NOTES OF CASES
| DOI | http://doi.org/10.1111/j.1468-2230.1955.tb00292.x |
| Published date | 01 March 1955 |
| Date | 01 March 1955 |
NOTES
OF
CASES
ADMINISTRATIVE
DISCRETION
AND
THE
COURTS
-
THE
BETTER
PART
OF
Va~oua?
IrJ
Prescott
v.
Birmingham Corporation
119541
8
W.L.R.
600,
990
the facts were these. The defendant corporation resolved to
approve and adopt a scheme to provide free travel facilities
on
the
corporation’s omnibuses
on
every day (except Saturday) between
10
a.m. and
4
p.m. for old people resident in the city who were
already receiving retirement
or
old age pensions
or
national assist-
ance payments. The loss of income was estimated at about
S90,OOO
which was to be met from the rate fund. The power of the corpora-
tion to
run
omnibuses was given by private Acts. The permission of
the licensing authority had been obtained. The plaintiff, a ratepayer,
sought
a
declaration that the scheme was illegal and
ultra vires.
In
the court of first instance, Vaisey
J.
gave judgment for the plaintiff.
He
was upheld by the Court of Appeal.
The basis of the decision of Vaisey
J.
was that the corporation
was attempting to usurp the functions of the legislature and to
redress a nation-wide grievance by local administrative methods.
“
The subsidising of particular classes of society,” said the learned
judge,
“
is
.
. .
a matter for Parliament, and for Parliament alone.”
As a statement of political, social
or
economic opinion this is
clearly defensible. But
it
would seem to follow from another pro-
position: that taxation ought to be
a
matter for the central
government alone. This again is defensible and the abolition of
local rates has been frequently advocated as a radical solution for
the anomalies
of
local taxation. The present position is, however,
that directly
or
indirectly some fifteen hundred local authorities
(excluding parishes and special bodies like river boards) demand
precepts
or
levy rates. The amounts demanded by rating autho-
rities vary from about
14s.
to
80s.
in each pound of rateable value.
Rateable values themselves differ considerably throughout the
country. The services provided are similarly unequal in quality
and extent.
If
there exists this large and varied system of local
taxation with innumerable concealed subsidies to different groups
according to geographic and party disposition, then
it
can equally
be argued, as a matter of political, social
or
economic opinion, that
the local,
no
less than the central, taxing authority is entitled to
give relief to certain groups at the inevitable expense of others.
What
is
not clear is how far a court should declare a particular
operation valid
or
invalid by reason of one
or
other of these argu-
ments.
If
Birmingham Corporation acted illegally,
it
must be because
159
160
THE
MODERN
LAW
REVIEW
VOL
18
the borough had, in law, exceeded its limited powers. The question
is
one of legal validity, of the differences between statutory and
common law corporations, of
vires
and of the proper exercise of
discretion. The principle has generally been accepted that
a
borough
is
not limited, as is an authority created by statute, to its
statutory powers, but may act as a natural person; that the
Municipal Corporation Acts of the nineteenth century restricted this
principle by requiring statutory authority for the spending of money
out of the rate fund; and that there is doubt
(Att.-Gen.
v.
Leicester
Corporation
[1943]
Ch.
86)
how far this restriction has been affected
by the Local Government Act,
1938.
It
was thought that the Court
of
Appeal might consider the decision along these lines.
But the Court of Appeal upheld the decision
on
new and different
grounds. The single judgment of the court was read by Jenkins
L.
J.
and may be summarised thus. The defendant corporation are
authorised by statute to maintain and operate their transport
undertaking and
(‘
to charge such fares to passengers travelling
on
their vehicles as the defendants think
fit”
subject to any pre-
scribed statutory maxima and to any conditions fixed by the
licensing authority. The interest of the licensing authority
is
to
see that the fares are reasonable, and for this reason the authority
required the corporation
to
pay
290,000
to the transport under-
taking out of the rate fund in the first year and not to meet the
cost of the scheme by an increase in fares. The Court of Appeal
accepted that discriminatory charges might be valid. But they
said that
if
a
trustee running an omnibus service chose, from
motives of philanthropy, to allow some person
or
class of persons
to
travel free
or
at reduced fares, although those charged the full
fare might not be able to object,
cestuis que trustent
certainly
could. Then follows the core of the judgment.
‘(
Local authorities
are not, of course, trustees for their ratepayers, but they do, we
think, owe an analogous fiduciary duty to their ratepayers in rela-
tion to the application of
funds
contributed by the latter.” Thus
local authorities are not, “purely
on
the strength of a general
power,” entitled to charge different fares to different passengers
‘‘
simply because the local authority concerned are of opinion that
the favoured class of persons ought
on
benevolent
or
philanthropic
grounds
to
be accorded that benefit.” This is illegal because
“it
would amount simply to the making of a gift
or
present
in
money’s
worth
to
a particular section of the local community at the expense
of the general body
of
ratepayers.” The corporation were required
to run the undertaking as a business venture and, although they
had to aim at providing an efficient service at reasonable cost
(which might involve some degree
of
loss), they should not go out of
their way to make losses by giving away rights of free travel. Con-
cessions in favour of children were readily justifiable on business
principles. Those to blind and disabled persons
“
may perhaps be
classed as a minor act of elementary charity to which
no
reasonable
To continue reading
Request your trial