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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> INNOCENCE NURSERY LIMITED, PETITION OF FOR JUDICIAL REVIEW [2018] ScotCS CSOH_67 (20 June 2018)
URL: http://www.bailii.org/scot/cases/ScotCS/2018/[2018]_CSOH_67.html
Cite as: [2018] CSOH 67, [2018] ScotCS CSOH_67
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OUTER HOUSE, COURT OF SESSION
[2018] CSOH 67
P742/17
OPINION OF LORD UIST
in the Petition of
INNOCENCE NURSERY LIMITED
Petitioner
for
Judicial Review of a refusal to grant “partnership status” by East Renfrewshire Council
Respondent
20 June 2018
Petitioner: Robertson; Drummond Miller LLP
Respondent: O’Neill (sol adv); Brodies LLP
Introduction
[1] In this application to the supervisory jurisdiction of the court the petitioner, which
operates a nursery for children in Newton Mearns, seeks reduction of a decision of the
respondent dated 11 May 2017 to refuse partnership status to it. The respondent is a local
authority with obligations and powers in relation to pre-school children. It is obliged to
secure provision of early learning and child care under Part 6 of the Children and Young
People (Scotland) Act 2014 and otherwise. The respondent operated a scheme whereby
providers of care could become “partners” with it. Such partnership indicated approval of
the provider and involved the provision of funding to enable the attendance of children at
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nurseries which were partners. In the absence of partnership status on the part of the
provider the respondent did not fund the provision of care by that provider. Partnership
status therefore brought with it a potentially significant financial benefit to a child-care
provider, such as the petitioner.
The pleadings
[2] The petitioner avers that its application for partnership status for the year 2016-17
was refused by the respondent on the ground that the numerical score given was less than
the minimum threshold score for recommendation for partnership status. The petitioner
subsequently applied for partnership status for the year 2017-18. It was provided with an
“Assessment Pro-Forma”, together with information in a covering letter dated 30 March
2017. In terms of the process an applicant required to score 14 out of a potential score of 27,
applying the documentation used by the respondent. The petitioner scored 3 “satisfactory”
for “Quality of Improvement Plan and Standards and Quality Report”, -1 “Unsatisfactory”
for “testimonials from departmental staff” and a total of 11 points. A difference of 3 points
or more in any score would have resulted in approval by the respondent of the petitioner’s
application for partnership status.
[3] In order to obtain the scores for “testimonials from departmental staff” the
respondent sent a Ms Carlton to visit the nursery. Before she attended she was privy to an
email from a Ms Rodriguez dated 3 May 2017 in which the latter narrated that “they have
been in partnership before but they had low grades in the second last inspection and lost it”.
The petitioner avers that that information was and is untrue because neither the petitioner
nor its directors or employees was responsible for the previous enterprise, there being no
connection between any old nursery referred to in that email and the nursery run by the
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petitioner. The email also stated “The paperwork they have shared looks good though it’s
all about the environment and experiences for them.” The email also referred to another
nursery to be inspected at 10.30am (the 10.30am nursery) about which it stated:
“The manager is [name], she is fairly new and was appointed after previous
disastrous care inspectorate, recently inspected in Jan 17 they did much better so for
them it’s all about the journey and what’s improved. Janice might wave the score
with -7 as it covers the bad inspection which the owner disputed was conducted
fairly.”
The pro-forma in respect of that nursery, which subsequently obtained partnership status,
listed the “number of requirements given by the Care Inspectorate in last 2 reports” as -7. In
order for the 10.30am nursery to meet the threshold for partnership status it would have
required to have obtained either a waiver by the respondent of the -7 score or a rating of 6
(excellent) or full marks for the “testimonial from departmental staff”. No other nursery had
received a rating of excellent. It was inherently unlikely that any nursery would score full
marks on a real-life assessment. The petitioner avers that it believes that the respondent
waived the -7 score attributed to the 10.30am nursery when deciding whether or not to grant
it partnership status.
