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England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Hopley, R (on the application of) v Liverpool Health Authority & Ors [2002] EWHC 1723 (Admin) (30 July 2002)
URL: http://www.bailii.org/ew/cases/EWHC/Admin/2002/1723.html
Cite as: [2002] EWHC 1723 (Admin)
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QUEENS BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL | ||
B e f o r e :
____________________
| THE QUEEN (on the application of RICHARD HOPLEY, a person under a disability suing by his mother and Litigation Friend, Patricia Hopley) | Claimant | |
| - and - | ||
| LIVERPOOL HEALTH AUTHORITY and NATIONAL HEALTH SERVICE LITIGATION AUTHORITY and DEPARTMENT OF HEALTH | 1st Defendant 2nd Defendant 3rd Defendant |
____________________
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Robert Seabrook QC and Shaheen Rahman (instructed by Hill Dickinson) for the First and Second Defendants
Susan Chan (instructed by The Department of Health) for the Third Defendant
____________________
AS APPROVED BY THE COURT
Crown Copyright ©
- The Claimant seeks judicial review of a decision by the First Defendant not to consent to the payment to him of damages for personal injury by periodical payments under a With Profits Structured Settlement pursuant to s.2 Damages Act 1996. The Second and Third Defendants are joined since, it is contended by the Claimant, they contributed to or directed the First Defendant's decision.
- The Claimant was born on 20 March 1973 and is now aged 29 years. He is the son of Kenneth and Patricia Hopley. Richard Hopley was at birth the victim of hypoxic ischaemic encephalopathy. He suffers a form of athetoid cerebral palsy which renders him severely physically incapacitated. Richard retains much of his cognitive functioning, indeed he attended most of the hearing before me, but suffers profound communication difficulties. He is wheelchair dependent, requires assistance with transfers and his carers are on 24 hour call. His bravery and the care he has received from his family are impressive.
- The Claimant pursued a claim for clinical negligence arising from the treatment provided by the First Defendant, Liverpool Health Authority, at or about the time of his birth. That claim was compromised on 20 June 2000 at 50 % full liability with damages to be assessed. On 27 February 2001 Ouseley J. adjourned approval of a proposed settlement between the Claimant and First Defendant in the conventional sum of £2,100,000 for consideration of a structured settlement under s. 2 Damages Act 1996.
- The Second Defendant is the National Health Service Litigation Authority, ('NHSLA'), a creature of statute. It is necessary to examine the statutory provisions. Section 21 National Health and Community Care Act 1990 empowered the Secretary of State for Health, with the consent of the Treasury, to make regulations establishing a scheme by which Health Authorities and other bodies would be enabled to meet their liabilities to "third parties for loss, damage or injury arising out of the carrying out of the functions of the body concerned". Such a scheme could, by s. 21(3), provide for its administration by the Secretary of State or a Special Health Authority, could require any participating body to make payments in accordance with the scheme, and could provide for the making of payments for the purpose of the scheme by the Secretary of State.
- One such scheme was established by the Secretary of State by means of the National Health Service (Existing Liabilities Scheme) Regulations 1996. That scheme applied to liabilities arising out of or in connection with any breach of duty by Health Authorities and other bodies before 1 April 1995. There is a separate scheme for post 1 April 1995 breaches. The breach alleged by the Claimant against Liverpool Health Authority in this case was a breach of duty qualifying under the 1996 Regulations and the Authority was an eligible body within the meaning of Regulation 2. The scheme, to be administered by and be subject to the directions of the Secretary of State, offered Health Authorities and other bodies, on terms, indemnity against their liabilities for breach of duty. The regulatory provisions include the following:
- By section 21(4) of the Act of 1990,
- Exercising powers given by ss.11 and 126(4) National Health Service Act 1977, the Secretary of State, by the National Health Service Litigation Authority (Establishment and Constitution) Order 1995, created the National Health Service Litigation Authority. One of its functions was to administer funding on behalf of the Secretary of State under the 1996 Regulations.
- T hose parts of the Order dealing with establishment, function and constitution of the Authority provide:
- The effect of these Regulations is that NHSLA, under the direction of the Secretary of State, has control over all claims arising from breaches of duty occurring before 1 April 1995 if the Health Authority or other body concerned wishes to be or is required to be indemnified by the Department of Health. Liverpool Health Authority was and is a participant in the scheme and subject, therefore, to the direction of NHSLA and, thus, the Secretary of State.
- Mr Thomas Fothergill is the Director of Finance (or Chief Finance Officer-see Paragraph 4(c) of the 1995 Order) of NHSLA, a position he has held since 1 April 2000. In a witness statement made on 11 June 2002, Mr Fothergill explained the practical operation of the authority:
- It is apparent that the arrangements thus made by the Department of Health for handling the defence to claims for clinical negligence in the NHS reflect those of the major insurers in the field of public and professional liability insurance. However, by s. 21(5) National Health Service and Community Care Act 1990:
- The Claimant, having secured an offer of settlement, obtained the advice of Messrs Frenkel Topping Limited ('FT'). On 11 April 2001 FT submitted a report recommending that of the £1.75 million available from the total for investment, £1 million should be invested in a "With Profits Linked" structured settlement offered by Windsor Life Assurance Limited. Of the balance of £750,000, £85,000 would be invested in a high interest bank or building society deposit account and £665,000 in named equitable funds.
- The authors of the report, Stephen Ashcroft and Norma Hayton, stated the objective, at page 4, of providing the claimant with a sustainable income to match his needs for life, "together with the potential for capital growth over the medium to long term". While stating that the claimant should be exposed to the lowest possible risk, reflecting the prudent investment strategy on which the House of Lords decision in Wells was based, they recognised that their proposal exposed the claimant to "the volatility inherent in the stock market with a portion of the contingency fund". The Summary of Objectives concluded, "Investment of part of the award could be used to provide a guaranteed income for Richard's lifetime to secure the bedrock of his care costs through the use of a structured settlement". If no structure was purchased the fund would be exhausted after 30 years. Structure would preserve the fund beyond the 45th year and result in a cumulative tax saving of £1.44m.
- In Section 3, pages 7-10, of their report, FT considered whether the structured element of the investment strategy should be linked to the Retail Prices Index or comprise a With Profits investment. Inland Revenue agreement had been obtained for both. With Profits annuities would receive exactly the same tax treatment as annuities under the conventional structure. In a further report of 11 February 2002, FT confirmed that the underlying annuity was guaranteed for life and, if necessary, was underwritten in full by the Policy Protection Board (Policy Protection Act 1975, s. 11 as amended by Damages Act 1996, s. 4).
