IN THE UPPER TRIBUNAL Case No  GLGSE/1395/2012

ADMINISTRATIVE APPEALS CHAMBER

 

Before UPPER TRIBUNAL JUDGE WARD

 

Decision:  The appeal is allowed.  The decision of the First-tier Tribunal dated 2 December 2011 under reference LGS/2011/0559 involved the making of an error of law and is set aside.  I substitute a decision that Mrs Bence was not in breach of paragraphs 10(2)(b) and 12(1)(a) of the Code of Conduct (which relate to prejudicial interests) but was in breach of paragraphs 8(1)(a), 8(1)(b) and 9(1) (which relate to personal interests) by virtue of her failure to declare an interest in an agenda item relating to a livery access track.  As to sanction, I adopt the reasoning of the First-tier Tribunal and impose no sanction in all the circumstances of the case.

 

REASONS FOR DECISION

 

1. The legislation with which this decision is concerned has of course now been repealed and the First-tier and Upper Tribunals no longer have jurisdiction in new cases.  I do not know to what extent local authorities are drawing on the old form of the Model Code of Conduct for their own codes of conduct under the Localism Act 2011.  If they are, and if the result in the present case is found surprising or undesirable, they may wish to take steps to amend their codes. 

 

2. In the decision which is under appeal, with permission of a judge of the First-tier Tribunal, Mrs Bence, then a councillor, had been found to have had a personal and a prejudicial interest in an agenda item of the Bishopton Parish Council discussed at its meeting of 16 January 2008.  Following a determination on the papers alone, the First-tier Tribunal had upheld the decision of the respondent standards committee (given after oral evidence and submissions) that there had been a failure to comply with paras 8(1)(a), 8(1)(b), 9(1), 10(2)(b) and 12(1)(a) of the Council’s Code of Conduct i.e. the rules regarding personal interests and prejudicial interests.  It did not however uphold the sanction imposed (censure) and imposed no sanction at all in the circumstances of the case.

 

3. I need not set out here the full history.  In essence, the business was the consideration in January 2008 by the parish council (not itself, of course, the planning authority, but whose views would be material) of an application for planning permission (made by a party unconnected with Mrs Bence) in respect of an access affecting Manor Farm.  Manor Farm is the next door site to Mrs Bence’s property, separated from it at the time by a rather narrow lane.  The lane was not the access which was the subject of the planning application and the extent to which the latter affected Mrs Bence’s property is disputed.  I am aware of the background but it is not necessary to go into it here.

 

4. Mrs Bence does not dispute that she had a personal interest in the matter.  Nor did the terms on which the First-tier Tribunal granted permission either to appeal to it (under the particular terms of the Local Government Act 2000 (“the 2000 Act”), or from it, suggest any doubt on this aspect.  In my view those views and the conclusions of the First-tier Tribunal on that issue are correct, notably in the light of the content of the letter dated 4 January 2008 from Darlington Borough Council to Mr and Mrs Bence.

 

5. Mrs Bence does however dispute that she had a prejudicial interest.  Her grounds were principally detailed ones about the facts and their implications.  However, it is not on the basis of those that the appeal is being allowed and I need not dwell on them.

 

6. I shared my provisional reading of the relevant provisions with the parties, inviting their submissions on what appeared at first sight a surprising situation.  Mrs Bence replied, associating herself with the key part of that reading.  A submission was received from Darlington Borough Council, for which I am grateful.

 

7. As my initial reading had implications for the Model Code of Conduct generally, the Secretary of State for Communities and Local Government was also sent the Directions which contained my provisional view and was offered the opportunity to apply to be joined as a party, an opportunity which he did not take up.

 

8. Section 49(1) of the 2000 Act empowered the Secretary of State by order “to specify the principles which are to govern the conduct of members and co-opted members of relevant authorities in England…”. Parish councils are “relevant authorities” for this purpose.  Under that power, the Secretary of State made the Relevant Authorities (General Principles) Order 2001/1401 (“the Principles Order”).  The Schedule to the Order contained the relevant principles.  It suffices to refer to the following:

 

“Selflessness

1. Members should serve only the public interest and should never improperly confer an advantage or disadvantage on any person.