[4] On 4 May 2017 Ms Carlton attended at the nursery to assess it, using a pro-forma
provided to her by the respondent. The pro-forma which was used in relation to
“testimonials from departmental staff” related to 5 factors or quality indicators. It was a
form that had been used by the respondent for at least 8 years. The respondent claimed that
these factors related to the factors in Education Scotland’s document “How good is our early
learning and childcare?” (2016), which lists 15 factors. Following the assessment by
Miss Carlton, the petitioner’s application for partnership status was refused by letter from
the respondent dated 11 May 2017. The petitioner has clientele which uses its services on a
regular basis. They have lost some of them as a result of the respondent’s decision not to
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award them partnership status. That clientele included clients whose children would not in
the past have been eligible for local authority funding but in the year 2016-2017 would have
been. The petitioner has also lost funding which it would have received directly from the
respondent if it had been granted partnership status. If it had been granted partnership
status the petitioner would have provided care for children who would have been funded at
least in part by the respondent and estimate their losses as being in the region of £100,000.
[5] The petitioner was dissatisfied with the decision of the respondent to refuse it
partnership status and sought to challenge it in an email dated 12 May 2017. The
respondent replied by email dated 16 May 2017 stating that there was no appeal process.
The petitioner’s solicitor wrote a letter to the respondent dated 31 May 2017, to which the
respondent replied by letter dated 19 June 2017 stating that it refused to reconsider its
decision.
[6] The petitioner avers that the decision of the respondent is irrational. The underlying
assessment used only 5 out of 15 factors that were relevant to the decision. No reasonable
decision-maker would have relied upon such a narrow assessment. Indicators 1.3, 1.4, 1.5,
2.1, 2.4, 2.5, 2.6, 2.7, 3.1 and 3.3 in the document “How good is our early learning and
childcare?” were not assessed. If, as the respondent maintains, that document was the basis
of the assessment, then it had failed to apply the quality indicators in a rational or fair way.
It had also failed to use a system of assessment in which the methodology of the document
was applied. For the rating to be 3 or satisfactory the assessor required only to conclude that
“the strengths just outweigh weaknesses”. That involved a weighing-up exercise which
required (1) accurate, fair and comprehensive identification of strengths; (2) accurate, fair
and comprehensive identification of weaknesses; (3) proper use of all relevant quality
indicators in the process of appraisal of those strengths and weaknesses; (4) adding up
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strengths and weaknesses respectively; and (5) making an accurate, fair and realistic
assessment of whether aggregate strengths outweighed aggregate weaknesses or vice versa
so that an appropriate rating might be given. A decision which failed to do that was
irrational, especially since the design of the scoring system using the 11 elements had more
regard to items 8, 9 and 10. The experience of parents well placed to offer views on the
nursery’s provision of care and educational support were, by contrast, not given significant
weight. The final item “Parents’ Testimonial received” attracted a score of 1 if received
and 0 if not. The respondent did not seek to establish the views or concerns of parents by
any means other than relying on the objective scoring of their assessor in the circumstances
described. Further, the decision was irrational because Ms Rodriguez, having described the
paperwork as “looks good” then went on to award it a 3 for satisfactory rather than a 4 for
good.
[7] The petitioner also avers that the decision was unfair because the assessor was
wrongly informed that the nursery had been in partnership but had “lost it”. Such
information was suggestive of lower standards than required and tended to create an
unfavourable impression in the mind of anyone privy to that information. Ms Rodriguez,
who either advised the decision-maker, Janice, or was herself the decision-maker, was of the
view that this erroneous information was accurate. The assessor and the decision-maker
were both under the erroneous impression that inaccurate information deleterious to the
petitioner was true. The conduct of Ms Carlton did not indicate that she had identified the
error in this information. She had carried out the assessment in the mistaken belief that the
petitioner had previously lost its partnership status by failing to meet the required
standards. The decision was therefore affected by apparent bias. The decision-maker had
chosen to waive some of the elements on the pro-forma for the 10.30am nursery on the basis
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of a factual dispute. No consideration was given to disputed elements in the assessment of
the petitioner. Waiver of a poor score was apparently a possibility for the 10.30am nursery,
but not for the petitioner. In those circumstances the decision-maker appeared to have been
biased in favour of the 10.30am nursery over the petitioner.
