England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE QBEN1 96/1705/E

(MR S GOLDBLATT QC Sitting as a Deputy High Court Judge )

Royal Courts of Justice

Strand

London WC2

Friday 25 July 1997

B e f o r e:

THE MASTER OF THE ROLLS

(LORD WOOLF)

LORD JUSTICE BROOKE

SIR BRIAN NEILL

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ANDREAS CHRY ANDREOU

Plaintiff/Respondent

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INSTITUTE OF CHARTERED ACCOUNTANTS IN ENGLAND & WALES

Defendant/Appellant

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(Transcription of the Handed-down Judgment of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MISS P BAXENDALE QC and MISS M CARSS-FRISK (Instructed by Denton Hall, Milton Keynes, MK9 2HR) appeared on behalf of the Appellant

LORD THOMAS QC and MR G WIGNELL (Instructed by Messrs Cope's, Bucks, HP13 6NR) appeared on behalf of the Respondent

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J U D G M E N T

(As approved by the Court )

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©Crown Copyright

JUDGMENT

LORD WOOLF, MR: This is a judgment of the Court.

In order to understand the issues on this appeal it is necessary to be aware of the background to this appeal.

The Background

In 1972 the plaintiff, Mr Andreou became a member of the defendant Institute (“the Institute”). On the 14th December 1993 the Disciplinary Committee of the Institute found him guilty of serious disciplinary charges and as a result he was excluded from membership. Mr Andreou wished to overturn this decision but failed to bring an internal appeal within 28 days, the time prescribed by the Institute’s Bye-law 85(c). When he applied for an extension of time in which to bring his appeal, he was informed by the Institute by a letter dated 22 February 1994 that there was no discretion to extend the time limit.

Being unable to appeal, Mr Andreou then made an application for leave to apply for judicial review in order to challenge the vires of Bye-law 85(c) and the decision of the Institute that it had no power to extend time.

On the 26th April 1995 on a renewed application for leave Mr Andreou was granted leave by the Court of Appeal. He was also allowed to amend his application to include a claim for damages. However he failed to enter a notice of motion within the 14 days required by RSC Order 53 r5(5). He then applied for an extension of time in which to enter his notice of motion. By the time the application for an extension was heard by Popplewell J on the 4th October 1995 the application was in practice for an extension of some 6 months and it was refused on the grounds of unjustified delay.

On the 19th March 1996 the Court of Appeal refused Mr Andreou’s application for leave to appeal against that decision. The court did, however, order that the claim be continued as if begun by writ pursuant to RSC Order 53, r9(5). In doing so it expressed no opinion and made no finding as to whether Mr Andreou had a right which could be pursued in this way. Counsel for the Institute indicated to the Court of Appeal that the Institute might seek to strike the claim out. This the Institute did by an application under Order 18, r19 R.S.C. and under the inherent jurisdiction of the Court on the ground that the claim was an abuse of process of the Court. This application was dismissed by Mr Simon Goldblatt, QC sitting as a deputy judge of the High Court. The Institute was given leave to appeal by the Court of Appeal on the 12th December 1996.

The Amended Notice of Application

Mr Andreou in his amended notice of application sought an order of certiorari quashing the decision of the Institute set out in its letter dated 22 February 1994, which was to the effect that it had no discretion to allow his appeal to be considered out of time. He also sought a declaration that the Institute’s Bye-laws are unlawful insofar as they prohibit the Appeal Committee from considering an appeal from a finding or order of the Disciplinary Committee where the defendant has not given notice to appeal within 28 days of a finding or order to be appealed. He also claims damages together with interest.

The grounds upon which Mr Andreou relies are that since becoming a member of the Institute in 1972, a written contract has existed between him and the Institute. While it was an express written term of the contract that the Institute would have power from time to time to make such Bye-laws as it thought fit for the purpose of regulating its affairs, it was an implied term of the contract:

“(a) That the power of the Institute to make Bye-laws... would be exercised fairly and reasonably.

(b) That the Institute would act fairly in the conduct of its disciplinary procedures.”

In about 1990 the Institute made Bye-law 85(C), which prohibits the Appeal Committee from exercising a discretion to consider an appeal made after 28 days from the date of an order of the Disciplinary Committee. It is alleged that that Bye-law was made in breach of the implied term set out in subparagraph (a) above in that it is unfair and unreasonable. In addition it is alleged that the hearing before the Disciplinary Committee having taken place in Mr Andreou’s absence on the 14th December 1993, the Institute was in breach of the implied term set out in paragraph (b) above in writing to him on the 21st December 1993 to inform him of the result of the hearing and not at the earliest opportunity.