 

Honesty and Integrity

2. Members should not place themselves in situations where their   honesty and integrity may be questioned, should not behave improperly and should on all occasions avoid the appearance of such behaviour.

…

Accountability

4. Members should be accountable to the public for their actions and the manner in which they carry out their responsibilities, and should co- operate fully and honestly with any scrutiny appropriate to their   particular office.

 

Openness

5. Members should be as open as possible about their actions and those of their authority, and should be prepared to give reasons for those actions.”

 

9. Section 50 empowered the Secretary of State by order to “issue a model code as regards the conduct which is expected of members…of relevant authorities in England…”  By section 50(4), a model code of conduct was required to be consistent with the principles for the time being specified in an order under section 49(1).

 

10. There were initially separate orders issuing model codes made for parish councils (SI 2001/3576) and other councils (SI 2001/3575).  The structure of the two was however, as regards interests, similar. Both were in due course replaced by the Local Authorities (Model Code of Conduct) Order 2007/1159 (“the 2007 Order”), which governed the position at the time with which we are concerned.  The 2007 Order recites that the Secretary of State was satisfied that it was consistent with the principles for the time being specified in the order under section 49 i.e. the Principles Order

 

11. Part 2 of the Code contained in the 2007 Order deals with interests.  By paragraph 8 a person is said to have a personal interest in any business of their authority where either:

 

(a) “it relates to or is likely to affect” one of a number of persons or   bodies specified or (among other things) “any land in your authority’s area in which you have a beneficial interest”; or

 

(b) “a decision in relation to that business might reasonably be regarded as affecting your well-being or financial position or the well- being or financial position of a relevant person to a greater extent than the majority of [other local taxpayers, inhabitants etc.]”

 

The basic obligation in relation to personal interests was one of disclosure (paragraph 9).

 

12. Prejudicial interests were defined in paragraph 10 as follows:

 

“(1) Subject to sub-paragraph (2), where you have a personal interest in any business of your authority you also have a prejudicial interest in that business where the interest is one which a member of the public with knowledge of the relevant facts would reasonably regard as so significant that it is likely to prejudice your judgement of the public interest.

 

(2) You do not have a prejudicial interest in any business of the authority where that business—

 

(a) does not affect your financial position or the financial position of a person or body described in paragraph 8;

 

(b) does not relate to the determining of any approval, consent, licence, permission or registration in relation to you or any person or body described in paragraph 8; or

 

(c) relates to the functions of your authority in respect of—

(i) housing, where you are a tenant of your authority provided that   those functions do not relate particularly to your tenancy or lease;

(ii) school meals or school transport and travelling expenses, where you are a parent or guardian of a child in full time education, or are a parent governor of a school, unless it relates particularly to the school which the child attends;

(iii) statutory sick pay under Part XI of the Social Security Contributions and Benefits Act 1992, where you are in receipt of, or are entitled to the receipt of, such pay;

(iv) an allowance, payment or indemnity given to members;

(v) any ceremonial honour given to members; and

(vi) setting council tax or a precept under the Local Government Finance Act 1992.”

 

(In the remainder of these Reasons, I refer to “approval, consent, licence, permission or registration” as used in paragraph 10(2)(b) as “the listed items”.)

 

13. It appears that the juxtaposition of two negative conditions and a positive one in paragraph 10 may have caused problems for the draftsman.  To make sense of the provision, it is in my view necessary to read in the word “and” after sub-paragraph (2)(a): the intention is plainly that a matter not falling within sub-paragraph (c) must avoid falling within both (a) and (b), not merely one of them.  It would be pointless to permit say the determination of a permission in relation to a member to escape regulation on the basis that it had no financial impact, or a matter which clearly affected a member’s financial position on the basis that it did not involve one of the listed items.  Mrs Bence seeks to rely on the absence of an “and” between (a) and (b), but as that would lead to an absurd result, I adopt a strained construction of the words.

