England and Wales High Court (Administrative Court) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE,
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
(MR. JUSTICE MACPHERSON)

		Pro forma Royal Courts of Justice Strand London WC2
		15 December 1995

THE MASTER OF THE ROLLS: This is the judgment of the court

1. There are before the court two applications for leave to appeal against decisions of Macpherson of Cluny J reached on 8 December 1995. In our opinion the applicants, unsuccessful before the judge, raise serious, difficult and important issues. We would grant leave and treat these as appeals. They were argued as if they were.
2. The issue we have to decide can be very shortly put. In specifying minimum service levels for railway passenger services for the initial letting of franchises has the Director of Passenger Rail Franchising complied with a direction given to him by the Secretary of State for Transport ?
3. The issue arises under the Railways Act 1993, which establishes a statutory scheme for transferring the operation of rail passenger services into private ownership. As is well known, the merits of this scheme have been the subject of political controversy. That controversy is wholly irrelevant to the problem we have to resolve. The strengths or weaknesses of the statutory scheme are no concern of ours. We confine our attention to the much more limited, legal, problem defined above. In approaching that limited legal problem, the court must again steer very well clear of any involvement in making or evaluating substantive decisions. The immensely difficult and complex task of deciding what trains should run to and from different destinations, and at what times, and with what capacity, and with what intermediate stopping places, is not one that is or ever would be entrusted to the court. Our task begins and ends with review of the lawfulness of what has been done under the Act. The first and necessary hurdle the applicants must surmount is to demonstrate unlawfulness.
4. The scheme of privatisation involves separation of the railway infrastructure (track and signalling equipment) from the operation of passenger and goods services. These cases involve passenger services only. The privatisation of these services has involved the division of the national rail network into a number of networks. Under the Act, privately owned enterprises are to be contractually franchised to operate services over these networks on which corporate subsidiaries of British Rail now operate.
5. Central to the management of the statutory scheme is a public officer, appointed under section 1(1)(b) of the Act, and known as the Director of Passenger Rail Franchising, or more simply the Franchising Director. He is the respondent to these appeals. He is required to carry out the functions assigned or transferred to him by or under the Act.
6. Section 5 of the Act lies at the heart of this appeal and should be quoted in full :

" (1) It shall be the duty of the Franchising Director to exercise any functions assigned or transferred to him under or by virtue of this Act in the manner which he considers best calculated -

(a) to fulfil, in accordance with such instructions and guidance as may be given to him from time to time by the Secretary of State, any objectives given to him from time to time by the Secretary of State with respect to -

(i) the provision of services for the carriage of passengers by railway in Great Britain ; or

(ii) the operation of additional railway assets under or by virtue of any franchise agreement or any provision of sections 30 and 37 to 49 below ;

(b) to ensure that any payments to which this paragraph applies are such as he reasonably considers will achieve economically and efficiently any objectives given to him by the Secretary of State under paragraph (a) above.

(2) The payments to which paragraph (b) of subsection (1) above applies are -

(a) any payments which the Franchising Director may be required to make pursuant to a franchise agreement ;

(b) any payments which the Franchising Director may make with a view to securing -

(i) the provision of any services, or

(ii) the operation of any network, station or light maintenance depot, or any part of a network, station or light maintenance depot, in pursuance of any provisions of sections 30,37 to 42 and 52 below ; and

(c) any payments which it falls to the Franchising Director to make to passenger service operators as mentioned in section 136(7) below.

(3) Where the Secretary of State gives the Franchising Director any objectives under subsection (1) (a) above, the Secretary of State shall -

(a) lay a copy of a statement of those objectives before each House of Parliament ; and

(b) arrange for copies of that statement to be published in such manner as he may consider appropriate."