- An RPI linked structure is backed by index linked gilts (ILGS) issued by the UK Government. Since the Life Office enters a long term arrangement to make index linked payments to the claimant, the obligation must be matched, for solvency purposes, with equivalent assets. They provide known income and capital returns. Annuity payments are matched to investment returns. A With Profits structure, on the other hand, depends for its returns on a wider range of investments including equities and property. There is a potential for higher returns in the long term: "Returns are not linked to any index. However, historically the total return from equity backed investments has been a better match for earnings related costs over the long term". Since earnings related costs include care costs, which outstripped price inflation by 1.5% per annum for the 10 year period to 1999, there was an advantage to investment in equities.
- The guaranteed income in the Claimant's case was to be £50,184 per annum for 10 years or the Claimant's lifetime, whichever was greater, increasing at an assumed 4% per annum provided the required bonus was declared, against an estimated requirement for care costs of £80,000 rising at the same rate (see page 9 and section 5, page 13, report 11 April 2001). The shortfall was occasioned by the compromise on liability. It was necessary to increase the scope for greater returns on the fund available.
- The provider (report, page 10) was to be Windsor Life, "one of the most significant providers in the Structured Settlement market". At the time of FT's report Windsor Life was the only Life Office offering a With Profits structure but since then NFU Mutual has joined the market. Windsor Life's assets were just under £4billion at the last published valuation. FT expressed the opinion that financial strength of the provider was "not an issue". The distribution of the fund was to be 50-60% UK equities, about 30% fixed interest stocks and about 10% cash and property.
- FT recognised that "there is an extra risk associated on [sic] a With Profits annuity. It is not guaranteed that the returns will beat those that could be achieved from purchasing an index linked annuity. There may be times when the increase on the policy does not match the increase in inflation, due to poor equity returns within the fund. Windsor Life have, however, guaranteed that once a bonus has been allocated, it cannot thereafter be removed and is payable for the rest of the Claimant's life". The authors expressed the firm opinion that a With Profits structure was in the Claimant's interests. The starting yield was about 21% higher than the conventional index linked annuity. In their view it was unlikely that an index linked annuity would ever catch up.
- The recommendation was put to the Defendant for its consent under s.2 Damages Act 1996. On 30 January 2002 solicitors acting on behalf of the Health Authority wrote, "As has already been made clear, our clients are not prepared to consider a With Profits Structure. If you wish to put to us proposals in relation to a conventional RPI Structure, then our clients would be prepared to consider this provided they are given adequate time to do the necessary Value For Money assessment".
- Already in the pipeline was the claim of Mr. David Clegg. In his case also, a With Profits structure had been recommended and approved by the Court of Protection in a letter from Master Lush dated 11 July 2001. The Defendants would not consent. There followed correspondence between Mr. Clegg's MP, Mr. Ian Lucas, the Parliamentary Under Secretary of State in the Department of Health, Ms Hazel Blears, the Chief Executive of NHSLA, Mr. Steven Walker, the Senior Clinical Negligence Manager in the Department of Health, Mr. Malcolm Baguley, Windsor Life and Frenkel Topping.
- The stance taken by Department of Health was (letter Ms Blears to Ian Lucas MP 17th October 2001) that while both the Department and NHSLA were strongly in favour of structured settlements in clinical negligence claims, and they would not wish to deny access by a claimant to a structured settlement, "we must be assured…that structures constructed 'with profits', do not disadvantage the claimant, and represent value for money to the NHS". The last phrase is pregnant with a meaning which FT certainly understood. It only emerged to full effect upon the Claimant's legal advisers when they were served with Mr. Fothergill's statement of evidence.
- Ms. Blears continued that the Department was yet to be convinced of the advantages of With Profits structures and confirmed that NHSLA had been advised to "maintain the status quo until a full assessment of the benefits and drawbacks of with-profits structures can be undertaken". Furthermore, Ms Blears remarked, Mr. Alan Milburn had announced in July that the Government was currently examining options for reform of the system of compensation for clinical negligence cases, including the use of structured settlements, for inclusion in a White Paper.
- To the Chief Executive of NHSLA, on 13 November 2001, Mr. Malcolm Baguley wrote in similar terms and added:
- On 30 January 2002 Mr. Stuart Wilkinson of Windsor Life wrote to Ms Blears providing information about their product in an attempt to quell her fears about its advantage to claimants. He confirmed the existence of the guarantee of a minimum annuity and accrued bonuses. He said that his investment managers were:
- On 11 February 2002 FT completed its further report on the With Profits/RPI analysis and comparison. In it Mr. Ashcroft said:
- Mr. Ashcroft proceeded to set out the case for WPSS, a case which has been advanced in submissions to me by Mr. Hone QC to demonstrate the irrationality of the First Defendant's refusal to consent. In short, the arguments are:
- The Claimant's adjourned approval hearing took place at Liverpool on 19 February 2002 before Gross J. It was again adjourned for 14 days for the purpose of affording the Claimant the opportunity to address the foregoing arguments to the Liverpool Health Authority and the Authority the opportunity to give reasons for its refusal to consent to the structure proposed. The arguments in favour were summarised in a letter from the Claimant's solicitors to the First Defendant's solicitors dated 20 February 2002. At the resumed hearing on 6 March 2002 the Defendant produced a "To whom it may concern" letter, the author of which was Mr. Baguley. The letter, probably composed on 5 March, repeated the views expressed by Mr. Baguley in his letter of 13 November 2001 to NHSLA and included the significant sentence:
- On 6 March 2002 Gross J. further the adjourned the Claimant's application on terms that:
- The Claim Form seeking permission to proceed with a claim for judicial review was filed on 15 March 2002. The Defendant to the application was Liverpool Health Authority. Interested Parties named were Department of Health and NHS Litigation Authority. On the same day an Amended Claim Form was filed. The Interested Parties were deleted. NHS Litigation Authority was named Second Defendant and Department of Health, Third Defendant. The Claim Form was accompanied by a Statement of Facts and Statement of Grounds (sections 8 and 6). The "Details of remedy being sought", both in the original and as amended, were as follows:
- Section 2 Damages Act 1996 provides:
- It is the Claimant's case that:
- The First Defendant, Liverpool Health Authority, was the litigant in the clinical negligence claim entitled to give its consent for the purposes of s.2 Damages Act 1996.
- The First Defendant was itself a public body created under National Health Service Act 1977 as amended. The hearing proceeded on the common ground that the refusal to consent was caused or influenced by a policy adopted by NHSLA, the Second Defendant, under the direction of Department of Health, the Third Defendant.