 

14. We need not dwell on paragraph 11 of the 2007 Order which is immaterial for present purposes. The implications of having a prejudicial interest are set out in paragraph 12 of the 2007 Order as follows:

 

“(1) Subject to sub-paragraph (2), where you have a prejudicial interest in any business of your authority—

(a) you must withdraw from the room or chamber where a meeting   considering the business is being held—

(i) in a case where sub-paragraph (2) applies, immediately after making representations, answering questions or giving evidence;

(ii) in any other case, whenever it becomes apparent that the business is being considered at that meeting;

unless you have obtained a dispensation from your authority's standards committee;

(b) you must not exercise executive functions in relation to that business; and

(c) you must not seek improperly to influence a decision about that business.

 

(2) Where you have a prejudicial interest in any business of your authority, you may attend a meeting (including a meeting of the overview and scrutiny committee of your authority or of a sub- committee of such a committee) but only for the purpose of making representations, answering questions or giving evidence relating to the business, provided that the public are also allowed to attend the meeting for the same purpose, whether under a statutory right or otherwise.”

 

15. It is instructive to contrast the prejudicial interest provisions in the 2007 Order with those under the orders 2001/3575 and 3576 which had dealt with earlier versions of the Model Code.  Under the earlier provisions, the test of a prejudicial interest adopted a materially identical formulation to that in paragraph 10(1) of the 2007 Order above, followed by a list comparable to that in para 10(2)(c).  In essence, it was sub-paras (2)(a) and (b) that were added in 2007.  At the same time, changes were made to paragraph 12, in essence by relaxing to a limited extent, in the manner set out in paragraph 12(2), the strictness of the bar on participation by those with a prejudicial interest.

 

16. It does appear that in making the 2007 Code, sub-paras (a) and (b) of para 10(2) were added to the Government’s original proposals following consultation and adopted advisedly: see Results of consultation on revised code of conduct for local government members, DCLG, April 2007.  Section 50 contains wide consultation obligations and it is evident that among the 906 responses received there had been a

“suggestion that more relaxed regime proposed for members with a “public service interest” should be extended to all members, so that a member would not have a prejudicial interest in any matter unless it includes a financial benefit to the member or the member’s family and those with a close association with him or her, or it relates to the determining of any approval, consent or licence in respect of the member, his or her family or those with a close association with the member…”

 

17. The close correlation between what was in the document reporting the results of consultation (not a legal text) and what ended up as changes ion the 2007 Model Code is striking.  The document also reported the view that members with a prejudicial interest should be granted the same right to speak, to make representations and give evidence as the general public: i.e. what turned into paragraph 12(2).  Similar passages can be found in the Explanatory Memorandum to the 2007 Order.

 

18. The First-tier Tribunal held (para 18) that Mrs Bence had a personal interest in the development in that it not only affected her property, land in which she had a beneficial interest, but was also one which might reasonably be regarded as affecting her well-being of her and her husband.

 

19. At para 21 it addressed the question of prejudicial interest:

 

“…Although the nature of the matter did not fall within the exceptions set out in paragraphs 10(2)(a) or 10(2)(c), it did relate to an approval of planning permission that affected the Appellant and her husband and therefore came within the scope of what might amount to a prejudicial interest as the exception in paragraph 10(2)(b) provides.  …The Tribunal was of the view that a member of the public, with knowledge of the relevant facts would reasonably regard the Appellant’s interest as so significant that it was likely to prejudice her judgement of the public interest and as such she should have withdrawn from the room where the meeting considered the matter and not taken part in any discussion.”

 

20. In my view the tribunal misconstrued the legislation.  Paragraph 10(1) (what an informed member of the public would reasonably think) is, following the provisions introduced by the 2007 Order, expressly made subject to paragraph 10(2).  Falling within para 10(2)(b) would therefore have the effect of excluding a person from having a prejudicial interest that would otherwise arise.  Though I do not find the tribunal’s expression of its position particularly easy here, I infer that what it was saying was that the case did not fall within the negatively phrased paragraph 10(2)(b) and thus that there was nothing to displace the operation of paragraph 10(1).

