In a judgment handed down on 10 May 2023, the Court of Appeal held that the Local Government and Social Care Ombudsman did not have a power to withdraw a report issued on completion of his investigation. We consider below the implications of the judgment for public bodies when discharging their functions, including when carrying out reviews and responding to legal challenges.
In August 2019 the Local Government and Social Care Ombudsman (the “Ombudsman”) issued a final report following his investigation of a complaint made by Piffs Elm Limited (“Piffs Elm”). The complaint initially concerned a decision by Tewkesbury Borough Council (the “Council”) not to consider a repeat planning application made by Piffs Elm. However, the complaint was narrowed during the course of the investigation to focus solely on whether the Council had acted with maladministration by refusing the refund the fee (£41,244) paid by Piffs Elm at the time of submitting a third planning application (the “Fee”).
The role of the Ombudsman is to investigate complaints of maladministration made against bodies within his jurisdiction, in connection with (in this context) their administrative functions. Importantly, the Ombudsman does not have any power to resolve legal disputes and his statutory scheme provides that he should not ordinarily investigate matters for which a complainant has or had an alternative legal remedy before a court or tribunal.
After seeking to grapple with the legal issues raised by Piffs Elm’s complaint, and various challenges to his jurisdiction, the Ombudsman issued his August 2019 report (the “2019 Report”) which found that the Council had a discretion to refund the Fee and had acted with maladministration by failing to consider whether to do so. To remedy that fault, the Ombudsman recommended that the Council consider whether to exercise its discretion and inform the complainant of its decision.
The Council challenged the 2019 Report in pre-action correspondence, arguing that it did not have any power or discretion to refund the Fee or, in the alternative, that the legal question over whether or not the Council did have any such power or discretion was so uncertain that it could not amount to maladministration for the Council to have reached a different view. This was consistent with an established line of authority that maladministration and unlawfulness are distinct concepts so that there may be unlawfulness without maladministration, and vice versa.
The Ombudsman agreed that the 2019 Report contained errors of law and agreed to withdraw it (the “Withdrawal Decision”). The Ombudsman wrote to the parties explaining his decision, and confirming that he would re-open his investigation and issue a further decision in due course. The Ombudsman subsequently issued a new draft report in January 2020 which proposed to find that he could not make a decision on whether the Council had a discretion to refund the Fee as that was a question of law, and therefore a matter for the courts. The Ombudsman also considered in any event that the Council had reasonable arguments in support of its position such that it had not acted with maladministration.
The Ombudsman issued a second final report in February 2021 (the “2021 Report”), which was materially consistent with the draft report he had issued in January 2020.
Piffs Elm brought Judicial Review proceedings against the Ombudsman alleging, amongst other matters, that the Withdrawal Decision was unlawful. This was because, it was argued, the Ombudsman had discharged his function on issue of the 2019 Report, which he did not have any power to withdraw, and he was therefore functus officio.
To protect its position, the Council also brought a separate Judicial Review claim against the Ombudsman so that it could challenge the 2019 Report if the court found that the Withdrawal Decision was unlawful. Both sets of proceedings were heard together.
The High Court’s decision
The High Court rejected Piffs Elm’s claim and held that the Ombudsman did have a power to withdraw the 2019 Report in order to conduct further investigation and issue a further report. Whilst it was common ground that no such express power existed in the Ombudsman’s statutory scheme, there was an implied power under section 12(1) of the Interpretation Act 1978 (the “1978 Act”). This provision states that where an enactment confers a power or imposes a duty it is implied, unless a contrary intention appears, that the power may be exercised, or the duty performed, from time to time as the occasion requires.
In her judgment, Mrs Justice Heather Williams DBE found that Parts 3 and 3A of the Local Government Act 1974 (the “1974 Act”) did not amount to a complete statutory code governing the Ombudsman’s functions, and were consistent with a power to withdraw being implied under the 1978 Act. The judge concluded that a power to withdraw under section 12 of the 1978 Act could be implied in circumstances where the Ombudsman reasonably considered that his decisions were flawed by legal error.
