In this e-bulletin we consider two recent cases on consultation and the duty of fairness, R (on the application of Moseley (in substitution of Stirling Deceased) v London Borough of Haringey [2014] UKSC 56 and R (on the application of United Rusal Company Plc) v London Metal Exchange [2014] EWCA Civ 1271.

Key Points

  • The duty to provide sufficient information in a consultation does not in general extend to providing information about options or proposals a consultant body is not pursuing unless there are specific reasons for doing so. One such reason may be that the information is necessary to allow consultees to understand the proposal under positive consideration and provide an intelligent response.
  • The adequacy of information contained in a consultation notice depends upon the context in which the consultation is taking place, how familiar the consultees are with the issues being consulted on and whether someone is being deprived of an existing benefit as opposed to being an applicant for a future benefit.

R(on the application of Moseley (in substitution of Stirling Deceased) v London Borough of Haringey [2014] UKSC 56

Facts

The appellant, Ms Moseley, was a single mother in Haringey who up until April 2013 had been in full receipt of council tax benefit ("CTB") granting relief from payment of Council Tax. Local authorities were then required to devise their own Council Tax Reduction Schemes ("CTRS"). Each local authority was required by statute to consult on the proposed CTRS before finalising it with anyone who it considered was likely to have an interest in the scheme

In the respondent's consultation document a reduction in CTB was assumed and there was no mention of other ways in which the funding cuts could be addressed.

Ms Moseley, as a consequence, thereafter had to pay 19.8% of full council tax.

The application for judicial review was dismissed as was the appeal to the Court of Appeal.

Supreme Court Decision

The Supreme Court unanimously allowed the appeal and declared that the consultation was unlawful. It did not order the respondent to undertake a fresh consultation exercise however as this was considered disproportionate in the circumstances. The Lords differed slightly in the way in which they arrived at this unanimous judgment.

Procedural fairness: duty to provide sufficient information to allow an intelligent response

Lord Wilson, who gave the leading judgment, stated that when a public authority has a duty to consult before taking a decision, regardless of whether that duty is generated by statute or by common law, the same common law requirements of procedural fairness will inform the manner in which the consultation should be conducted. He emphasised three points in relation to this fairness obligation:

  • Fairness includes an obligation to let those who have a potential interest in the subject matter know in clear terms what the proposal is and exactly why it is under positive consideration, telling them enough to enable them to make an intelligent response.
  • The degree of specificity with which a consultant body consults may be influenced by the identity of those it is consulting. A greater level of specificity will be required where the consultees are less familiar with the issues being consulted on.
  • The demands of fairness are likely to be higher when an authority contemplates depriving someone of an existing benefit or advantage than when the claimant is a potential applicant for a future benefit.

Applying these principles to the facts in the case, Lord Wilson found that fairness demanded that the consultation document should have briefly referred to alternative methods of absorbing the CTB shortfall and to the reasons why the Respondent had concluded that they were unacceptable. This was because it was not obvious to those consulted what other options there may have been and the reason why such options had been discarded. They were therefore unable to provide an informed intelligent response to the consultation. This was particularly the case given that those primarily consulted where the most economically disadvantaged residents in the local authority. Their income was already at a basic level and the effect of the proposals was to reduce it below that level and potentially cause them real hardship.

Alternative approach: scope of the statutory duty to consult

Lord Reed concurred with Lord Wilson but stated that where a duty to consult is imposed by statute, the scope of the duty varies according to the statutory context. The purpose of this consultation was not to ensure procedural fairness in the treatment of persons whose legally protected interests may be adversely affected, as the common law seeks to do. The purpose of this statutory duty was instead to ensure public participation in the local authority's decision-making process. The consultation therefore had to fulfil certain requirements in order to achieve that objective, and one of these was that consultees were provided with sufficient information so they could meaningfully participate in the decision making process. This included an obligation to provide information about the draft scheme, an outline of realistic alternatives and an outline of the reasons for the adoption of the draft scheme. Lord Reed emphasised that this did not mean that consultant bodies were required to provision information about options which had been rejected. Instead, sufficient information had to be provided to allow the consultees to express meaningful views on the proposals. These requirements were not met in this case. The presentation of the reduction in CTB as an assumed fact prevented a consultation on the very issue which Haringey was required to consult on.

R(on the application of United Rusal Company Plc) v London Metal Exchange [2014] EWCA Civ 1271

Facts

United Rusal Plc ("Rusal"), a leading global producer of aluminium, judicially reviewed the decision of the defendant, the London Metal Exchange ("LME"), the world's premier base metals exchange, to introduce a new rule into its warehouses. This rule was intended to address the build-up of stocks of aluminium in LME's factories and associated queues in accessing this metal. LME issued a consultation notice setting out this proposal inviting comments and at the end of that consultation period it announced that a slightly modified version of the proposal would be introduced.

Rusal challenged LME's decision on the basis that the consultation process was procedurally unfair; it had not explored a key alternative option for reducing warehouse queues, banning warehouses from charging rent for the period during which metal was held in a queue, or capping the amount of the rent charged (the "rent ban option").

This challenge was successful at first instance, Phillips J holding that fairness demanded that LME's consultation should have encompassed the rent ban option.

Court of Appeal decision

The Court of Appeal overturned the High Court decision.

Duty of fairness only requires consultation on proposals being considered for implementation

Firstly, the fairness duty only required LME to consult on proposals which it intended to implement unless there was an express promise, statutory duty or a legitimate expectation to do more. In exceptional cases a consultation process may be held to be unfair for a failure to set out alternative options, but this was not such a case. LME had correctly disclosed the true reasons for the proposals and there was therefore no need to put forward a proposal which it was not willing to promote.

No duty to set out less damaging options if consulting body does not support them

The Court of Appeal also disagreed with Phillips J's view that metal producers who stood to incur losses should have been provided with the opportunity to consider other options which might cause them less damage. If correct, this would mean that LME would have to set out an option which would be less damaging to producers even if they did not support it. This would be contrary to the authority that the duty of fairness does not require a consultant body to put forward options which it has disregarded.

Adequacy of consultation depends on sufficiency of information in context of consultation

In response to the judge at first instance's ruling that the consultation process was unfair because consultees who proposed the rent ban option would do so in ignorance of the reasons why it was previously rejected, the Court held that the adequacy of a consultation must depend on the sufficiency of information in the context in which the consultation took place. It was well known in the market that there were competition issues associated with the rent ban option and the Court could not ignore this information, even if it was not set out or referred to in the consultation process.

Comment

These cases provide useful guidance on the duty of fairness when consulting and how far that duty extends. In general, consultant bodies do not have an obligation to set out options which are not under positive consideration unless there are exceptional circumstances. From Moseley it is clear that the Supreme Court considers these to include circumstances in which a failure to briefly mention alternative options prevents consultees providing an intelligent response to the issues under consideration.

Whilst this arguably does not sit comfortably with the decision in London Metal Exchange, the type of consultee and familiarity of the consultees with the consultation issues differed. Indeed, the two cases demonstrate the principle stated in Moseley that the adequacy of information in a consultation document depends upon the context in which the consultation is taking place. A greater level of information is required where the consultees are less familiar with the issues being consulted on (for example, members of the public as opposed to commercial entities with expertise in the relevant areas) and where the authority is contemplating depriving someone of an existing benefit. Whilst the LME decision should be welcomed by public bodies as it acknowledges and seeks to control the increasing burden of public law consultations for decision makers by keeping the duty of fairness within its proper limits, Moseley is a reminder that particular consideration must be given to potential consultees and the information provided in the consultation document adapted accordingly.