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
		11 November 2011

Mr Justice Bean :

1. The Defendant commission was established by the Local Government Act 1974. Its members are the Parliamentary Commissioner for Administration and a number of Local Commissioners for England. Just as the Parliamentary Commissioner, whose office dates back to 1967, is universally known as the Ombudsman, so the Local Commissioners under the 1974 Act are known as Local Government Ombudsmen (or collectively as the Local Government Ombudsman), as are the staff authorised to carry out their functions and make decisions on their behalf pursuant to paragraph 13 of Schedule 4 to the 1974 Act.
2. The Claimant Janet Adams and her younger sister Joan live together in the London Borough of Lambeth. Joan has a number of very serious physical health problems and requires help with both mobility and personal care. She also has long-term depression. Janet is the primary carer for Joan but herself has a number of significant health problems. Neither can work and they survive on a very low income.
3. Until July 2009 the two sisters lived in private rented accommodation. This was unsuitable for their needs. In 2005, with assistance from a local advice centre, they applied to the Council for urgent re-housing under the Council's Allocation Scheme. This was classified as a "group F referral". The request met with no success prior to December 2007 when the advice centre closed. They were referred to their current solicitors, Pierce Glynn.
4. The Council agreed to give the sisters priority for referral under group F, but this did not advance matters in practice because very few two bedroom homes were allocated to Group F. In the period from October to December 2008 Pierce Glynn wrote a number of detailed letters of complaint to the Council but did not obtain a response.
5. By letter of 4 February 2009 Pierce Glynn, on behalf of the Claimant, made a complaint of maladministration against the Council to the Defendant. The case was allocated to an investigator, Ms Jane Beck, to whom I shall refer as "the Ombudsman" or "the LGO". After an initial acknowledgment by letter of 9 February she replied in detail setting out a summary of her understanding of the complaint on 27 February, confirming that she would investigate it. After some correspondence both with Pierce Glynn and with the Council, the LGO wrote on 21 May 2009 to the Council. Having set out the details of the complaint made by Pierce Glynn she went on:

"My present view is that it is likely there had been maladministration by the Council which has caused injustice to Joan and Janet Adams. A central part of the complaint is that they need to move from their present unsuitable accommodation and there has been a delay by social services in making a 'Group F' referral to housing…

The Ombudsman always welcomes attempts to settle complaints locally. He is likely to consider that it would be reasonable to pay compensation to the Complainants in this case including a time and trouble element. The Ombudsman may also recommend that the Council should pay their reasonable legal costs associated with pursuing their complaint. But their most immediate need is for them to move to suitable affordable accommodation. If they were able to secure suitable accommodation, that would be a major step in putting things right. One way of achieving this might be to move their application into Group B [emergencies]. Please let me know whether the Council would agree to do this or to take some other step that would assist Joan and Janet Adams to secure suitable accommodation quickly. I would be grateful if you would reply to this letter and comment on my suggestion for a partial resolution in the next three weeks. If a partial resolution cannot be agreed at this stage, I would like to make arrangements to view the Council's files and to interview the key people directly involved with the complaint…"

6. This carefully argued letter, from which I have given only short extracts, achieved an almost instantaneous result. By letter of 29 May 2009 Lambeth's Corporate Complaints Manager confirmed that the Council had authorised the case for housing in Group B and agreed that the sisters would be offered a Council property, 112 Granville Road. The letter concluded by accepting that a compensation payment would be appropriate for the sisters' "time and trouble", and asked the LGO to advise what figure was considered suitable. The Claimant and her sister moved to the new property on 8 June 2009.
7. By letter of 12 June 2009 to Pierce Glynn the Ombudsman set out her provisional view that there had been maladministration by the Council which had caused injustice to the Claimant and her sister. In particular, she accepted the complaint of delay by the Council for over two years in making a Group F referral and awarding Group F priority. At one point in the letter she wrote:

"I consider that it would be reasonable to expect the Council to pay compensation to Joan and Janet Adams in this case including a time and trouble element and their reasonable legal costs associated with pursuing their complaint."