It is further alleged that the reason Mr Andreou did not attend the hearing was because he had been ill and it was only on the 13th January 1994, after the time for appealing had expired on the 11th January 1994, that he had opened the Institute’s letter.

The amended application goes on to explain that it is because Mr Andreou was suffering from a depressive illness that he was not able to attend at the disciplinary hearing and that this was the reason why he did not appeal in the 28 days allowed by the Rules. It is alleged he attempted to give notice of appeal as soon as he learnt of the Disciplinary Committee’s Order and so in the circumstances either the decision is unfair or Bye-law 85(c) is unfair.

In his affidavit in support of his application Mr Andreou does not say when the letter of 21 December arrived at his office. There is in this context a Bye-law which deems a notice to be served 48 hours after posting. He does however say in his affidavit that in October-November 1993 “things became very bad. I know that letters were coming from the Institute since they would appear in characteristic buff envelopes, I did not open them”. He adds that he was away from his office for two months in December 1993 - January 1994. He returned to the office on the 10th January 1994, but read the letter on the 13th January as alleged.

In his judgment, Mr Goldblatt reviewed some of the relevant authorities and having done so, set out his conclusion in the following terms:

“At the end of this review it seems to me clear that the disciplinary functions of the Institute fall on the wrong side of the line for the purpose of the defendant’s argument in the present case.

I take the view that the essential underlying complaint by the plaintiff is the assertion of a personal right arguably arising out of the contractual relationship between himself and the Institute. I cannot accept that the fact that the Institute was created by Royal Charter, as indeed was the Jockey Club, is enough to convert its activities from private or domestic activities to regulatory activities in the field or public law; neither do I accept that the requirement that the Institute’s bye-laws have to have the approval of the Privy Council before they take effect is a fact which either taken alone or in conjunction with the chartered incorporation of the Institute is enough to bring the case across the dividing line.

It seems to me that, at the end of the day, a case which depends upon a plaintiff saying, “In the particular circumstances, given that a hearing took place of which I was unaware, and that a decision was made about which I learnt after it was too late for me to appeal”, is a complaint of a private law character, and even though it will involve the examination of some of the Institute’s bye-laws and their effect, and even though such a pronouncement may be of some general interest to members of the Institute generally, nevertheless the real flavour that this dispute carried is a private law flavour.

If I approach it the other way and ask myself: can it be categorised as an abuse of the process of the court for a person who has been excluded from membership of a body through a decision of which he was unaware and in respect of which he has no extant right of appeal to say in a private law action, “This is unfair, this is unreasonable, it is not binding on me”? - my answer is, “No, it cannot be an abuse of the process of court put so simply as that”. Of course, I recognise the force of the defendant’s argument that the plaintiff was given the full opportunity to bring a public law complaint and has lost that opportunity by not carrying on with the proceedings in due time. Nevertheless, that consideration, whatever criticism it involves of the plaintiff or his team, cannot, of itself, answer the underlying question of whether the private law remedy which is sought is, itself, an abuse of the court. That is the underlying question that I have sought to address in this judgment in the light of close consideration of all the authorities that have been cited to me.”

The main submissions of the Institute on this appeal can be paraphrased under four heads. They are:

1. The disciplinary functions of the Institute are a matter of public law and the exercise of these functions can only be challenged by judicial review. A claim in private law is therefore misconceived and bound to fail.

2. Further, as formulated the private law claim is contingent on establishing the invalidity of Bye-law 85 (c) and therefore cannot succeed because the Court of Appeal has established that an attack on the Bye-law by means of judicial review is now precluded by the procedural mistakes which were made.

3. In addition, if one takes account of the history of the proceedings, the claim is an abuse of process because the Court of Appeal has already decided that the public law claim should not be allowed to proceed and this is an attempt to resurrect that claim.

4. In any event the private law claim is bound to fail, because, even if Bye-law 85(c) could be shown to be unreasonable, the court would not hold the rule to be void or unenforceable on that ground alone.

Lord Thomas of Gresford, on behalf of Mr Andreou, approaches the issues from a different direction. He submits that the Institute having selected to strike out the statement of claim under RSC Order 18, r 19 rather than to have a preliminary issue determined under RSC Order 33, r3 the decision of the judge should stand unless the arguments before the Court of Appeal clearly and strongly favour a different result. (We accept this submission). In support of this approach he prays in aid the speech of Lord Slynn in Mercury Limited v Telecommunications Director [1996] 1 WLR 48. He also submits that if the Institute is a public body it is not a public body for all purposes and that not every decision it reaches is reviewable on judicial review. Further if the issue in these proceedings is a mixed issue of private and public law, then the application for judicial review is neither the only or the most appropriate avenue by which Mr Andreou might seek a remedy. In any event this is a case which is more appropriately resolved in a private law action.