- Mr. Hone QC submits on behalf of the Claimant that although the giving or withholding of consent under s. 2 may appear at first sight to be the exercise of the private right of a litigant, the discretion was exercised by a public body with statutory powers. While a private person may exercise a discretionary power just as he wishes, a public authority must act reasonably and in good faith, and upon lawful and relevant grounds of public interest. Thus, a discretion exercised by a public authority cannot be unfettered or absolute and is reviewable.
- The relief sought is an order requiring the Defendants, all three of them, to fund a With Profits Structured Settlement. It is contended that the Second and Third Defendants, in turn, exercised their statutory powers under the 1995 and 1996 Regulations by giving directions to the First Defendant as to its conduct in defence of the litigation. An exercise of statutory power is amenable to judicial review particularly, it is submitted, when it is driven by policy. There could be no doubt this decision was driven by policy rather than a balance of factors, some of which would, rightly, concern the public finances and others of which would or ought to have concerned the personal interests of the Claimant. Once the personal interests of the Claimant were placed in the balance, consent to a WPSS was, or should have been, inevitable.
- The Defendants acknowledge that Liverpool Health Authority and NHSLA are statutory bodies, many of whose decisions may be subject to judicial review. However, the function performed in this particular case was, it is contended, non-public. The decision made under s.2 Damages Act 1996 was an entirely private one. No defendant in litigation is required to submit to an award wholly or partly comprising periodical payments. As an exception to the usual rule the court could make a s. 2 award but only if both parties consented. The decision taken and the direction presumably given took place in the context of private clinical negligence proceedings in which the defendants had a community of interest. The only undetermined issue was the mechanics of payment of damages agreed. The First Defendant could give or withhold consent entirely as it pleased and for any reason it pleased. It was in no different position from any other litigant, in particular a litigant indemnified by an insurance company.
- Furthermore, Mr. Seabrook QC for the First and Second Defendants, and Miss Chan for the Third Defendant submitted, what was at issue in the judicial review proceedings was not the policy. There was no claim to strike down the policy, or for a declaration that the policy was unlawful. No application to amend the relief sought had been made. The sole issues for my consideration, they submitted, were whether the First Defendant's refusal to consent was susceptible to review at the instance of the Claimant and, if so, whether the decision itself was unlawful.
- During the course of submissions from Mr. Hone QC, it became apparent that the Claimant might not, on his own case, succeed in obtaining a mandatory order enjoining the Defendants to approve or consent, as the case may be. It did not follow that if the First Defendant's decision was improperly driven by the Second and Third Defendants' policy, the only rational decision had to be consent.
- I shall first consider whether the First Defendant's decision not to consent is amenable to judicial review. Upon this decision, I understand, rests the future of this and several other such claims.
- My attention has been drawn to several authorities concerning the issue whether a public body with statutory powers was performing a public function amenable to judicial review, or a private function amenable only to challenge in an action to enforce a private law right. In the course of reviewing the authorities, it became clear that there is a need to identify: first, whether the Defendant is a public body exercising statutory powers (about which there is no dispute); second, whether the function being performed in exercise of those powers was a private or public one; and third, whether the defendant was performing a public duty owed to the Claimant in the particular circumstances under consideration.
- In R v East Berkshire Health Authority ex parte Walsh [1985] 1 QB 152, the Court of Appeal considered whether a senior nursing officer employed by the health authority could challenge his dismissal in proceedings for judicial review. The Court concluded that where terms of employment by a public body were controlled by statute, its employees might have rights both in public and private law to enforce those terms but a distinction had to be made between an infringement of statutory provisions giving rise to public law rights and those rights which might arise solely from a breach of the contract of employment. What was required was an identification whether the Claimant was seeking to enforce a public right on the one hand or a private contractual right on the other.
- In a passage at page 162B Sir John Donaldson M.R. drew the distinction of principle:
- In R v British Coal Corporation ex parte Vardy [1993] ICR 720, the Defendants sidestepped a colliery review procedure instituted under s.46(1) of the Coal Industry Nationalisation Act 1946 and announced its intention to close 10 of its deep mine collieries. Glidewell LJ, at page 751D-F, explained his view that British Coal were performing a public function and not exercising a private commercial right as follows:
- In McClaren v Home Office commencing at page 836B, Woolf L.J. explained that there were circumstances in which an employee of a public body may enjoy rights in public law and in private employment law. In certain cases an employee may be one of a number employed in the service of the Crown whose position is affected by public law considerations. In Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374, for example, it was the action of the Minister requiring a variation in important and long standing terms of employment of employees at GCHQ on grounds of national security, in other words the application of policy, which attracted the attention of public law.
- In the context of this Claimant's case a well known and frequently quoted passage in the speech of Lord Diplock in the GCHQ case at pages 408-409 is instructive:
- Mr. Hone QC has emphasised (and in so doing has relied on the contract and commercial cases) that what may appear to be a private occasion may be and often is given a public law dimension because the Defendant is exercising a statutory power and/or applying Government policy. Counsels' researches had failed, however, to reveal an occasion on which a court had interfered to review a tactical or strategic decision made by or on behalf of a public body in private litigation.
- What seems to emerge from the authorities is that no single factor is determinative. In R. v Panel on Take-overs and Mergers ex parte Datafin Plc [1987] 815 at page 838E, Sir John Donaldson M.R. in the context of the nature of the body under consideration advised:
- I am here concerned primarily with the quality and purpose of the function which the First Defendant was performing at the material time. As Neill L.J. said in R. v Disciplinary Committee of the Jockey Club, ex parte Massingberd-Bundy [1993] 2 All E.R. 207 at page 218f:
- The judgments of Keene J. in R. v Bolsover District Council ex parte John Pepper CO/1450/2000, 3 October 2000 (non-use of a power of sale under s. 123 Local Government Act 1972) and Latham J. in R. v London Borough of Camden ex parte Hughes CO/2119/93 21 December 1993 (competition between bidders for purchase of land from local authority) have assisted me to appreciate the importance in this case of an understanding of the function being performed or, to put it another way, the quality and purpose of the decision the subject of criticism.
- In Hughes Latham J. held that the mere exercise of an essentially private law function such as entering into a contract pursuant to a statutory power was not susceptible to judicial review. Only when making a decision which affected the defendant's public responsibilities (such as changing its policy towards sale) was public law engaged.
- In Pepper, at paragraph 30, Keene J. explained his decision thus:
- Mr. Hone QC endeavoured to persuade me that I should treat Pepper with a degree of caution. Mr. Clive Lewis in his "Judicial Remedies in Public Law", 1st Supplement to 2nd Edition, paragraph 2-121, had expressed the view that while Keene J. had considered that the exercise by a public body of a statutory power to contract was amenable to judicial review if some public law element was present, the better view was public law principles do, generally, apply to such decisions because of their statutory origin and, as a public body, a Council ought to exercise its statutory powers in accordance with the principles designed to prevent the abuse of power. The preferable basis for the decision was submitted to be that on the facts of the case the claimant had no legitimate expectation to enforce.
