P ART 3: J UDICIAL R EVIEW , U LTRA V IRES AND N ATURAL
11.7 Policy and the Exercise of Discretionary Powers
It has been seen previously that where statute confers a discretion on an admin- istrative agency, that agency has an opportunity to make a choice in determin- ing what action to take or decision to make. In order to guide the making of any such discretionary choice, the administrative agency may adopt a policy. A pol- icy will often be made where the administrative agency is charged with the responsibility of distributing scarce resources in order to achieve what seems to be the most equitable distribution of that resource. A local authority, for exam- ple, may adopt a policy in relation to the payment of grants for the repair and improvement of houses by reference to the high priority needs of certain areas of urban decay. Whatever the policy adopted by an administrative agency, that policy must be within the limits of the powers of the Act in question (Cumings v Birkenhead Corporation(1972)).
11.7.1 Lawful and unlawful policies
If a policy is ultra vires the Act under which an administrative agency is dis- charging its functions, that agency nevertheless acts unlawfully where the pol- icy prevents consideration of the merits of each case. The essence of this legal requirement has been expressed in a number of cases. The requirement was dealt with by Lord Reid in British Oxygen Co Ltd v Minister of Technology(1971):
The general rule is that anyone who has to exercise a statutory discretion must not ‘shut his ears’ to an application ... There may be cases where the Board should listen to argument against the policy. What it must not do is to refuse to listen at all ... a large authority may have had to deal already with many similar applications and then it will almost certainly have evolved a
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policy ... There is no objection to that provided it is always ready to listen to new argument.
In another leading statement of principle, Bankes LJ in R v Port of London Authority, ex p Kynoch (1919) expanded this all important distinction between lawful policies and unlawful, preclusive policies. Referring to a licensing func- tion of the Authority, he observed that:
There are on the one hand cases where a tribunal in the honest exercise of its discretion has adopted a policy, and, without refusing to hear the applicant, intimates to him what its policy is, and that after hearing him it will in accor- dance with its policy decide against him, unless there is something excep- tional in his case ... If the policy has been adopted for reasons which the tribunal may legitimately entertain, no objection could be taken to such a course. On the other hand there are cases where a tribunal has passed a rule, or come to a determination, not to hear any application of a particular char- acter by whomsoever made. There is a wide distinction to be drawn between these two cases.
The basis of these legal requirements relating to policy is that the statutory responsibilities of administrative agencies cannot be fettered or frustrated.
Wherever Parliament has specified by statute that administrative action should be initiated, that administrative disputes should be adjudicated or that applica- tions should be processed, any attendant duty or discretion should be exercised according to law. In R v Secretary of State for the Environment, ex p Brent London Borough Council & Others (1982) the court was concerned with the Secretary of State’s policy to reduce the rate support grant payable to local authorities affected by this policy. Because their rights were adversely affected by the potential loss of grant it was decided that the Secretary of State had not acted fairly towards the local authorities and in so doing had used his policy unlaw- fully to fetter any genuine exercise of his statutory discretion under the Local Government, Planning and Land Act 1980. As a result, the court quashed the decision to reduce the local authorities’ rate support grant.
In the same way that an unlawful policy may preclude or fetter the lawful exercise of a statutory duty or discretion, these statutory responsibilities may also be affected by contracts and other similar transactions. In Ayr Harbour Trustees v Oswald (1883) the trustees were subject to a statutory duty to acquire such land as was required for the construction of harbour facilities. Having pur- chased land, it was agreed that no construction would take place on that land which would injuriously affect other neighbouring land retained by the vendor.
It was decided that this restriction in the agreement was ultra vires the trustees’
statutory duty. Similarly, in William Cory & Son Ltd v Corporation of London (1951) the court refused to imply a term in a contract between the parties that the local authority would not make a bylaw which was inconsistent with the contractual terms. However, there can be no such objection to such a contract or other similar transaction which is consistent with statutory duties or discretions.