7. It was not suggested in argument before us that the legal effect of this section was in any way obscure. It seems refreshingly clear. The Franchising Director's statutory duty under (1)(a) is to fulfil the objectives given to him from time to time by the Secretary of State and under (1) (b) to ensure that the payments defined in subsection (2) are such as he reasonably considers will achieve economically and efficiently any objectives given to him by the Secretary of State under (1) (a) . He is to perform those duties in the manner which he considers best calculated to comply with the objects specified in (a) and (b) : from this it is plain that reliance is placed in the statute on his exercise of a considered professional judgment. This is what one would expect of an officer holding so demanding an office. But he is to fulfil the objectives given to him by the Secretary of State under (a) in accordance with such instructions and guidance as may be given to him from time to time by the Secretary of State. The procedure in subsection (3) for laying before Parliament, and publishing, any statement of objectives given by the Secretary of State makes it plain, in our view, that particular significance was attached to these objectives. In seeking to achieve these the Franchising Director must act in accordance with such instructions and guidance as may be given from time to time by the Secretary of State. But these need not be laid before Parliament, or published. To that extent they are treated as less significant than the prescribed objectives, perhaps because they may be more readily subject to change. There is, however, no reason to doubt that "instructions and guidance" bear their ordinary meaning. An instruction is a direction with which the recipient must comply. Guidance is advice which the recipient should heed and respect ; it should ordinarily be followed but need not if there are special reasons for not doing so. This response to the instructions and guidance of the Secretary of State forms part of the statutory duty of the Franchising Director.
8. Section 23 of the Act imposes a duty on the Franchising Director to designate services as suitable for franchising. Section 26 governs the franchising procedure. Nothing is said to turn on the detailed terms of these sections.
9. Section 5 of the Act was brought into force on 21 March 1994. On the following day the Secretary of State sent to the Franchising Director "my objectives, instructions and guidance for you". This was a single document, which had been laid before Parliament, although the instructions and guidance need not have been.
10. The first section of the document was introductory and indicated that instructions were italicised. The next section was headed "Objectives" and read :

"2. Your principal objectives are:

to secure that railway passenger services in Great Britain, other than exempted services, are provided under franchise agreements as soon as reasonably practicable; and

to secure an overall improvement in the quality of railway passenger and station services available to railway passengers.

You should also:

encourage efficiency and economy in the provision of railway services;

promote the use and cost-effective development of the railway network; and

promote the award of franchise agreements to companies in which qualifying railway employees (within the meaning of section 4(4) of the Act) have a substantial interest. "

These objectives have, so far as we know, remained in force without amendment.

11. The next section was headed "Instructions and Guidance". It opened with general guidance in these terms :

"3. In seeking to fulfil these objectives, you should ensure that the terms of your invitations to tender for franchises and the terms of franchise agreements and any other contracts you enter into are such as to :

ensure good value for money;

encourage competition in the railway industry; and

protect the interests of passengers

and are consistent with the resources available to you.

12. In designating services for franchising, drawing up invitations to tender and franchise specifications, holding franchise competitions and awarding franchises, you should have regard to the particular circumstances of the services under consideration. You are not expected to negotiate uniform franchise agreements. You should leave maximum scope for the initiative of franchisees, imposing requirements no more burdensome than are required in your opinion to achieve your objectives; you should act so far as possible so as to enable franchisees to plan the future of their businesses with a reasonable degree of assurance."
13. The document continued with passages, part guidance, part instruction, dealing with consultation, the franchising programme and payments in respect of railway passenger services. Then came a section headed "Franchise Specification". This dealt with the length and scope of franchises and then included a section on which the argument before the court has largely concentrated. This must be quoted in full, the italicised passages being instruction and the remainder guidance :

"Quality of Services

14. For the initial letting of franchises, your specification of minimum service levels for railway passenger services is to be based on that being provided by BR immediately prior to franchising, taking into account the existence of and justification for seasonal variations in service schedules.
15. The detail of your specifications should depend on the nature of the service to which they relate. Service levels may be specified in terms of the following:

• service frequency and capacity;

• service availability (for example, the need for evening and weekend services);

• provision of through services by fast trains;

• intermediate stations served; and

• journey time.

16. Service quality for railway passenger services and station services operated by franchisees should be specified in the degree of detail that is appropriate for the particular franchise. For some franchises, particularly those conferring monopoly power, you should ensure that the franchise agreement provides an effective substitute for market pressures. For other franchises, where market pressures are present to a greater extent, you should impose such service quality requirements as are necessary to ensure that the taxpayer obtains good value for money.
17. When you are specifying the quality of service to be provided:

i) the performance standards which you set for franchisees should have the effect of maintaining or improving standards;

ii) your specification of the quality of service to be provided by franchisees, should, as far as possible, be in terms of the desired outputs, so leaving operators as much freedom as possible for responding innovatively to passengers' demands;

iii) you must require each franchisee to publish his own Passengers' Charter. This should include the franchisee's own code of conduct for dealing with passengers, publishing performance information, handling complaints, and payment of compensation to passengers in the event of poor performance.

