A recent adverse High Court ruling against a council over its decision to terminate a claimant law firm's lease is a salutary reminder of the need for authorities to justify their public law decisions, writes Stephen McNamara.
Ordinary folk have the right to be unreasonable (and, indeed, some regard this as a duty) but a local authority (even with the general power of competence) must be able to justify the discharge of its public law duties in the court of reasonableness (ie the High Court within judicial review proceedings).
A salient reminder of what can go wrong is to be found in the recent case of Joanna Trafford v Blackpool Borough Council  EWHC 85 (Admin).
Joanna Trafford practises as a solicitor under the firm name 'North Solicitors'. It is a specialist personal injury firm and works from offices in the New Blackpool Enterprise Centre - which is owned by Blackpool Borough Council.
A three-year lease was taken out in June 2010 - this was a contracted out lease from the requirements of the Landlord and Tenant Act 1954. This means that the lease would automatically terminate after three years unless the landlord offered a new lease.
The relevant statutory power is s123 of the Local Government Act 1972 . This enables a council to dispose of land in any manner they wish - within a set of familiar restrictions but is a broad power.
The Enterprise Centre was built with public funding and has a set of standard tenancy selection criteria for such a development (including supporting new businesses from the Blackpool area).
North Solicitors are a well known local law firm of solicitors and, amongst other things, have brought a number of tripping claims against the council.
In November 2012, the Corporate Asset Management Group (CAMG) of the council decided not to offer North Solicitors a new lease on the basis that tripping claims are a drain on the council and divert resources from the provision of services and on the basis that it is for the council to choose who it enters commercial relationships with (ie the council was treating this as a purely private law matter).
This decision, when communicated to Ms Trafford, resulted in a challenge and finally judicial review proceedings. The Leader of the council responded to the challenge from Ms Trafford in forthright terms:
"The nature of your business is wholly contrary to the stated aims and objectives of Blackpool Council. I support and uphold the views stated by our officers."
And so, a judicial review was brought and this required His Honour Judge Stephen Davies to decide:
- whether the decision was a public law matter;
- whether the decision was taken for improper reasons;
- whether the decision was "Wednesbury" unreasonable; and
- whether there was procedural unfairness.
The first question was whether the decision was amenable to judicial review at all. After considering the case law, the court found that the grounds of challenge did involve genuine and substantial public law challenges to the decision complained. The Court decided that this was not a merely private law challenge to decisions made under and by reference to the terms of the lease. The Court noted that there were published selection criteria, and that the council had ruled out any further lease for North solely on the ground of its business activities .
The Court found "the only consideration which it had regard to when deciding whether or not even to consider a request by the claimant for a new tenancy was its desire to punish the claimant for engaging in that activity by subjecting her firm to some difficulty and inconvenience, without having any regard to whether or not that would achieve any benefit for the wider community interest or indeed the defendant's own financial interests."
The Judge's language becomes even fiercer when considering whether the decision was Wednesbury unreasonable: "the decision can be categorised as either vindictive, in which case it really falls under ground 1, or irrational, in that if – contrary to my primary conclusion – it was motivated by the desire to protect the CAMG's assessment of the defendant's own financial interests, there were demonstrably no grounds for considering that it would achieve that purpose. In short, there was no rational connection between the decision and the objective."
It is, perhaps, no surprise that the Judge also found that the decision was procedurally unfair. There was a tenant selection policy but the council made a decision contrary to that policy without allowing any representations.
The moral of this story is that local authorities decisions need to be fundamentally reasonable (or, rather, neither fundamentally unreasonable or vindictive). Whilst clearly an embarrassing (and expensive) decision for the authority , it does serve as a salutary reminder that councils need to be able to justify their public law decisions. If there is no connection between decision and objective, or representation is not permitted when it is, an authority will be asking for trouble.