Porter v Magill
| Jurisdiction | England & Wales |
| Judge | Lord Justice Kennedy,Lord Justice Robert Walker |
| Judgment Date | 30 April 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0430-5 |
| Docket Number | QBCOF 98/0316/4 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 April 1999 |
[1999] EWCA Civ J0430-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
(Rose LJ, Latham J and Keene J)
Royal Courts of Justice
Lord Justice Kennedy
Lord Justice Schiemann
Lord Justice Robert Walker
QBCOF 98/0316/4
QBCOF 98/0884/4
and
LORD LESTER OF HERNE HILL Q.C., MR. J. McMULLEN Q.C., MR. S. CAKEBREAD and MISS CLARE ROBERTS (instructed by Messrs Nicholson Graham & Jones, London, EC4) appeared on behalf of Dame Shirley Porter.
MR. S. CAKEBREAD and MISS CLARE ROBERTS (instructed by Messrs Nicholson Graham & Jones, London, EC4) appeared on behalf of Mr. David Weeks.
MR. J. HOWELL Q.C. and MISS K. McHUGH (instructed by Messrs Rowe & Maw, London, EC4) appeared on behalf of the Respondent Mr. John Magill.
This judgment is in three sections. The first section is an introduction which comes conveniently at the beginning of this judgment, but which is in fact an introduction provided by the court. A more detailed summary of events covering the years 1986 to 1989 can be found at the start of the judgment of Robert Walker LJ. The second section of this judgment looks at the decision of the Divisional Court in relation to the issue of liability, and the third section deals with my approach to that issue. My conclusions in relation to that issue make it unnecessary for me to deal with the other two issues, namely fairness and quantum, but fairness is dealt with in the judgment of Schiemann LJ, with which I agree, and I also agree with that part of the judgment of Robert Walker LJ which deals with quantum.
This is an appeal by Dame Shirley Porter and Mr David Weeks from an order of the Divisional Court (Rose LJ and Latham and Keene JJ) made on 19 December 1997. The Divisional Court had heard appeals under s. 20(3) of the Local Government Finance Act 1982 ('the 1982 Act') by five individuals (three former members and two former officers of the Westminster City Council) against whom the appointed auditor, Mr John Magill, had issued certificates of loss under s. 20(1) of the 1982 Act.
The Divisional Court allowed the appeals of three of the appellants (Mr Peter Hartley, Mr Graham England and Mr Bill Phillips). It reduced the amount of the loss certified against Dame Shirley and Mr Weeks but dismissed their appeals on liability. They appeal to this court on issues of procedural unfairness, liability and quantum. The auditor by a respondent's notice seeks to reverse the reduction in quantum.
Elected members and senior officers of local authorities are in the position of trustees for their ratepayers and since the 19th century there have been statutory procedures of audit and surcharge as a sanction against losses to ratepayers caused by unlawful expenditure or wilful misconduct on the part of members or senior officers of local authorities. The provisions in force at the material time (since re-enacted in the Audit Commission Act 1998) were in Part III of the 1982 Act.
Section 11 of the 1982 Act provided for the establishment of the Audit Commission for Local Authorities in England and Wales ('the Audit Commission'). Sections 12 to 16 provided for the Audit Commission to appoint auditors and for the appointed auditors to audit local authorities' accounts in accordance with a code of audit practice prescribed by the Audit Commission, with statutory powers of obtaining documents and information. Section 15(3) was in the following terms,
"(3) The auditor shall consider whether, in the public interest, he should make a report on any matter coming to his notice in the course of the audit in order that it may be considered by the body concerned or brought to the attention of the public, and shall consider whether the public interest requires any such matter to be made the subject of an immediate report rather than of a report to be made at the conclusion of the audit."
Section 17 provided for accounts to be open for public inspection, and by s. 17(3) any local government elector might (on notice under s. 17(4)) make an objection as to any matter in respect of which the auditor could take action under s. 19 or s. 20, or could make a report under s. 15(3).