In coming to his conclusion that the action should be allowed to continue, the deputy judge commendably sought to adopt an untechnical approach to a subject which regrettably has become highly arbitrary and inconsistent with what we believe Lord Diplock intended to achieve by his seminal speech in O’Reilly v Mackman [1983] 2 AC 237.

As we understand his judgment the deputy judge did not decide that the Institute did not perform any public functions. If he had, then this would not be a view that we would accept. In our judgment, in particular having regard to its important responsibilities which are recognised in the Companies Act 1989 (see section 25, 30 and 32) the Institute does perform public functions which certainly justify it being regarded as a public body. In relation to certain of its activities it is therefore amenable to judicial review. Here it is not without interest that this was accepted to be the position without argument to the contrary by this court in R v Institute of Chartered Accountants in England and Wales and Others ex-parte Brindle [1994] B.C.C. 291 and the decision of Sedley J in R v Institute of Chartered Accountants of England and Wales ex parte Taher Nawaz [1996] Times Law Reports 624.

However, the fact that the Institute is a public body does not prevent the Institute entering into contractual relations giving its members private rights. Our view of the status of the Institute is therefore not necessarily inconsistent with the conclusions of the judge. Indeed Bye-law 30 of the Institute does lend support to the judge’s approach. Bye-law 30 provides:

“Every person before becoming a member shall undertake to be bound by the Royal Charters and the Bye-laws in force at the time of his admission or which may thereafter from time to time be made”.

However the validity of Bye-law 85 (c) which limits the right of appeal to 28 days was at the heart of Mr Andreou’s application for judicial review and it has been dismissed. This means in our judgment that Mr Andreou would be acting in a manner which was an abuse of process if he was as part of his remaining private law proceedings to rely on public law claims which he was previously relying on as part of his judicial review proceedings. Any valid claim which he now has must exist in private law independently of those public law claims. Whether any such claims exist is the question which it seems to us is at the nub of this appeal.

Miss Presiley Baxendale submits that this is not acceptable and relies upon the third principle identified by Laws J in his judgment in British Steel PLC v Customs and Excise Commissioners [1996] 1 A.E.R 1002. (His judgment in this case was reversed in the Court of Appeal but the decision did not affect the principles identified by Laws J.) The third principle is in these terms:

“Where statute confers what is plainly a private right, if on the Act’s true construction the right enures only after and in consequence of a purely public law decision in favour of the claimant, any complaint directed to the public decision-making stage must be brought by Ord 53: see Cocks v Thanet DC . Thus (absent such exceptional matters as the parties’ consent to the appropriateness of private law proceedings) a case of this kind is not within the category of exceptions to the O’Reilly principle, adumbrated but not defined by Lord Diplock. I may, with great diffidence, add that this is by no means surprising: the public policy which requires that purely administrative decisions be subject only to the supervisory jurisdiction of the High Court in Ord 53 proceedings is in no sense weakened by the circumstances that the out-turn of a favourable decision may be to confer a private right.”

However the first four principles which Laws J set out are expressly subject to a fifth which is in these terms:

“All this said, there needs to be some procedural flexibility: as Lord Slynn made clear in Mercury, the boundaries between public and private law have not been fully worked out, and, as Lord Diplock stated, exceptions to the general O’Reilly principle should be developed on a case to case basis.”

This qualification is most important and it is worth paying attention to what Lord Slynn said in the Mercury case to which Laws J refers. The passage he had in mind is no doubt the following [1996]1 W.L.R. 48 at page 57:

“The recognition by Lord Diplock that exceptions exist to the general rule may introduce some uncertainty but it is a small price to pay to avoid the over-rigid demarcation between procedures reminiscent of earlier disputes as to the forms of action and of disputes as to the competence of jurisdictions apparently encountered in civil law countries where a distinction between public and private law has been recognised. It is of particular importance, as we see it, to retain some flexibility as the precise limits of what is called “public law” and what is called “private law” are by no means worked out. The experience of other countries seems to show that the working out of this distinction is not always an easy matter. In the absence of a single procedure allowing all remedies - quashing, injunctive and declaratory relief, damages - some flexibility as to the use of different procedures is necessary. It has to be borne in mind that the overriding question is whether the proceedings constitute an abuse of the process of the court.”

