by Ian Gatenby
It is commonplace for citizens to be faced with public authorities who are given a statutory discretion in relation to some matter. It is normal to find statutes which indicate that some public authority “may” take some action. A widespread misconception is that this gives the authority complete freedom to act, or not to act, as it thinks fit and that the law offers no redress in those circumstances.
Nothing could be further from the situation. As a matter of law there is probably no such thing as unfettered discretion granted by statute. All statutory discretions are limited as a matter of law and the only question is whether the limitation is narrow or broad.
Many of my examples are taken from the area of property, and in particular town and country planning, since this is an area which is familiar to me and will be of concern to many readers, but the principles are of general application.
The legal restrictions
All statutory powers must be used:
(a) in accordance with the “policy” of the relevant statute (ie the broad reasons for the powers being granted);
(b) lawfully (eg in accordance with procedural requirements);
(c) in good faith;
(d) reasonably; and
(e) (in relation to proceedings of a quasi-judicial nature) fairly.
Statutory powers must be examined in accordance with the “policy” of the relevant statute, ie the broad purposes for which the powers were intended. Powers are sometimes used by public bodies with the best of motives of serving the public, but not necessarily those items of public interest for which the powers were intended. This is unlawful. For example, a district council has powers and duties as housing authority to ensure the availability of accommodation. It has powers and duties as planning authority, eg to impose conditions on planning permissions. However, it is not as a matter of law permitted to use its planning powers in order to secure the performance of its rights and duties as housing authority, even though planning and housing are both public purposes: R v Hillingdon London Borough Council, ex parte Royco Homes Ltd [4] QB 720. Similarly, it would be an unlawful use of planning powers to require land to be dedicated for public use, as an open space, since a requirement of that kind relates not simply to the use of land, which is the proper concern of planning, but to proprietary rights in land: M J Shanley Ltd (in liquidation) v Secretary of State for the Environment [1982] JPL 380.
In the area of planning agreements, eg under section 52 of the Town and Country Planning Act 1971, although there are no express statutory provisions to this effect, a planning authority must act by reference to planning considerations, and not some other objectives, and it must act reasonably, eg as defined in the Wednesbury case, to which I refer below: R v Gillingham Borough Council, ex parte F Parham Ltd [8] 1 PLR 7.
In practice, the courts will not substitute their idea of reasonableness for that of the statutory authority. They will intervene only where the authority has reached a decision so unreasonable that no sensible authority could have reached it, or if it has made some other error of law.
Duty to act fairly
This arises where the statutory power involves the determination of disputes or other proceedings which have a judicial flavour or where the courts think that the statutory power ought to have a judicial flavour. It finds expression in a number of ways; the following is not an exhaustive list but some examples.
(a) In the context of a planning appeal or other quasi-judicial proceedings, a fair hearing must be given to each side. For example, the outcome should not be decided on the basis of some particular issue unless that issue has been drawn to the attention of the parties so that they have a fair opportunity of expressing their views on it. A fair “hearing” will not necessarily involve an oral hearing, but the circumstances may require it, eg where decisions are being taken which concern a person’s livelihood.
(b) The Secretary of State’s power to “call-in” a planning application for determination by himself must be exercised fairly. Thus, if there are two rival planning schemes, it may be that the Secretary of State should not refuse to call in one of them if that decision prejudged one scheme without having heard the other: Lakin Ltd v Secretary of State for Scotland and Central Regional Council, Court of Session, May 1 1987.
(c) The duty to act fairly may, in effect, convert administrative practice into legal rights. Where a government department indicated that an inquiry would consider only one issue, it was unlawful for it to determine the outcome on the basis of another issue: Costain Homes Ltd v Secretary of State for the Environment [8] 2 PLR 101.
(d) Similarly, legal rights may arise where there is a legitimate or reasonable expectation arising not just from an expressed promise on behalf of a public authority but from the existence of a regular practice which can reasonably be expected to continue: Council of Civil Service Unions v Minister for the Civil Service [5] AC 374.
(e) Where a person has made representations to a local planning authority in respect of a planning application, the duty of fairness requires that he be given an opportunity to comment on a consequential appeal: Wilson v Secretary of State for the Environment [8] 1 PLR 101.
