P ART 3: J UDICIAL R EVIEW , U LTRA V IRES AND N ATURAL
11.6 The Limits of Discretionary Powers
Reference has been made to the general practice of conferring discretion on the initiators of administrative action to determine the limits of their statutory pow- ers whereas the adjudicators – tribunals in particular – usually operate with ref- erence to such discretionary powers. Where an administrative agency’s powers are discretionary so that it is able to make choices before acting, those choices must be made by reference to lawful factors which are expressly or impliedly recognised by and within the statutory limits under which the powers are exer- cised. Equally, any policy which is made by the administrative agency in order to guide the exercise of these discretionary choices must be within the same statutory limits.
Before these principles are explained and illustrated, reference must be made to the leading statement of principle by Lord Greene MR in Associated Provincial Picture Houses Ltd v Wednesbury Corporation(1948). He stated that when a discre- tion is granted:
... the law recognises certain principles upon which that discretion must be exercised, but within the four corners of those principles the discretion ... is an absolute one and cannot be questioned in any court of law. What then are those principles ... The exercise of such a discretion must be a real exercise of the discretion. If, in the statute conferring the discretion, there is to be found expressly or by implication matters which the authority exercising the dis- cretion ought to have regard to, then in exercising the discretion it must have regard to those matters. Conversely, if the nature of the subject-matter and the general interpretation of the Act make it clear that certain matters would not be germane to the matter in question, the authority must disregard those irrelevant collateral matters ... [A] person entrusted with a discretion must ...
direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration mat- ters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said ... to be acting ‘unreasonably’.
A good example of a statutory discretion is to be found in s 8 of the Education Act 1944 by which the council of a local education authority is obliged ‘... to secure that there should be available for their area sufficient schools for provid-
ing full-time education’ suitable to the requirements of pupils. It was decided in Meade v Haringey London Borough Council(1979) that this discretion does not per- mit the council simply to provide school buildings. Through an interpretation of the Act the Court of Appeal decided that the discretion also required the provi- sion of teachers and other essentials if the object of the Act – to secure the edu- cation of children – was to be realised. In other words, these wider requirements mark the limits of the council’s statutory powers, emphasising the fact that it is the court which is the judge of the legal limits of discretionary powers. It was further suggested in Meade that the council would have been acting ultra vires had it been established that its schools had remained closed during a caretakers’
strike as a result of political influences and considerations. In the event, the injunction sought by parents against the council to restrain any further breach of duty under s 8 and to require the reopening of the schools was not granted when, during the litigation, the strike was ended. From the foregoing principles it can be seen that any discretion, whether it relates to the limits of statutory powers (as in Meade) or to a determination of the merits of any case by an administrative agency within those limits, can only be influenced by considera- tions which are legally relevant to the legislation containing the powers. Hence from Meade political reasons for keeping the schools closed were regarded as being legally irrelevant to and ultra viresthe Education Act powers. The same is true of the hypothetical furnished rent tribunal mentioned at the beginning of the present chapter. Where that tribunal, in the course of dealing with the merits of any claim by a tenant within its powers, takes into account some considera- tion which is regarded as alien to the Act conferring the powers, eg that the ten- ant is an immigrant, its eventual decision will again be ultra vires. The same conclusion would be possible upon proof that the administrative agencies in question had used their various statutory powers for improper purposes, that is, unlawful purposes beyond the defined statutory limits.
Assuming that an administrative agency has correctly determined the scope of its statutory powers at the outset, either for the purpose of initiating adminis- trative action or for the purpose of adjudicating some claim or dispute, then it will be action intra vires, that is, within the limits of its statutory powers.
Thereafter, the agency, in dealing with the merits of different alternatives for administrative action or the merits of competing claims, as the case may be, has to avoid the foregoing irrelevant considerations or improper purposes. If it does then its eventual decision or other action will not be ultra vires as long as that decision or other action is expressly or impliedly permitted by the empowering legislation. In so avoiding any review of the legality of its decision or other action, the administrative agency is free, within these legal constraints, to exer- cise its expertise, judgment and opinion in relation to the problem to be dealt with. Accordingly, and by way of illustration, the way in which educational facilities are provided by virtue of s 8 of the Education Act is entirely a matter for the responsible council acting as local education authority. If, therefore, it is felt that more resources are required for the provision of educational facilities to
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benefit particularly deprived members of the community, that is a matter entirely for the council acting within its powers: any such decision cannot be ultra vireswhere it is motivated by educational considerations.