8. Pierce Glynn replied on 23 June 2009. They passed on their client's thanks to the LGO on realising "that it was as a result of your intervention that they have finally been offered some suitable accommodation". They made a number of detailed points about the provisional findings on the complaint. The LGO replied on 2 July 2009 and wrote that "it would be helpful if you would let me know whether Joan and Janet Adams have incurred legal costs as a result of pursuing their complaint with the Council and the Ombudsman."
9. On the same date the LGO wrote to the Council saying that, as she saw it, the remaining issues were a review of the Council's relevant housing allocation procedures, and compensation for the complainants' time and trouble and the reasonable legal costs they had incurred in pursuing their complaint. She asked to be told whether the Council would agree to review its procedures in accordance with her suggestions within 3 months of her decision on the complaint. As to compensation, she asked whether the Council would be prepared to offer a payment of £2000 to recognise the injustice to Joan and Janet Adams which she had identified and pay any reasonable legal costs. She did not copy this letter to Pierce Glynn.
10. On 14 July 2009 Pierce Glynn replied to the Ombudsman's letter to them of 2^nd July 2009. The letter began (encouragingly) "your letter addresses all of our client's outstanding concerns." The remainder of the letter concerns legal costs. Pierce Glynn informed the LGO that "as Joan and Janet have been assisted under the Legal Help Scheme they have not themselves incurred any legal costs. However, the remuneration we receive under the Legal Help Scheme is very limited. As a result, unless Lambeth are required to pay our reasonable costs, all of the work we will have done in assisting Joan and Janet with this complaint will have been at a loss". After referring to one previous case (in 2005) in which another Local Government Ombudsman, Mr Redmond, had recommended that the local authority concerned, the London Borough of Waltham Forest, should pay the complainant's reasonable legal costs even though the solicitors involved were acting under the Legal Help Scheme, they continued:-

"Whilst we accept that some complaints to the Ombudsman may be appropriately pursued without legal representation, the issues raised by this complaint were exceptionally factually and legally complex. That complexity, combined with Joan's and Janet's very significant health problems, meant that Joan and Janet would have found it extremely difficult, if not impossible, to pursue these complaints without assistance… In these circumstances we suggest that Lambeth should bear responsibility for Joan and Janet's reasonable legal costs, rather than expecting the Legal Services Commission (whose budget is currently under exceptional pressure) to pay part of those costs, and to expect this firm to write off the remainder."

11. Ms Beck responded on 28 July 2009 asking for an estimate of costs and for an indication of what contribution, if any, the Legal Services Commission ("LSC") had made to them. She added that "the Ombudsman will only recommend that the Council should meet a complainant's legal costs in exceptional circumstances and the facts in each individual case will be carefully considered."
12. Pierce Glynn replied on 28 July saying that the LSC had not so far made any contribution, and that if the Council were to agree to pay their reasonable costs in the case they, the firm, would not submit a claim to the LSC for payment. They enclosed two alternative schedules of costs. Schedule A, showing costs calculated at market rates, used a figure of £180 per hour (in accordance with the Costs Office Guidelines) for a solicitor of six years post-qualification experience in an outer London firm. This gave a total of £10,242. Schedule B set out the costs at legal aid rates under the Legal Help scheme, that is to say £48.50 per hour, giving a total of £3,248.10. Both figures excluded VAT.
13. On 31 July Lambeth wrote to the LGO offering £1,000 in compensation. She adhered to her view that £2,000 was a reasonable sum "in this unusual case" and explained why. Lambeth's letter also confirmed their housing department's agreement "to review their procedures and implement changes, as recommended by the Ombudsman".
14. On 10^th September 2009 the LGO reported the offer of £1000 compensation to Pierce Glynn. She wrote "I am still considering whether this is sufficient but I wanted to ensure that they would not have to pay legal fees out of any compensation awarded to them". She wrote that she had referred Pierce Glynn's request that the Council should be asked to pay their costs to Mr Jerry White, who at that time held the title of the "Local Government Ombudsman". Mr White was not persuaded that it would be reasonable to ask Lambeth to pay Pierce Glynn's costs. She went on to indicate the changes to the Council's procedures that she had recommended, adding that the Council had agreed to implement them all. (The Council's interpretation of its letter of 31 July was that it had only agreed to review its procedures. It is not necessary for me to adjudicate on this issue.)
15. Pierce Glynn replied on 15 September indicating that they were content with the proposed changes to procedures. They considered that the figure of £1,000 compensation to the sisters was "completely inadequate". Finally, on costs, they asked for clarification whether the LGO considered that the sisters could reasonably have been expected to pursue the complaint without professional assistance; and if not, why she was not prepared to require Lambeth to make any contribution to their costs.
16. On 20 September Lambeth agreed to the LGO's suggested figure of £2000 compensation. She reported this to Pierce Glynn three days later, writing:

"The Council has now agreed to offer £2,000 compensation in addition to the steps already agreed to resolve this complaint. In view of the uncertainty about whether your clients would have been suitably rehoused by a specific date, I consider that £2,000 is a fair and reasonable amount and there are no grounds for me to pursue this complaint further. Please would you let me know to whom the Council's cheque should be made payable. [In due course the sisters were paid £1,000 each.] If you wish to make any further comments before you reach a final decision, this is your opportunity to do so. … I would like to make sure that I have taken all of your views into account before I make a decision on your complaint. So please let me have anything further within the next three weeks. If you need more time, please contact me."

17. Pierce Glynn wrote back by letter of 12 October 2009. This had not reached the LGO when on 16 October 2009 she wrote the letter which constitutes the decision under challenge in these proceedings:-

"I refer to my letter of 23 September 2009 giving you an opportunity to submit any further comments before I reached a final decision on your complaint. As you have not sent me any new information which might alter my provisional view, I have now discontinued the investigation and closed our file. I have copied my letter to the Council's Corporate Complaints Manager and asked the Council to send £2000 to your clients. … "

18. On 22^nd October Pierce Glynn wrote:-

"We are concerned to note from your 16 October 2009 letter that you have discontinued your investigation, whereas in your letters you have repeatedly stated that you would conclude your investigation and issue a final decision [emphasis in the original]. … It appears to us to be wrong to describe your investigation as having been discontinued in circumstances where your investigation appears to have been completed. Certainly we cannot see in what way your investigation into this complaint might be described to be incomplete. The consequence of you deciding to regard this investigation as having been discontinued is that there appears, as a result, to have been a failure to consider whether to prepare and publish a report of your investigation in accordance with section 30(1) of the Act. … "

19. Ms Beck replied, on 2 November 2009:-

"My letter of 16 October 2009 is my final decision on your complaint. I wrote to the Council's Corporate Complaints Manager on the same date to advise him of the decision made and to ask him to let me know when the cheque had been issued to your clients and when the Council had completed its review of procedures. The Council agreed to review its procedures within three months of the decision on the complaint so that means that the review should be completed by 16 January 2010. Although the file on your complaint has been closed I had already planned to contact the Council at the end of November to find out how that review is progressing.

My final decision was to discontinue the investigation without publishing a report. In my previous letter dated 23 September 2009 I said that I did not consider that there were grounds to pursue the complaint further. That was because I considered that the issue of compensation was the only outstanding issue and the £2000 compensation payment agreed by the Council was a fair and reasonable amount.

This case is rather unusual because my provisional view on your complaint was explained in several letters. That was because I wanted to focus first of all on the need for Joan and Janet Adams to move. Letters explaining my provisional view on were sent to you on 16 June, 2 July, 10 September, 22 September and 23 September 2009. The fact that the investigation has been discontinued has no effect on the Ombudsman's monitoring of the Council's compliance with the recommendations made."

The Local Government Act 1974

20. The 1974 Act has been amended several times since its enactment. In particular, significant amendments were introduced with effect from 1 April 2008 by the Local Government and Public Involvement in Health Act 2007. In 2010 some further amendments were made, immaterial to the issues in this case. I set out the text of the relevant sections as it stood in 2009.
21. The Defendant's powers and duties are set out in Part III of the Act. Section 26(1) sets out what matters are subject to investigation; these include "alleged or apparent maladministration in connection with the exercise of the authority's administrative functions". By section 26A(1) a complaint may be made:-

"(a) by a member of the public who claims to have sustained injustice in consequence of the matter, [or]

(b) by a person authorised in writing by such a member of the public to act on his behalf…"

Section 26D also allows the Ombudsman to act on his or her own initiative if in the course of an investigation it appears that "a member of the public has, or may have, suffered injustice in consequence of the matter", even if no formal complaint has been made. Section 24A(6) and (7) emphasise the discretion afforded to the LGO:-

"(6) In determining whether to initiate, continue or discontinue an investigation a Local Commissioner shall, subject to the provisions of this section and section 26-26D, act in accordance with his own discretion.