- I need not enter the debate how the decision should best be explained on the facts but I am in no doubt that Keene J. was right in principle and I follow his example. There is respectable authority for the proposition that an examination of the function being performed is, in some circumstances, essential to the question whether the decision is susceptible to review, whatever the source of the power to make the decision.
- Mr. Hone demonstrated to me that a decision made in the course of an apparently commercial process can be amenable to judicial review if there is an additional public element introduced to the process (see, for example, Ise Lodge Amenity Committee v. Kettering Borough Council [2002] EWHC Admin 1132 (in which both parties agreed that the present state of the law was as Keene J. had stated it in Pepper); R. v Legal Aid Board ex parte Donn [1996] 3 All E. R. 1; and Wandsworth London Borough Council v. A [2000] 1 W.L.R. 1256). From that proposition I would not depart.
- In my judgment the function being performed by the First Defendant as it concerned and affected the Claimant was a private one. The First Defendant was a litigant defending a claim in clinical negligence brought by the Claimant. Having compromised the liability claim, it agreed damages. That process, it seems to me, involved no public law duty to the claimant at all. It might have involved the performance of a different obligation in public law enforceable by others. The First Defendant would not, for example, have been fulfilling its public duty if it knowingly offered inflated damages to the Claimant for oblique motives (compare R. v. Port Talbot Borough Council, ex parte Jones [1988] 2 All E. R. 207-improper allocation of council accommodation). Having agreed damages the First Defendant owed no duty to the Claimant other than to meet judgment according to law. That included a duty to consider giving consent to a structured settlement if asked. It had no duty to the Claimant to render the agreement more advantageous to him than the law required. It had at no stage represented to him or to claimants generally that it would behave in any particular way under s. 2 Damages Act 1996. It was under no obligation to justify its decision to the Claimant. In my judgment this exercise of statutory power by a public body took place, to the extent that it concerned the Claimant, in an entirely private context and involved no fulfilment of any public duty to him.
- The foregoing conclusions are framed entirely within a consideration of the function apparently being performed by the First Defendant. I return to and apply the analysis of Lord Diplock in the GCHQ case (see paragraph 44 above). As to (a), there was here no right or obligation of the Claimant enforceable in private law which the First Defendant could affect. There was no right to a structured settlement which could be enforced in private law. The section simply created a statutory concession to litigants if they were in agreement.
- As to Lord Diplock's alternative route to judicial review (b), the decision of the First Defendant did not deprive the Claimant of a benefit or advantage he had formerly enjoyed, nor had any assurance been given that such a benefit or advantage would not be withdrawn without the opportunity to make representations; in other words the Claimant had no 'legitimate expectation' that the First Defendant would act in any particular way.
- I have considered whether advice or directions from the Second or Third Defendants removed the decision from the private to the public sphere. In my view no advice or instruction from the other defendants could or did change the quality of the function being performed by the First Defendant; nor could or did it create a public law right of itself to review the decision. Assuming the First Defendant acted under a policy direction, it was doing no more than it was required to do under regulation 6 of the 1996 Regulations to obtain its indemnity from the Secretary of State; and it was doing no more than any other litigant which under the terms of a policy passes to its insurer the right to control the litigation. Finally, no intervention by or direction from NHSLA or Department of Health altered any right or obligation enforceable by or against him in private law; nor did it deprive the Claimant of any 'legitimate expectation'.
- I accept Mr. Seabrook QC's and Miss Chan's submissions on behalf of the Second and Third Defendants that the subject of the claim here is the First Defendant's decision. I am not entitled to go behind the remedy sought in the Claim Form in order to get at the policy. No application is made to declare the policy unlawful.
- I conclude that the decision criticised is not amenable to judicial review.
- In his statement of 11th June 2002, Mr. Fothergill explained at paragraph B.7 that amongst the specific objectives of NHSLA is a wish to minimise overall costs of clinical negligence cases to the NHS, to spread the costs of clinical negligence cases more evenly over time, to provide cost effective clinical risk management, to improve claims management and to ensure that patients have appropriate remedies including financial compensation where proper.
- He emphasised at paragraphs D.2 and 5 the advantage to the Third Defendant of a self-funded structure:
- Mr. Fothergill, at paragraph E, described the approach of NHSLA and the Department of Health to WPSS. It is a relatively new product without a track record of viability or benefit to claimants. It was not possible to measure value for money in the same terms because long term growth forecasts remained in question. NHSLA had no 'profits' by which to create the index which drives the self-funded arrangement. Not only would the NHS lose the financial advantage it enjoyed with self-funding but a shortfall in illustrated income created by a more risky product might well result in a later burden being imposed on public funds. There were reviews taking place and until such time as a change of policy occurred the Department of Health wished, for the sake of consistency, to maintain the status quo.
- Mr. Seabrook QC argued that there was nothing irrational, unfair or unreasonable about the Defendants' approach. Given the serious decline in values in the stock market during the past twelve months, their concern for the viability of the product was demonstrably reasonable. Having fulfilled their legal obligation to a claimant their primary duty was to the public purse. Whether the Defendants were acting reasonably might be tested against the Defendants' assertion that the Claimant was attempting to achieve more than that to which the law strictly entitled him. The Defendants were content to fulfil their legal obligations to him by the payment either of a lump sum award or periodical payments linked to the Retail Prices Index. Their Lordships' speeches in Wells v Wells [1999] 1 A C 345 are clear in their conclusion that claimants should be entitled to the greater multipliers produced by lower discount rates in order to permit the safer investment of a lump sum award. This Claimant was seeking to characterise as irrational a decision by the Defendants to insist upon an approach consistent with Wells.
- It was argued that financial self interest or 'value for money' was a legitimate consideration, even if the dominant consideration, when the Defendants were considering their response to the Claimant's request. It might be that the Claimant had a strong personal interest in achieving, if he could, the defendants' agreement to an equity based investment but the defendants were entitled to give precedence to other and wider interests. It was true that if consent was withheld the Claimant would have to choose between a lump sum (in which case the First and Second Defendants would lose the self-funding advantage in any event and the Claimant would his lose tax advantage) or an RPISS, in which case the Defendants could maintain the status quo. However, in common with any other group of defendants with a community of interest, these Defendants were entitled, if they could, to endeavour to protect their wider, even future, financial interests and, in pursuit of those interests, to adopt a common policy.