[8] The petitioner also avers that the respondent did not properly exercise its discretion
by focussing unduly on “environment and experiences” in accordance with the instructions
given to Ms Carlton in the statement of intent form Ms Rodriguez. Such a focus to the
exclusion of other relevant factors was a fettering by the respondent of its discretion and so
unlawful.
[9] Lastly, the petitioner avers that the scheme operated by the respondent was
insufficiently certain and foreseeable in its application. There was no formal application
procedure and there were no leaflets or other sources of information about the process
provided to applicants. The petitioner was provided with the assessment pro-forma ahead
of time together with some information in a covering letter dated 30 March 2017, but it was
not and is not clear what “Quality of Improvement Plan and Standards and Quality Report
(one score)” or “Testimonials from department staff” meant. It could reasonably be thought
that a “testimonial” related to someone who already had had experience with the nursery
(as was the case in relation to Parents’ testimonial”), but it did not. By email dated 20 April
2017 the petitioner enquired of the respondent, in relation to testimonials from departmental
staff, what the phrase “to be completed by Partnership teachers” meant. The respondent
replied that it would arrange for one of the partnership teachers to come out and visit. The
petitioner was not provided with the assessor’s “Partnership Teacher’s Evaluation
Pro-Forma” before the assessment. Moreover, it was not apparent before and at the time of
the assessment what differentiated one level of competence (excellent, very good etc) from
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another. This was particularly important in the case of the petitioner, where a difference of
3 points would have resulted in the threshold being reached. It was not evident that 5 out
of 15 possible relevant quality indicators would be considered. It was and is not apparent
why these 5 indicators were of relevance and the other 10 were not. It was and is not
apparent what weighting was given to each of the indicators. It was not apparent whether
there was any right of appeal. It was and is not apparent whether there was or is any way in
which to make representations to affect the assessment or the decision. It appeared that
the 10.30am nursery was able to obtain a waiver in one of its scores in the pro-forma, or at
least that was a possibility. The petitioner was entirely unaware how it could obtain a
similar waiver from the respondent as there was no indication from the respondent of how
the petitioner might do so. The petitioner did not know ahead of time in what way it could
regulate its behaviour in order to obtain partnership status. Nor could it have done so with
appropriate advice. The respondent had not reconsidered its decision.
[10] In answer the respondent avers that the principal feature of partnership status for a
nursery is the funding by the respondent of places for children attending those nurseries.
The respondent had operated such a scheme for more than 8 years. The petitioner first
applied for partnership status in January 2016. The petitioner was aware of the nature of the
scheme, and of the information relied upon by the respondent to make decisions about
partnership status, from at least January 2016. The petitioner submitted information to the
respondent in 2016 in support of its application. The nursery was visited by a member of
the respondent’s staff in February 2016 as part of the assessment process used by the
respondent. It was assessed in March 2016 as not meeting the threshold score required for
partnership status and provided with a copy of the assessment pro-forma used by the
respondent. The petitioner did not then challenge the fairness, transparency or lawfulness
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of the assessment process. On 30 March 2017 the respondent wrote to the petitioner inviting
it to apply for partnership status for the academic session 2017-2018, enclosing information
about the selection process including (a) the assessment pro-forma; (b) a blank “Early years
Workforce Qualifications Audit” on which the petitioner was expected to provide details of
its staff; (c) a blank parent testimonial form to be completed by a parent selected by the
petitioner. The petitioner completed the paperwork provided and submitted its application
for partnership status. The petitioner was aware of the respondent’s scheme for granting
partnership status by, at the very latest, 30 March 2017. The proceedings, so far as directed
against the operation of the scheme, were therefore time-barred, having been raised more
than 3 months after 30 March 2017 (Court of Session Act 1988, section 27A). The respondent
enjoyed discretion as to the manner in which it discharged its duties under Part 6 of the
2014 Act. It did so using a range of mechanisms. It funded and operated its own nurseries.
It also funded places for children under school age who attended nurseries operated by
private sector providers such as the petitioner, where such providers met the minimum
standards necessary to be awarded partnership status. The respondent required each such
provider to attain a minimum overall score before the provider would be recommended for
partnership status. The criteria used, and the range of scores available, were set out on the
assessment pro-forma. The criteria included the qualifications and suitability of the nursery
manager, the ratio of qualified staff, the percentage of staff holding additional qualifications
and the average score from the nursery’s most recent Education Scotland and Care
Inspectorate inspections. A further requirement was a testimonial from departmental staff.
