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SPA v. City Edinburgh Council, [2003] ScotCS 180 (25 June 2003)

OUTER HOUSE, COURT OF SESSION

CA13/03

OPINION OF LORD CLARKE

in the cause

SPA (SCOTLAND) LTD

Pursuers;

against

THE CITY OF EDINBURGH COUNCIL

Defenders:

________________

Pursuers: Mitchell, Q.C.; Archibald Campbell & Harley

Defenders: Davidson, Q.C.; E. Bain, Solicitor

25 June 2003

[1] In this action the pursuers seek various declarators that the defenders are not, and never have been, entitled to seek payment from any person as a condition precedent of providing any such person with certain specified information. They also seek repetition from the defenders of the sum of £19,720 with interest thereon.

The pursuers aver that they are a company specialising in the supply of what is described as "search information". They go on to explain that among other services they supply their clients with certificates relative to heritable properties and any debts or obligations relative thereto. The pursuers aver that in order to prepare such certificates, they obtain a mandate from the owner or other person, having, or claiming an interest, in the particular property and, on the authority of that mandate, request the local authority within whose area the relevant property is situated to provide them with information regarding (1) the extent of any debt owed by the client to the local authority, and (2) the extent of any sums due to the local authority in respect of which the local authority either has or might have a charge over the property in question. The pursuers then go on to aver, and it is a matter of admission by the defenders, that when the pursuers request such information from the defenders, it is the defenders' practice to require payment of a fee of £40 for the release of the information in question. The defenders explain, in their averments, that the fee of £40 has remained fixed since 1996 and is based on the cost of the use of resources in providing the information.

[2] It is averred by the pursuers that during the period 5 November 2001 to 22 October 2002 they made about 493 such requests for information to the defenders and that in respect of each of the requests the defenders required the pursuers to make payment of £40 for the release of the necessary information. In article 3 of Condescendence the pursuers aver as follows

"In order to be able to provide their services to their clients without undue delay, the pursuers made payment of these sums totalling £19,720 being aware that unless such payment were made the defenders would refuse to provide such information. After 22 October 2001, such payments were only made under explicit protest that they were not properly due or repayable".

The defenders' reply to these averments, in Answer 3, is as follows

"Admitted the pursuers made about 493 such requests to the defenders and were charged at the rate of £40 each. Admitted the pursuers paid about £19,720. Admitted the pursuers protested the price. (sic).."

[3] It is the position of the pursuers, in this case, that the defenders' practice of requiring such payments to be made is unlawful and ultra vires and that the defenders are not entitled to impose any charges, except those that are authorised by express statutory provision or which are authorised by necessary implication arising therefrom. The pursuers refer to the Data Protection Act 1988, (and its statutory predecessors), and the Consumer Credit Act 1974 and the Freedom of Information (Scotland) Act 2002 which they say make express provision for charges for information provided in certain circumstances, but the pursuers contend that the defenders did not seek payment in terms of any of the relevant provisions of those Acts. The defenders admit that, in requiring payment for the provision of the relevant information, they were not relying on any of those statutory provisions. Their sole justification for imposing the charges, as averred in Answer 4, is tersely expressed in the following terms

"Explained and averred the defenders made said charges to permit their resources to be used in an efficient manner. Section 170 of the Local Government etc. (Scotland) 1994 is referred to for its terms".

Parties were agreed that the issue of principle that the action raised could be disposed of by way of discussion at debate, leaving over the question of whether a claim for repetition is open to the pursuers in the circumstances. I allowed parties a debate on the issue of principle.

[4] At the debate, senior counsel for the defenders sought dismissal of the action as being irrelevant. His submission, reflecting the terse averments in Answer 4, which I have referred to above, relied solely on the provision of section 122A of the Local Government (Scotland) Act 1973, which was added to that Act by section 170 of the Local Government Etc. (Scotland) Act 1994. That section provides as follows

"It shall be the duty of each local authority to make proper arrangements for securing economy, efficiency and effectiveness in their use of resources".