The point is also illustrated in Eckersley v Secretary of State for the Environment (1978) where the Secretary of State confirmed a compulsory purchase order for the acquisition of land to permit the clearance of slum properties, by virtue of powers contained in Part 3 of the Housing Act 1957 now contained in the con- solidating Housing Act 1985. It was decided that the confirmation was ultra vireson the ground that there was a failure to take into consideration compara- tive costs of demolition and rebuilding. Had the Secretary of State lawfully taken these fundamental factors into consideration, his conclusions on cost would not generally have been of any concern to the court. He may have had a policy to aid him in the exercise of his discretionary powers. The policy may have been in favour of saving houses where possible. Accordingly, any decision not to confirm a compulsory purchase order, even though renovation of the housing might cost £500,000 more than demolition and redevelopment, is entirely a matter for the Secretary of State acting within his statutory powers, ie it is a matter going to the merits of the decision, which cannot be challenged as an ultra viresdecision.
11.6.1 The problem of subjectively worded discretionary powers
It has been emphasised that the High Court must be the final arbiter of the outer limits of any discretion conferred on an administrative agency. One of the lead- ing statements of principle comes from the judgment of Sachs J in Customs and Excise Commissioners v Cure and Deeley Ltd(1961). By virtue of s 33 of the Finance (No 2) Act 1940 the Commissioners were empowered to ‘... make regulations providing for any matter for which provision appears to them to be necessary for the purpose of giving effect to the provisions of this Part of this Act and of enabling them to discharge their functions thereunder’. In a set of regulations made in 1945 it was stated that: ‘If a person fails to furnish a return as required by these regulations the Commissioners may ... determine the amount of tax appearing to them to be due from such person ... which amount shall be deemed to be the proper tax due.’ In a claim for purchase tax against the com- pany it was decided that this regulation was ultra viresthe empowering Act. In so deciding, Sachs J rejected the view that the words ‘appear to them to be nec- essary’ when used in a statute conferring powers on a competent authority:
... necessarily make that authority the sole judge of what are its powers as well as the sole judge of the way in which it can exercise such powers as it may have. It is axiomatic that ... ‘the paramount rule remains that every statute is to be expounded according to its manifest or expressed intention’.
It is no less axiomatic that the application of that rule may result in phrases identical in wording or in substance receiving quite different interpretations
according to the tenor of the legislation under consideration. As an apt illus- tration of such a result it is not necessary to go further than Liversidge v Anderson (1942) ... and Nakkuda Ali v Jayaratne (1951) ... in which the words
‘reasonable cause to believe’ and ‘reasonable grounds to believe’ received quite different interpretations.
In Liversidgethe Home Secretary was empowered by Defence Regulation 18B to make order for the detention of persons where he had reasonable cause to believe that they were of hostile origin or association. In an action by a detainee for false imprisonment against the Home Secretary it was found by the House of Lords that there could be no inquiry by the court into the question of whether there were reasonable grounds for the Home Secretary’s belief that a person should be detained, except on proof of bad faith. In exercising his considerable discretion the Home Secretary was responsible only to Parliament, not the court. By contrast, in Nakkuda Ali it has been seen in the chapter on natural jus- tice that a Controller of Textiles in Ceylon was empowered by a regulation gov- erning his powers to cancel textile licences where he had reasonable ground to believe that any dealer was unfit to continue in that capacity. In giving judg- ment the Judicial Committee of the Privy Council sought to emphasise that Liversidgewas a decision referable to its own peculiar wartime context. As to the words in the present case, Lord Radcliffe giving judgment considered that:
... they must be intended to serve in some sense as a condition limiting the exercise of an otherwise arbitrary power. But if the question whether the condition has been satisfied is to be conclusively decided by the man who wields the power the value of the intended restraint is in effect nothing ...
Their Lordships therefore treat the words in [the] regulation ... as imposing a condition that there must in fact exist such reasonable grounds, known to the controller, before he can validly exercise the power of cancellation.