- It is contended for the Claimant that the Defendants took account of irrelevant considerations and/or failed to take account of relevant considerations. In substance the argument is that the decision was unreasonably weighted by policy.
- Mr. Hone QC invited me to treat with scepticism the evidence that financial advantage to the Department of Health was a significant factor in the decision making process. That concern barely emerged until Mr. Fothergill concentrated upon it in his witness statement. In any event, it is asserted boldly that the Department and/or NHSLA was not entitled to have regard to its own financial interests when deciding whether to direct consent to a structured settlement. It is suggested that this is an attempt to 'claw back' to the public purse money which rightly belongs to the Claimant under the provisionally agreed award. A public body is not entitled to use its statutory power to enforce a policy which would not be available to a private litigant.
- The Defendants' argument that WPSS is an untried product which might, if failing to generate the returns expected, cause the Claimant to look again towards to the Defendants for recompense or state benefit is, submits the Claimant, unrealistic, if not irrational. The Claimant is prepared to give a disclaimer and the risk is the Claimant's. If he wished the Claimant could in any event dissipate his award and fall back on state support. The minimum income under WPSS would be guaranteed and underwritten by the Policy Protection Board.
- The existence of reviews or research projects is not material to the decision under consideration, it is claimed. The Claimant is not seeking from the Defendants the payment of any greater sum of money than that which they have already offered. He merely wishes, with the Defendants' agreement, to invest that sum as he is, for compelling reasons, advised. Further information or advice to the Department at some unspecified time in the future about the handling of claims is incapable of affecting the issues relevant to the Claimant's case which is, subject to s. 2, already settled.
- In short, it is submitted none of the reasons given by the Defendants for the decision in the Claimant's case constitutes a rational basis for refusal. Either the reasons given are manifestly discredited by the evidence or they are improper in the sense that they are oblique, insubstantial or immaterial. They have failed to address satisfactorily or at all any of the matters placed before them in the Claimant's solicitors' letter of 20 February 2002. The First and Second Defendants have closed their minds to the merits of the case and applied a blanket policy. This amounts to an unlawful fetter on discretion where the public body concerned owed a public duty to strike a balance (see, for example, Bromley London Borough Council v. Greater London Council [1983] AC 768). NHSLA, by applying the policy, had failed to exercise its own discretion-see R. v Police Complaints Board ex parte Madden [1983] 1 W.L.R. 447, particularly at page 470C, per McNeill J:
- I start with the statutory scheme. By Paragraph 3 of the National Health Service Litigation Authority (Establishment and Constitution) Order 1995 NHSLA was created to perform the functions of the Secretary of State in connection with the scheme to provide indemnity to, amongst others, Health Authorities. It is a requirement of Paragraph 3 that the NHSLA shall perform its functions "subject to and in accordance with such directions as the Secretary of State may give".
- It follows that, contrary to the submissions made to me by Mr Hone QC, NHSLA's discretion to act or to make decisions in performance of any particular function is expressly circumscribed by the statutory provisions by which it was created. I do not consider the argument that NHSLA has chosen to fetter its discretion has substance. Mr. Fothergill's statement, particularly Parts C and F, and the letter from Mr. Baguley of Department of Health to NHSLA dated 13th November 2001 make clear that NHSLA exists to work under the direction of the Secretary of State and has in the case of WPSSs applied, as required, the policy emanating from the Department.
- The First Defendant may seek an indemnity, which may, at the Secretary of State's/NHSLA's discretion (Regulation 6(1) National Health Service (Existing Liabilities Scheme) Regulations 1996) be granted. Even if the eligible body qualifies for indemnity under Regulation 6(2), the grant of the indemnity is subject to the Secretary of State's discretion.
- Since the First and Second Defendants must act as directed by the Secretary of State in their administration of the scheme for providing indemnity to the First Defendant (section 21(4) National Health and Community Care Act 1990, paragraph 6 above), it follows that the scope for their independent decision making is limited. I am satisfied the First and Second Defendants were performing their statutory duty in applying the Third Defendant's policy.
- It seems to me that the real object of attack was, from the start, the policy. I have already decided that I am not, on the basis of the application before me, entitled to grant the remedy which would serve the Claimant's purpose even if I thought it had substance.
- Nevertheless, I shall express my view upon the legitimacy of the policy. The following passage from Wade, Administrative Law 5th ed. at 355-356, expanded in later editions, was cited with approval by Lord Bridge in R. v Tower Hamlets London Borough Council ex parte Chetnik Developments Ltd [1988] AC 858, 872B:
- Section 21 National Health Service and Community Care Act 1990 created the power to make the regulations of 1995 and 1996. Subsection (4) reserves powers to the Secretary of State (see paragraph 6 above).
- This subsection, when read with the terms of the 1995 and 1996 regulations, establishes for the Secretary of State an extremely wide discretion in the handling of claims against those who administer and perform work within the NHS. The creation of the statutory scheme by which 'eligible bodies' would become subject, at the discretion of the Secretary of State, to control within the scheme by the Secretary of State, implies the grant by Parliament of powers so to arrange the affairs of the NHS in the context of clinical negligence claims as to bring efficiency, coherence and a unified approach to the handling of claims. The statutory purpose must, in my view, encompass a power in the Secretary of State in the context identified to utilise the resources of the NHS to the maximum benefit of the public it serves, while fulfilling legal obligations to those who are entitled to compensation as a result of breaches of duty within the NHS.
- The use of the words 'value for money' in describing the Defendants' approach towards financial products created to make use of the tax advantages of structured settlement is, in my opinion, both appropriate and significant. It is of the first interest to those who administer the scheme to explore ways in which settlements of claims can be managed to the financial advantage of the public in general. One way to achieve savings is the 'self-funded' arrangement by which NHSLA retains capital and makes periodical payments itself. Another is to negotiate the price of an annuity to the advantage of the defendant. I recall in this context (paragraph 24 above) the letter from Windsor Life to the Parliamentary Under Secretary of State of 30th January 2002 in which Mr. Wilkinson noted he was still in negotiation with NHSLA with view to acting as their supplier of structured settlements in cases they were unwilling to fund themselves.
- In my opinion, financial advantage to the NHS, present and future, is a legitimate and indeed essential consideration for the Secretary of State in the performance of the responsibilities created by the statutory scheme.
- It would, in my view, have been a perfectly responsible line to take that for the time being claimants who wished to invest their awards in With Profits schemes should be permitted to do so, particularly when the lump sum award was significantly discounted for the risks of litigation and the annual payments were, in any event, likely to be insufficient to meet the claimant's care requirements in full. It would have been entirely consonant with the careful performance of the Secretary of State's duties to have permitted existing awards to be structured as the claimants were advised while awaiting the outcome of a more general review or the result of continuing negotiations with the Life Offices offering the service.