The assessment pro-forma made clear that this testimonial was to be submitted by
partnership teachers. The assessment pro-forma disclosed that the maximum score available
was 27 and that the threshold for a recommendation for partnership was 14. The
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respondent did not operate a “quota” or other system for limiting the number of nurseries
that might be awarded partnership status. For the session 2017-2018 12 nurseries had been
awarded partnership status and 2 (including the petitioner) were refused. The petitioner
was refused partnership status for the session 2016-2017 on the basis that (as for
session 2017-2018) it did not meet the minimum level for recommendation for partnership
status. A visit to the nursery was made by a member of the respondent’s staff on
23 February 2016. The petitioner obtained a score of 3 for that element of its application
for 2016-2017. The petitioner was scored by reference to 11 separate criteria, 4 of which were
listed on the assessment pro-forma under the heading of “Risk” and the remaining 7 listed
under the heading of “quality”. The petitioner achieved a total score of 12 for the
session 2016-2017 and a total score of 11 for the session 2017-2018. The petitioner achieved
the same or a higher score for some criteria in each year and for other criteria achieved a
score in 2017-2018 which was lower than it had been in 2016-2017. The petitioner was not
challenging those scores which were the same as or higher than the scores achieved in the
previous year.
The submissions
[11] The petitioner submitted that the decision of the respondent of 11 May 2017 to refuse
the petitioner partnership status was irrational, relying on Associated Provincial Picture Houses
Secretary of State for Scotland 1996 SLT 653 fell to be distinguished in respect that the key
point which led to dismissal of the petition in that case did not apply to the facts and
circumstances of the present case. In that case it was held that irrationality could involve an
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error of fact where it related to the facts material to the decision, but that it was not sufficient
for the error to be discovered by a process of hindsight. The petitioner contended that a
proper analysis of the facts in the present case showed that there was irrationality at the time
of the decision-making process. In reply the respondent submitted that the choice by it of
the 5 quality indicators which it used for assessment came nowhere close to meeting the test
of irrationality.
[12] So far as apparent bias was concerned, the petitioner submitted that the respondent’s
decision of 20 May 2017 was the outcome of a process which involved Ms Rodriguez
sending instructions and inaccurate information to the assessor, Ms Carlton. The inaccuracy
consisted of the statement that the petitioner’s nursery had previously lost its partnership
status, which was seriously detrimental to the assessment of the petitioner’s nursery and
tainted the decision by apparent bias. Reliance was placed on the decision by the House of
at paragraphs 60, 61 and 103. At paragraph 103 he stated that the question was whether the
fair-minded and informed observer, having considered the facts, would conclude that there
was a real possibility that the tribunal was biased. The petitioner also referred to the
decision of Lord Hodge in the Outer House in the case of Kiani v Secretary of State for
Business, Innovation and Skills [2013] CSOH 121 and sought to distinguish it on the ground
that the detailed averments in the present case were clearly distinguishable from the bare
averments which were the subject of criticism in that case. In response the respondent
submitted that there was nothing in the terms of Ms Rodriguez’s email of 3 May 2017 to
suggest favouritism in favour of any nursery at the expense of that of the petitioner. The
contents of that email were not such as to meet the test of apparent bias set out by
Lord Hope at paragraph 103 of Porter v Magill.
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[13] The petitioner also submitted that the respondent had fettered its discretion by
stipulating only that certain areas were important for consideration and that by narrowing
the focus to “environments and experiences” its decision-making process was flawed
because it disregarded other relevant factors which were vital to a balanced decision. The
respondent submitted that that contention was without foundation as its decision not to
award partnership status to the petitioner was based on an assessment carried out by
reference to 11 criteria. Ms Carlton’s visit to the nursery, which provided the basis for the
scoring of one of those criteria, involved assessment of the nursery by reference to 5 quality
indicators. Neither the overall assessment nor Ms Carlton’s visit was constrained by
Ms Rodriguez’s email.