The judge did not need to decide the Council’s own Judicial Review claim given her finding that the 2019 Report had already been lawfully withdrawn by the Ombudsman.
The judge also rejected a challenge by Piffs Elm against the Ombudsman’s final conclusions set out in the 2021 Report.
The Court of Appeal’s decision
Piffs Elm appealed against the High Court ruling, and was granted permission to challenge the judge’s findings in relation to both the Withdrawal Decision and the 2021 Report. The Council cross-appealed to revive its challenge to the 2019 Report, in the event that consideration of that decision became necessary. The Court of Appeal heard the appeal in March 2023 and handed down its judgment on 10 May 2023.
The leading judgment, written by Lady Justice Elisabeth Laing (with whom Lord Justice Popplewell and Lord Justice Dingemans agreed), overturned the first instance decision and held:
- the Withdrawal Decision was unlawful as the Ombudsman had no power to withdraw the 2019 Report. In this regard, the Court of Appeal decided that Parts 3 and 3A of the 1974 Act do contain a complete statutory code for the Ombudsman, and it was not necessary, or consistent with the Ombudsman’s scheme, to imply a power to withdraw reports and re-open investigations under the 1978 Act;
- it was therefore necessary for the Court of Appeal to consider the 2019 Report, which it found to be unlawful as the Ombudsman did not have jurisdiction to determine a disputed question of law; and
- the 2021 Report was lawful.
Following the Court of Appeal’s decision, the practical outcome for the parties is the same, namely that the 2019 Report is no longer effective and the 2021 Report represents the Ombudsman’s final say on Piffs Elm’s complaint, namely that whether the Council had a discretion to refund the Fee was a question of law, and therefore a matter for the courts. However, the approach taken by the High Court and the Court of Appeal to get to that outcome differs significantly.
Whilst the Court of Appeal’s judgment primarily relates to the Ombudsman’s scheme under the 1974 Act, the court’s findings may have implications for other public bodies, particularly those which perform adjudicative or quasi-judicial decision making functions.
- when ombudsmen, regulators and other statutory bodies are carrying out post-decision reviews, either as part of a review procedure or in response to threatened challenges, they will need to consider carefully whether the decision being reviewed or challenged represents a completion of their function, whether they may be functus officio, and if so, whether they have any power to withdraw or revoke the decision;
- the Court of Appeal’s narrow construction of section 12 of the 1978 Act means that statutory bodies will possibly need to be able to rely on some other power to revoke or withdraw an existing decision, if they consider it to contain legal error. Careful consideration will need to be given to the relevant underlying statutory scheme for a particular decision maker. We note, in this regard, that the court distinguished between section 12 of the 1978 Act, which does not confer an express power to revoke, and section 14 of the 1978 Act, which does confer such a power in the context of rule-making functions being performed. The court also confirmed that it must be necessary, rather than merely convenient, for a power to withdraw or revoke to be implied into a statutory scheme;
- if no power to withdraw or revoke can be identified, statutory bodies may need to consider consenting to Judicial Review proceedings being brought to seek a quashing order in respect of the relevant decision, rather than merely agreeing to withdraw it. This will have a cost impact, and may give rise to difficult questions over bodies’ powers to commence proceedings if a willing claimant does not come forward; and
- the Court of Appeal decided not to comment on the ongoing relevance of common law exceptions to the functus officio doctrine which had hitherto been thought to apply in the case of fraud and fundamental mistake of fact (i.e. distinct from fundamental legal error). The court indicated however, that the question of whether a decision had been affected by fraud could only be decided by a court.
Our expert public law and regulatory lawyers can provide specialist advice on whether the functus officio doctrine applies to your statutory scheme, both on the development of policies and procedure for post-decision reviews, and in response to threatened legal challenges. Please get in contact with Amy Tschobotko or Jason Tandy, both of whom acted for the Ombudsman in this case.
 Functus officio is a legal doctrine that once an office holder or decision maker has performed his function or discharged his duty, he has no further role or status in the matter.