The duty of the local authorities, in this respect, is subject to the supervision of the Accounts Commission and the authorities' own auditors (see section 97A and 99 of the Local Government (Scotland) Act 1973). Senior counsel for the defenders' position, under reference to those provisions, was shortly stated. The defenders being a local authority had to comply with the duty set out in section 122A. Yet the pursuers were contending that, nevertheless, there should be a free of charge provision of information to them by the defenders in the way that they contended. Having regard to the section 122A duty, it would be a breach, by the defenders, of that duty to make proper arrangements for securing economy in the use of their resources, if they were to provide the information free of charge. I was referred to the decision of the House of Lords in the case of Bromley L.B.C. v Greater London Council [1983] AC 768. In that case, Greater London Council issued a precept to all London burghs to levy a supplementary rate of 6.1 pence in the pound to enable the G.L.C. to finance, by grant, to the London Transport Executive, the cost of reducing London Transport's bus and tube fares by 25%. One of the affected burgh councils sought judicial review of the precept. The Court of Appeal quashed the precept as being null and void and of no effect, a decision which was upheld by the House of Lords, on appeal. The case was, in large measure, taken up with the construction and effect of the provisions of the Transport (London) Act 1969, under which the G.L.C. operated the transport system for London. Section 1 of that Act provided that it was the general duty of the G.L.C. to develop and encourage measures which would promote the provision of

"integrated, efficient and economic transport facilities and services for Greater London".

Senior counsel for the defenders relied on certain dicta of their Lordships, in that case, regarding the meaning to be attributed to the word "economic" in such a context, and to the existence of a fiduciary duty owed by local authorities to their rate-payers. I was, for example, referred to the speech of Lord Scarman, at pages 838 to 839 where his Lordship was, inter alia to the following effect

".. so far as I am aware, the principle of a fiduciary duty owed to the ratepayers has never been doubted. Certainly, I do not doubt it. It is no more than common justice - especially where, as in the case under the existing law, those who provide the greater part of the rates have no vote in local government elections".

Later on in his speech His Lordship, at page 839A to B, said as follows

".. business principles can be applicable to a public service undertaking as to a commercial venture. The avoidance of a deficit which falls to be made good out of rates is important to rate-payers - some would say of no less importance to them that the making of a profit to persons engaged in a commercial venture: and business principles are clearly as effectual in avoiding a deficit as they can be in making a profit"

At page 852B to D, Lord Brandon of Oakbrook said this:

"My Lords, stress was laid in the judgements in the Courts below, and again in the arguments in your Lordship's House, on the use of the word 'economic' in section 1 of the Act, in which the general duty of the G.L.C. in respect to transport is prescribed, and further use of the word 'economy' in section 5(1), in which the general duties of the L.T.E. with respect to passenger services are prescribed. It was argued on behalf of Bromley that the use of these words indicated an intention on the part of the legislature that passenger services for Greater London should be run on a business, and therefore, so far as practicable, on a self-financing, basis. I should not myself be prepared to rest my preference for Bromley's case on the two closely linked questions of construction referred to earlier on the use in sections 1 and 5(1) of the words 'economic' and 'economy' respectively. I think that these words are used in order to ensure that both the G.L.C. and the L.T.E. have proper regard, in the performance of their functions, to the principle of cost-effectiveness or value for money, and do not of themselves throw any light on the sources of the moneys in the expenditure of which that principle of cost-effectiveness or value for money is to be applied".

I doubt if that case is of any real assistance in deciding the question before me. It dealt with the question as to what were the authorities' powers and duties in respect of the exercise of functions expressly conferred upon them by statute. The present case raises the question as to whether or not the defenders have the power to impose a charge for a service or function which they had no statutory duty, at all, to perform. Senior counsel for the defenders, also, referred me to the case of Commission for Local Authority Accounts in Scotland v Stirling District Council 1984 SLT 442 in which the First Division affirmed the existence of a fiduciary duty owed by local authorities to their rate-payers - see Lord President Emslie at page 446 column 1. Senior counsel for the defenders submitted that in making the charges they did, the defenders were exercising that duty. He sought dismissal of the action.

