Gordon Peters v London Borough of Haringey
| Jurisdiction | England & Wales |
| Judge | Mr Justice Ouseley |
| Judgment Date | 08 February 2018 |
| Neutral Citation | [2018] EWHC 192 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/3713/2017 |
| Date | 08 February 2018 |
Neutral Citation Number: [2018] EWHC 192 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Ouseley
Case No: CO/3713/2017
and
Mr David Wolfe QC, Miss Sarah SackmanANDMiss Katherine Barnes (instructed by LEIGH DAY) for the Claimant
Mr Nigel Giffin QC, Mr Ranjit BhoseQC ANDMiss Ruchi Parekh (instructed by PINSENT MASONS LLP) for the Defendant
Mr James Goudie QC (instructed by ASHURST LLP) for the Interested Party
Hearing dates: 25 & 26 October 2017
The Claimant is a resident of Haringey, Chair of the Older People's Reference Group for Haringey, a member of “Stop HDV” which is a coalition of groups of Haringey residents opposed to the Haringey Development Vehicle (“HDV”) and a former senior local government official. Put very simply, the purpose of the HDV is to create a partnership between the Defendant, Haringey London Borough Council (“the Council”) and the private sector, to bring private sector finance, experience and expertise to the task of developing the Council's land for its better use, and so achieving the Council's strategic aims in housing, affordable housing and employment.
The Claimant challenges by way of judicial review a decision made by the Council, through its Cabinet or Executive, on 20 July 2017; the Grounds refer to an earlier decision on 3 July 2017, which the later decision reconsidered and confirmed; nothing turns on which of these two decisions is challenged. The decision of 20 July was to confirm Lendlease Europe Holdings Ltd (“Lendlease”) the Interested Party, as the successful bidder to become the Council's partner in the HDV. The decision also approved the structure of the HDV, the 50/50 split between Lendlease and the Council, as well as the related legal documents.
The merits of that decision, and of those which led up to it, are controversial among many in the Borough, including council tenants. There was considerable public interest at the hearing. But I am not concerned with the wisdom or merits of the decision. I am concerned with the issues of law about the powers of the Council and the lawfulness of the procedures it adopted.
The grounds of challenge are that the Council (1) could not use a Limited Liability Partnership (“LLP”) for these purposes since the Council was acting for a commercial purpose under s1 Localism Act 2011, and so had to use a limited company; (2) had failed in its statutory duty of consultation under s3 Local Government Act 1999; (3) had failed in its public sector equality duty under s149 Equality Act 2010; and (4) could only take this decision in full Council and not by Cabinet alone, by virtue of rule 4(1)(b) Local Authorities (Functions and Responsibilities) (England) Regulations 2000 SI No.2853, (“the Functions Regulations”).
These grounds are all contested by the Council and Lendlease, who both also say that all grounds, save the question of whether the decision should have been taken in full Council, are affected by undue delay: grounds for the challenges first arose on 10 November 2015 or at the latest on 14 February 2017, when earlier decisions in the long process of decision-making were taken. Proceedings were not lodged until 14 August 2017. Time should not be extended. Permission and relief should also be refused under s31(6) of the Senior Courts Act 1981 because it would cause hardship, prejudice and detriment to good administration. They also say that permission and relief should be refused under s31(3D) of the 1981 Act because it is highly likely that the outcome for the Claimant would not have been substantially different, if the alleged unlawful acts had not taken place. The Claimant contests each of these points in his turn, in particular as to when grounds for the challenges first arose.
The proceedings took the form of a rolled up hearing, not least because of the significant delay issues. I heard the permission and substantive issues together.
The grounds require consideration of many reports, minutes and resolutions over a period of more than two years, as well as of other documents. I am going to set out the relevant parts for all grounds in one stage, rather than going to the documents separately for each stage. However, so that the significance of what I set out is more readily apparent, I start with the statutory provisions the interpretation or application of which is at issue.