 

21. However, even on that basis, I consider that the tribunal erred in law.  The tribunal seems to have interpreted para 10(2)(b) as if the words “in relation to” in para 10(2)(b) were equivalent to “affecting”.  That is not the natural meaning of the words: Oxford English Dictionary (online version, accessed on 4 April 2014) indicates “P2. in (also with) relation to : with regard to, in respect of.”  More importantly, if it is right to apply conventional techniques of statutory interpretation to the Code enshrined in the schedule to the Order, there are a number of indications that “relating to” and “affecting” are not intended to be synonymous.  It would be most unlikely that the draftsman of para 8(1)(a) was using the two phrases as synonymous in “it relates to or is likely to affect” so that the latter was a mere alternative way of putting the former.  Rather in that context “relates to” and “likely to affect” create alternative tests by satisfaction of either of which a personal interest may be found to exist.  Further, in paragraph 10 the concept of “to affect” meaning “to have an impact upon” is used in sub-paragraph (a) of the very same paragraph (2).  It would have been easy to have used the same word in paragraph 10(2)(b).  To have done so would have used concepts already in service in paragraph 8.  Using “affecting” if that was what was intended would have been grammatically perfectly possible as it is capable of being applied to each of “approval, consent, licence, permission or registration”.  Nor is there is no grammatical difficulty in speaking of any of the listed items as being “in relation to you.”

 

22. I see no reason not to apply conventional techniques of statutory interpretation to the Model Code.  It is contained in a schedule to a piece of delegated legislation.  It was a mandatory document for local authorities to adopt.  Breach of it could have serious reputational, political and, to a degree, financial consequences for a local authority member and could lead to voters being effectively disfranchised for a time if their councillor was suspended.  The tone of the document is in general formal and legalistic and understandably so.  Admittedly the 2007 Model Code uses the second person where previous versions did not, but I infer that that was merely a cosmetic change designed to impress upon members the significance of the Code for them and does not in my view detract from the overall nature of the document  or affect how it should be read.

 

23. I do bear in mind that by section 50, the Code is to be consistent with the principles laid down by order under section 49 and the Secretary of State confirmed that that was so in the preamble to the 2007 Order.  One can well see that subjecting a member to the restrictions on activity where they had a prejudicial interest in a wider sense might be thought to support, for instance, the principle that “members should not place themselves in situations where their honesty and integrity may be questioned”. Thus for example under the predecessor 2001 Code, a local authority member was held to have a prejudicial interest in a planning application submitted by a neighbouring landowner. in R (Richardson) v North Yorkshire CC [2003] EWCA (Civ) 1860; [2004] 1 WLR 1920 at [76], on the basis that what is now the paragraph 10(1) test would be met.  However, the question for me is a different one: whether, given the requirements of sections 49 and 50, “in relation to“ should be construed as meaning “affecting” when on the face of it, it does not.  I bear in mind that the 2007 Code was arrived at after a lengthy, statutorily mandated, consultation process.  There was a clear desire to liberalise the “prejudicial interest” rules.  Whether or not it was intended to go as far as the expression of that liberalisation would suggest is hard to say, but I cannot say that the Secretary of State could not have intended to draw the line where he apparently did (and thus that my reading could not be correct), even if others might have drawn it somewhere different.

 

24. That is all the more so as the Code contains a separate provision catching “conduct which could reasonably be regarded as bringing a member’s office or authority in to disrepute”, something which could be alleged of a member who was in flagrant breach of the principles of the Principles Order.  Further, it would be possible to take the view that cases not falling within the scope of a prejudicial interest would still constitute personal interests and thus subject to disclosure requirements and that it would then be a matter for the electorate to judge.  It is thus entirely possible that the view was taken that there was adequate alternative provision for such a matter not to need to be covered by the prejudicial interest rules in the climate of modest liberalisation which was, to judge by the summary of consultation responses, prevailing at the time.  This therefore again militates against my adopting a forced reading that is contrary to the natural meaning of the words.  Unlike in the case of the need to read in the word “and” discussed earlier, it is not necessary to do so in order to avoid a result which the legislator cannot be taken to have intended.

 

25. Darlington Borough Council submit that the business under consideration that is caught by the phrase “in relation to you” is not limited to concerns about an application (sc. for one of the “listed items”) made by an individual member.  It is submitted that the paragraph could have been drafted using “in relating to your application or that of any person or body described in paragraph 8” and that the use of “in relation to you” imports something wider.  I agree that there are other ways in which it might have been put, but to define it by reference to “your application” for instance, could create other problems.  In my judgment, if “in relation to you “ imports something wider, it is that “you” are the subject of the listed item (whether or not “you” applied for it).  In any event, I find these submissions about what might have been done differently less powerful than the arguments at [19] above, which address how things might have been done differently based on how they actually were done in comparable parts of the Code.

