England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		26/08/2005

Mr Justice Stanley Burnton :

Introduction

1. The application for permission to apply for judicial review in this case was heard by me on 17 August 2005. At the end of the hearing I stated that permission would be refused for reasons I would give later in writing. These are my reasons for refusing permission.

The facts in summary

2. Ofcom is the licensing authority and regulator for radio. This case concerns Its licensing of a second commercial radio station for Cornwall. There was an existing commercial radio station, Pirate FM, which had been launched in 1992. Ofcom published its statutory advertisement inviting applications for the licence on 8 . September 2004. The closing date for applications was 8 December 2004. The advertisement gave guidance as to Ofcom's approach to the licensing process. It stated:

"Given the relatively dispersed nature of the population to be served by this Cornwall licence, criterion (a) - the ability of each applicant to maintain, throughout the period for which the licence would be in force, the service which it proposes to provide - is likely to be considered of particular importance. As the licence is designed to serve a clearly defined locality (i.e. the county of Cornwall) which is not the sole focus (in marketing terms) of the only existing service available in the area, criterion (c) - the extent to which a proposed service would broaden the range of programmes available by way of local (commercial) services in the area, and would cater for tastes and interests different from those already catered for - is likely to be considered as important in relation to an applicant's proposals for speech content as it is in relation to its music proposals, and less significant overall than criterion (b) - the extent to which an applicant's proposed service would cater for local tastes and interests (general or particular)."

3. Eight companies applied for the licence. The successful applicant was Atlantic Broadcasting Ltd ("Atlantic"), the Interested Party.
4. The Claimant is the managing director and a minority shareholder (with about 6.5 per cent) of one of the unsuccessful applicants, CKFM Kernow Ltd ("CKFM"). He has been involved in commercial radio for over 40 years, and has worked in that medium in this country and abroad. He was "the prime mover, originator and manager" of the company's application. He had himself invested a modest sum in the enterprise, but' the shareholders of the company had together invested a sum exceeding £250,000 in connection with its application.
5. Ofcom has delegated its commercial radio licensing function to its Radio Licensing Committee, commonly referred to as the RLC. Neil Stock, a staff member, prepared a paper dated 28 February 2005 for the Committee summarising the applications that had been received and the issues to be considered and expressing views as to their merits. As envisaged in the Ofcom advertisement, a score was assigned to each applicant to reflect the extent to which he considered that it satisfied each of the statutory criteria in section 105 of the Broadcasting Act 1990. The RLC met to discuss the applications, and on7 March 2005 made and announced its decision. It published its reasons for its decision on 18 March 2005. In accordance with its normal practice, those reasons explained why Atlantic had been successful rather than why the other applicants had failed.
6. On 11 April 2005, i.e. 5 weeks after the announcement of Ofcom's decision and 312 weeks after the publication of their reasons, the board of directors of CKFM met to discuss the position. The notice of that meeting is not in evidence; nor are the minutes. Mr Grierson wanted the company to apply for judicial review of Ofcom's decision. The board refused to do so. He decided to proceed personally. He sent a pre-action protocol letter to Ofcom on 20 April 2005, and copied it to all of the other' applicants for the licence, in which he stated that he had concluded, "after taking appropriate advice", that the decision to award the licence to Atlantic was "not one which a reasonable regulator, acting reasonably, could have taken in applying the appropriate... legislative requirements and in following its own guidelines, policies and regulations, and in exercising its discretion fairly, reasonably and rationally." He gave extensive reasons for that conclusion.
7. Mr Collini of Ofcom replied by letter dated at 27 April 2005. Ofcom rejected Mr Grierson's contentions. The letter was copied to Atlantic, and Mr Collini stated:

"The successful applicants may be concerned that 6 weeks had already elapsed when you wrote your letter before claim and for its part may wish to raise at any point regarding delay or timing. "

Atlantic responded to Mr Grierson's letter on 18 May 2005.