It will be seen that this duty to act fairly is potentially a wide avenue for judicial intervention in the exercise of statutory powers.
Acting reasonably
The classic judgment on this point was given by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [8] 1 KB 223. He explained the legal doctrine that discretion must be exercised reasonably by pointing to the obligations on a person with such a discretion:
(1) To direct himself properly in law.
(2) To consider all the matters which he is bound to consider.
(3) To exclude from consideration matters which are irrelevant.
(4) To act in good faith.
(5) Not to reach a decision so absurd that no sensible person could agree that it lay within the authority’s powers.
These points are not necessarily exclusive. Lord Greene referred to the example of a teacher being dismissed for the colour of her hair. In one sense that would be unreasonable. In another sense it would be taking into consideration extraneous matters. It would be so unreasonable that it might also be described as being done in bad faith. It is clear that these matters run into one another.
The question of what is the purpose of a statutory power is undoubtedly a matter for the courts. This will determine, for example, what factors are relevant and what are irrelevant. Moreover, the courts are entitled to interfere if a public body purports to exercise discretion in such a way as to frustrate the policy of the statute which confers that discretion: Padfield v Minister of Agriculture, Fisheries and Food [8] AC 997. Also, R v Tower Hamlets London Borough Council, ex parte Chetnik Developments Ltd [1988] 2 EGLR 195; [1988] 26 EG 69, where on an apparently unlimited discretion whether to refund overpaid rates, the local authority was not entitled to take into account the needs and requirements of its ratepayers as a whole or the fact that it was financially constrained and ratecapped.
Enforcement
Sometimes statute provides a mechanism for challenging discretion as a matter of law, eg the right to challenge a planning appeal decision under section 245 of the Town and Country Planning Act 1971.
Normally, challenge to the exercise of a statutory discretion will be by way of judicial review. This requires leave of the High Court, but this would generally be given in the case of a prima facie case where the complainant was affected (ie not just an officious busybody) and had acted promptly. In general, leave to challenge the exercise of statutory discretion would not be given where the application for leave was made more than three months from the action giving rise to complaint. However, where there is a second exercise of discretion, which necessarily assumes that the first exercise of discretion was lawfully made, this might give a further opportunity to challenge the legality of the situation.
A distinct practical problem is that citizens are usually unaware of this three-month period and often do not seek legal advice until it is too late. Sometimes it can be a problem to obtain the information necessary to establish the legality of the situation.
The outcome of a successful judicial review is not to reverse the action giving rise to complaint. Normally the outcome would be a judgment that the action was unlawful and should be retaken. While in many cases this would, in practical terms, result in the relevant action being reversed, this would not necessarily be the case, and one might at the end of the day achieve the same decision again, but more carefully worded!
Misfeasance in public office
An action for damages might be brought against a public body acting in excess of its powers if that body was aware that it was stepping outside those powers.
When someone in public office takes action (a) which he knows to be ultra vires and (b) which is likely to cause damage to another person and (c) damage to that other person in fact occurs, then this constitutes the tort of misfeasance in public office. It is not necessary to show that the public official acted with malice or otherwise intended to inflict harm: Dunlop v Woollahra Municipal Council [2] AC 158 as explained in Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] QB 716.
Since knowledge is an essential element of the tort, anyone seeking damages would have to show that the public body knew, or must have known, or was advised, of the unlawfulness of the conduct.
Conclusions
All statutory discretions are subject to legal limitation. Some may be so wide that they can, for practical purposes, be challenged only if shown to have been exercised irrationally or in bad faith. In other cases the statutory context may well indicate, directly or indirectly, the limitations on power.
Whether wide or narrow, a statutory discretion must be exercised for reasons which are relevant to the purpose for which the power was granted. The definition of that purpose is a matter for the courts, which will intervene if they consider that a discretionary power is being abused.
A statutory discretion intentionally used for improper purposes may give rise to an action for damages for misfeasance in public office.
Ian C Gatenby MA (OXON) is a partner in McKenna & Co, solicitors.