So far as the Cox case to which Laws J refers is concerned, that has now been considered by the House of Lords, but not on this point, in O’Rourke v The Mayor etc of the London Borough of Camden [1997] 3 WLR 86. In his speech in O’Rourke, Lord Hoffmann differed from the view which Lord Bridge had expressed in Cox in relation to Lord Bridge’s own earlier judgment in De Falco v Crawley Borough Council [1980] Q.B. 460, at p480. On Lord Hoffmann’s approach it appears that in future there will be very few cases, if any, in which the undesirable need for two sets of proceedings, judicial review followed by an ordinary action, will be necessary. It seems to us to be consistent with the approach of Lord Lowry in Roy v Kensington & Chelsea & Westminster Family Practitioner Committee [1992] 1 AC 624 at 653 to regard it as appropriate to proceed in a private law action even though there is a public law issue to be determined as long as there is a private law right which is clearly identified which has also to be determined. We therefore do not regard the third principle of Laws J as being an insurmountable barrier to Mr Andreou’s claim.

Where we depart from the approach of the deputy judge and Lord Thomas is not on any procedural ground. It is on the possibility of Mr Andreou being able to succeed on his private law claims based on breaches of the alleged implied terms.

Article 15(a ) of the Supplemental Charter of 1948 of the Institute provides:

15(a) the Institute may from time to time by resolution passed by a majority of not less than two thirds of the members present and voting (in person or by proxy) at a meeting specially convened for the purpose with at least 21 days notice in writing make such Bye-laws for regulating the affairs of the Institute as the Institute sees fit and from time to time rescind or vary any of the Bye-laws and make others in their stead.

Thereafter the Bye-law has to be submitted to the Privy Council.

Bearing in mind that a member undertakes to be bound by the Royal Charters and the Bye-laws we cannot see any room for a general implied term of the sort Mr Andreou alleges as (a) which seeks to make the express power subject to a qualification that it should be exercised fairly and reasonably. Any private law protection which is needed is intended to be provided by the requirement of a two third majority and the approval of the Privy Council. If there is any further protection for a member, it must be dependent upon the public law allegation made in the application for judicial review and not upon contract.

If this is the position with regard to the implied term(a) on which Mr Andreou relies, then it cannot be unfair to conduct disciplinary procedures in accordance with the express terms of the applicable Bye-laws. Implied term (b) cannot assist Mr Andreou to make allegations that time for appealing should be extended. It is not suggested the relevant Bye-law could be interpreted so as not to have the draconian effect which the Institute claims for it.

It is also alleged that the Institute is in breach of implied term (b) because of the delay in writing to Mr Andreou to inform him of the result of the disciplinary hearing. Here the difficulties which Mr Andreou faces are that on the facts on which he relies for a possible cause of action he has no prospect of success. The delay in writing was modest and hardly likely to be treated as a breach of the implied term. In addition the delay, on his own account of events, was irrelevant since the letter would not have been read prior to 13th January in any event. This being the position we cannot see how Mr Andreou’s claim can succeed.

In coming to this conclusion, we should not be thought to be approving of the present Bye-laws. It is always open to the Institute to promote changes in its Bye-laws and in our judgment Mr Andreou’s application makes it manifest that the relevant Bye-laws require amending. We appreciate that short time limits are necessary if, as happens now, an appeal automatically acts as a stay. However to have a guillotine which can operate prior to a member being aware of a Disciplinary Committee’s decision cannot be desirable. Either the guillotine should operate from a restricted number of days after the Disciplinary Committee’s decision is brought to the attention of the member affected or the Appeal Committee should have a discretion to extend time.

In its recent report Administrative Law: Judicial Review and Statutory Appeals (1004) Law Com No 226 the Law Commission commented at paragraphs 12.20 to 12.22 on the different formulae which are now in use for prescribing the time within which different types of statutory appeals to the High Court may be brought. The Commission also mentioned the different regimes which in some cases give the court a discretion to extend time and in other cases do not. Examples are given of some of those different formulae in paragraph 3 of Appendix E to the report, and in its Model provision (see p181, clause XX(1)) the Commission adopted the approach that the “relevant date” from which time should start to run in any given case should be a matter of choice for those concerned with the operation of the specialist jurisdiction in question (see p 182, para 4). In a context like the present, the Commission clearly would have favoured what it called “a date of posting (plus a specified number of days) provision” (see p 111, para 12.21): it added that it was a matter of policy whether or not time should be extendable (p112,para 12.22).

It appears to us that these passages would warrant careful study by those who are concerned with reshaping the Institute’s own internal appeal timetables in the light of what we have said about the present Bye-law.

We allow the appeal and Mr Andreou’s proceedings are dismissed.

Order: Appeal dismissed with costs.