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Cases: Substantive Review
Nottinghamshire County Council v Secretary of State for the Environment  AC 240, Lord Scarman
Summary: The Secretary of State gave guidance to local authorities over their spending which the respondent authorities felt unfairly discriminated against them as being over-spending councils. They contended that the differentiation between high-spending and low-spending authorities was unlawful. Held, that the guidance given by the Secretary of State was lawful and proper. The Secretary of State was obliged to adhere to consistent principles, but those principles themselves could properly contain matters differentiating between high-spending and low-spending authorities. Only if there was an allegation of bad faith, or something akin thereto, could the court properly intervene on a ground of "unreasonableness," particularly where the matter was one for the political judgment of the Secretary of State.
Lord Scarman (Generally very impressed with fact that House of Commons has assented to the policy): He was empowered to issue guidance by section 59 of the Local Government, Planning and Land Act 1980 ("the Act"). It is this guidance which the respondents challenge as unlawful. They make two submissions. First, they submit that the guidance does not comply with subsection (11A) of section 59 of the Act in that it was not "framed by reference to principles applicable to all local authorities." This submission was rejected by the trial judge (Kennedy J.) but accepted on appeal by the Court of Appeal (Lawton, Slade and Dillon L.JJ.). In his speech to your Lordships my noble and learned friend, Lord Bridge of Harwich, considers the Act as amended, and advances his reasons for holding that on the true construction of the subsection the Secretary of State's guidance was framed by reference to principles applicable to all authorities. I agree with him. Accordingly, I confne my speech to the respondents' second submission to which I now turn.
Their second submission is that, even if the guidance complies with the words of the statute, it offends a principle of public law in that the burden which the guidance imposes on some authorities, including Nottingham and Bradford, is so disproportionately disadvantageous when compared with its effect upon others that it is a perversely unreasonable exercise of the power conferred by the statute upon the Secretary of State. (Wed irrational) Neither the trial judge nor the Court of Appeal accepted the second submission. But much has been made of it in the courts below and in your Lordships' House. The respondents' case is that the guidance is grossly unfair, some authorities doing disproportionately well and others being hit undeservedly hard. Your Lordships have been taken through the detail and have been invited to hold that no reasonable Secretary of State could have intended consequences so disproportionate in their impact as between different local authorities. The House is invited in its judicial capacity to infer from these consequences that the Secretary of State must have abused the power conferred upon him by the Act. The submission raises an important question as to the limits of judicial review. We are in the feld of public fnancial administration and we are being asked to review the exercise by the Secretary of State of an administrative discretion which inevitably requires a political judgment on his part and which cannot lead to action by him against a local authority unless that action is frst approved by the House of Commons.
The Secretary of State's guidance which is challenged was included in the Rate Support Grant Report for 1985-86 which was laid before and approved by the House of Commons: no payment of grant, and no reduction in the amount of grant by the Secretary of State applying a multiplier pursuant to section 59 of the Act, can be made unless covered by the report or by a supplementary report and approved by the House of Commons. I am not surprised that the trial judge and Court of Appeal declined to intervene. My Lords, I think that the courts below were absolutely right to decline the invitation to intervene. I can understand that there may well arise a justiciable issue as to the true construction of the words of the statute and that, if the Secretary of State has issued guidance which fails to comply with the requirement of subsection (11A) of section 59 of the Act of 1980 the guidance can be quashed. But I cannot accept that it is constitutionally appropriate, save in very exceptional circumstances, for the courts to intervene on the ground of "unreasonableness" to quash guidance framed by the Secretary of State and by necessary implication approved by the House of Commons, the guidance being concerned with the limits of public expenditure by local authorities and the incidence of the tax burden as between taxpayers and ratepayers. Unless and until a statute provides otherwise, or it is established that the Secretary of State has abused his power, these are matters of political judgment for him and for the House of Commons. They are not for the judges or your Lordships' House in its judicial capacity. For myself, I refuse in this case to examine the detail of the guidance or its consequences. My reasons are these. Such an examination by a court would be justifed only if a prima facie case were to be shown for holding that the Secretary of State had acted in bad faith, or for an improper motive, or that the consequences of his guidance were so absurd that he must have taken leave of his senses. The evidence comes nowhere near establishing any of these propositions. Nobody in the case has ever suggested bad faith on the part of the Secretary of State. Nobody suggests, nor could it be suggested in the light of the evidence as to the matters he considered before reaching his decision, that he had *248 acted for an improper motive. Nobody now suggests that the Secretary of State failed to consult local authorities in the manner required by statute. It is plain that the timetable, to which the Secretary of State in the preparation of the guidance was required by statute and compelled by circumstance to adhere, involved him necessarily in framing guidance on the basis of the past spending record of authorities. It is recognised that the Secretary of State and his advisers were well aware that there would be inequalities in the distribution of the burden between local authorities but believed that the guidance upon which he decided would by discouraging the high spending and encouraging the low spending authorities be the best course of action in the circumstances. And, as my noble and learned friend, Lord Bridge of Harwich, demonstrates, it was guidance which complied with the terms of the statute. This view of the language of the statute has inevitably a signifcant bearing upon the conclusion of "unreasonableness" in the Wednesbury sense. If, as your Lordships are holding, the guidance was based on principles applicable to all authorities, the principles would have to be either a pattern of perversity or an absurdity of such proportions that the guidance could not have been framed by a bona fde exercise of political judgment on the part of the Secretary of State. and it would be necessary to fnd as a fact that the House of Commons had been misled: for their approval was necessary and was obtained to the action that he proposed to take to implement the guidance. " Wednesbury principles" is a convenient legal "shorthand" used by lawyers to refer to the classical review by Lord Greene M.R. in the Wednesbury case of the circumstances in which the courts will intervene to quash as being illegal the exercise of an administrative discretion. No question of constitutional propriety arose in the case, and the Master of the Rolls was not concerned with the constitutional limits to the exercise of judicial power in our parliamentary democracy. There is a risk, however, that the judgment of the Master of the Rolls may be treated as a complete, exhaustive, defnitive statement of the law. The law has developed beyond the limits understood to apply to judicial review as practised by the courts in 1948. The ground upon which the courts will review the exercise of an administrative discretion by a public offcer is abuse of power. Power can be abused in a number of ways: by a mistake of law in misconstruing the limits imposed by statute (or by common law in the case of a common law power) upon the scope of the power; by procedural irregularity; by unreasonableness in
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