8. Mr Grierson told me that he sent off the claim form to the Administrative Court Office on 13 May 2005, but it was not issued until 23 May 2005. He seeks an order quashing the decision of Ofcom to award the licence to Atlantic, an order requiring Of com to retake its decision, and a stay of the grant of the licence pending the conclusion of these proceedings. He named in the claim form as interested parties all of the applicants for the licence, including CKFM.
9. Ofcom filed their acknowledgement of service on 17 June and Atlantic filed its acknowledgement of service at about the same time. No other applicant for the licence has. filed an acknowledgement of service or appeared to support Mr Grierson's challenge to Ofcom's decision. On 4 July 2005 Walker J made an order-that Mr Grierson's application for permission and for interim relief should go to an .oral hearing. It was heard by me because I had given judgment in another challenge to an Ofcom commercial radio licensing decision, R (Wildman) v Ofcom [20051 EWHC 1573 (Admin), which had some similarities to the present case, on 25 July 2005.

Preliminary issues

10. Two issues that are normally regarded as preliminary were raised by Ofcom and Atlantic: delay and standing. Before addressing these issues, it is necessary to summarise the relevant facts in so far as I have not already done so.
11. On delay, Mr Grierson commenced these proceedings before the expiration of the period of 3 months stipulated in CPR Part 54.5. However, the Defendant and Atlantic submitted that he did not bring these proceedings promptly as required by that rule.
12. Mr Grierson asserted that the board meeting of 11 April 2005 could not have been called earlier. There was no witness statement explaining why the meeting could not have been called within a week of Ofcom's decision, or at least of the publication of its reasons on 18 March 2005. Of course, Mr Grierson could have proceeded in a personal capacity without waiting for a board meeting, but it is impossible to criticise him for not doing so. Conversely, however, he must accept that there was delay in calling the board meeting, which should have taken place as a matter of urgency. There was again delay after Mr Collini's letter of 27 April 2005, but this was of a lesser order.
13. Mr Grierson is a litigant in person, and a certain amount of allowance is doubtless due to him as such. However, according to CKFM's licence application, he "Qualified as a solicitor and barrister, MA, LL B Cantab and BA University of Cape Town';. The allowance appropriate to him is significantly reduced by his qualifications, which go some way to explain the quality of his submissions and the courtesy of his conduct in court.
14. The importance of promptness in bringing these proceedings is made clear by Atlantic's evidence. Following the announcement of the award of the licence, Atlantic planned to launch its station in February 2006. In order to broadcast it must acquire premises, equipment and staff. In mid-June 2005 it was engaged in negotiations over premises; it had already spent some £8,500 on its search for property, and if it were unable to make a prompt commitment it would lose the opportunity to rent premises that over an 8-year term would be some £32,000 cheaper than alternatives. The cost of keeping the company at a readiness to act level, i.e. without making any of the investments for broadcasting, is in the region of £5,000 a month. Postponement of its acquisition of premises, equipment and staff would lead to postponement of broadcasting, with attendant financial loss. I was told by Mr Coppel that Atlantic has already lost the opportunity to take one of its preferred premises because it considered that it could not enter into a commitment while these proceedings were pending. He also said that if the result of the hearing before me was known within a fortnight, the expected launch date would be in March or April 2006.
15. These considerations do not go only to the question of delay in commencing proceedings. This evidence establishes that Atlantic will suffer financial loss if permission is given and Mr Grierson's claim goes to a substantive hearing, even if it is ultimately dismissed, unless Atlantic takes the risk that he will eventually fail and proceeds to prepare for broadcasting regardless of the proceedings. Given that any expenditure might be wasted if the award of the licence were set aside, that is not a risk the Court should expect Atlantic to take. Moreover, even standing still is costing Atlantic some £5,000 per month. It is also relevant that Atlantic cannot be said to be a party to the alleged defects in Ofcom's decision. The grant of permission would have financial consequences for Atlantic. Permission should not be lightly granted.
16. Turning to the question of standing, that Mr Grierson has brought these proceedings in a personal capacity is emphasised by an email sent to Ofcom by GMG Radio, a company that was part of the CKFM consortium, and indeed its major investor, with 12 1/2 per cent of the shares. The email stated that CKFM was in the process of being dissolved, and that:

"Mr Grierson is going ahead with (the judicial review) entirely in his own name and without the approval of any shareholder within the company. We would therefore wish you to be aware that GMG Radio formally and entirely disassociates itself from this and disagrees totally with such a course of action."