(7) Without prejudice to the discretion conferred by subsection (6), a Local Commissioner may in particular decide:-

(a) not to investigate a matter, or

(b) to discontinue an investigation of a matter,

if he is satisfied with action which the authority concerned have taken or propose to take."

22. Sections 30 and 31 are central to this case. So far as material, they read in 2009 as follows:-

"30(1) If a Local Commissioner completes an investigation of a matter, he shall prepare a report of the results of the investigation and send a copy to each of the persons concerned (subject to subsection (1B))."

(1A) A Local Commissioner may include in a report on a matter under subsection (1) any recommendations that he could include in a further report on the matter by virtue of section 31 (2A) to (2BA).

(1B) If, after the investigation of a matter is completed, the Local Commissioner decides-

(a) that he is satisfied with action which the authority concerned have taken or propose to take, and

(b) that it is not appropriate to prepare and send a copy of a report under subsection (1),

he may instead prepare a statement of his reasons for the decision and send a copy to each of the persons concerned.

(1C) If a Local Commissioner decides-

(a) not to investigate the matter, or

(b) to discontinue an investigation of a matter,

he shall prepare a statement of his reasons for the decision and send a copy to each of the persons concerned.

31(1) This section applies where a Local Commissioner reports that there has been-

(a) maladministration in connection with the exercise of the authority's administrative functions ….

(2) The report shall be laid before the authority concerned and it shall be the duty of that authority to consider the report and, within the period of three months beginning with the date on which they received the report, or such longer period as the Local Commissioner may agree in writing, to notify the Local Commissioner of the action which the authority have taken or propose to take.

(2A) If the Local Commissioner-

(a) does not receive the notification required by subsection (2) above within the period allowed by or under that subsection, or

(b) is not satisfied with the action which the authority concerned have taken or propose to take, or

(c) does not within a period of three months beginning with the end of the period so allowed, or such longer period as the Local Commissioner may agree in writing, receive confirmation from the authority concerned that they have taken action, as proposed, to the satisfaction of the Local Commissioner,

he shall make a further report setting out those facts and making recommendations.

(2B) Where the report relates to maladministration, those recommendations are recommendations with respect to action which, in the Local Commissioner's opinion, the authority concerned should take-

(a) to remedy any injustice sustained by the person affected in consequence of the maladministration, and

(b) to prevent injustice being caused by the future in consequence of similar maladministration in connection with the exercise of the authority's administrative functions."

The grounds of challenge

23. Mr Buley contends that the Ombudsman's decision to discontinue the investigation was unlawful for the following reasons (leaving out for the moment Ground 4, relating to costs):

i) Ground 1 : Investigation completed At the date of the Final Decision, the Ombudsman had completed her investigation and hence had no power to discontinue the investigation. Rather, subject to the discretion to provide a statement of reasons under section 30(1B), the Ombudsman was obliged to prepare a report under section 30(1).

ii) Ground 2: In the alternative to ground 1, if the Ombudsman had power to discontinue the investigation she nevertheless erred in the exercise of her discretion by proceeding on the basis that her decision would not affect her ability to monitor the Council's compliance with the recommendation. By discontinuing the investigation, the Ombudsman has deprived herself of the powers conferred by section 31 of the 1974 Act, which would have been applicable if she had published a report.

iii) Ground 3: Failure to provide a statement of reasons In the alternative to grounds 1 and 2 above, the Ombudsman breached section 30(1B) and/or section 30(1C) by failing to provide a statement of reasons for her decision.

v) Ground 5: Natural justice In the circumstances it was procedurally unfair, and in breach of the principles of natural justice, for the Ombudsman to conduct her investigation by separate correspondence with both parties, which meant that, on the one hand, each party was made privy to particular aspects of her thinking which was not known to the other side, and, on the other, that neither side was able to see the representations made against its case by the other.

24. Ground 5 was added by way of late amendment. Since it was fully argued and the amendment caused no prejudice to the Defendant I grant permission to amend.