[5] In opening his submissions in reply, senior counsel for the pursuers accepted that there was no duty imposed upon the defenders to provide the information in question to the pursuers or to anyone in the pursuers' position, but, having chosen to provide the information, they were not entitled to charge for it. Senior counsel referred me to the decision of the House of Lords in the case of Regina v Richmond LBC, Ex.p. McCarthy and Stone (1992) 2AC 48. In that case property developers challenged the legality of a decision, by a planning authority, to levy a charge on developers for enquiries relating to speculative development or redevelopment proposals. The House of Lords held that no charge could be made by the planning authorities for pre-planning application advice since they had no power to do so, either expressly, or by necessary implication. The planning authority, in that case, had relied on the provisions of section 111(1) of the Local Government Act 1972, as amended, to support the legality of charging for the information and advice in question. The relevant statutory provision was to the following effect

"Without prejudice to any powers exercisable apart from this section, but subject to the provisions of this Act and any other enactment passed before or after this Act, a local authority shall have power to do any thing (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions..."

The House of Lords held that the giving of pre-application advice was not itself a function of the local authority within the meaning of section 111(1) of the 1972 Act and that to charge for such advice did not facilitate nor was it conducive or incidental to the authority's functions in considering and determining planning applications, within the meaning of the sub section. Moreover, the power to charge did not arise by necessary implication by virtue of the giving of such advice, since that was done purely in the exercise of a discretionary function by the authority. It had not been contended on behalf of the defenders, in the present case, that the giving of the information in question, was one of their functions. In choosing to do so they were therefore exercising a discretion. In dealing with the argument in the McCarthy and Stone case that power to charge arose from the exercise of a discretionary power, by necessary implication, Lord Lowry, in giving the main speech, with which all of the others of their Lordships agreed said this at page 70:

"... it is said, the council can charge for a service which at its discretion it provides by virtue of section 111(1), as facilitating or being conducive or incidental to the relevant function (in this case the function of considering and determining planning applications).

My Lords, the council's interpretation of section 111(1) is built on that proposition, but I consider its reasoning to be mistaken, because it does not by any means follow that all of the discretionary functions of the council or all of the facilitating or incidental activities contemplated or possibly contemplated by section 111 are services for which it is permissible to charge in the absence of express authority to do so. The rule is that a charge cannot be made unless the power to charge is given by express words or by necessary implication. These last words impose a rigorous test going far beyond the proposition that it would be reasonable or even conducive or incidental to charge for the provision of service. Furthermore, as it seems to me, the relevance of the contrast attempted to be drawn, with respect to the power of the council to charge, between duty functions and discretionary functions is vitiated when one has regard to the large number of discretionary functions for the provision of which express statutory authority to charge has been enacted. I am not impressed by the submission that an express power to charge for the performance of discretionary functions may have been conferred 'for the sake of clarity'".

The speech of Lord Lowry in the case of McCarthy v Stone was referred to in the subsequent Scottish case of Stirrat Park Hogg v Dumbarton District Council 1996 SLT 1173. In that case, a partnership of planning consultants, sought, inter alia a declarator that they were entitled to inspect the planning register, maintained by a planning authority, without payment of any charge in request of such inspection, despite a decision to the contrary by the authority. The planning authority in seeking to support the legality of the charge, relied upon, inter alia the fact that section 50D of the Local Government (Scotland) Act 1973 provides that documents which are background papers to reports for meetings of local authorities shall be open to inspection by members of the public and section 50H of the Act provides that such inspection shall be open upon payment of a reasonable fee. The authority contended that the register, or part of it, was a background document for the purposed of section 50D of the 1973 Act. They, furthermore contended that, in any event, the power to make such a charge arose, by necessary implication. These arguments, advanced on behalf of the local authority, were rejected by the Lord Ordinary, Lord Cameron of Lochbroom. In his judgement, on no reading of section 50 of the 1973 Act could the register, or part of it, be considered to be a background document for the purposes of that section - see his Lordship's opinion at page 1117. His Lordship, moreover, held that the authority's argument, based on necessary implication, failed the rigorous test referred to by Lord Lowry in the McCarthy v Stone case and, that therefore, the charge was illegal, see his Lordships opinion at page 1118.