Section 19(1), (2) and (3) were in the following terms,
"(1) Where it appears to the auditor carrying out the audit of any accounts under this Part of this Act that any item of account is contrary to law he may apply to the court for a declaration that the item is contrary to law except where it is sanctioned by the Secretary of State
(2) On an application under this section the court may make or refuse to make the declaration asked for, and where the court makes that declaration, then, subject to subsection (3) below, it may also —
(a) order that any person responsible for incurring or authorising any expenditure declared unlawful shall repay it in whole or in part to the body in question and, where two or more persons are found to be responsible, that they shall be jointly and severally liable to repay it as aforesaid;
(b) if any such expenditure exceeds £2,000 and the person responsible for incurring or authorising it is, or was at the time of his conduct in question, a member of a local authority, for him to be disqualified from being a member of a local authority for a specified period; and
(c) order rectification of the accounts.
(3) The court shall not make an order under subsection (2)(a) or (b) if the court is satisfied that the person responsible for incurring or authorising any such expenditure acted reasonably or in the belief that the expenditure was authorised by law, and in any other case shall have regard to all the circumstances, including the person's means and ability to pay that expenditure or any part of it."
The following subsections contained ancillary provisions, including rights of appeal for objectors under s. 17(3). Section 20(1),(2),(3) and (4) were in the following terms,
"(1) Where it appears to the auditor carrying out the audit of any accounts under this Part of this Act —
(a) that any person has failed to bring into account any sum which should have been so included and that the failure has not been sanctioned by the Secretary of State; or
(b) that a loss has been incurred or deficiency caused by the wilful misconduct of any person,
he shall certify that the sum or, as the case may be, the amount of the loss or the deficiency is due from that person and, subject to subsections (3) and
(5) below, both he and the body in question (or, in the case of a parish meeting, the chairman of the meeting) may recover that sum or amount for the benefit of that body; and if the auditor certifies under this section that any sum or amount is due from two or more persons, they shall be jointly and severally liable for that sum or amount.
(2) Any person who —
(a) has made an objection under section 17(3)(a) above and is aggrieved by a decision of an auditor not to certify under this section that a sum or amount is due from another person; or
(b) is aggrieved by a decision of an auditor to certify under this section that a sum or amount is due from him,
may not later than six weeks after he has been notified of the decision require the auditor to state in writing the reasons for his decision.
(3) Any such person who is aggrieved by such a decision may appeal against the decision to the court and —
(a) in the case of a decision to certify that any sum or amount is due from any person, the court may confirm, vary or quash the decision and give any certificate which the auditor could have given;
(b) in the case of a decision not to certify that any sum or amount is due from any person, the court may confirm the decision or quash it and give any certificate which the auditor could have given;
and any certificate given under this subsection shall be treated for the purposes of subsection (1) above and the following provisions of this section as if it had been given by the auditor under subsection (1) above.
(4) If a certificate under this section relates to a loss or deficiency caused by the wilful misconduct of a person who is, or was at the time of such misconduct, a member of a local authority and the amount certified to be due from him exceeds £2,000, that person shall be disqualified for being a member of a local authority for the period of five years beginning on the ordinary date on which the period allowed for bringing an appeal against a decision to give the certificate expires or, if such an appeal is brought, the date on which the appeal is finally disposed of or abandoned or fails for non-prosecution."
The following subsections contained ancillary provisions. It will be apparent that section 20 is concerned with the most serious breaches of duty (failure to account, or wilful misconduct causing loss) and that neither the auditor nor the court has any discretion as to the amount to be certified.
The principal events relevant to this appeal were concerned with housing policies in the City of Westminster between 1986 and 1989. Those events were examined in great detail in a history of events which formed part of the auditor's report and decisions. There is little or no challenge to the accuracy of that history, so far as primary facts are concerned, although the conclusions drawn are matters of acute controversy.
By way of introduction it is useful to isolate a few landmark dates and events. On 8 May 1986 there were local elections at which the Conservative group on the Westminster City Council was returned to power, but with a greatly reduced majority. Dame...
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