- The issue is not, however, whether the court would have come to the same conclusion as the minister but whether the decision made and the policy adopted for the time being was unreasonable (amounting to an abuse of power) in the Wednesbury sense.
- In my view all those matters referred to by Mr. Fothergill in Parts D and E of his statement which explain the current policy of the Second and Third Defendants were legitimate considerations. None of them was irrelevant to the formation of the policy although some, for example the expressed concern about the Claimant's own interests, were of comparatively little weight. It is quite apparent that foremost in directing minds was the wish to exert some influence over the financial consequences to the NHS of clinical negligence claims.
- The Second and Third Defendants were, in my judgment, acting well within acceptable limits of statutory discretion when forming conclusions and directing policy as they did. The effect of the decision not to consent to the particular form of structured settlement desired by the Claimant was to fulfil in full the legal obligation the First Defendant owed to the Claimant upon principles settled by the House of Lords in Wells. It does not seem to me that the decision or the policy which educated it could in those circumstances be described as Wednesbury unreasonable or an abuse of power.
- In the circumstances I do not consider that the Claimant is entitled to the relief sought and the application must be dismissed.
Mr Justice Pitchford:
The Claim
The Parties and Factual Background to the Dispute
"Establishment of Scheme
2. There is hereby established a scheme, to be known as the Existing Liabilities Scheme, whereby an eligible body may, in accordance with the following provisions of these Regulations, make provision to meet qualifying liabilities.
[Regulation 3 omitted]
Liabilities to which the Scheme applies
4. The Scheme applies to any liability in tort owed by an eligible body to a third party in respect of or consequent upon personal injury or loss arising out of or in connection with any breach before 1st April 1995 of a duty of care owed by that body, or a body referred to in regulation 3(b)(ii), to any person in connection with the diagnosis of any illness, or the care or treatment of any patient, in consequence of any act or omission to act on the part of a person employed or engaged by such a body in connection with any relevant function of that body.
Administration of the Scheme
5. The Scheme shall be administered by the Secretary of State.
Payments under the Scheme
6. (1) Where, in any year, a qualifying liability falls to be met by any eligible body, the Secretary of State may, subject to paragraph (2), pay to that body an amount to be determined by him in accordance with paragraph (3).
(2) No payment shall be made under paragraph (1), except to such extent as the Secretary of State may determine, in respect of –
(a) any liability admitted by the eligible body without the consent in writing of the Secretary of State;
(b) any liability determined by a Court in proceedings conducted by the eligible body otherwise than in consultation with the Secretary of State; or
(c) any payment which the eligible body has agreed to make otherwise than in the course of legal proceedings, or in consequence of its having compromised legal proceedings, without the consent in writing of the Secretary of State.
(3) The amount of any payment to an eligible body under paragraph (1) shall be determined by reference to –
(a) where an award of damages has been made against the eligible body by a Court, the amount of that award, together with the amounts of the legal and associated costs awarded to the plaintiff and of any such costs incurred by the eligible body;
(b) where legal proceedings have been compromised by the eligible body, the amount of –
(i) any sum paid by the eligible body in relation to the plaintiff's claim for damages,
(ii) the eligible body's contribution towards any legal and associated costs incurred by the plaintiff; and
(iii) any such costs incurred by the eligible body;
(c) where, in any legal proceedings, a Court has declined to award damages against the eligible body, the amount of any legal and associated costs incurred by the eligible body, to the extent that such costs are not recoverable from the plaintiff or from the Legal Aid Board under section 18 of the Legal Aid Act 1988;
(d) where the eligible body has agreed to make a payment, otherwise than in the course of legal proceedings, in settlement of the plaintiff's claim, the amount of that payment.
Provision of information
7. An eligible body shall, at such times and in such manner as the Secretary of State may require, furnish to the Secretary of State such information as he may request about –
(a) the nature of any relevant function carried on, during any period falling before 1st April 1995 which the Secretary of State may specify, by the eligible body or by any body whose liabilities have been transferred to the eligible body; and
(b) any event of which the eligible body is aware which it considers might give rise to a qualifying liability.
Availability of directions and guidance
8. The Secretary of State shall make available to eligible bodies, in such form and at such times as he may consider appropriate –
(a) any direction he may give, to any body directed under section 21(4)(b) of the Act to carry out functions in connection with the administration of the Scheme, with respect to the discharge by that body of those functions; and
(b) any guidance he may give to that body as to the manner in which the Scheme is to be administered. "
"Without prejudice to any other power of direction conferred on the Secretary of State,-
(a) if the Secretary of State so directs, a body which is eligible to participate in a scheme shall do so;
(b) where a scheme provides for it to be administered by the Secretary of State, a Health Authority, Special Health Authority, Primary Care Trust or NHS Trust shall carry out such functions in connection with the administration of the scheme by the Secretary of State as he may direct."
"Establishment of the National Health Service Litigation Authority
2. There is hereby established a Special Health Authority which shall be known as the National Health Service Litigation Authority.
Functions of the Authority
3. Subject to and in accordance with such directions as the Secretary of State may give to the Authority, the Authority shall perform on behalf of the Secretary of State such of his functions in connection with the establishment of a scheme under section 21 of the National Health Service and Community Care Act 1990 (scheme for meeting liabilities of health service bodies), and such other functions, as the Secretary of State may direct the Authority to perform on his behalf.
Constitution of the Authority
4. The Authority shall consist of-
(a) a chairman;
(b) three members who are not officers of the Authority; and
(c) three other members, being persons who for the time being hold the offices of Chief Officer, Chief Finance Officer and Clinical Director of the Authority. "
"C.1. The major reason for centralising control of claims within the NHSLA was to introduce an element of global control for the Department of Health. The organisation effectively operates upon similar lines as that of a mutual insurer with NHS Trusts and health authorities acting as members/policy holders. All claims falling under the remit of the NHSLA are managed by a team of claims handlers and a panel of appointed solicitors.
C.2. If a trust or health authority is seeking indemnity under either the existing Liabilities Scheme or the Clinical Negligence Scheme they must seek prior approval and authority for any admission or other major step throughout the litigation process. The NHSLA operates on a scheme of delegation with the overall budget manager for the NHS being the Department of Health.
C.3. In short the Department of Health delegates powers to the NHSLA to agree and make payments in respect of settlements up to and including a certain financial threshold with the requirement that any claim where the payments will exceed that threshold have to be referred back to the Department of Health for their agreement.