[6] Senior counsel for the pursuers also referred me to the provisions of section 150 of the Local Government and Housing Act 1989. It provides as follows:

"(1) The Secretary of State may make regulations providing that a charge may be imposed in respect of anything -

(a) which is done by any relevant authority or by any relevant authority of a prescribed description;

(b) which is prescribed or falls within a prescribed description;

(d) which is not done in the course of exercising an excepted function.

(2) The regulations may include such provision as the Secretary of State sees fit as regards charges for which the regulations provide: and nothing in the subsections (3) to (5) below or section 190(1) below is to prejudice this.

(3) The regulations -

(a) may be made as regards services rendered, documents issued, or any other thing done by an authority (whether in pursuance of a power or a duty);

(b) may provide that the amount of a charge (if imposed) is to be at the authority's discretion or to be at its discretion subject to a maximum. ..."

Having regard to those provisions, which apparently recognise the need for express regulation to allow local authorities to impose charges, if such power is not otherwise expressly conferred by statute, it would have been extremely odd, senior counsel for the pursuers, submitted, if the passing of section 122A of the 1973 Act by virtue of section 170 of the Local Government Etc. (Scotland) 1994 had, by a side wind, as it were, conferred on the defenders' power, by necessary implication, to charge for providing the information in question.

[7] I am entirely satisfied that the sole basis, (and I repeat and stress the sole basis) upon which the defenders seek to justify the legality of the charges they have been imposing for the provision of the information sought by the pursuers, namely the provisions of section 122A of the 1973 Act, do not avail them. As has been noted, senior counsel for the defenders accepted that there was no duty on the defenders to provide the information. Economy of use of their resources, in my judgement, could have been as well met by the defenders simply refusing to provide the information. Be that as it may, the law is clear, in my judgement, that since the provision of the information in question is not a statutory duty, or statutory function, imposed or conferred on them, the giving of such information is simply done by them in an exercise of a discretion and as no express power has been conferred upon them to make a charge in respect thereof, they have, following the approach of the House of Lords in the McCarthy and Stone case no such power to do so, arising by necessary implication. The pursuers'position, in my judgement, is fortified by virtue of the provisions of section 150 of the Local Government and Housing Act 1989 to which I have referred. I agree that the provisions of section 122A of the 1973 Act cannot be read to provide, by implication, for the imposition of charges for providing information where this is done, neither in the exercise of a statutory duty or function, nor where a regulation in relation thereto has been made by the Secretary of State under section 150 of the 1989 Act.

[8] The pursuers seek a number of declarators to reflect what they contend should be the position, in law, if they were to succeed in the argument they put forward in relation to the legality of the charges. The declarators sought are somewhat elaborate and detailed in their terms and senior counsel for the defenders invited me to decide the question of principle and if I were to be against the defenders on that question, to refrain, in the meantime, from granting the declarators sought, as he would wish to consider, and, perhaps, make submissions regarding the ambit of these conclusions, as presently framed. As the case will require to be put out by order for further procedure I will accede to that request. It may be that parties will be able to reach some measure of agreement as to the scope of the declarators which should be pronounced in light of my decision in respect of the question of law that has been discussed before me. In any event, I shall have the case put out by order for discussion of the orders to be pronounced, as a result of my decision, and as to the future procedure in the case.