17. However, in his letter dated 20 July 2005, Dr Stanhope, the chairman of CKFM, stated that at the time of the board meeting the directors. did not know of Mr Grierson's decision to pursue judicial review, and that the company had not been dissolved. He stated that it was clear that if reconsideration of the licence award takes place, CKFM would be a contender. He said:

"Accordingly, I will be calling a Board meeting, and an Extraordinary General Meeting as soon as possible to reverse the previous decision and delay in the question of winding up CKFM unless and until the Judicial Review process has reached its conclusion. To do anything else would be foolish in the extreme and against the interests of the members of CKFM Kernow Ltd, who have supported this project for so many years .... I would also like to make it plain that there is no question of the company 'distancing itself from you as our Managing Director, as I have seen it suggested. You are acting with courage and responsibility as is right and proper in terms of your duty of care to the members of the company."

While the company has not been dissolved, no documents relating to that in board meeting or the extraordinary general meeting were in evidence. I do not think that I can speculate as to the result of those meetings ..

18. Mr Grierson ascribed GMG's decision to its desire not to alienate Ofcom and thereby endanger any future licence application. Whether this was its motivation I do not know, and I do not think it important. Its decision to join the consortium must have been commercial, and so would be its reason for not wishing to commit CKFM to judicial review proceedings. What is important is that CKFM decided not to challenge Ofcom's decision to award the licence to Atlantic.
19. Mr Grierson's contract of service provides for a salary of £2,000 per month until the announcement of the award of the licence. If CKFM was awarded the licence, his salary would be doubled, to £4,000 per month, and in addition he would be entitled to a bonus calculated as a small percentage (0.5) of net revenue. His agreement was deemed to have commenced on 1 March 2001, and was to continue thereafter, subject to termination by notice after 3 years, "provided only that if and when (Ofcom) advises the company in writing that its application has not been successful, this agreement will terminate ipso facto on that date". Mr Grierson informed me that notwithstanding this provision his contract had been continued by an agreement evidenced by letter, but he was unable to put a copy of the letter before me. He also said that he had an option agreement that would have entitled him to increase his shareholding to about 10 per cent if the company had been awarded the licence.
20. Mr Grierson cannot be castigated as a busybody. He clearly had and has a real interest in 'Ofcom's decision to award the licence to Atlantic. He stood to gain financially from its award to CKFM. But it remains the fact that neither that company nor any other unsuccessful applicant has sought to challenge the decision.' Indeed, the company through which he has an interest in the decision has decided not to challenge the decision. There is force in Miss Gallafent's submission that it would be inconsistent with that decision of the company to accept that Mr Grierson, whose interest is as an investor' and officer of CKFM, has personal standing to bring proceedings for judicial review. She referred me to the decision of the Privy Council in Durayappah v Fernando [1967] 2 AC 337. The appeal concerned an order made by a minister that the council of a local authority be dissolved. The council did not seek to challenge the order. The appellant, who was the mayor, brought proceedings in his individual capacity to challenge the minister's decision. The Privy Council held that he did not have the necessary standing. Lord Upjohn, giving the reasons for the decision of the Privy Council, said, at 352-3:

"Apart altogether from authority their Lordships would be of the opinion that this was a case where the Minister's order was voidable and not a nullity. Though the council should have been given the opportunity of being heard in its defence, if it deliberately chooses not to complain and takes no step to protest against its dissolution, there seems no reason why any other person should have the right to interfere. To take a simple example to which their Lordships will have to advert in some detail presently, if in Ridge v. Baldwin [1964] AC 40 the appellant Ridge, who had been wrongly dismissed because he was not given the opportunity of presenting his defence, had preferred to abandon the point and accept the view that he had been properly dismissed, their Lordships can see no reason why any other person, such, for example, as a ratepayer of Brighton should have any right to contend that Mr. Ridge was still the Chief Constable of Brighton. As a matter of ordinary common sense, with all respect to other opinions that have been expressed, if a person in the position of Mr. Ridge had not felt sufficiently aggrieved to take any action by reason of the failure to afford him his strict right to put forward a defence, the order of the watch committee should stand and no one else should have any right to complain."