18. Whatever the length of the franchise, it will be important to ensure that service patterns do not ossify, and that operators are able to adjust services to match demand. You should therefore, conclude franchise agreements that permit flexibility in service provision within a framework you have agreed.
19. Although service specifications set for the initial franchises must be based on the timetable being operated by BR immediately prior to franchising, you should aim, over time, to tailor the provision of franchised services more closely to demand. In large part this tailoring should be driven by franchisees responding on a commercial basis to passenger demand : that is why I want you to leave maximum scope for the initiative of franchisees in your franchise specifications as noted in paragraph 4 above. Any changes from the existing pattern of services should be made gradually.
20. In order for you to decide appropriate service specifications for loss-making services you will need to develop criteria which will enable you to evaluate the benefits to be obtained from their provision. Such criteria must be submitted to me for approval."
21. The court was not referred to any other parts of this document. We were told, and of course accept, that the Franchising Director has been in constant touch with the Secretary of State since March 1994, but it was not suggested that the contents of this document had ever been varied or superseded. The crux of the dispute between the parties concerns the effect of paragraph 18, and in particular the words "based on that being provided by BR immediately prior to franchising". To that issue we must return.

The first application

22. On 16 May 1995 the Franchising Director issued Passenger Service Requirements ("PSR's") for the services operated by Great Western Trains Company Limited, South West Trains Limited and LTS Rail Limited. These had been the subject of much previous consultation. They specified the services which franchisees would have to agree to provide. The PSR for each franchise operator was set out route by route and was said to be "broadly based on the current timetable".
23. On 16 August 1995 8 applicants gave notice of application for leave to apply for judicial review of these 3 PSRs issued by the Franchising Director. Relief was sought on several grounds which have not been pursued, but also on the ground that these PSRs were issued by the Franchising Director without complying with the Secretary of State's instruction in paragraph 18 of his Objectives, Instructions and Guidance quoted above.
24. The capacity of at least 2 of these applicants to sue is at best questionable. But there is no ground for challenging the capacity of the others, who are individual members of the travelling public and as such plainly have sufficient interest to apply.
25. Brooke J adjourned an ex parte application for leave to move until the substantive hearing of the second application. Macpherson J gave leave to move on 7 December and dismissed the application on the following day.

The second application

26. On 14 September 1995 the Franchising Director issued PSRs for the services operated by Inter City East Coast Limited, Gatwick Express Limited, Midland Main Line Limited and Network South Central Limited. Again, there had been much previous consultation. Again, the PSRs specified the services which franchisees would have to agree to provide. In three of the PSRs, but not that for Gatwick Express, the PSR was again said to be "broadly based on the current timetable".
27. On 20 October 1995 5 applicants gave notice of application for leave to apply for judicial review of these 4 PSRs. The first ground relied on was that the Franchising Director had not complied with an instruction of the Secretary of State.
28. Again, the capacity of one of the applicants to sue is questionable. But the capacity and standing of the others cannot be impugned, and there are 3 local authorities and 2 Members of Parliament who wished to be joined, in addition to some 19 local authorities who have indicated support for the application.
29. Leave to move in this case was granted by Brooke J on 24 November 1995 on hearing an ex parte application. He ordered an expedited hearing on 7 and 8 December. The two cases were heard and dismissed together.

The argument

30. The applicants' argument before us essentially involved two limbs, one legal, one factual. The legal argument was that the Secretary of State's instructions in paragraph 18 of his Objectives, Instruction and Guidance, while not requiring minimum service levels specified on the initial letting of franchises to be in precise conformity with levels being provided by BR immediately prior to franchising, did require the levels specified to correspond, at least approximately, to the levels provided by BR. The factual argument was that the levels specified did not in a number of instances correspond, even approximately, to the levels provided by BR.