Grounds 1-2: discontinuance

25. Once an investigation is under way, section 30 allows three possible outcomes: (i) discontinuance, with a statement of reasons for that decision; (ii) completion of the investigation with no report to the authority, provided that the LGO is satisfied with the action which the authority have taken, but with a statement of reasons for that decision; (iii) completion of the investigation with the issuing of a report under section 30(1) (which may in due course lead to a further report under section 31(2A)).
26. Mr Buley argues in ground 1 that on 16 October 2009, when Ms Beck made her decision to discontinue the investigation, that option was no longer available because her investigation was complete. She had expressed a concluded view on maladministration by 2 July 2009, and on remedy by 23 September 2009.
27. Mr Maurici's answer is that for the investigation to be "complete" within the meaning of section 30, the stage would have had to be reached where the Ombudsman could lawfully decide to send a report to the Council; and to get that far more work would have been needed, in particular by interviewing the officials whose action or inaction had contributed to the two year delay in rehousing the Claimant and her sister.
28. Section 30, read on its own, might appear to suggest that discontinuance is only a lawful option where the investigation is incomplete. But the terms of section 24A(7) demonstrate, in my view, that Mr Maurici is right. That provision makes it clear that it is a proper exercise of discretion for the investigation to be discontinued if the LGO "is satisfied with action which the authority have taken or propose to take". The investigation in such a case might be described as complete in one sense – the LGO is not going to take the investigation further, because she is satisfied with the authority's actions and proposed actions – but it is not complete in the sense envisaged by section 30, namely that the matter has reached the stage where a report could be issued.
29. In any event I cannot see that this issue has the importance which Mr Buley sought to place on it. It is clear beyond doubt that by 16 October 2009 the LGO was satisfied with the actions of the Council in rehousing the Claimant and her sister, paying them £2000 (£1000 each) in compensation, and reviewing their procedures for Group F referrals. It is also clear beyond doubt that she did not consider it appropriate to proceed to the stage of a report to the Council. Neither of these conclusions can sensibly be criticised on substantive grounds. So whether her decision to bring the case to an end was correctly described as discontinuance or ought to have been described as the completion of the investigation, the only formal action remaining to be taken was the preparation and sending to the parties of a statement of reasons for her decision.
30. Ground 2 does not take Mr Buley any further. It is true that the Act gives the Ombudsman no express power to make recommendations except by virtue of section 31(2B) when making a "further report" under section 31(2A). But in practice, as this case demonstrates, recommendations are made regularly in the course of investigations, and (as in this case) may succeed in having the desired effect without the exercise of formal powers. Where this is done there is no statutory monitoring power; but it is the practice of the Defendant to issue each local authority such as Lambeth with an annual report on the investigation and outcome of complaints made against them. (One of these, contained in the trial bundle, devotes a paragraph to the present case, which was one of 21 complaints about housing allocation in Lambeth made to the Defendant during the year in question.) If the Council took a defiant stance in response to informal recommendations of the Ombudsmen, they would run the risk of more formal steps, including reports, being taken in future similar cases.

Ground 3: statement of reasons

31. Whether on discontinuance or on completion of the investigation without proceeding to a report, the Ombudsman was required to prepare and send to the parties a statement of reasons for her decision. I reject the Defendant' argument that the letter of 16 October 2009 constituted or contained a statement of reasons. It contains no reasons at all. Even as amplified on 2 November it does not give the reasons, except by referring back to a series of letters leading up to the decision. This is not what the statute requires.
32. Following Pierce Glynn's challenge to the lawfulness of the procedure adopted, Ms Beck sought to explain what her reasons were. I indicated that I was not prepared to take that subsequent explanation into account, and Mr Maurici did not seek to persuade me otherwise. Nevertheless it is clear to me from the correspondence before 16 October 2009 that the Ombudsman (a) was satisfied with the actions Lambeth had taken in rehousing the complainants as tenants of a suitable Council property and paying them £2000 compensation for the injustice they had suffered; (b) was satisfied with the steps Lambeth had taken or proposed to take to remedy maladministration by reforming a number of aspects of their housing allocation procedure (which were set out in detail in the previous letters, but should have been at least summarised in the statement of reasons); (c) did not think it appropriate to proceed to issue a report; (d) did not think it necessary to "complete" the investigation by interviewing the individual officials concerned; and accordingly (e) had decided to discontinue the investigation.
33. Mr Maurici argues, in reliance on South Bucks Council v Porter (No.2) [2004] 1 WLR 1953, in particular paragraph 36 of the speech of Lord Brown of Eaton-under-Heywood, that a judicial review challenge on the grounds of inadequacy of reasons will only succeed if the aggrieved party can show genuine substantial prejudice. But I do not accept that this applies where there is an express statutory duty to issue a statement of reasons and no such statement has been produced at all. The Claimant is entitled to a declaration that the Defendant unlawfully failed to issue her and her sister with a statement of reasons for the discontinuance of the investigation into their complaint. However, it would be a pointless exercise in formalism to grant substantive relief by ordering the provision of a statement of reasons in this case two years after the event, and I decline to do so.
34. In fairness to Ms Beck as an individual I should add that the documents before me show that it was not the practice of the Defendant to issue statements of reasons on the completion or discontinuance of individual investigations until early 2010. Such statements are now issued as a matter of routine. (A circular from Mr White in July 2009 stated that the aim was that they would in most cases be no longer than one page of A4 text.) For the reasons I have given I consider that the present practice is correct and the previous practice was wrong.