Lord Upjohn concluded, at 355:

"Their Lordships therefore are clearly of opinion that the order of the Minister on May 29, 1966, was voidable and not a nullity. Being voidable it was voidable only at the instance of the person against whom the order was made, that is the council. But the council have not complained. The appellant was no doubt mayor at the time of its dissolution but that does not give him any right to complain independently of the council. He must show that he is representing the councilor suing on its behalf or that by reason of certain circumstances, such, for example, as that the council could not use its seal because it is in the possession of the Municipal Commissioner, or for .other reasons it has been impracticable for the members of the council to meet to pass the necessary resolutions, the council cannot be the plaintiff. Had that been shown then there are well-known procedures whereby the plaintiff can sue on behalf of himself and the other corporators making the council a defendant and on pleading and proving the necessary facts may be able to establish in the action that he is entitled to assert the rights of the council. That, however, is not suggested in this case. The appellant sets up the case that as mayor he is entitled to complain but as such he plainly is not. If the council is dissolved, the office of mayor is dissolved with it and he has no independent right of complaint; because he holds no office that is independent of the council. If the mayor were to be heard individually he could only deal with complaints against the council with which ex hypothesi the council itself did not wish to deal. So, accordingly, it seems to their Lordships that on this short ground the appellant cannot maintain this action."

21. The derivative nature of Mr Grierson's claim is emphasised by the fact that if the company were to decide to go into liquidation notwithstanding these proceedings, he would cease to have any interest. In my judgment, it is not possible to distinguish the present case from Durayappah- v Fernando. All that can be said is that the decision of the Privy Council has been overtaken by subsequent developments in administrative law. For the purposes of my decision in this case, I have assumed that to be so. Nonetheless, the fact that Mr Grierson has only a derivative interest is of substantial importance in the decisions whether he has sufficient standing and whether permission should be granted.
22. Mr Grierson drew a distinction between the court's decision as to the standing required to seek judicial review and the question whether a claimant has sufficient standing to justify the grant of the relief that he seeks. He submitted that since he had a real personal interest in Ofcom' s decision, he was not (as I have accepted) a busybody or troublemaker, and therefore he has sufficient standing for permission to apply for judicial review. In this connection, he referred me to paragraph 38.3.2 of Fordham's Handbook on Judicial Review. However, I do not think it right totally to divorce standing at the permission stage from standing for the grant of relief. If, at the permission stage, it is apparent that the claimant does not have the standing required for the relief he seeks, there is no point in granting permission. It is highly relevant that neither CKFM, which is the party through which Mr Grierson is interested in the decision, nor any other unsuccessful applicant, has applied for judicial review or supported Mr Grierson's claim. Nor has any member of the listening public, other than Mr Grierson, and it would be unreal to regard his interest as that of a listener rather than a broadcaster.
23. In my judgment, making the assumption I have referred to about Durayappah v Fernando, both of these preliminary issues should be considered flexibly. The more important an arguable issue, the stronger its apparent merits, the more ready should the court be grant standing and the less strict should it be in its application of the requirement that proceedings be commenced promptly. So far as standing is concerned, this approach is consistent with statement in Wade and Forsyth, Administrative Law, 9^th edition, at paragraph 2-036:

'''Sufficient interest' should therefore be regarded as being an extremely flexible test of standing. The more important the issue and the stronger the merits of the application, the more ready will the courts be to grant leave ... "

See too my own judgment in Wildman at paragraph 23.