C.4. All major questions with regard to a claim will be dealt with by the NHSLA unless they are settled by the court. A trust or health authority cannot make any admission of breach of duty or deal with questions of causation or quantum on any matter where it seeks to make a recovery and either the Existing Liabilities Scheme or the Clinical Negligence Scheme managed by the NHSLA".
"Neither the Secretary of State nor any Health Authority, Special Health Authority, Primary Care Trust or NHS trust administering the scheme under this section shall, by virtue of their activities under the scheme, be regarded as carrying on insurance business for the purposes of the Insurance Companies Act 1992.
"…..I am not opposed in principle to NHSLA considering 'with profits' structures, but I deem the timing for implementation of this type of structure inappropriate. The Chief Medical Officer and his advisory committee are currently considering a reform of clinical negligence, and structured settlements are one aspect of this review. I am also aware that the Lord Chancellor's Department are also considering the wider usage of structured settlements. Both of these reviews may significantly change the way we use structured settlements and I do not wish to have the NHSLA change horses midstream on any 'with profits' considerations. That said, I would welcome the NHSLA's advice on any 'with profits' schemes that may be presented between now and March 2002."
"tightly constrained to pre-defined benchmark investment objectives. The product is priced such that an achieved investment return of 6% (after tax) per annum would sustain a bonus rate of 4% per annum."
He reminded Ms Blears of the protection afforded to policyholders by the Policyholders Protection Act 1975. Bonuses may not be protected, he conceded, but the product was still more attractive than an RPI linked structure. His company had structured 40 With Profits funds. He reported what he understood to be the view of Messrs. Walker and Fothergill of NHSLA that it was "not their responsibility to evaluate the merits of alternative investments that could be purchased by defendants once the settlement had been paid across as a lump sum". He was still exploring with NHSLA "how we might act as a supplier to them for structured settlements that they are unable or unwilling to provide themselves".
"In the early 1990s the Department of Health recognised the value of Structured Settlements, and together with HM Treasury, introduced criteria to enable Health Authorities and Trusts to 'self fund' such Structured Settlements. In effect where a settlement figure was agreed, and the Claimant wished to structure, a value for money exercise was carried out to determine whether the defendant Health Authority should purchase an annuity or self fund, i.e. retain the capital sum which would be paid to the Life Office to purchase the annuity, and meet the annual payment themselves.
This method has obvious attractions for the NHS since it helps cash flow considerably and has the potential for windfall benefit should the Claimants die before their expected life span. The potential downside is that should Claimants live beyond their expected life span, the NHS is committed to maintain lifetime payments. In essence, however, this system has been acceptable to Claimants and their advisors since, as far as the Claimants are concerned, all the NHS is doing is matching the best rate available. The choice of funding vehicle is largely irrelevant, and if the NHS feel that a saving can be made by self-funding, this does not present a problem."
(i) Tax exemption for structured settlements has been available for years. The recipient of a WPSS annuity is in no better position than his RPI equivalent.
(ii) For understandable reasons HM Treasury has declined to self fund WPSS arrangements but WPSSs have been purchased by other Government departments, notably the Ministry of Defence which makes, suggested Mr. Ashcroft, the NHSLA's position untenable.
(iii) An argument put forward by counsel for the defendant in Mr. Clegg's case, to the effect that WPSSs undermines their Lordships' judgment in Wells (claimants should be awarded a multiplier based upon the assumption that they will invest in gilts), was disproved by experience. The Lord Chancellor in setting the discount rate for multipliers at 2.5% rather than 1.9% was expressly moved by the fact claimants continued to invest in equities, as did the Court of Protection on behalf of infants and patients.
(iv) Any concern about the security of WPSSs was answered by the 100% protection against loss of guaranteed annuities afforded by section 4 Damages Act 1996. The probability is that any exclusion of declared bonuses would in fact be met by the Life Office which took over and stepped into the shoes of the impecunious provider.
(v) Of the working party investigations being conducted, the Chief Medical Officer was, to Mr. Ashcroft's understanding, looking not at WPSS or even structured settlements specifically but an alternative system of compensation for lower claims in clinical negligence cases. The Master of the Rolls was considering a Practice Direction or recommendation, or some other provision, requiring parties to produce evidence that a structured settlement had been considered. The Lord Chancellor's Department was undertaking the most wide ranging and radical of reviews, considering not only a judicial power to impose structured settlements but also periodical payment orders, both of income and capital. A consultation paper was to be issued in March 2002 but no proposals were expected until 2003 at the earliest.
(vi) In the meantime, claimants were being caused considerable distress because they were being deprived, by the tortfeasors' refusal to consent, of the opportunity to invest their awards of damages as the experts in the field of investment advised they should.
Mr. Ashcroft concluded that "While recognising that the NHS has a responsibility to the public purse, we would welcome a response and a full and proper explanation of the rationale for this refusal as a matter of urgency".
"The Department of Health would not wish to deny a claimant access to a structured settlement, but must be assured, however, that structures constructed 'with profits' do not disadvantage the claimant, and represent value for money to the NHS."
After referring to the need to make a full assessment it concluded:
"We hope to be in a position to advise NHSLA on the application of 'with profits' settlements later this year.
I hope that this explains the Department of Health's current position on structured settlements."
"(1) Claimant issues application for permission for judicial review within 14 days;
(2) If application for judicial review is issued, then the adjournment shall continue until the disposal of the judicial review proceedings;
(3) If no application for judicial review is made, or if such application fails, this matter to be restored for final order on the earliest available date.
Claimant do have the costs of today and 19 February 2002."
"An order requiring the Defendants to fund a With Profits Structured Settlement"
Permission to proceed was granted by the single judge on 23rd April 2002.
The Issues
"(1) A court awarding damages in an action for personal injury may, with the consent of the parties, make an order under which the damages are wholly or partly to take the form of periodical payments".
The effect of the First Defendant's refusal to give that consent is to deprive the court of power to make an award of damages wholly or partly in the form of periodical payments, unless the Claimant abandons the proposal to purchase a WPSS and submits instead to an RPISS.
1. The Defendant's decision is amenable to judicial review; and
2. Is unlawful because:
(i) the Defendants have taken irrelevant considerations into account in reaching their decision; and/or
(ii) the Defendants have fettered their discretion in that they have applied a blanket policy of refusing to consent to a with profits structure and/or have given no individual consideration to the Claimant's case and/or the National Health Service Litigation Authority has given no individual consideration to the Claimant's case; and/or
(iii) the Defendants refusal to consent to a with profits structure is unreasonable in the Wednesbury sense.
Is the First Defendant's decision amenable to judicial review?
