R v Secretary of State for The Environment and William Morrison Supermarket Plc ex parte Kirkstall Valley Campaign Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE SEDLEY |
| Judgment Date | 06 March 1996 |
| Judgment citation (vLex) | [1996] EWHC J0306-6 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | CO/1314/95 |
| Date | 06 March 1996 |
[1996] EWHC J0306-6
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(CROWN OFFICE LIST)
Before: Mr Justice Sedley
CO/1314/95
MISS H MOUNTFIELD for MR J HOBSON and MR P STINCHCOMBE instructed by (Godlove Pearlman, Leeds) appeared on behalf of the Applicants.
MR R DRABBLE QC , MR D ELVIN and MR J LITTON instructed by (The Treasury Solicitors) appeared on behalf of the Secretary of State for the Environment.
MR G RYAN QC and MR J MILNER instructed by (Gordons, Wright & Wright, Bradford) appeared on behalf of William Morrison Supermarket Plc.
(As Approved)
Wednesday, 6th March 1996
MR JUSTICE SEDLEYThis application for judicial review raises questions of some importance about the obligation of members of a statutory corporation to abstain from participation in the corporation's proceedings when matters arise in which they have a pecuniary or personal interest.
The urban development corporation
The corporation in question is the Leeds Development Corporation, which came into being by ministerial Order in June 1988, lost its powers in March 1995 and ceased to exist in July 1995. The power under which it was brought into being and functioned is to be found in Part XVI of the Local Government Planning and Land Act 1980. Within this Part, section 134 allows the Secretary of State, if 'of opinion that it is expedient in the national interest to do so', to designate any area of land as an urban development area. Section 135 then provides:
"(1) For the purposes of regenerating an urban development area, the Secretary of State shall by Order made by statutory instrument establish a corporation (an urban development corporation) for the area.
(4) An urban development corporation shall be a body corporate ………..
……………….
(6) It is hereby declared that an urban development corporation is not to be regarded as the servant or agent of the Crown or as enjoying any status, immunity or privilege of the Crown and that the corporation's property is not to be regarded as the property of, or property held on behalf of, the Crown."
The general powers of the Corporation were those set out in section 136:
"(1) The object of an urban development corporation shall be to secure the regeneration of its area.
(2) The object is to be achieved in particular by the following means (or by such of them as seem to the corporation to be appropriate to its area), namely, by bringing land and buildings into effective use, encouraging the development of existing and new industry and commerce, creating an attractive environment and ensuring that housing and social facilities are available to encourage people to live and work in the area."
The section goes on in sub-section (3) to empower an urban development corporation to hold land, provide services and conduct undertakings for its statutory purposes. It then provides:
"(6) To avoid doubt it is declared that sub-section (3) above relates only to the capacity of an urban development corporation as a statutory corporation; and nothing in this section authorises such a corporation to disregard any enactment or rule of law."
By the Leeds Development Corporation (Planning and Functions) Order 1988, in the exercise of power conferred by section 149, the Corporation became the local planning authority for all but strategic purposes in lieu of the local authority, Leeds City Council.
The Leeds Development Corporation (Transfer of Property Rights and Liabilities) Order 1995, by which the Corporation was wound up transferred its property, rights and liabilities to the Secretary of State for the Environment who, in consequence, appears by counsel not in his own right but as the legal successor to the Corporation. This brings the adventitious benefit that the submissions on behalf of the first respondent have been based upon the accumulated experience of the responsible Department of State.
Schedule 26 to the Act of 1980 makes provision for the composition and proceedings of UDCs. They are to have a chairman, a deputy chairman and between 5 and 11 members, all appointed by the Secretary of State. Paragraph 2(2) provides:
"In appointing members of the corporation the Secretary of State shall have regard to the desirability of securing the services of people having special knowledge of the locality in which the urban development area is or will be situated."