Discussion
[14] In my opinion there is no substance in the petitioner’s grounds of challenges based
on irrationality and fettering of discretion, essentially for the reasons given by the
respondent in its submissions. The respondent enjoyed a wide ambit of discretion in
deciding how to go about awarding partnership status for nurseries, providing the process
was conducted fairly. I find nothing in the system operated by it which amounts to
irrationality or fettering of discretion. It had in place a system for the assessing of nurseries
which it was entitled to employ and contained no illegality.
[15] On the other hand, I have concluded that there is merit in the petitioner’s complaint
based on apparent bias, which I would prefer to categorise as proceeding on the basis of an
incorrect material fact. In my opinion the respondent really had no answer to this ground of
challenge. Ms Rodriguez, in the email which she sent to Ms Carlton on 3 May 2017, stated,
with reference to the petitioner’s nursery:
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“The manager is Sam Kiyani, they had been in partnership before but they had low
grades in the second last inspection so lost it. The paperwork they have shared looks
good though, so it’s all about the environments and experiences for them.”
In a letter dated 31 May 2017 to the respondent’s Director of Education the petitioner’s
solicitor stated:
“Further, it has come to Ms Kiyani’s attention that the assessor was provided with
erroneous information by Rosamund Rodriguez, who is understood to be the quality
assurance individual at East Renfrewshire Council, in relation to the nursery prior to
the visits. It is understood that Ms Collins was advised that the nursery had
previously been in partnership but had lost that because of poor scoring. That is
false. This nursery has never been in partnership previously, largely because it not
(sic) met the qualifying criteria. It is unclear whether the information related to a
previous nursery which has traded from the same premises, but, if so, Innocence
Nursery had no connection with that or any other nursery. Ms Kiyani has not
previously operated any nursery as principal.”
In its response dated 19 June 2017 the respondent accepted that the petitioner had never
worked in partnership with the respondent.
[16] It was therefore accepted by the respondent that it was not true that the petitioner
had been in partnership before but had low grades and lost it. Ms Carlton was accordingly
provided with information about the nursery containing what was an incorrect material fact
before she carried out her inspection. In my view it cannot be maintained that this incorrect
statement was not material. While it was true that the petitioner had failed to obtain
partnership status the previous year, it was not true that before then it had enjoyed
partnership status which it had lost. I consider that there is a clear difference between
having and then losing partnership status due to low scores and never having had
partnership status at all. The former is worse than the latter because it shows that the
applicant had previously been able to meet the requisite standard but later failed to do so.
In addition, the provider of the incorrect information was the respondent itself, the body
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which took the ultimate decision to refuse partnership status to the petitioner. The incorrect
material fact therefore pervaded the whole decision-making process.
[17] Quite apart from that, even if the information had been true, it would have been
damaging to the petitioner as it would have put it at a clear disadvantage in the mind of
Ms Carlton at the outset of her inspection. Ms Carlton, although she was only carrying out
an inspection to assist the eventual administrative decision-maker and not herself taking a
judicial decision, was obliged to approach her task with an open mind and not be affected
by the adverse outcome of any previous inspection. Her task was to inspect the nursery for
the 2017-2018 session. Although she obviously required to be provided with some
information about the nursery, the adverse outcome of a previous inspection was irrelevant
as far as her task was concerned, and had the potential to give rise to apparent bias on her
part.
Damages
[18] The petitioner originally sought damages by way of just satisfaction under
section 8(3) of the Human Rights Act 1998 but it was refused permission to proceed with its
challenge based on human rights grounds. It has no relevant case for an award of damages
on any other basis. In the area of discretionary decision making by public bodies damages
are available at common law only in cases of misfeasance in office or abuse of power
amounting to bad faith (Shetland Line at p658) and an allegation of apparent bias does not
meet that threshold (Kiani at paragraph 18). An allegation of recklessness or negligence is
insufficient. The petitioner’s claim for damages is therefore irrelevant. In any event, the
petitioner has failed to make relevant and specific averments of loss of profit or loss of value
in its business in order to found a claim for damages.
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Decision
[19] As I have concluded that Ms Carlton carried out her inspection of the petitioner’s
nursery on the basis of an incorrect material fact and that this has tainted the decision
complained of I shall grant decree of reduction of that decision.