24. So far as delay is concerned, this is not a case in which the claimant's delay has been so egregious that the court should refuse to countenance the grant of permission irrespective of the merits of his claim.
25. It follows that I should consider the merits of Mr Grierson's claim before deciding whether to grant permission, and take the derivative nature of his interest and the question of delay into account in the composite decision to grant or to refuse permission.

The substance of Mr Grierson's contentions (a) the approach of the Court

26. I summarised the approach of the Court in proceedings for the judicial review of a licensing decision of Ofcom in paragraphs 14 to 16 of my judgment in Wildman. In paragraph 14 I said this:

"Parliament has not provided an appeal on the facts or on the law against Ofcom's decisions. Ofcom is an expert body, and it, and not the Court, has been given the responsibility for making the evaluations and exercising the discretions inherent in a licensing process that involves the selection of only one of a number of applicants to be awarded a licence. Ofcom's decisions may have substantial financial consequences, as may any decision of the Court to set aside a decision of Ofcom to award a licence to a particular applicant. In the exercise of its judicial review jurisdiction, the Court may set aside a decision of Ofcom if it is shown that it made a material error of law, but the power to do so is discretionary. In my judgment, the Court must exercise a high degree of caution before interfering with a decision such as the present, and do so only if it is shown that there has been real unfairness to a candidate or a significant error of law or other error giving rise to the power, on judicial review, to quash the decision."

27. I was referred to the judgment of the Court of Appeal in Mass Energy Ltd v Birmingham City Council [1994] Env LR 298. The Court of Appeal refused leave to move for judicial review: In doing so, it applied not an arguability test, but required the appellant to surmount a significantly higher hurdle, namely whether the applicant had shown that its case was likely to succeed if leave was granted. The case had marked similarities to the present. It related to the decision of the local authority to award a contract, following tenders, to the Interested Party. The appellant was an unsuccessful tenderer. The grant of leave would cause expense and delay to the interested party. The Court had before it most of the relevant documents, and there had been substantial argument on the issues. During the course of the hearing before me I asked Mr Grierson what further documents he would seek to be disclosed by Ofcom if permission were granted. I am satisfied that those documents would not add significantly to the court's consideration of the issues he has raised. The decision in the Mass Energy case encourages me to apply a flexible test to the question of permission, one that takes account of the financial consequences of the grant of . permission to an innocent third party.

(b) Mr Grierson's contentions

28. Mr Grierson does not assert that the award process was unfair. He contended that the Ofcom decision was Wednesbury unreasonable. He focused principally on the requirement in section 1 05( c) of the 1990 Act that Ofcom have regard, among other matters, to:

"the extent to which any such proposed service would broaden the range of programme available by way of local services to persons living in the area or locality for which it would be provided, and, in particular, the extent to which the service would cater for tastes and interests different from those already catered for by local services provided for that area or locality."

He submitted that Ofcom had failed to have regard to this, i.e., the broadening of choice for the listening public in Cornwall, because Atlantic's format (i.e. the structure of its proposed programming) would not be materially different from that of Pirate FM. He referred to the staff paper, which stated that: .

"(Atlantic's) Proposed Format is fairly loose, in line with intention to compete directly with Pirate (which has even looser Format) for a broad mainstream audience."

Mr Grierson submitted that this statement was inconsistent with the award to Atlantic of a score of 6 out of 10 for this criterion. Atlantic's format, he said, is not very materially' different from Pirate's. It follows that Ofcom acted perversely in its consideration of this criterion. Incidentally, CKFM received a mark of 7 for this criterion.

