Lake airways Ltd v Dept of trade [1977] QB 643

• A government department minister introduced legislation to allow competition between national and private airlines and gave himself the powers of “guidance” to achieve this.

• He gave a new airline the right to compete with the nationalised airline over long haul flights and encouraged it to outlay capital expenditure, but then reversed the policy (under the guise of “guidance”) after the airline had spent loads of money in preparation for the venture.

• However CA ruled that he had over-extended his right of guidance since it was only used to the ends of securing the initial objective (competition).

Lord Denning

As the exercise of the Crown's prerogative is discretionary, the courts are entitled to see that it is not exercised improperly or mistakenly