Submissions
Authorities
"The remedy of judicial review is only available where an issue of 'public law' is involved, but as Lord Wilberforce pointed out in Davy v Spelthorne Borough Council [1984] AC 262, 276, the expressions 'public law and 'private law' are recent immigrants and, whilst convenient for descriptive purposes, must be used with caution, since English law traditionally fastens not so much upon principles as upon remedies. On the other hand, to concentrate on remedies would in the present context involve a degree of circularity or levitation by traction applied to shoe-strings, since the remedy of certiorari might well be available if the health authority is in breach of a 'public law' obligation, but would not be if it is only in breach of a 'private law' obligation."
"........ I do not accept that British Coal is to be equated to other major employers who are in private ownership. From the time when the coalmines first came into national ownership, s.46 of the Coal Industry Nationalisation Act 1946 has provided a regime for consultation on the matter to which it refers, including colliery closures and resulting redundancies, which is unique to the coalmining industry. In other words, the statute places express duties on British Coal which are not placed on other employers. To use Sir John Donaldson MR's phrase in R v East Berkshire Health Authority, ex parte Walsh [1984] ICR 743, 753, Parliament has underpinned the position of coalminers by directly restricting the freedom of British Coal to dismiss them. The modified colliery review procedure, to use Woolf LJ's formulation in McClaren v Home Office [1990] ICR 824, is a mechanism and the independent review body is a body to which the employee or the employer is entitled or required to refer disputes affecting their relationship. If therefore British Coal had not complied with their obligations under s.46 of the Act of 1946, and under the machinery established under that section, their decision not to do so is, in my judgment, a matter of public law and susceptible to judicial review".
"To qualify as a subject for judicial review the decision must have consequences which affect some person (or body of persons) other than the decision maker, although it may affect him too. It must affect such other person either:
(a) by altering rights or obligations of that person which are enforceable by or against him in private law; or
(b) by depriving him of some benefit or advantage which either (i) he had in the past been permitted by the decision-maker to enjoy and which he can legitimately expect to be permitted to continue to do until there has been communicated to him some rational grounds for withdrawing it on which he has been given the opportunity to comment; or (ii) he has received assurance from the decision-maker will not be withdrawn without giving him the opportunity of advancing reasons for contending they should not be withdrawn."
The continued authority of this passage emerges from references to it by the Court of Appeal in the 'legitimate expectation' cases of R. v Devon County Council ex parte Baker [1995] 1 All ER 73 and R. v North and East Devon Health Authority ex parte Coughlan [2001] Q.B. 214.
"In all the reports it is possible to find enumerations of factors giving rise to the jurisdiction, but it is a fatal error to regard the presence of all those factors as essential or as being exclusive of other factors."
To similar effect was the observation of Lord Woolf C.J. in Poplar Housing Association Ltd. V. Donoghue [2001] 3 WLR 183 at page 202, paragraph 66:
"While these are the most important factors in coming to our conclusion, it is desirable to step back and look at the situation as a whole. As is the position on applications for judicial review, there is no clear demarcation line which can be drawn between public and private bodies and functions."
"It is plain that in order to determine whether the decisions of a particular body can be reviewed…it is not always sufficient to apply a single test. In many cases it will be enough to inquire whether the source of the powers of the body concerned is statutory or derived from the prerogative."
And at page 220d:
"But I am completely satisfied that judicial review is an inappropriate remedy in this case. In order to succeed in obtaining an order for judicial review it is necessary for the applicant to show not only that the body concerned is one whose decisions are susceptible to judicial review but also that the relevant decision was one which infringed or affected some public law right of the applicant." [my emphasis]
Roch J. put it similarly at page 220j:
"The first issue is whether the applicant's claim to relief can be brought by way of judicial review. The answer to that question turns on whether the applicant is seeking to enforce some public right or the performance or proper performance by some public or other similar authority of a public duty. Thus the general test seems to be the question: was the person or body performing a public duty when carrying out the act or reaching the decision in respect of which the applicant seeks judicial review?"
"It seems to me quite clear that the mere fact that a housing authority is exercising a statutory power when it decides to sell land is not enough by itself to render its decision a public law matter. I agree with the judgment of Latham J. in ex parte Hughes. In so far as the decision in R. v. Barnet London Borough Council ex parte Pardes House School [1989] COD 512 seems to suggest otherwise, it cannot stand with authorities such as the Council of Civil Service Unions v Minister for the Civil Service [1985] 1 AC 374 (the GCHQ case) where the speeches established that the availability of judicial review depends not on the source of the power being exercised by a body in question, but on the subject matter of the exercise of power. The Pardes House School decision is understandable in the end result because of express policy decisions which applied to the disposal of land of the kind in question in that case."
And at paragraph 32:
"The appropriate test for determining whether the decision is a matter of public law or not is one whether the decision maker is performing a public function: see ex parte Datafin [1987] 1 QB 815 and R. v. Lord Chancellor ex parte Hibbit and Saunders [1993] COD 326."
Hibbit and Saunders concerned the Lord Chancellor's decision on shorthand writers in courts.
Conclusion
If judicially reviewable was the decision unlawful?
Submissions
"The major benefit to the Department of Health and the NHS of such an arrangement is the cash flow value of retaining the lump sum and replacing it with an annual stream of payments into the future. At inception, this approach is specifically aimed at removing the incidence of such large settlements directly from the annual budget of the Department of Health and to offer a more long term and structured approach to the cash flow requirements of such settlements."
"Reduced to its crudest elements in the instant case, the board has a duty to receive a complaint. Since the object for which it was created was the consideration of complaints I cannot see that that object is pursued if, in relation to certain complaints, it accepts as binding upon it the decision of another body, even so distinguished a person as the Director of Public Prosecutions."
Conclusion
"Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely-that is to say, it can validly be used only in the right and proper way which Parliament when conferring it is presumed to have intended. Although the Crown's lawyers have argued in numerous cases that unrestricted permissive language confers unfettered governmental discretion, the truth is that, in a system based on the rule of law, unfettered governmental discretion is a contradiction in terms. The real question is whether the discretion is wide or narrow, and where the legal line is to be drawn. For this purpose everything depends on the true intent and meaning of the empowering Act."
Lord Bridge continued at 873G:
"..before deciding whether a discretion has been exercised for good or bad reasons, the court must first construe the enactment by which the discretion is conferred. Some statutory discretions may be so wide that they can, for practical purposes, only be challenged if shown to have been exercised irrationally or in bad faith. But if the purpose which the discretion is intended to serve is clear, the discretion can only be validly exercised for reasons relevant to the achievement of that purpose."