Business premises – Lease – Renewal – Claimant solicitor seeking to renew lease of office premises – Defendant local authority refusing application –Claimant applying for judicial review – Whether decision being susceptible to judicial review – Whether defendants acting unlawfully – Claim allowed
The claimant was a solicitor who practised principally in the personal injury field. Her office premises were located in the New Blackpool Enterprise Centre which was owned by the defendant local authority. The principal aim of the centre was to act as an accelerator to developing new innovations and consequently increasing economic growth and prosperity in the local area. Units within the centre could only be occupied by private sector businesses falling within the EU definition of a small and medium sized enterprise. Prospective tenants had to demonstrate their eligibility and suitability to the centre management board which dealt with applications. The claimant initially obtained a three-year lease of a unit in the centre and subsequently obtained a new three year lease of a larger unit.
Although the defendants at no time expressed to the claimant any concerns about her occupation of the office space on the basis of her activities, their corporate asset management group decided that the claimant’s lease should be terminated as her firm had brought a large number of personal injury claims against the defendants. The claimant was subsequently informed that her lease would not be renewed on the ground that the firm had brought a number of personal injury claims against the defendants on behalf of clients.
The claimant applied for judicial review contending, amongst other things, that the defendants had exercised their power for the improper or unauthorised purpose of seeking to cause detriment to the claimant, even though her firm had been acting entirely lawfully. The defendants raised a preliminary issue whether their decision was amenable to judicial review. They argued, in deciding whether or not to offer a further lease to the claimant, they had been performing a purely private function, in circumstances where it owed no public duty to the claimant and in the context of a purely commercial relationship in respect of purely commercial premises. The claimant argued that the defendants had been acting under the statutory power conferred by section 123 of the Local Government Act 1972.
Held: The claim was allowed.
In a case involving a challenge to a decision of a public body in relation to a contract, it was necessary to consider whether, and if so to what extent, the public body was exercising a public function in making the decision complained of; and whether the grounds of challenge involved genuine and substantial public law challenges to the decision complained of, or whether they were in reality private law challenges to decisions made under and by reference to the terms of the relevant contract. In a case involving a challenge to a decision of a public body acting under a statutory power but in relation to a contract and in the absence of a substantial public function element, a claimant would nonetheless normally be entitled to raise genuine and substantial challenges based on fraud, corruption, bad faith and improper motive. The extent to which a claimant would be entitled to raise genuine and substantial public law challenges beyond those limited classes would depend on a careful analysis of all of the relevant circumstances so as to see whether or not there was a relevant and sufficient nexus between the decision in relation to the contract which was challenged and the grounds complained of: R v Camden London Borough Council, ex p Hughes (21 December 1993, unreported), Mercury Energy Ltd v Electricity Corpn of New Zealand Ltd [1994] 1 WLR 521, R (on the application of Pepper) v Bolsover District Council [2000] PLSCS 200; [2000] EGCS 107, R (on the application of Molinaro) v Kensington and Chelsea Royal London Borough Council [2001] EWHC Admin 896, R (on the application of Cookson & Clegg) v Ministry of Defence [2005] EWCA Civ 811, Supportways Community Services Ltd v Hampshire County Council [2006] EWCA Civ 1035, R (on the application of Bevan & Clarke LLP) v Neath Port Talbot County Borough Council [2012] EWHC 236 (Admin) and R (on the application of A) v B Constabulary Chief Constable [2012] EWHC 2141 (Admin) considered.
In the present case there was a sufficient public law element or connection to render the decision amenable to judicial review on the ground of abuse of power. The decision was be considered in the context of its being a decision under section 123 of the 1972 Act, which conferred an extremely wide and, in the context of a short lease such as the present, virtually untrammelled power. Thus there were no specific statutory restrictions or limitations on the exercise of the discretion whether or not to dispose of council land, nor was there any statutory guidance in such respect. Furthermore, the premises comprise commercial premises let under a commercial lease on a commercial rent, and the specific decision under challenge was a decision not to offer a new lease to someone who had no right to request a new lease because the statutory right of renewal available in the case of business tenancies had been validly contracted out. Moreover, the defendants had chosen to promote a policy in relation to tenancy selection criteria under which they had clearly stated that they had delegated the decision on the suitability of an individual applicant to the centre management board, to be taken solely by reference to its assessment of the claimant’s alleged activities, rather than to published tenant selection criteria specified in the context of the centre having been built with public funding. Accordingly, it was not solely a purely arms length commercial relationship.
(2) The defendants had been under a duty not to exercise their discretion for improper or immaterial purposes. In the present case, there was no evidence that the defendants had conducted a rational assessment of all relevant considerations, including the extent to which the claimant had met the published tenant selection criteria and the nature of its business having regard to the wider community interest including that of the defendants themselves. Based upon their conclusion that the firm was engaged in claims farming which harmed the defendants’ own financial interests, the only consideration to which they had had regard when deciding whether even to consider a request by the claimant for a new tenancy had been their 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 their own financial interests. Accordingly, the defendants had failed to exercise their power to promote the purpose for which it had been conferred, having regard not just to the wide power in section 123 itself, but also the circumstances in which the centre had been constructed and operated at public expense and for public good and in which the defendants had promulgated and implemented a policy as to the selection of tenants.
Accordingly, the defendants’ decision had been fundamentally tainted by illegality: Wheeler v Leicester City Council [1985] AC 1054, R v Ealing London Borough, ex p Times Newspapers Ltd [1987] IRLR 129, R v Derbyshire County Council, ex p Times Supplements Ltd [1990] 3 Admin LR 241 and R v Somerset County Council, ex p Fewings [1995] 1 All ER 513 and R v Lewisham London Borough Council, ex p Shell UK Ltd [1995] 1 All ER 938 considered.
Jonathan Auburn and Ian Skeate (instructed by North Solicitors, of Blackpool) appeared for the claimant; Adam Fullwood and Paul Whatley (instructed by Blackpool Borough Council Legal Services) appeared for the defendants.
Eileen O’Grady, barrister