Ground 5: natural justice

35. It is a basic rule of natural justice that a decision maker in a dispute must inform each party what is said against him; and allow him to answer it before a decision is made. The Ombudsman did not copy all her letters to the Council to Pierce Glynn. Mr Buley submits that:

"This caused real unfairness here. There are at least two, and perhaps three, issues on which the Ombudsman reached conclusions adverse to the Claimant, namely (i) in deciding to discontinue the investigation rather than publish a report (ii) as to the recommended level of compensation; and (iii) possibly, as to what other steps the Council should take and the extent of its compliance."

36. There is nothing in any of these points. The Ombudsman made it clear in correspondence to each side that she was attempting to promote a settlement, and rightly so. The extent of future compliance was not a matter which could go to the lawfulness of the decision of 16 October 2009. As to compensation, when asked by the Council to recommend a figure, the Ombudsman suggested £2,000. The Council offered £1,000, which she put to Pierce Glynn who rejected it. The Council then offered £2,000 which, again, she reported to the Claimant's solicitor. An Ombudsman has a legitimate role as a mediator. This may involve asking the authority what compensation they will pay (or complainants what compensation they would accept), or making suggestions to either side as to what figure might be appropriate, and awaiting a response before going back to the other party. Far from acting in breach of the rules of natural justice, I consider that Ms Beck dealt with this case fairly and effectively.

Ground 4: failure to recommend payment of Pierce Glynn's costs

37. When issuing a report under section 30(1), or a further report under section 31(2A), relating to maladministration, the Ombudsman may make recommendations with respect to action which the authority concerned should take:

a) to prevent any injustice sustained by the person affected in consequence of the maladministration; and

b) to prevent injustice being caused in the future in consequence of similar maladministration in connection with the exercise of the authority's administrative functions.