(1) The legal argument

31. Although we have described this as a legal argument it is not a pure legal argument. In reading the Objectives, Instructions and Guidance the court is not construing a statute, nor even subordinate legislation. The document must be read in a practical down-to-earth way as a communication by a Secretary of State to a responsible public official. The language used is not to be invested with more precision than it would naturally bear. Paragraph 18 must be read in the context of the whole document, and of the Act itself. All this we take to be clear. But the statutory duty of the Franchising Director is, as we read section 5, to exercise his functions in the manner which he considers best calculated to fulfil the objectives given to him in accordance with the Secretary of State's instructions and guidance. Thus the objectives, instructions and guidance define and circumscribe the Franchising Director's statutory duty. The court accordingly cannot, in case of dispute, abdicate its responsibility to give the document its proper meaning. It means what it means, not what anyone - Franchising Director, Secretary of State or member of the public - would like it to mean.
32. The applicants accepted that the words "based on" did not require exact reproduction of the BR specification. Some latitude was permitted. But the express reference to seasonal variations in paragraph 18 and the effect of both that paragraph and paragraph 23 were relied on as showing that any departure was to be relatively minor. That paragraph of guidance plainly envisaged that the service specifications in the initial franchises would be based on the current BR timetable ; that only over time would the franchised services be tailored to accord more closely to demand ; and that any changes from the existing pattern of services should be made gradually, not on the grant of the initial franchise. The applicants also relied on paragraph 24. This required criteria for evaluating the benefits of loss-making services to be submitted to the Secretary of State before application. This had not been done, showing (as the applicants argued) that loss-making services were not intended to be dropped on the grant of the initial franchises without evaluation of benefits.
33. For the Franchising Director, Mr Jeremy Sullivan QC roundly rejected this argument, as did the judge. The applicants' construction, it was said, gave no effect to the Franchising Director's duty to fulfil the objectives of encouraging efficiency and economy and promoting the cost-effective development of the railway network, nor did it recognise his need to ensure good value for money or the need (referred to in paragraph 22) for flexibility. All that "based on" in the paragraph 18 instruction and the paragraph 23 guidance required was that BR's existing service specification and timetable immediately before franchising should be taken as the starting point. Provided that was done, the Franchising Director could properly specify minimum service levels which might be markedly different from the levels provided by BR immediately before franchising.
34. "Based on" is not a term of art, and it is not an exact term. It permits some latitude. It is obvious that every train timetabled by BR need not continue to run. There may be changes, and within limits it is for the Franchising Director to rule on the extent of the changes. His is the primary judgment. But there is a limit to the changes which may be made without ceasing to comply with the instruction in paragraph 18 and the guidance in paragraph 23. The changes must in our view be marginal, not significant or substantial, as one deponent put it. We cannot read this document as a warrant for more than relatively minor change. Give or take relatively minor changes, the minimum service level specified was, as we understand the instruction, to correspond reasonably closely with the pre-franchising BR specification.
35. In support of his contention that this was a wrong approach, Mr Sullivan relied on evidence of Mr Lee, an assistant director in the office of the Franchising Director. The judge attached importance to this evidence and we should quote it :

"43. To set service requirements too close to current service levels could leave franchisees with inadequate flexibility to use initiative in developing new service patterns. It could also increase the overall call on the Franchising Director's budget: those bidding for franchises will take into account both the rights offered to them under the franchise, and the obligations. The PSR is the principal such obligation. It represents a liability ; the successful bidder for the franchise must be prepared to operate 100% of the services in the PSR, regardless of developments over the life of the franchise. The inclusion of currently profitable services in the PSR could in some cases increase the subsidy sought by bidders. Where such services are not included in the PSR the operator would be free to withdraw them if market conditions were to change and they ceased to be profitable. This is currently the position which applies to BR. Bidders may therefore require a premium, if these services are included in the PSR, to compensate them for the loss of this business flexibility. Such a premium would be new expenditure; the Franchising Director concluded that it would not represent good value for money and could well be inconsistent with the resources available to him.