Decisions like that in Liversidge, where the court was effectively saying that it could not define any statutory limits surrounding the minister’s powers, are rare. Indeed, the case is most frequently remembered for the dissenting judg- ment of Lord Atkin who desired that an objective construction be placed on the terms of Defence Regulation 18B. In what was a truly remarkable judgment, Lord Atkin was unashamedly critical of ‘... judges who on a mere question of construction when face to face with claims involving the liberty of the subject show themselves more Executive-minded than the Executive’. However, the trend is very much in a direction where the court will not often find that a com- plete discretion has been granted to a minister or any other administrative agency. In Secretary of State for Employment v ASLEF (No 2) (1972) the court found that the Secretary of State’s decision to order a strike ballot under the Industrial Relations Act 1972 was not ultra vires his powers under the Act.
Nevertheless, and despite the fact that he could take action ‘where it appeared’
to him that irregular industrial action had begun or was likely to begin, this did not mean, according to Lord Denning that:
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... the minister’s decision is put beyond challenge ... [I]f the minister does not act in good faith, or if he acts on extraneous considerations which ought not to influence him, or if he plainly misdirects himself in fact or in law, it may well be that a court would interfere; but if he honestly takes a view of the facts or of the law which could reasonably be entertained, then his decision is not to be set aside simply because thereafter someone thinks that his view was wrong. After all, this is an emergency procedure, it has to be set in motion quickly, when there is no time for minute analysis of facts or of law.
Further important examples in the present context of the court’s concern about discretionary powers are found in Norwich City Council v Secretary of State for the Environment (1982), referred to in Chapter 1, Congreve v Home Office(1976) and Secretary of State for Education and Science v Tameside Metropolitan Borough Council (1977). In Congrevea large number of television licence holders had prematurely renewed their licences in order to avoid paying an increased fee when it came into force subsequently. They were told by the Home Office that unless they paid the balance between the cost of the old licence and the increased cost for new licences, their licences would be revoked. This action was taken under s 1(2) and s 1(4) of the Wireless Telegraphy Act 1949. Section 1(2) states that: ‘A licence ... may be issued subject to such terms, provisions and limitations as the minister may think fit.’ Section 1(4) states that a licence: ‘... may be revoked ... by a notice in writing served on the holder.’ It was found by the Court of Appeal that the powers were not unlimited and could only be exercised to revoke a licence for good reason and the Home Office’s dislike of ‘overlapping’ licences was not a good reason so that the threatened revocation was ultra vires. In the Tameside case a Conservative-controlled education authority refused to imple- ment proposals for the introduction of comprehensive secondary education which had been approved by the Secretary of State for Education when the Labour Party had controlled the authority. Section 68 of the Education Act 1944 empowers the Secretary of State to serve a direction against an education authority if he ‘... is satisfied ... that any local education authority ... have acted or are proposing to act unreasonably with respect to the exercise of any power conferred or the performance of any duty imposed by or under this Act’. In the face of the refusal to implement the proposals for comprehensive education, the Secretary of State served a direction and now sought an order of mandamus to enforce observance of that direction. It was decided by the House of Lords that the direction was ultra vires because there were no grounds for concluding that the authority has acted ‘unreasonably’. Following the dicta of Lord Denning in the ASLEF case, it was considered that although the Secretary of State might legitimately take the view that the authority’s proposal to retain grammar schools and to implement selection procedures for certain schools was mis- guided or wrong, there were no grounds which could justify a conclusion that the proposal was such that no education authority, acting reasonably, would carry it out.
A similar conclusion to that in Tameside was reached by the Court of Appeal in Coleen Properties Ltd v Minister of Housing and Local Government (1971), using the so-called ‘no evidence’ rule. Once again the court was confronted by a min- ister’s statutory powers which appeared to confer a considerable discretion. The Housing Act 1985 empowers the minister to confirm a local authority’s compul- sory purchase order which includes land which is ‘reasonably necessary’, either for the purpose of securing a slum clearance area of convenient shape and dimensions or to secure the satisfactory development or use of the area (s 290(2)). The court concluded that what is ‘reasonably necessary’ is a fundamen- tal question of fact so that if land is to be included in a confirmed order, the minister should have evidence to justify its inclusion. On this basis, the
‘grounds’ which were lacking in the Secretary of State’s action in Tamesidecould have been provided had there been some evidence that the education authority had acted ‘unreasonably’ (a question of fact) in refusing to implement the pro- posals for comprehensive education.