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04 JUL 2013

R (on the application of Nash) v Barnet London Borough Council [2013] EWHC 1067 (Admin); (2013) PLLR 072

Local government - provision of services - outsourcing - procurement - award of contract - grounds for judicial review - delay - rule 5.4 Civil Procedure Rules - time limits - R (Burkett) v Hammersmith and Fulham London Borough Council - duty to consult - section 3(2) Local Government Act 1999 - public sector equality duty - section 149 Equality Act 2010 - fiduciary duty

An application for judicial review was out of time when it related not in fact to a decision to award outsourcing contracts, but rather to the prior decision to outsource certain services provided by the local authority. Had it not been out of time, permission would have been granted on the basis that the local authority had not fulfilled the requirement to consult laid down by section 3(2) of the Local Government Act 1999.

29 April 2013

Administrative Court

Underhill LJ

(1)        The claimant (N) sought permission to apply for judicial review of the decision of the defendant local authority (B) to award a contract for the provision of services to a preferred contractor, as well as an impending decision to award a similar contract to one of a number of interested parties.

(2)        The grounds for review were that B had failed to fulfil its duty to consult under section 3(2) of the Local Government Act 1999 (the 1999 Act); that the decision to award the contract breached the public sector equality duty under section 129 of the Equality Act 2010  (the 2010 Act) by virtue of the Equality Impact Assessment having been carried out too late and not having taken into account sufficient information to properly evaluate the impact of outsourcing on protected groups; finally, that B had breached its fiduciary duty.

(3)        Underhill LJ held: That N was out of time on all three grounds of review; rule 54.5 of the Civil Procedure Rules required claims to be brought within three months, and section 31(6) of the Senior Courts Act 1981 (the 1981 Act) granted the court discretion to refuse leave to make an application on the grounds that there has been undue delay likely to prejudice good administration. Although N's claims purported to relate to B's decision, taken in 2012, to award an outsourcing contract, the substance of the claim was in fact a challenge to the much earlier decisions (in 2010/2011) to outsource certain services and begin a tendering exercise. As regards the consultation claim, if any such duty arose it had arisen when the original decision was made. Even if there was an ongoing breach, time ran from the point at which the grounds first arose. If a duty to consult arose it related to policy and not specific operational decisions. The decision in R (Burkett) v Hammersmith and Fulham London Borough Council [2002] 1 WLR 1593 did not allow time to run from the date of the latest in a series of decisions where an identical challenge could have been made at an earlier point. If the earlier decision is merely preliminary or provisional the subsequent decision will be treated as a new one, but where distinct decisions form different stages of the same process, it is necessary to decide which one is in fact being challenged in order to decide when time begins to run. The 2010/2011 decisions were clearly distinct substantive decisions. They were not preliminary, provisional or contingent. They led the Council to take significant action and spend a considerable amount of money. There were no grounds to extend time. The Council had acted on the basis that its decision were lawful and to grant permission would be contrary to principles of good administration. The Council had not acted in a covert manner and the decisions, and their controversial nature, had been well known since the time at which they were made. The argument relating to failure to draw up an EIA sufficiently early was also out of time, although the claim relating to the sufficiency of evidence could be pursued; however, only those aspects of the later decision which were genuinely distinct from what had already been decided could be challenged. The fiduciary duty claim was also out of time [33] - [35], [41] - [43], [49], [53], [55] - [58].

(4)        It was clear that B had not conducted a consultation specifically addressing the question of outsourcing. The question was whether section 3(2) of the 1999 Act required B to go further, consulting with representatives of the kind identified by section 3(2): council tax payers, those who use or are likely to use services, and those who have an interest in any area within which the authority carries out its functions. It was not possible to consult on an issue without directly inviting views on it; consultation on general matters did not fulfil this role or the duty. Not only was this a natural reading of the statutory language in its context, but it also accorded with what Parliament could be expected to have intended. This interpretation left local authorities with broad discretion as to how to fulfil the duty and did not impose an unreasonable burden. B was not required to consult on specific decisions, but it was required to give representatives to the opportunity to express their views about outsourcing generally. Statute did not require B to go further than consulting with representatives of the groups named generally, as opposed to directly with individuals. If the application had been made on time B would have been held to have been in breach of section 3(2). This would not have necessarily led to the quashing of the impugned decision; it would have been necessary to consider whether relief should be withheld under section 31 of the 1981 Act on the basis that the challenge could have been brought at an earlier stage and to grant relief may have prejudiced good administration [73] - [76].

(5)        The EIA clearly showed that due regard had been paid to the impact of the decision on protected groups. N's claim that the information on which the assessment was made was insufficient was wrongheaded in that B had concentrated on whether the contractual provisions it entered into with service providers were sufficient to ensure that service levels would remain the same, and had taken the view that they were. Permission to challenge would be refused [83] - [84].

(6)        Although views differed over the degree of financial analysis which should be undertaken prior to making a decision, there was nothing to suggest that B's analysis came anywhere near the level required to show reckless disregard sufficient for a claim of breach of fiduciary duty. Permission would not have been granted on this head even if the claim were in time [88].

Permission to apply for judicial review refused

Key paragraphs

[1] - [5] Introduction

[6] - [20] The decision-making process

[21] - [29] The issues

[30] - [60] Is the claim in time?

[61] - [77] Consultation

[78] - [87] Public sector equality duty

[88] - Breach of fiduciary duty

[89] - [90] Conclusion.

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