36. To set service requirements too far below current service levels, however, would not be consistent with the Franchising Director's objective to protect the interests of passengers. This would be a particular concern if inadequate protection was offered for services which are not currently profitable.
37. Instruction 18 (quoted above) led the Franchising Director to adopt the current timetables themselves as the starting point for drawing up PSRs. He concluded that minimum service levels should be set at, or below, the levels in those timetables. To set them below the levels in the timetable would be necessary in some instances in order to achieve flexibility and value for money. As is explained below, the Franchising Director considered that it was unnecessary to set higher PSR levels because he considered either that :-

(a) the existing BR level of service would be likely to be maintained because it was commercially attractive,

or

(b) the service had a very low usage and, given the existence of reasonable alternatives, it was not appropriate that public money be used to guarantee it.

A further section of the OIG defined the scope of PSRs..."

38. Mr Lee then quoted paragraph 19 of the Objectives, Instructions and Guidance, and went on to describe the approach adopted in practice with regard to the Inter City East Coast PSR. He deposed :

"47. It has not been possible in the time available to detail fully the approach to each of the PSRs. The fundamental approach adopted was, however, the same. I detail specifically the approach in relation to the PSR for the Intercity East Coast franchise ("ICEC").

39. The Franchising Director drew up the ICEC PSR by considering the service level in the current timetable route by route, and station by station. The first step was to decide whether any parts of the current service should be omitted from the PSR. This was generally considered in three situations :

i) Where setting the PSR a little below current service levels would allow some flexibility to the operator to respond to new passenger requirements.

ii) Where current service levels were particularly high because this was a profitable policy for BR to adopt.

The Franchising Director had regard to the fact that ICEC, for many years up to 19 94, operated within the Intercity business sector of the BR Board, which was ineligible for financial support from the Government. Despite this service levels had risen and were now substantially higher than they had been 20 years earlier.

The Franchising Director considered it reasonable that, on long-distance routes such as these, a service level equivalent to one train an hour through the day (about 15 trains per day) represented the highest level which it was necessary to safeguard, given that to safeguard above this level could require additional subsidy. He therefore considered that these were instances where it was unnecessary, and would not offer value for money, to require a guarantee from the franchise operator that the existing high levels of service would be maintained.

The consequence of this is that for a small number of stations which are currently served by an exceptionally large number of trains (in the case of ICEC for example these are Peterborough, Doncaster, York and Newcastle) the difference between this current service and the level safeguarded by the PSR is therefore marked. This is illustrated at page 134 of "ML1". This graph compares the number of ICEC trains serving each station on the route to Aberdeen in the summer 1995 timetable with the number required to be operated under the PSR.

iii) In a small number of cases where services in the current timetable are exceptionally lightly used. The flexibility to curtail services at the margin of the timetable, where there is no longer enough demand to justify them even to protect the interests of passengers, is an important feature of efficient operation of the railway. Where the Franchising Director believed that existing services might come into this category he obtained information about the actual level of use of these services. Where this was particularly low, and where there would nonetheless be safeguarded services which appeared to him to offer reasonable alternatives to those passengers who might be affected, he omitted the trains in question from the PSR. Often such trains were in fact being operated principally in order for BR to move the rolling stock to and from depots, and would not otherwise have been included in the timetable."

With reference to ex-Network South East franchises Mr Lee deposed:

"For those franchises involving ex-Network South East services the approach has been similar in most respects. For the shorter distance journeys involved, the Franchising Director considers that he would not normally wish to safeguard a level of service above two trains an hour."

40. The Franchising Director's approach seems clear. He has been cautious in including loss-making services in his minimum service level specification because a subsidy would be payable to the operator required to run it. This is an intelligible and in no way irrational approach. But it is not in our view an approach which gives effect to the instruction in paragraph 18 or the guidance in paragraph 23. No one reading the Objectives, Instructions and Guidance could in our view have appreciated that this approach would be adopted or that the subsidy payment factor would be given so much weight. Mr Lee himself accepted that to set the PSR "too far below current service levels" would conflict with one of the Franchising Director's objectives.
41. Mr Sullivan urged that the Secretary of State had at all times known of and approved the approach of the Franchising Director. This is no doubt true ; but the Secretary of State's approval cannot alter the effect of his predecessor's instruction. It was also urged that the Secretary of State could at any time have amended the instruction. From a purely legal point of view, of course, he could. But up to now he has not done so.
42. We feel bound to accept the applicants' legal argument. We do so without regard to the parliamentary materials put before us, which are not in our view admissible when considering the proper interpretation of the Objectives, Instructions and Guidance. That being so, we make no comment beyond observing that they do not cause us to doubt what seems to us the inescapable effect of the document.

