Chandler v Camden London Borough Council

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLady Justice Arden
Judgment Date09 October 2009
Neutral Citation[2009] EWCA Civ 1011
Docket NumberCase No: C1/2009/0695

[2009] EWCA Civ 1011

[2009] EWHC 219 (Admin)

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

(QUEEN'S BENCH DIVISION)

(ADMINISTRATIVE COURT)

Forbes J

Before: The President of the Queen's Bench Division

Lady Justice Arden

and

Lord Justice Toulson

Case No: C1/2009/0695

Between
The Queen (on the Application of Gillian Chandler)
Appellant
and
Secretary of State for Children, Schools and Families
Respondent
and
(1) University College London
(2) London Borough of Camden
Interested Parties

Mr Rhodri Thompson QC, Mr David Wolfe & Mr Christopher Brown (instructed by Messrs Leigh Day & Co.) for the Appellant

Mr Michael Beloff QC, Mr Gerard Clarke & Mr Sam Grodzinski (instructed by Treasury Solicitors) for the Respondent. The interested parties were not represented.

Hearing dates: 30 June-1 July 2009

Lady Justice Arden

Lady Justice Arden:

1

This is the judgment of the court written by Arden LJ.

2

This appeal concerns the public procurement regime, that is, the rules that govern the process whereby public authorities make contracts for the provision of goods and services. These rules are derived from directives made under the European Union Treaty (referred to below as “the Treaty”), and from the jurisprudence of the Court of Justice of the European Communities (“the Court of Justice”), which imposes obligations in certain circumstances where the directives do not apply. This appeal is of legal interest because it is one of the few cases on the public procurement regime to reach this court, and deals with important issues which have not previously reached this court.

3

The immediate concern of this appeal is the process that must be adopted by a public authority when making arrangements with a sponsor for establishing a school as an Academy school. The statutory framework for establishing such schools is summarised in paragraphs 6 and 7 below. A major issue is whether, if the sponsor is prepared to assume the management of the school for no remuneration, the arrangements fall within the public procurement regime at all. The question is important in relation to Academy schools as the policy of the Secretary of State is to offer to make such arrangements only on those terms. But the question has wider implications since the answer affects a broad range of situations, such as the case where a public authority asks (say) a commercial enterprise to take over the running of a cultural festival in return for (at most) reimbursement of its costs. These situations have been labelled “philanthropic” in argument. We are invited to consider whether services offered on a philanthropic rather than a commercial basis fall outside the public procurement regime.

4

The appeal is from the order dated 13 February 2009 of Forbes J. He dismissed the appellant's claim that (amongst other matters) the decision of the Secretary of State for Children, Schools and Families (“the Secretary of State”) to approve an expression of interest by University College London (“UCL”) in being involved in the establishment of an Academy in the London Borough of Camden (referred to below as the Camden Academy) infringed the public procurement rules. UCL is a university based in the London Borough of Camden. The local authority, London Borough of Camden (“Camden LBC”), and University College London were joined as interested parties but have not been represented on this appeal.

5

On 28 July 2009, this court informed the parties that the appeal would be dismissed for reasons to be given in October 2009. This judgment sets out those reasons.

BACKGROUND

6

The Education Act 1996 (“the EA 1996”) provides for the establishment of a new type of independent school to be known as an Academy. Under s 482(1) of the 1996 Act, the Secretary of State may enter into an agreement (a “s 482 agreement”) with any person who wishes to establish an Academy, subject to certain consultation obligations. The Secretary of State may agree to make payments to such person in consideration of his undertakings (s 482(1) (b)).

7

The procedure for establishing an Academy school differs from that which generally applies when a new maintained school is to be established. Where a local authority wishes to establish a new school, the procedure in the Education and Inspections Act 2006 (“the EIA 2006”) requires the local authority to follow a consultative procedure. If it wishes to establish a school, it must publish a notice inviting proposals for the establishment of a school following consultation with such persons as appear to it to be appropriate (ss 7 and 9). New maintained schools can only be established through that process (s 28). This consultative procedure does not apply to the Secretary of State when he establishes an Academy.

8

Against that background, UCL indicated its desire in 2005 to be involved in school education in Camden. Discussions with Camden LBC led to the development of a proposal whereby UCL would become a sponsor of an Academy. On 4 July 2007 UCL publicly confirmed that it had a firm intention to apply to the Secretary of State to establish an Academy. Camden LBC gave provisional approval on 25 July 2007 and the appropriate committee confirmed that decision on 11 September 2007. Following further consultation by Camden LBC, UCL developed its proposal. The Secretary of State approved this on 29 February 2008. Ms Chandler seeks to have that decision quashed. Ms Chandler's case is that at least two other potential contractors in the United Kingdom had expressed a serious interest in entering into a funding agreement to provide the Academy. In addition there was a Swedish company called Kunskapsskolan (“Kunskap”) which was known to be interested in running academies in England, though there is no evidence that it had expressed any interest in the Academy in Camden with which these proceedings are concerned.

9

Other claimants started judicial review proceedings but Ms Chandler was substituted as claimant on 17 July 2008. She also began a second set of judicial review proceedings. She alleged in her proceedings that the Secretary of State had failed to comply with the public procurement regime. Ms Chandler would like a competition to take place to determine who should be the sponsor of an Academy. She further contends that if the local authority decides as a result of the competition that an Academy should be opened she should then be consulted as part of the decision-making process about which organisation should sponsor and run it.

10

According to the first witness statement of Neil Flint, a senior civil servant in the Department of Children Schools and Families (“DSCF”), the state funding of academies aims to mirror so far as possible funding in the maintained sector. He states that a sponsor is not paid for the role it plays in either the creation or establishment of the Academy. Feasibility funding is released and paid to project managers engaged by DCSF for the purposes of the project. He states that a significant financial donation is usually required (save in the case of bodies such as Universities), plus significant time and work. His evidence is that: “[T]o the extent that any payment might be made to sponsors, on account of their provision of some services towards project managers, this will be at cost and will not include any profit element.” The fact that the sponsor obtains no profit does not mean that he may not gain by becoming a sponsor. Involvement in the establishment of an Academy may assist an independent school to show that its activities are for “public benefit”, thus justifying its charitable status.

11

If UCL agrees to be responsible for running the new Camden Academy, it will have to set up a charitable company limited by guarantee (referred to below as an Academy trust) to enter into a funding agreement with the Secretary of State. The memorandum of association of the Academy trust states that its income and property can only be applied in the promotion of its objects, which in essence provide for setting up and running an Academy school. We have not been shown the articles of association of the Academy trust but it appears from the model funding agreement that we have been shown that the directors of the Academy trust will be the governors of the school. They cannot receive any benefit from the Academy trust except in certain specified circumstances. Under the model funding agreement, the Secretary of State agrees to make payments to the Academy in accordance with the conditions set out in the model funding agreement. The payments include grants towards capital and current expenditure. If the grant exceeds expenditure in any year, it can be applied to capital purposes or carried forward. There is no right for the Academy trust to receive or retain for its own purposes any benefit from any grant or surplus of any grant.

12

The evidence shows that, where there is a proposal to establish an Academy, there is often more than one organisation prepared to become a sponsor even in the absence of a competition. A potential sponsor may be a charitable organisation but it could be a commercial enterprise involved in a manufacturing or other industry. There is no evidence of interest in setting up Academies from entities based in other member states apart from Kundskap, and Kundskap has not shown any interest in the Camden Academy despite the publicity which the proposal to set it up has already received.

THE PUBLIC PROCUREMENT REGIME

13

The public procurement regime consists of four connected elements: firstly, the principles in the Treaty, secondly, a number of...

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