29. Quite apart from the fact that this statement in the staff paper may not have reflected the thinking of the RLC when it made its decision, I do not think there is substance in this criticism. As Miss Gallafent pointed out, this point in the staff paper referred to the composition of the proposed audience rather than the content of programmes. The staff paper made sensible comments on the section 1 05( c) criterion under the heading "105(c) - Broadening choice". Paragraph 3 of the executive summary in the staff paper gave sensible reasons for the difficulties in considering this criterion in relation to the second Cornwall licence. The table at page 37 of Atlantic's application demonstrates the differences between its proposed programming and that of Pirate. As to the points awarded, it can only be in the most exceptional cases that this Court can embark on an examination of the particular points awarded to an applicant, provided there is (as here) justification for an award of points. The evaluation of applications is very much a matter for Of com, not the Court. This is not such a case.
30. The section 105(c) criterion was referred to by Ofcom when it published its reasons for its award of the licence to Atlantic. It stated:

"The Committee recognised a particular difficulty in relation to section 1 05( c) resulting from the broad nature of Pirate FM's Format. Atlantic FM's proposal was to broaden choice in relation to Pirate FM by offering alternative output across .a broad range of tastes and interests to a potential audience large enough to be commercially viable. The Committee felt that his proposal was superior to one which aimed to provide a service to a narrowly-defined age-group perceived to be underserved by Pirate FM's present output and potentially offering less positive commercial prospects. The Committee therefore felt that Atlantic FM's approach was appropriate in view of the characteristics of the market as outlined above."

31. There is no perversity in this statement. It refers to Ofcom's view of the characteristics of the market, which Mr Grierson also criticised. Ofcom "recognised that Cornwall is a relatively large and rural area in which the population is highly dispersed, with no single town or city acting as a focus for a majority of the county's residence". Ofcom gave these characteristics of the market as the justification for giving the criterion in section 105(a) particular weight. Mr Grierson submitted that this was perverse. In my judgment, Ofcom was entitled to give that criterion particular weight. It was reasonable to take into account that, for example, businesses whose customers were local (e.g., a shop that was not part of a chain) might be reluctant to . pay to advertise on a radio station broadcasting county-wide, so that· its advertisements would be irrelevant to most of the listeners.
32. In addition, Mr Grierson did not demonstrate that the assessment of Atlantic's business plan, in connection with the application of the criterion in section 105(a) (the ability of an applicant to maintain its service throughout the period of the licence), was irrational.
33. Mr Grierson also relied on section 154(2)(a) of the Communications Act 2003, which requires Ofcom to have regard to the desirability of promoting the efficient management and use of the part of the electro-magnetic spectrum available for wireless telegraphy. Since Atlantic proposed to broadcast 24 hours a day, this requirement adds nothing to section 1 05( c) of the 1990 Act.
34. Mr Grierson also submitted that the award of the licence to Atlantic was liable to be set aside on the ground of mistake of fact. Its licence application listed 4 persons as directors who were not directors at the date of the application, although they now are. They included Richard Eyre, who became the chairman, and was named as such in the application. He has an impressive curriculum vitae, and his participation in Atlantic would have been a material consideration for Ofcom, as would the participation of the others named as directors. The information provided with regard to Camel Media LLP, which was to be a major shareholder in Atlantic, was similarly said to be incorrect. The Ofcom advertisement had referred separately to existing and proposed directors, requiring details of each director of an applicant, including the proposed chairperson and "if there are firm plans to appoint any further directors, provide information (with details of any specific individuals in mind)".
35. This ground of challenge fails, if only because in considering an application Ofcom does not distinguish between existing directors of an applicant and those who will be . appointed as such if the application succeeds. Miss Gallafent made it clear that Ofcom regards the distinction between current and potential directors as irrelevant. It follows that there has been no material error of fact. It would indeed be anomalous if a third party could set aside a licence award in circumstances in which the representee of the factual misrepresentation did not regard itself as having been misled. It is not without interest that the CKFM application named John Myers as a director, although a company search dated 2 August 2005 does not name him as such; and there are 2 versions of Dr Stanhope's letter of 20 July 2005 in evidence, one, provided to Ofcom by Mr Grierson, which names Mr Myers as a director of the company and one, a copy produced by Mr Grierson, which does not.

Conclusion

36. For the above reasons, I concluded that there was no real prospect of Mr Grierson being granted relief if permission were granted. I refused permission on this ground. If I were to apply the Mass Energy test, the case for refusing permission would be even stronger. His difficulties in relation to standing, and the effect of a delayed decision on Atlantic, fortified my conclusion that permission should not be granted.