(2) The factual argument

43. We heard some, but limited, argument on the facts, (i) Great Western Trains Limited. On the Franchising Director's figures the minimum service level specified is set at 86% of the current BR level of service. The applicants point out, among other changes, that services between Taunton and London are reduced from a current total (in both directions together) of 27 to a specified minimum of 18 and that services between Didcot and London are reduced from a current total (in both directions together) of 48 to a specified minimum of 30.
44. We have very considerable doubt whether the specified PSR in this instance complies with paragraph 18. But the court should not intervene unless it is quite clear that it should, and any doubt must be resolved in favour of the primary decision-maker. The figures in this case do not in our view compel the conclusion that the Franchising Director was in breach of his statutory duty, whether as a result of misdirection or mere non-compliance.

(ii) South West Trains Limited. The Franchising Director's figures put the minimum service level specified at either 89% or 86% of the current BR level of service. The first alternative assumes that load factor regulation forces the operator to run the same number of services in the peaks as at present ; the second alternative represents the position if the operator is able to meet the load factor requirement while only offering the minimum frequency of service otherwise specified in the PSR. The applicants draw attention to the facts that, for instance, the minimum service levels specified do not require a Saturday service between Epsom and Dorking which currently operates, reduce Vauxhall trains from 2 0 per hour to 8 and fail to protect the hourly off-peak Guildford to Haslemere shuttle (serving intermediate stations) causing a 50% reduction in service at intermediate stations and a 33.3% cut for Haslemere.

45. We do not think we can in this situation assume in favour of the franchisee that he will operate more services than he need. We therefore think that we must work on the lower of the Franchising Director's alternatives.
46. We would reach the same factual conclusion as in (i) , for the same reason.

(iii)LTS Rail Limited. The Franchising Director puts the minimum service level specified at either 80% or 69% of the current BR level of service. The alternative underlying assumptions are those given in (ii) . The applicants point out by way of example that, during weekday peak hours, the minimum level of services at Thorpe Bay, Southend Central and Leigh on Sea are, respectively, 55%, 50% and 41% of the current BR service.

47. For reasons already given we must in our view work on the lower of the Franchising Director's alternative percentages.
48. In this instance, making all possible allowances in favour of the Franchising Director, we feel bound to conclude that he did not correctly understand, or if he correctly understood did not comply with, the Secretary of State's instruction.

(iv) Inter City East Coast Limited. The Franchising Director puts the minimum service level specified at 71% of the current BR level of service. The applicants give examples : the specified minimum number of trains between Peterborough and London (both ways) on weekdays is reduced from 37 to 20 ; between Doncaster and London (both ways, on weekdays) from 34 to 16 ; and between York and London (both ways, weekdays) from 28 to 17.

49. We reach the same conclusion as in (iii) for the same reason.

(v) Gatwick Express Limited. The Franchising Director puts the minimum service level specified at 45% of the current BR level of service. It is suggested on his behalf that since this is a single, profitable, service the franchisee is likely to operate a service well above the minimum specified. The applicants reply that the instruction in paragraph 18 is directed to minima. They point out that the service may, without breach of the specified PSR, be reduced from a quarter hourly to a half hourly frequency except for the morning peak period ; that the first train may leave Victoria at 0700 as compared with the earliest current departure at 0423 ; and that the last train may leave Victoria at 1900 compared with the latest current departure at 2300.

50. We reach the same conclusion as in (iii) for the same reason.

(vi) Midland Main Line Limited. The Franchising Director puts the minimum service level specified at 75% of the current BR level of service. The applicants give examples. The current BR service provides, on weekdays, for 15 trains per day southbound and 16 trains per day northbound to stop at Luton ; this total of 31 trains is compared with a specified minimum total of 16 trains. On the same basis a current total of 20 trains at Bedford is to be compared with a specified minimum total of 8.

51. We reach the same conclusion as in (iii) for the same reason.

(vii) Network South Central Limited. The Franchising Director puts the minimum service level specified at either 82% or 77% of the current BR level of service. The alternative underlying assumptions are those given in (ii). The applicants point to routes on which the specified minimum involves a reduction of 33.3%, 43% and 50%.