 

26. The Borough Council’s submission then refers me to the Code of Conduct Guide for Members, published by the Standards Board for England in May 2007.  That document says, inter alia, that

 

“You can only have a prejudicial interest in  a matter if it falls into one of the following two categories:

…

(b) The matter relates to an approval, consent, licence, permission or registration that affects you or any person or body with which you have a personal interest.”(p23)

 

It then goes on (at p24) to give as an example of “what is so significant that it is likely to prejudice your judgment” “a planning application proposal if a member of your family lives next to the proposed site.”  The point is raised in a context of discussing the paragraph 10(1) test (albeit it would be misleading to include it if it were not the view of the Standards Board about the impact of paragraph 10(2).)  Particularly troublesome, therefore, is the view at p23 quoted above that “in relation to” means “affects.”

 

27. I turn to examining the status of the Guide.  The Standards Board for England was established under section 57 of the 2000 Act.  It was under a duty in exercising its functions to have regard to the need to promote and maintain high standards of conduct by members.  It had power under s57(5)(b) to issue

 

“guidance to relevant authorities in England…on matters relating to the conduct of members and co-opted members of such authorities.”

 

The Guide is expressed to me to members rather than to authorities, but nothing of substance turns on that.

 

28. There is nothing material in the Standards Board for England (Functions) Order 2004/2618 or in schedule 4 of the 2000 Act (which supplemented s57).  I proceed on the basis that the Guide had no special status under statute and indeed, according to its preface, it “provides an overview”, provides the reader with “a general understanding” and reminds the reader of his/her responsibility to take specific advice from their monitoring officer where appropriate and to make a decision as to the most suitable course of action.  While produced by a body with relevant statutory responsibilities I can see nothing (eg by way of statutory underpinning) in the nature of or legal basis for the Guide which gives it any additional weight to a court or tribunal considering a question of interpretation.

 

29. The Borough Council then submits that the term “in relation to you” only makes sense if a member is “affected” to some degree. If this was not the case, it submits, all matters would potentially be caught, more in the abstract sense of “in relation to you”, even when a matter had absolutely no impact or effect on a particular member at all.  It is submitted that the phrase “in relation to you” in paragraph 10(2)(b) has the same meaning as “affects you” in paragraph 10(2)(a).  I think this is logically putting the matter the wrong way round.  A listed item “in relation to me” will affect me, because I am the subject of it.  It does not follow that because listed items “in relation to “ me will affect me, that every listed item that affects me is “in relation to me”. Nor do I think there is much by way of a listed item “in relation to” me that would be capable of having absolutely no impact or effect, so the effect of my construction is not to open the door to matters devoid of any effect. 

 

30. Accordingly, while I am grateful for the Borough Council’s submissions on the point, I am unable to accept them.

 

31. Does para 10(2)(b) apply to Mrs Bence?  I accept that the business before the Bishopton Council can be said to “relate” to the determining of any approval (etc), even though that Council was not itself determining it.  But was the approval (etc.) “in relation to you or any person or body described in paragraph 8”?  The approval was not in relation to Mrs Bence, it was in relation to the access to be constructed by others on their own land and was not Mrs Bence’s application.  It might be said that the application might have “affected” Mrs Bence.  But that is not the word used in para 10(2)(b) and, for the reasons I have given, I have to conclude advisedly so.

 

32. Given that the First-tier Tribunal imposed no sanction even when it thought there were breaches as to both personal and prejudicial interests, it would be surprising if I were to do anything different when the extent of the breaches is, in consequence of this decision, smaller and less serious.  I gratefully adopt the reasoning of the First-tier Tribunal as to why no sanction was (or is now) appropriate.

 

33. I am sorry that it has taken a long time for a decision to be issued in this case: the workload of the Chamber has been high for a prolonged period.

 

 

CG Ward

Judge of the Upper Tribunal

4 April 2014