38. Mr Maurici does not take the point that there is no express statutory power to make recommendations except in conjunction with a report. His argument is more fundamental: that there is no jurisdiction to recommend the payment of costs is He submitysHe where the individual complainant has not had to meet any and never had even a theoretical liability to do so. Alternatively, he says, it was clearly within the proper exercise of the Ombudsman's very wide discretion not to recommend such a payment.
39. The Claimant and her sister did not pay anything towards their legal costs. Pierce Glynn were acting for them under the Legal Help scheme, part of the Community Legal Service. Legal Help is to be contrasted with Legal Representation (still widely known as legal aid), which is available in certain court proceedings. In most cases solicitors offering Legal Help are limited to a fixed fee. In exceptional cases, of which this was one, they can recover at an hourly rate, which at the relevant time was £48.50 – less than a third of what would be recoverable at market rates under the Legal Representation scheme if an inter partes costs order were made. Another feature of Legal Help, in contrast to Legal Representation, is that there is no statutory charge on any money recovered by way of compensation.
40. Owen J, in refusing leave on the papers, noted that the Claimant and her sister have not suffered any injustice by reason of the LGO's refusal to recommend payment of costs. Mr Buley now accepts this. He does not suggest either that Pierce Glynn can be regarded as a person "affected in consequence of the maladministration". So subsection (a) of section 31(2A) cannot assist him. He relies on subsection (b). The payment of costs by Lambeth should, he submits, have been recommended as action which the authority "should take to prevent injustice being caused in the future in consequence of similar maladministration in connection with the exercise of the authority's administrative functions". He argues that unless firms such as Pierce Glynn can recover costs at market rates, they will be unable to act for clients such as the Claimant in complaints to the Ombudsman.
41. The Public Law Project (PLP), a national legal charity whose central aim is to improve access to public law remedies for those whose access to justice is restricted by poverty or other disadvantage, was granted leave to intervene at a late stage in this case and did so by letter of 28 October 2011. PLP referred to recent evidence to the Justice Select Committee from the Law Society urging that "public authorities whose administrative decisions are overturned by courts and tribunals should be required to pay the costs of the claimant to the legal aid fund, together with a surcharge". The Select Committee considered that there was "potential for such a 'polluter pays' principle to be extended considerably", and that "the Minister is overlooking the potential benefit such a policy would have in providing a financial incentive to public authorities to get their decisions right first time".
42. The Legal Services Commission, by a letter of 6 September 2011 to Pierce Glynn, supported "the principle that where expense has been or is going to be occasioned to the legal aid fund by the conduct of a public body, ….the fund should be reimbursed where appropriate. The Legal Aid Fund is a limited resource and every case in which costs are not recovered from a non-funded opponent puts additional pressure on the fund. Firms of solicitors which achieve successful outcomes on behalf of their clients with the benefit of legal aid are encouraged to recover costs from their opponent in appropriate circumstances."
43. I was referred to three authorities on this aspect of the case. In re appeals by Governing Body of JFS and others [2009] 1 WLR 2353 concerned an application for a protective costs order in what was then a forthcoming appeal before the Supreme Court. The claimant, who challenged the refusal of the defendant governing body to offer his son a place at their school, was legally aided under the Legal Representation scheme. At first instance his claim was dismissed, but he appealed successfully to the Court of Appeal and obtained an order for costs there and below. When the defendant obtained permission to appeal to the Supreme Court, the LSC indicated that it was unwilling to provide him public funding to resist the defendant's appeal unless his solicitors obtained a protective costs order that each side should be liable for its own costs in the Supreme Court in any event. The Supreme Court held that the only reasonable decision open to the LSC was to continue to provide the claimant with public funding for the appeal without imposing any condition. At paragraphs 24 and 25 Lord Hope of Craighead DPSC said:-

"24.    ……..[T]he failure of a legally aided litigant to obtain a costs order against another party may have serious consequences. This is because, among other things, the level of remuneration for the lawyers is different between a legal aid and an inter partes determination of costs. This disadvantage is all the greater in a case such as this. It is a high costs case, for which lawyers representing publicly funded parties are required to enter a high costs case plan with the Legal Services Commission. It is a common feature of these plans that they limit the number of hours to an artificially low level and the rates at which solicitors and counsel are paid to rates that are markedly lower than those that are usual in the public sector. Mr Reddin has indicated that, as they are defending a win, E's solicitors would not be expected to be paid at risk rates. Nevertheless the rate of remuneration that is likely to be agreed for this appeal will be considerably lower than that which would be reasonable if costs were to be determined inter partes."

25.     It is one thing for solicitors who do a substantial amount of publicly funded work, and who have to fund the substantial overheads that sustaining a legal practice involves, to take the risk of being paid at lower rates if a publicly funded case turns out to be unsuccessful. It is quite another for them to be unable to recover remuneration at inter partes rates in the event that their case is successful. If that were to become the practice, their businesses would very soon become financially unsustainable. The system of public funding would be gravely disadvantaged in its turn, as it depends upon there being a pool of reputable solicitors who are willing to undertake this work. In R (Boxall) v Waltham Forest London Borough Council Scott Baker J said that the fact that the claimants were legally aided was immaterial when deciding what, if any, costs order to make between the parties in a case where they were successful and he declined to order that each side should bear its own costs. It is, of course, true that legally aided litigants should not be treated differently from those who are not. But the consequences for solicitors who do publicly funded work is a factor which must be taken into account. A court should be very slow to impose an order that each side must be liable for its own costs in a high costs case where either or both sides are publicly funded. Had such an order been asked for in this case we would have refused to make it."

44. In R(Bahta) v SSHD [2011] EWCA Civ 895 the Court of Appeal considered the then prevalent practice of making no order for costs in an immigration case in this court where, before the matter has reached a hearing, the Secretary of State has granted indefinite leave to remain (or in some cases permission to work) which was the subject of the claim in the first place. Pill LJ said at paragraph 61-62:-

"61. In the case of publicly funded parties, it is not a good reason to decline to make an order for costs against a defendant that those acting for the publicly funded claimant will obtain some remuneration even if no order for costs is made against the defendant. Moreover, a culture in which an order that there be no order as to costs in a case involving a public body as defendant, because a costs order would only transfer funds from one public body to another is in my judgment no longer acceptable.