52. For reasons already given We must in our view work on the lower of the Franchising Director's alternative percentages.
53. We reach the same conclusion as in (iii) for the same reason

Delay

54. In his published Objectives, Instructions and Guidance of 22 March 1994 the Secretary of State said :

"10. I recognise that the pace of franchising will be influenced by the interest shown by bidders. You are to formulate and submit to me by 5 April 1994 a programme for franchising BR's passenger services. This programme is to be consistent with meeting the targets of commencing the competitive process for the first six franchises by the end of 1994, awarding the first six franchises by the end of 1995, and securing that 51% or more of the railway passenger services currently operated by BR are provided under franchise agreements by 1 April 1996. You are to update this programme from time to time."

55. It has at all times been common knowledge that the Franchising Director was to invite bids and award franchises within a tight timetable. The first of his objectives was indeed, as already noted, to secure that railway passenger services in Great Britain were provided under franchise agreements as soon as reasonably practicable.
56. Section 31 (6) of the Supreme Court Act 1981 provides :

"Where the High Court considers that there has been undue delay in making an application for judicial review, the court may refuse to grant -

(a) leave for the making of the application ; or

(b) any relief sought on the application,

if it considers that the granting of the relief sought would be likely to cause substantial hardship to, or substantially prejudice the rights of, any person or would be detrimental to good administration."

57. Order 53 rule 4 (1) of the Rules of the Supreme Court provides :

"An application for leave to apply for judicial review shall be made promptly and in any event within three months from the date when grounds for the application first arose unless the Court considers that there is good reason for extending the period within which the application shall be made."

58. The governing principles are summarised in de Smith, Woolf and Jowell, Judicial Review of Administrative Action, 5th edn (1995) at paragraphs 15-019 et seq and 20-008 et seq. As put at paragraph 15-019,

"The primary requirement is always one of promptness and leave may be refused on the ground of undue delay even if the application is made within three months."

The first application

59. We do not think these applicants can be criticised for failing to apply before the issue of the relevant PSRs on 16 May 1995. Had they brought legal action while the consultation period was still in progress they would have run a real risk of failing on grounds of prematurity. Nor do we think that the Franchising Director had clearly indicated what is now, according to the argument presented on his behalf, his understanding of paragraph 18.
60. We do, however, think that there was an imperative need for the applicants to take action with the utmost promptness after issue of the PSRs. We regard the delay of 3 months between the issue of the PSRs and the making of application as "undue" in all the circumstances. While the reasons given for the delay explain it, they do not in our view excuse it ( and we do not overlook the delay by the Franchising Director's office in sending a copy of the final draft of the PSR for prospective LTS Rail franchisees) . That the grant of certiorari or mandamus now, following this undue delay, would be detrimental to good administration seems to us to be clear.
61. We would refuse this application for that relief on this ground. It follows that we would dismiss this appeal against the judge's decision on this application, although, in the case of LTS Rail, in view of the conclusion expressed earlier on the merits, we would if asked consider making a declaration.

The second application


 


62. In this case the relevant PSRs were published on 14 September 1995 and the applicants lodged notice of application on 20 October. It is not clear whether, before the judge, delay was relied on as a ground for defeating this application. If it was, the judge appears to have been unimpressed, but he plainly had little or no hesitation in dismissing the application anyway.
63. For reasons already given, we do not think these applicants can be criticised for waiting until the terms of the final PSRs were known. Thereafter, we cannot regard the delay before notice of application as "undue", given the need to obtain instructions, seek any necessary advice and settle proceedings.
64. It is not in our view apparent that the grant of relief will serve no useful purpose because the Secretary of State may simply amend his instructions. If he does so, the applicants' complaint may be defeated ; but whether he does so is a matter for him.
65. We are conscious that we are differing from a judge with great experience in this field, to whose reasoning (for want of time) we are doing scant justice. His clearly expressed view was that judicial review should be reserved for clear cases of unlawfulness. We agree. But to the extent that we find for the applicants we judge this to be such.
66. In this case we would grant relief. We would hear counsel on the appropriate form of order.