It was seen in Chapter 4 that local authorities have wide statutory powers to
undertake a large range of functions involving the making of contracts of all sorts. That such contracts are usually compatible with underlying statutory powers is illustrated by Birkdale District Electricity Supply Co Ltd v Southport Corporation (1926). It was agreed between the parties that the company would not charge higher prices for electricity than those charged by Southport Corporation. Subsequently, the corporation sought an injunction to restrain the company charging higher prices in breach of the agreement. It was found by the court that the agreement was not ultra vires: it was an agreement which was compatible with the corporation’s statutory power to determine the rates for electricity supply. That some contracts and agreements are not incompatible with statutory powers may be represented as a tenuous conclusion, as seen in Terryin the previous chapter. Finally in this context there seems to be a general presumption in the law that where the Crown is concerned, the court, in order to preserve freedom of executive action, will find that a contract or any other similar transaction cannot lawfully fetter the exercise of appropriate statutory or prerogative powers (Crown Lands Commissioners v Page(1960)).
11.7.2 Acts under dictation
There is resort to what is in effect an unlawful policy where an act is performed under dictation. This problem has occurred previously where local authorities in undertaking their statutory film licensing responsibilities have been prepared to grant licences to films approved by the British Board of Film Censors without themselves adjudicating the merits of each film (Ellis v Dubowski (1921)). In H Lavender & Son Ltd v Minister of Housing and Local Government (1970) the minis- ter, in determining a planning appeal in respect of a proposal to extract minerals from high-grade agricultural land, indicated that it was his policy not to permit such extraction in such areas unless the Minister of Agriculture was not against the proposal. The court quashed the minister’s decision on the ground that the policy precluded an exercise of the minister’s statutory discretion so that in fail- ing to determine the appeal himself, he had acted ultra vires. An opinion from the Secretary of State confirming that he would grant planning permission on appeal in conformity with a department circular is ultra vireswhen it influenced the local planning authority’s decision: R v Worthing Borough Council, ex p Burch (1983). Even in the absence of a policy an administrative agency may act unlaw- fully under dictation. In Laker Airways Ltd v Department of Trade (1977) which was previously dealt with in Chapter 9 under the heading of ‘Estoppel’, the Civil Aviation Authority had to review Laker Airways’ licence to operate
‘Skytrain’, acting under dictation from the Department of Trade. It was decided that any withdrawal of the licence was ultra vires because the Department had no power to give ‘directions’ to the Authority which, under the Civil Aviation Act 1971, was subject only to ‘guidance’ from the Department. Whether a policy is unlawfully preclusive is a matter of fact in each case. In Attorney General, ex rel Tilley v Wandsworth London Borough Council (1981) the local authority adopted a
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policy that whenever any case of an intentionally homeless family was before the social services committee it would not provide accommodation by virtue of s 1(1) of the Children and Young Persons Act 1963 which allows ‘assistance in kind’ (including the provision of accommodation) as part of the local authority’s statutory duty to promote children’s welfare. There was evidence before the court that exceptions to the policy could be made in appropriate cases.
However, it was decided by the court that the policy was unlawful: the commit- tee would be much influenced by the policy to an extent that there would be doubts as to the fairness of decisions made. The mere existence of the policy meant that in operating s 1(1) there would be differentiation between children according to the conduct of their parents.
Tilley was distinguished by the House of Lords in Re Findlay (1984) where the Home Secretary’s parole policy was in issue in proceedings where prisoners claimed that they had suffered loss of expectation of parole. The policy here was regarded as a complex one but perfectly lawful in so far as the merits of cases in particular categories could still be considered.
11.7.3 The interpretation and application of policy
Where an administrative agency indicates reliance on a policy for the purpose of making a decision or taking any other administrative action, the law may require a correct interpretation and application of that policy. The precise requirements were set out in Niarchos v Secretary of State for the Environment (1978) where it was considered to be:
... trite law that the Secretary of State is entitled to have a policy and to change it from day to day, and accordingly he is not bound to apply (although he must have regard to) the policy ... However ... when he expresses himself to be deciding a case under a stated policy, it must follow that if he decides the case other than in accordance with the policy he misdi- rects himself ... where there are no other considerations. Accordingly, ... if he misdirects himself as to the provisions of the policy he acts in excess of his power.
Although this case related to the Secretary of State’s determination of a plan- ning appeal, where the Town and Country Planning Act 1971 s 29 ( the prede- cessor of s 70 of the Town and Country Planning Act 1990) required him to have regard to the policy in the appropriate development plan and to any other material considerations, the principle could be applicable elsewhere in other statutory contexts.