62. Equally, it is not an acceptable reason to make an order for costs in favour of a claimant, and neither the appellants nor the interested parties have suggested it is, that publicly funded lawyers are, or are claimed to be, inadequately remunerated. Whether to make an order for costs depends on the merits of the particular application."

45. It should also be noted that at paragraph 49 Pill LJ had said that he regarded Lord Hope's statement in the JFS case that "the consequences for solicitors who do publicly funded work are a factor which must be taken into account" as being intended to be of general application.
46. Finally, Mr Maurici relied on the very recent decision of the Court of Appeal in R(Maxwell) v the Office of the Independent Adjudicator for Higher Education [2011] EWCA Civ 1236. The claimant had made a complaint of disability discrimination against a university to the defendant (the OIA). The OIA made certain recommendations favourable to the claimant but did not make a finding of disability discrimination. Not satisfied with this, she issued proceedings in both the county court and the Administrative Court. In the judicial review claim she sought an order quashing the OIA's decision and requiring it to reconsider the complaint of discrimination and make a finding on it. She failed before Foskett J and on appeal to the Court of Appeal, where Mummery LJ said:

"If the approach advocated by [counsel for the claimant] were correct, it is difficult to see what point there would be in having a scheme, which was established under the 2004 Act not as another court of law or tribunal, but as a more user friendly and affordable alternative procedure for airing students' complaints and grievances. The judicialisation of the OIA, so that it has to perform the same fact-finding functions and to make the same decisions on liability as the ordinary courts and tribunals, would not be in the interests of students generally. Recent years have seen the growth of alternative processes of inexpensive dispute resolution: they are not intended to be fully judicial, or to be operated in accordance with civil law trial procedures, or to be dependent on what is fast becoming a luxury of legal advice and representation. The new processes have the advantage of being able to produce outcomes that are more flexible, constructive and acceptable to both sides than the all-or-nothing results of unaffordable contests in courts of law."

Discussion on costs

47. I do not find either Bahta or the JFS costs decision of much assistance. Both concerned cases in court, where the usual rule is that costs follow the event. The Ombudsman is not even a tribunal, still less a court, but conducts what Mummery LJ in Maxwell described as a more user-friendly and affordable procedure whose procedures should not be judicialised.
48. The interpretation of section 31(2B) for which Mr Buley contends is a far fetched one. It involves saying that for Lambeth to have to pay costs would "prevent injustice being caused in the future in consequence of similar maladministration" by the Council. If this means that it would be a deterrent and make them behave better in future (as the Law Society suggested to the Select Committee), the answer is that it might, but this is wholly speculative. Instead, by transferring legal costs from the LSC's budget to Lambeth's it might simply reduce the amount available for other Council services such as housing; the number of staff might well have to be cut; and those left might carry greater burdens and make more mistakes. I accept that the LSC's budget is under great pressure, but so are the budgets of local authorities.
49. The alternative to the deterrent argument is the more positive one that injustice through similar maladministration would be prevented in the future by assisting firms such as Pierce Glynn to continue to take on complaints of this kind. In order to make a direct financial difference to Pierce Glynn this depends on demonstrating not merely that the Ombudsman erred in declining to recommend reimbursement of their costs at Legal Help rates (£48.50 per hour), but that she should have recommended payment at Legal Representation inter partes rates. This seems to me an even more strained interpretation of the subsection. Legal Representation is not available in complaints to the Ombudsman. If solicitors take on such work it has to be at Legal Help rates. The client cannot then be asked to pay at a higher rate. If Mr Buley were right it would be open to anyone in a relatively complex dispute with their local authority (for example, over entitlement to a benefit) to consult solicitors under the Legal Help scheme and for the solicitors then, with the support of the client, to seek a recommendation from the LGO for reimbursement at market rates. This would erode the distinction between Legal Help and Legal Representation in a very large number of disputes with public authorities, and involve a still greater transfer of public resources towards legal services than that discussed in the previous paragraph. Many would consider this a desirable outcome and one which would prevent injustice. But in my judgment it is not what Parliament had in mind in 2007 in enacting what is now section 31(2B) of the 1974 Act.

Conclusion

50. Save to the limited extent I have indicated in relation to ground 3, the application for judicial review is dismissed.