The statutory provisions
(1) The Localism Act 2011
S1 creates a general power of competence, rather awkwardly sometimes called “GEPOC”. It provides:
“(1) A local authority has power to do anything that individuals generally may do.”
(2) Subsection (1) applies to things that an individual may do even though they are in nature, extent or otherwise —
(a) unlike anything the authority may do apart from subsection (1), or
(c) unlike anything that other public bodies may do.
(4) Where subsection (1) confers power on the authority to do something, it confers power (subject to sections 2 to 4) to do it in any way whatever, including –
(a) power to do it anywhere in the United Kingdom or elsewhere,
(b) power to do it for a commercial purpose or otherwise for a charge, or without charge, and
(c) power to do it for, or otherwise than for, the benefit of the authority, its area or persons resident or present in its area.
(5) The generality of power conferred by subsection (1) (“the general power”) is not limited by the existence of any other power of the authority which (to any extent) overlaps the general power.
(6) Any such power is not limited by the existence of the general power (but see section 5(2)).”
S4(1) and (2) create a qualification:
“(1) The general power confers power on a local authority to do things for a commercial purpose only if they are things which the authority may, in the exercise of the general power, do otherwise than for a commercial purpose.
(2) Where, in the exercise of the general power, a local authority does things for a commercial purpose, the authority must do them through a company.
(2) A local authority may not, in exercise of the general power, do things for a commercial purpose in relation to a person if a statutory provision requires the authority to do those things in relation to a person”
“A company” for these purposes is defined in s4(4) in a way which excludes an LLP; it includes a company within the meaning of s1 Companies Act 2006.
For an LLP to be incorporated, s2(1) Limited Liability Partnerships Act 2000 requires two or more persons to be associated for carrying on a lawful business “with a view to profit”.
The Council relied on s1 of the 2011 Act as the source of its power to enter into the HDV, with the associated arrangements. The Council contended that s4(2) did not apply because it was not “doing things for a commercial purpose”.
The issues included whether the Council was doing anything in relation to the HDV for a commercial purpose, whether the purpose of the HDV itself was relevant, and whether as Lendlease and the Council contended, to come within s4(2) any commercial purpose had to be the true and dominant purpose, rather than, as the Claimant submitted, “a” commercial purpose, which however significant or otherwise that might be, meant that a company and not an LLP had to be used.
The Council also contended that it did not matter if the GEPOC was not available, because other powers could have been used to achieve the same corporate structure and end.
It was not suggested that there was any aspect of what the HDV LLP was intended to do which could not have been done by a limited company as defined by s1 Companies Act 2006. An LLP was used because it would bring VAT and corporation tax advantages, and flexibility in its governance to cope with the two partners' differing interests.
S3 provides a general duty to consult in these terms:
“(1) A best value authority must make arrangements to secure continuous improvement in the way in which its functions are exercised, having regard to a combination of economy, efficiency and effectiveness.
(2) For the purpose of deciding how to fulfil the duty arising under subsection (1) an authority must consult—
a) representatives of persons liable to pay any tax, precept or levy to or in respect of the authority,
b) representatives of persons liable to pay non-domestic rates in respect of any area within which the authority carries out functions,
c) representatives of persons who use or are likely to use services provided by the authority, and
d) representatives of persons appearing to the authority to have an interest in any area within which the authority carries out functions.
(3) For the purposes of subsection (2) “representatives” in relation to a group of persons means persons who appear to the authority to be representative of that group.
(4) In deciding –
e) how to fulfil the duty arising under subsection (1),
f) who to consult under subsection (2), or
g) the form, content and timing of consultations that under subsection
an authority must have regard to any guidance issued by the Secretary of State.”
There was no dispute but that, like all local authorities, the Council is a “best value authority”. It did not carry out a statutory consultation exercise under s3. It says that the decisions of 3 and 20 July were not decisions in fulfilment of the duty in s3(1), so as to require the statutory consultation in s3(2). In any event, there had been significant opportunities for the Claimant, his group and others, to make their views known directly and through the Council's Overview and Scrutiny Committee, OSC.
S149 provides:
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