Back in the sombre days of November 1947, in the seminal Wednesbury case, master of the rolls Lord Greene expounded the following classic public law principle: ‘… a person entrusted with a discretion must, so to speak, direct himself properly in law.

He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider’. And if ‘he does not obey those rules, he may truly be said, and often is said, to be acting “unreasonably”’ (Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1 K.B. 223).

But although not getting a namecheck, this Wednesbury principle was a key ingredient in the failure of a decision by Durham County Council to dispose of land with a view to development. On 15 January, in R (Galaxy Land Ltd) v Durham County Council [2015] EWHC 16 (Admin), Cranston J agreed that the council’s cabinet took the decision in question without information necessary for it to ‘take into account obviously relevant considerations’.

The decision was consequently flawed and breached section 123 of the Local Government Act 1972, which gives councils power to dispose of land. The court also agreed that in taking the decision, the council breached the ‘open space’ notification requirements in section 123(2A) of the 1972 act.

Background

The claimant, property developer Galaxy Land Ltd, was a member of a limited liability partnership (Sniperley Park LLP1) formed for the purpose of promoting land in the area.

Although Durham County Council was not a member of Sniperley Park LLP1, in April 2014 it decided to join another LLP (Sniperley Park LLP2) for the purpose of promoting land for housing development in the Sniperley Park area. The land owned by the council included a playing field. The decision to join Sniperley Park LLP2 was the subject of the instant judicial review on the following two grounds:

1. The council, in deciding to join Sniperley Park LLP2, failed to have regard to material considerations. Among other things, the report before the council’s cabinet: contained no details of the LLP, no analysis of any other options open to the council, no summary of the views of officers or their appraisal of the LLP, and nothing about future negotiations. The report also failed to deal with the playing field issue or the legal provisions associated with its disposal.

The cabinet was also not informed of the council’s failure to conduct requisite consultations, nor that the land was being disposed of in breach of the procedures set out in the council’s property strategy, in particular the need to have a valuation.

2. The council failed to recognise that the playing fields are open space (within the meaning of section 336 of the Town and Country Planning Act 1990) and consequently failed to follow the procedure required by section 123(2A) of the Local Government Act 1972 (public advertisement and consideration of any consequent objections).

In October 2013, council officers (including Mr Darby, the asset services manager) had met Jonathan Bull-Diamond from an international firm of property consultants to discuss the proposed LLP agreement. His initial views included that the council ‘holds a strategic interest in a wider site that potentially has significant value in the long term’.

He considered that ‘there are other ways of allowing the council to participate alongside the existing LLP but not as part of it, that can better protect the public sector’s value and minimise the potential for conflict – and therefore minimise potential challenge from both objectors and competitors’. However, the asset services manager concluded that while Bull-Diamond had raised some concerns, these were not material.

The report for the material council cabinet meeting of 16 April 2014 was a joint report of senior corporate directors. But although Darby had previously prepared a draft report for the council’s management team which had canvassed the advantages and disadvantages of joining the consortium or holding back, his report did not in fact get beyond his head of department to the senior officers under whose names the report of 16 April went to the cabinet.

The day after the cabinet meeting the council entered into three agreements:

(i) a deed of adherence under which the council became a member of Sniperley Park LLP2;

(ii) an option agreement under which it granted an option in respect of the transfer of its land in Sniperley Park;

(iii) a deed of variation of the option agreement under which it granted a further option in respect of the playing fields so that they were included within its scope upon the grant of statutory consent for their disposal.

Court’s decision

In the view of Cranston J, ‘the cabinet was not provided with the necessary information so that it could take into account obviously relevant considerations’. Relevant case law makes it clear that although ‘section 123 does not require any particular process, a purported discharge of a duty under the section can be impugned on ordinary public law principles’.

As to the respective roles of officer and members in the decision-making process, Cranston J observed that ‘the cabinet did not need to be apprised of everything which was within the knowledge of the officers’. Officers are there ‘to digest material and to bring to bear their expertise, which the cabinet members will not have’. The cabinet can therefore ‘rely on the officers’ fair summary of relevant matters and their balanced evaluation of the implications’.

For if ‘the officers have given proper consideration to different arguments and then come to a conclusion there is no necessary error should the report not refer to the different contentions but only to the conclusions reached’.  

In that context the court had three difficulties with the cabinet report. First, Cranston J had seen no evidence ‘that the officers had considered and resolved a number of obviously relevant issues behind the recommendations being advanced’.  These included ‘pungent comments’ by consultant, Bull-Diamond, ‘on the control the council was ceding to the LLP’.

Second, Darby’s draft report, which canvassed the advantages and disadvantages of participation, was not apparently taken into proper account. And third, the strategic nature of the council’s landholding was ‘an obviously relevant consideration which on the evidence was not considered by the officers and thus not fed through to the cabinet’. The cabinet decision was therefore found to be flawed.

The second ground was also made out since the council had entered into a binding agreement to grant an option of the playing fields – an interest in land – subject to the requisite consents. And the failure to publicise that intention before the agreements were entered into meant that it would not be possible for the council to consider any objections to the proposed agreement under the section.  

Comment

The enthusiastic head of political-and-senior-officer steam that can amass behind an apparently desirable project can very easily railroad a broader and more balanced consideration out of focus.

However, public authorities spending public money need to ensure not only that they are complying with relevant statutes, but also that they are acting reasonably, prudently and in the light of all material considerations. For going down the big ‘snake’ on the judicial ‘snakes and ladders’ board is not where anyone wants important projects to go.

Nicholas Dobson, Freeths

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