Maladministration of planning authority on development. Judicial Review upholds 80% pay out reduction

A district council has paid a complainant only 20% of a £250,000 sum recommended by the Local Government Ombudsman and fought off a judicial review challenge to its decision not to pay.

In Nestwood Homes Developments Ltd, R (On the Application Of) v South Holland District Council [2014] the council took enforcement action against the developer contrary to legal advice and national planning policy guidance.

Based on plans that clearly showed raised site levels a council officer had confirmed that conditions attached to planning permission had been satisfied. So Nestwood started building works.

Neighbours complained. The council told Nestwood that it did not have planning permission for raised site levels.

The company resisted, so the council got counsel’s opinion. This was that the local authority had granted planning permission for the raised levels and that permission would remain valid if not quashed by judicial review.

Nestwood said that the council’s actions had caused significant loss to the business, distress to individual buyers concerned and reputational damage amounting to £1.2m.

The authority’s decision whether or not to accept and act on the Ombudsman’s recommendations on remedies is governed by usual, general public law requirements of good faith, rationality, fairness and so on. The rationality of a proposed response has to be assessed taking account of the binding findings of maladministration, injustice and loss which have been made.

Nestwood claimed:

i) The Council failed to provide adequate reasons;

ii) The Council gave excessive weight to the issue of the affordability of a payment and failed to take relevant considerations properly into account;

iii) The Council took the decision in an unfair way, in that it did not afford Nestwood an opportunity to make oral or written representations;

iv) The Council gave the appearance of predetermination and unfairness and a closed mind;

v) The decision was irrational and perverse.

The High Court said maladministration ombudsman findings do not have the same effect as those as to some other breach of public or private law duty.

The Ombudsman’s recommendation had to be taken very seriously by the authority but it leaves scope for that authority to have regard to other pressing aspects of the public interest in deciding whether or not to accept and act upon the recommendation.

The court ruled the council had given sufficient reasons.

What was affordable was not an exact science – “it is matter of evaluative judgment” in “the context of the local authority’s finances in this case” not for “precise calculation or elaborate explanation”. On affordability, the financial constraints were severe and the council was entitled to give them significant weight.

Though the amount of the payment was close to the lowest acceptable the council had not behaved irrationally or unlawfully in weighing the competing factors as it had.

On fairness, the High Court said the council did make the chief executive’s report available before the meeting and did give Nestwood an opportunity to make written representations. The obligation to act fairly involved no more than this – the council was not duty bound to give the company an opportunity to make oral representations at the council meeting.

On the suggestion of predetermination, the council members were entitled to have regard to affordability. They did not have a closed mind just because they had a disposition to conserve council finances to provide services in its area.

On the perversity challenge,it failed for the foregoing reasons. The Council did not act irrationally or unlawfully in making the decision it did.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.