases heard by the Administrative Court. The first, in which the claimant successfully argued that fairness required consultation, related to the Government's decision to change the basis on which PFI grants are paid to local authorities. The second challenge, which failed, related to the controversial decision to site ground to air missiles on the roof of a residential tower block during the Olympics.

Key Points

  • Public authorities must act fairly. However, the question of what procedural safeguards may be required as a matter of fairness will depend on all the circumstances of the case, as these cases well illustrate.
  • In the absence of a statutory duty to consult, or a legitimate expectation of consultation arising from a promise or past practice, consultation will only be required in exceptional circumstances. By way of example, to take a decision that fundamentally alters the nature of a prior commitment abruptly and without consultation may be so unfair as to amount of an abuse of power. 
  1. PFI credits – the Dudley case

In 1998 the claimant local authority (Dudley) was awarded a PFI grant in respect of a project for ICT in schools. The grant was made (like all other such grants at the time) on the "declining balance" basis meaning that the government's contribution to the capital costs associated with the project was to be made not by annual payments over the term of the contract, but over a much longer period, in theory extending to 100 years or even longer.

In 2004, following a government spending review, it was announced that all PFI grants would change to being paid in accordance with an "annuity based" system, meaning the capital cost would be paid by the government over the lifetime of the contract with no longer term revenue stream. Local authorities were consulted about the proposal and Dudley expressed its desire to stick to the declining balance basis – the Secretary of State agreed.

However, some years later, on 10 January 2011 Dudley was notified that all future government PFI funding would be paid on an annuity grant basis and therefore the basis of payment of its grant would change with effect from 2011-12. Although Dudley complained, the decision was confirmed in a further letter from the defendant of 19 April. Dudley brought judicial review proceedings, relying on a number of grounds.

Should the Secretary of State have consulted before changing the basis of payment of the PFI grant?

There were two bases on which Dudley argued it was entitled to be consulted before the decision. Firstly, it argued that it had a legitimate expectation of consultation based on the defendant's past practice. Secondly, Dudley argued that it had an expectation that the grant would continue to be paid on the declining basis such that fairness required that, before it was withdrawn, it be consulted on the issue.

The first argument failed. To found a legitimate expectation of consultation, there must be a promise or a past practice. In this case, there had been no promise and the only previous incidence of consultation was in 2004. One incidence of consultation did not amount to a "practice" so as to give rise to a legitimate expectation.

However, the second argument, based on consultation as a matter of fairness more generally, was successful.

  1. The defendant's decision fundamentally altered the nature of the commitment which had previously been made to fund capital projects and had a "pressing and focused" impact on Dudley.
  2. Given that a number of local authorities had changed to the annuity basis following the consultation in 2004, the decision did not amount to a general change in policy. Rather, a small and limited class of local authorities had enjoyed a benefit or advantage under the previous policy and were directly affected by the decision under challenge. As such, fairness required that they have the opportunity to make representations before having that benefit withdrawn.
  3. Having been offered the choice of payment options and having clearly chosen to remain on the declining balance basis in 2004, Dudley could legitimately expect that it would continue to be funded on that basis and not have a new policy applied to its existing arrangements. The taking of the decision abruptly and without consultation was so unfair as to amount of an abuse of power.

Substantive grounds

Dudley relied on a number of other substantive grounds of challenge, each of which failed.

First, it failed to persuade the court that it had a substantive legitimate expectation that it would continue to be paid on the declining balance basis. It was held that public bodies, and especially central government, must enjoy a wide discretion to change policies from time to time to reflect their conception of the public interest. The declining balance basis of payment could, in principle, last for 100 years or more. No government could reasonably be considered to be binding its successors in that way in the absence of something equivalent to a promissory note.

Dudley also contended, unsuccessfully, that the defendant had applied his policy in a rigid and inflexible way. The court held that although the defendant had not consulted Dudley at a formative stage, he had been prepared to consider representations made in the period between Dudley being notified of the proposed change of policy and the decision being formally taken.

Additional grounds, namely that the decision was based on an error of fact, and that there had been a failure to comply with the public sector equality duty, were also rejected.

  1. The Harrow case – consultation in the context of national security measures

Failure to consult

The claimants challenged the decision of the Secretary of State to locate a Ground Based Air Defence system and military personnel on the roof of the block of flats where they live, as part of the air security plan implemented for the 2012 Olympics.

They relied on several grounds of challenge, including the lack of any consultation before the decision was taken.

The court (Haddon-Cave J) emphasised that the deployment of military personnel and equipment is viewed by the courts as a discretionary power of the Crown in which they will be reluctant to get involved. However, one of the limited exceptions to this general rule is where a review of the act in question is required by statute and in this case, the claimants' reliance on human rights grounds required the case to be given consideration.

In a judgment which very clearly illustrates that context is everything when it comes to fairness, the court noted that in the absence of an express duty or a promise or past practice of consultation, it would only be required in exceptional cases, where the failure to consult would give rise to conspicuous unfairness. This was not such a case. Indeed, the court doubted that there could ever be conspicuous unfairness in a failure to consult in the arena of military operational deployment and national security.

The claimants' arguments based on Article 8 ECHR also failed. In the very particular circumstances of this case, it was clear that any interference with the claimants' Article 8 rights was justified under Article 8(2). In addition, the Secretary of State's decision was taken in order to protect the Article 2 right (to life) of the claimants and the wider public.

Comment

Consultation remains a hot topic for public bodies and those who are affected by their decisions. These two cases illustrate very clearly the importance of context when determining the requirements of fairness, and show that the court will only find a duty to consult based on the general duty to act fairly, in exceptional circumstances.

R (Dudley Metropolitan Borough Council) v Secretary of State for Communities and Local Government [2012] EWHC 1729 (Admin); Harrow Community Support Limited v Secretary of State for Defence [2012] EWHC 1921 (Admin)