By paragraph 9 members may resign, and by paragraph 6 the Secretary of State may remove members from office on various grounds, including unsuitability to continue as a member. By paragraph 8, members are to be paid for their services. Under the cross-head 'Meetings and Proceedings' the schedule provides:
"13. The quorum of the corporation and the arrangements relating to its meetings shall, subject to any directions given by the Secretary of State, be such as the corporation may determine.
14. The validity of any proceeding of the corporation shall not be affected by any vacancy among its members or by any defect in the appointment of any of its members."
The applicant
This application is made by Mr John Hobson on behalf of Kirkstall Valley Campaign, a company limited by guarantee. It is opposed by Mr Richard Drabble QC on behalf of the Secretary of State for the Environment and by Mr Gerard Ryan QC on behalf of William Morrison Supermarket plc, which has bought the land to which the decisions now under challenge relate in the expectation of benefiting by the material consents. Following the grant of leave to move by Turner J on the 23rd October 1995, Dyson J refused the second respondent's application for an order that the applicant, being a limited company, give security for costs. Before me neither respondent has taken any point upon the locus of the applicant, and for my part I have no doubt that its capacity as a community action group concerned with the interests of local residents in the development of Kirkstall Valley gives it a sufficient interest in the subject matter of the application. I was, however, concerned to know whether the Campaign had incorporated itself purely for the purpose of litigation. This issue arose in R v Secretary of State for the Environment, ex parte Rose Theatre Trust Company [1990] 1 QB 504, where it emerged that the Company had been formed for the purpose of litigating; the point was met by the substitution of some of its individual members as applicants. In the present case I am told that the Campaign, in existence since 1988, was incorporated in November 1993 in order to be able to raise and hold funds. This being so, the problem which initially arose in the Rose Theatre case of a colourable incorporation for the sole apparent purpose of escaping the impact of a costs order does not arise here. For the rest, I have no doubt that the respondents were right not to question the sufficiency of the applicant's interest in the matters before the court.
Standards of conduct
The analogies between an urban development corporation and a local authority, as well as the important difference that the members of the one are appointed for specific purposes and of the other are elected for various purposes, are readily apparent. The Secretary of State, plainly recognising the potential for unanticipated conflicts of interest created in particular by paragraph 2(2) of schedule 26, has issued a succession of Codes of Conduct for the chairmen and board members of urban development corporations. The version which was sent to the chairman of the Leeds Development Corporation, Mr Peter Hartley, with his letter of appointment had been promulgated earlier in 1988. It contained the following paragraphs:
"Political Activities.
1. Chairmen and Board members should not serve as executive officers of a political party. This rule does not apply to chairmen and board members who are also members of local councils.
2. Subject to the above paragraph, chairmen and members including those who are members of local councils are free to engage in political activities provided:
(a) They are conscious of their general public responsibility;
(b) They exercise discretion, particularly in regard to the work of the Corporation;
(c) They do not make political speeches, or engage in other political activities on matters affecting the Corporation's work.
……………………………
4. Chairmen and Board members may maintain associations with trade bodies, trade unions, co-operative societies, etc. provided that such associations do not conflict with the Board's interests.
5. Any Chairman or Board member who is doubtful about the application of these rules, or about the propriety of any political activity, should seek guidance from the Secretary of State.
CONFLICTS OF INTEREST AND BUSINESS ACTIVITIES —BOARD MEMBERS.
6. Board members should avoid situations in which their duties and private interests conflict or where there could be a suspicion of conflict.
7. When members are appointed to the board they should declare to the board their private interests which are likely to give rise to conflict.
8. Cases where conflict of interests would be likely to arise including cases where any company or body in which a member has an interest:
a. In cases of land or property transactions with the UDC;
b. Seeks financial assistance from the UDC;
c. Seeks planning or other regulatory consent from the UDC;
d. Engages in consultancy to any commercial undertaking which has contracts with the UDC.
A conflict of interest will also arise if a member has an...
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